Are Text Messages the New Social Media? One Start-Up Thinks So.

Andrew here. You probably received today’s DealBook newsletter, as you always do, by email. But you probably got a bunch of spam and junk mail in your inbox, too.

That’s why so many of us are moving our most important communications to text messages. And in the process, the “text inbox” has become the new holy space for brands, far more intimate than your social media feed.

At least, that’s the bet that Ashton Kutcher, the actor turned venture capitalist, and Guy Oseary, Bono’s and Madonna’s manager turned investor, made when they co-founded a text message company called Community in 2019. In the beginning, it was marketed to celebrities to communicate with their fans about tour dates and new projects.

But over the last year, the business has quietly grown to power text messages from some of the largest brands, like McDonald’s, HBO, the New York Yankees and Condé Nast. When this month’s Hollywood blockbuster, “The Super Mario Bros. Movie,” launched an advertising campaign, it came with a phone number for viewers to text, powered by Community.

The company plans to announce next week that it has raised another $25 million, bringing its total fund-raising to $110 million, from investors such as Salesforce Ventures, Morgan Stanley Next Level Fund and Verizon Ventures. (It did not disclose its latest valuation.)

It also made Robert Wolf, a former chairman of UBS Group Americas, who served as an informal adviser to President Barack Obama, its new chairman. He started helping to sign up large corporate customers over the past year, bringing the total clients to over 8,000. The company is run by Diankha Linear, a longtime executive who served as an Army logistics and transportation officer.

Community has gained its latest funding as questions have increasingly arisen about social media’s reach and how companies can own the digital relationship with their customers without a middleman like Facebook or Twitter.

“I started out with Twitter and built a fairly large following on Twitter,” said Mr. Kutcher, who has 16.8 million followers. “But Twitter today is very different than what Twitter was when I originally started playing around it,” he added. “The click-through rates are massively degraded — the number of people that actually see the post is massively degraded.”

At Community, in contrast, “we have like 45 percent click-through rates and 98 percent open rates,” Mr. Kutcher said. “You don’t get that in social environments because most people don’t even see the things you’re posting.”

Community competes with a bevy of different types of services vying for space in your text inbox, from Attentive to Twilio to Zendesk. And many of the software platforms that companies use to manage their relationships with customers now have features that facilitate texting.

But what sets Community apart is the dialogue that celebrities and brands have with their customers, who provide troves of information about themselves, which the brand owns and isn’t shared with Community’s other clients.

Oseary was originally drawn to Community because of his role as a music manager, he said.

“I have no way to know who came to the concert tonight. I have no way to speak to them again once they leave the concert. I have no way to know who bought the album,” he said. “With Community, once they text the number, we now have a way to stay in touch directly. And that information is not owned by anyone but the artist, the talent or the person who’s building a business.”

Companies advertise a phone number that users text to sign up for updates. McDonald’s posted its number on a billboard in Times Square just this month. The service also allows brands to segment customers who sign up for texts, so if an artist has an concert coming up in Atlanta, only people in Atlanta get the texts.

Using text messages to connect with customers, for all its promise, poses unique challenges. Brands are required to get their customers to opt in to messages, which is hard to do unless the brand is already well established. And customers may want to hear from fewer brands in their text inbox than they do in their email inbox.

“As opposed to email, when you have to scroll to the bottom of the thing and hit the link that says unsubscribe, if you don’t like the text messages you’re getting, you only have to write one word: Stop,” Mr. Kutcher said. (That’s some news you can use.)

IN CASE YOU MISSED IT

Rupert Murdoch makes another deal. Fox News settled a defamation case with Dominion Voting Systems at the last minute for $788 billion. The deal allowed Murdoch and his company’s executives to avoid having to testify, but it also handed Staple Street, the private equity owner of Dominion, a big payday after it bought the company for $38 million in 2018. His son Lachlan, C.E.O. of Fox Corporation, also settled a separate defamation suit against an Australian publisher this week.

Return to sender. Netflix ended its DVD delivery service after 25 years. The streaming company’s original business model revolved around sending discs by mail, and at its peak, in 2010, about 20 million subscribers used the service. The company announced the changes as it reported first-quarter profits of $1.3 billion, up 4 percent year on year.

Gary Gensler gets a grilling. The chair of the Securities and Exchange Commission, was hammered by Republicans over the agency’s handling of the cryptocurrency industry, in an appearance before the House Financial Services Committee. Gensler defended the regulator, saying he had never seen a sector break so many securities laws with such regularity, after being accused of failing to spot problems at FTX before the cryptocurrency exchange collapsed.

China’s economy bounces back, kind of. In its first full quarter since Beijing lifted punishing Covid restrictions, the world’s second-largest economy beat expectations on the back of surging consumer spending, rising exports and government-led infrastructure spending. But youth unemployment hit 19.6 percent, its second-highest mark on record, suggesting that businesses are not convinced that Beijing is finished dabbling in the private sector and that economic uncertainty is over.

Goldman Sachs quickens its retail banking U-turn. The Wall Street giant reported lackluster first-quarter returns and accelerated its retreat from consumer banking, including putting its GreenSky unit up for sale just a year after buying the lending company for $2.2 billion. One spot of new business: The bank introduced a savings account with Apple that offers a 4.15 percent annual interest rate — more than 10 times the national average.

BMW gets into hot water over ice cream. The German carmaker was forced to apologize after being accused of discriminating against Chinese visitors to the Shanghai auto show this week. Images went viral on Chinese social media of workers at its booth appearing to give free ice cream to a western man after telling ethnic Chinese attendees that they had run out.

Term of the week: ‘Greenhushing’

Ever since Earth Day was established in 1970, companies have advertised their green initiatives on April 22. But with many Republicans now taking a strong stand against corporate environmentalism and targeting companies that publicize their climate change-related goals, you might see fewer companies touting their green credentials this year. Instead, some businesses are resorting to “greenhushing.” An analysis of 1,200 companies published last fall by South Pole, a Swiss consultancy, found that one in four planned to go green but then “go dark” — that is, keep its green goals under the radar.

A.I., the artist

Artificial intelligence has had a creative few weeks: A song that used A.I. to mimic the voices of Drake and The Weeknd went viral; a murder-mystery novel penned using A.I. is available to preorder; and an image generated by A.I. won one of the world’s biggest photography prizes. DealBook wrote last week that A.I. was creating thorny copyright issues, but it is also raising questions about the nature of human creativity itself.

Companies have tried to draw lines between human and machine-generated work. Streaming services, including Spotify and Apple Music, pulled the tech-created song from their platforms this week. And Universal Music Group urged the services to block A.I. from scraping its songs for use as training data.

Some artists see creative possibilities rather than threats. Stephen Marche, who wrote the cheekily titled “Death of an Author” novel using three A.I. programs, compared the process to composing hip-hop: “You don’t necessarily know how to drum, but you definitely need to know how beats work, how hooks work, and you need to be able to put them together in a meaningful way,” he told The New York Times. “I am the creator of this work, 100 percent,” Marche said, “but, on the other hand, I didn’t create the words.”

Who is the creator? Boris Eldagsen, the Berlin artist whose A.I.-generated “Pseudomnesia: The Electrician” won the creative open category at the Sony World Photography Awards, told DealBook that making the image had been like directing a film.

“On a movie there is a set director, there is a cameraman, and there is an actress and a story writer, and I tell them which direction to go,” he said. “I am the one, as an artist, who needs to connect all of this to the world, the human condition.”

He entered the competition to kick-start a conversation about separating the art of photography from A.I.-generated art, which he considers co-creation.

But who should take credit for this type of collaboration? Generative A.I. is informed by reference material created by human artists. It becomes more complicated when A.I. is used to imitate a particular performer, or a specific artist’s drawing style. Last month, the Recording Industry Association of America launched a “human artistry campaign,” which argues that the makers of A.I. need to license copyrighted work they use as training data. And Holly Herndon, a musician, started a company to build consent guidelines for the tech. “The creative possibilities there are fascinating and will change art forever,” she told The Times. “We just have to figure out the terms and tech.”

Thanks for reading! We’ll see you Monday.

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