SplicedFeed

Apple's Amazing Run Is Masking The Much Of The Market Is Already Drifting Lower [Silicon Alley Insider]

2012-02-10T02:10:16-08:00

Interesting comment here from BTIG's Dan Greenhaus:

...the S&P continues to push higher although it shouldn’t go unnoticed that the Russell 2000 is down in three of the last four sessions, the transports are down in six of the last nine sessions and a large amount of recent gains in broad markets can be explained simply and solely by strength in AAPL.

You can really see the divergence here, comparing the NASDAQ 100 index (just the biggest NASDAQ stocks, to heavily Apple-dominated) to the Russell 2000 (small caps) over the past week.

And here's a chart of the aforementioned Dow Transports. No, that's hardly a big selloff, but it doesn't fit with the broader market, that's been edging higher and higher.

It's certainly possible that all this is an over-aggressive attempt to find something in this market, which really isn't moving very much.

A bullish counterpoint might be to point to the strength in the homebuilders, junior gold miners, and financial stocks, which you wouldn't expect to see if there was some nervousness behind the scenes.

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peHUB First Read [privateequityHUB]

2012-02-10T02:01:40-08:00

So, who should Thomson Reuters buy next?

Cementing Our Position: NYC Tech Day

Sun Capital says ‘Scotch & Soda, with a double of leverage.’

Myntra’s making friends

They Know Better? CD&R won’t go public

Turkish Delight: Deal time for PE in Turkey?

Apple: Just plain killing it

Scott Maxwell on CEOs pruning… people?

Is the MAC attack back?

Going Nuclear: US again building plants

USPS: Still a bad idea

Will an Iran attack preemptively strike Madge in Tel Aviv?

Take A Hike [HANSEN REPORT]

2012-02-10T01:21:37-08:00

(shot on top of Mount Baldy above Phoenix Lake)

Those familiar with my lifestyle know that I prefer a few things in life, one of which is most important, the great outdoors!

Blessed we have been in recent days with the clearing of the skies and the return to sun derived warmth. Its good to be back here. A year ago I was busy riding around Manhattan over black ice.

Will my friends in NYC please attend this in my... [HANSEN REPORT]

2012-02-09T20:13:27-08:00

Will my friends in NYC please attend this in my stead?

Ummm…thanks and you’re welcome for the heads up.

thegoldenfilter:

#fashionweeknyc

Here's How Microsoft Could Sell Lots Of ARM Tablets To Big Companies (MSFT) [Silicon Alley Insider]

2012-02-09T19:36:03-08:00

Enterprises might get a break on Windows 8 devices with Office 15 -- if they happened to have signed a new Enterprise Agreement after mid 2011.

That's speculation from Cynthia Farren, principal of a software license consulting company.

While Microsoft has not yet laid out its plans for how to charge enterprises for Windows ARM devices, it has offered clues.

An Enterprise Agreement is a license with Microsoft which covers much of a company's Microsoft software. It includes side benefits, particularly free upgrades to the latest versions of Microsoft software.

Earlier today, Microsoft said that Windows 8 ARM devices will include a special version of Office.

In EA agreements after mid-2011, Microsoft deliberately changed the definition of "qualified desktop" to "qualified device" when indicating what type of device is covered by the EA.

"If your EA includes Office and specifies 'device' then Microsoft will likely have to include Office 15 on ARM in your EA licensing agreement," says Farren.

But the trickier part is how Microsoft will charge for the Windows 8 operating system itself. To understand the potential gotcha, you've got to understand how Microsoft treats non-Windows devices in these agreements.

If a company yanks out its Windows desktops and replaces them with iPads that are set up to be able to run Windows and Office apps, Microsoft charges a "Virtual Desktop Access" fee for each device. And it doesn't remove those devices from the cost of the EA agreement unless a company deliberately goes back and negotiates for that. So Microsoft will double charge for those devices -- still charging for the Windows license no longer in use and also charging a fee to access Windows in a virtual Web-based cloud way.

Microsoft is clearly trying to penalize non-Windows devices by making it uber expensive to run Windows software on them.

So, if Windows 8 on an ARM tablet is considered a "fully functional OS" and not an "embedded OS" then an upgrade to it would be covered by the EA license with SA. A company with a recent EA could swap out other Windows devices with the tablet and be squared away.

It is unclear how Microsoft will treat customers with older EA agreements that still use the words "qualified desktop."

Farren also says that she doesn't expect Microsoft to be offering any great deals on EA licenses for Windows ARM tablets. While companies may not have to pay for Office 15 or the VDA fee, there are other gotchas. Because employees may actually need two devices -- their PC and their tablet -- enterprises could wind up spending more on Microsoft overall.

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Moriarty and Sherlock’s Anti-Showdown [Paul Kedrosky's Infectious Greed]

2012-02-09T18:04:38-08:00

From the wonderful BBC reboot of Sherlock Holmes, the superb Season 2 opening Sherlock/Moriarty anti-showdown.

Alibaba Group plans to take Hong Kong Unit Private [privateequityHUB]

2012-02-09T17:25:28-08:00

(Reuters) – Chinese e-commerce company Alibaba Group plans to take its Hong Kong-listed unit, Alibaba.com, private, two sources familiar with the matter told Reuters.

Under the yet-to-be-finalized deal, Alibaba would use borrowed money and internal cash as well as an asset swap to buy back most of a 40 percent stake that Yahoo owns in Alibaba Group, the sources said.

Alibaba.com shares were halted from trading on Thursday pending an announcement regarding its parent.

Yahoo’s stake in Alibaba Group has an estimated value of $14 billion. Under the plans being discussed, Alibaba Group wants to buy back about 25 percent of its stake. Alibaba Group plans to pay one-third of the consideration through a stake in one of its operating assets and the rest through cash.

Alibaba.com is the most likely operating unit in which Yahoo may be offered a stake, one of the sources said. Both parties have an understanding on this arrangement, but have not signed any formal deal yet, the source added.

The sources declined to be identified as the discussions were private. An Alibaba Group spokesman declined to comment.

Yahoo is choosing this route as it wants to achieve tax efficiencies, sources have said previously.

Alibaba Group, founded by former English teacher and now billionaire Jack Ma, is looking to raise a loan of about $3 billion, which will be partly used to fund the buyback and the privatization.

Alibaba Group currently owns about 73 percent in Alibaba.com, which has a market value of nearly $6 billion.

(Reporting by Prakash Chakravarti; Additional reporting by Stephen Aldred, Kazunori Takada, Saeed Azhar and Melanie Lee; Writing by Denny Thomas; Editing by Mark Bendeich and Muralikumar Anantharaman)

A new member of the Spark team [BijanBlog]

2012-02-09T17:00:00-08:00

Our team at Spark Capital has evolved a bit since we started in 2005. Since that time, we promoted Alex from Principal to General Partner. We promoted Mo from Principal to General Partner. And we promoted Andrew, from Sr. Associate to Principal

I’m proud that we’ve been able to grow the firm by giving members of the team more and more responsibility.

I always tell people that the best part of my job is that I get to meet and work with the most talented and creative entrepreneurs on the planet.

The other part of this job I love is that I get to work with my friends. I’ve known Santo for years before Spark. Same with Todd. My kids call our other partner/cfo Paul, grandpa in a joking way because his hair is gray. When we have our holiday party it truly feels like a family event.

Today we announced a new addition to the Spark team. Nabeel Hyatt has joined our company as a Venture Partner. Nabeel is super creative, smart and high energy. He gets the social web and obsesses about design. He’s also a serial entpreneur. Nabeel’s latest startup was Conduit Labs which was acquired by Zynga. After that acquisition, Nabeel became General Manager of the Zynga Cambridge office.

When I moved to Boston after 10 years in SF, Nabeel was one of the first people I met. He had cofounded Ambient Devices and I bought their Orb. I was so obsessed with connected devices that I reached out to him cold. We became fast friends and we always wanted to find a way to work together.

And now we have that opportunity.

Nabeel has a post up as well (and it’s on Tumblr wouldn’t you know!) about joining Spark.

Welcome aboard Nabeel!

Strategic Titans Validate Cloud Model—But Will it Work for Them? [privateequityHUB]

2012-02-09T16:57:48-08:00

SAP and Oracle are on a cloud buying spree. While that’s exciting for Wall Street it belies a bigger epiphany for the software industry. Thursday’s announcement of Oracle’s $1.9B acquisition of Taleo follows a pair of other big cloud deals: Oracle’s $1.5 billion purchase of RightNow and SAP’s play for SuccessFactors. By making these acquisitions, both of these traditional companies have validated that the cloud is the future of enterprise software. I believe that when we look back two years from now, we’ll say that the Taleo, RightNow and SuccessFactors acquisitions were the tipping point in the enterprise software industry finally shifting in earnest to the cloud.

Starting with salesforce.com, the business of building and selling business software fundamentally changed. Cloud based-vendors such as salesforce.com, Workday and, my company, Zuora, are stealing market share from traditional, on-premise software companies such as Oracle and SAP that they are finding uncomfortable. These old school enterprise providers know the power has shifted from the IT department to functional heads (e.g. insiders at SAP told industry analyst Dennis Howlett that 11 of its top customer CIOs have disappeared). They know that customers are choosing “on-demand” computing in lieu of traditional, on-promise software. They know that innovation in cloud-based software is measured in weeks while on-premise “innovation” creeps along at a glacial pace. And they know that customers don’t want to pay exorbitant, up front licensing fees for software that will become dated in a matter of months.

So what’s a big enterprise software company to do? In the early 2000s, ERP players tried building and marketing their own cloud apps, such as SAP’s “Business by Design” product. But in five years, SAP has signed on 1,000 Business by Design customers, less than half of 1% of its install base. Conversely, the significantly smaller SuccessFactors had racked up 3,500 customers in the cloud, representing 15 million subscription seats for its human resources solution. More importantly, SuccessFactors’ growth is off the charts, with 77 percent year over year revenue in the third quarter of 2011 and 59 percent year over year revenue for the first nine months of 2011. Rather than continuing to fight a losing battle, SAP elected to simply purchase SuccessFactors. Call it an attempt at cloud innovation via acquisition.

Oracle seemingly purchased RightNow for a similar reason. Salesforce.com has been taking CRM market share from Oracle (and Siebel, PeopleSoft and JD Edwards for that matter) for years. Apparently, Oracle believes scooping up RightNow will allow it to grab a bigger piece of the growing market for cloud-based CRM. But it’s yet another acquisition in a confusing mix of solutions, and one that flies right in the face of Oracle’s “private cloud” vision, which, as salesforce.com CEO Marc Benioff explains, “goes hand-in-hand with selling proprietary mainframes.”

Of course, Oracle and SAP aren’t the first monolithic, on premise companies who have tried to compete in the cloud via acquisition. In 2003, before being acquired by Oracle, Siebel gobbled up SaaS CRM vendor, Upshot, and subsequently launched its own line of cloud-based CRM. In that one stroke, Siebel signaled that on-demand computing was the preferred model for CRM.

But here’s the irony: Siebel had the right idea – realizing that the cloud was the future of computing – the company that most benefited from the acquisition was Salesforce.com. By buying Upshot, Siebel validated cloud-based CRM and, by default, Salesforce.com. Almost overnight, Salesforce.com was catapulted from a laggard position to the leader in cloud-based CRM. Needless to say, it has grown its position of dominance in the intervening years.

So why should anyone believe that today’s acquisition of Taleo presents any more of a threat to Salesforce?

The fact is that Oracle, SAP and Siebel each felt forced to buy SaaS companies to kick-start their own cloud efforts. They all acted in response to the market shift, not in a strategic, market-building way. They are admitting that they can’t compete against a better business model and against a better delivery model that customers prefer. SAP and Oracle were the prevailing figures of yesteryear and can’t simply acquire their way to success. They have to find another way to successfully compete – and be relevant – in the new era of the cloud. Because right now, who benefits most from today’s Taleo acquisition remains unclear, but I’d bet it won’t be Oracle.

Tien Tzuo is CEO of Zuora, a subscription commerce company based in Silicon Valley. Previously, he was the chief strategy officer and chief marketing officer at Salesforce.com. Opinions expressed here are entirely his own.

Inside TaskRabbit: Nobody Does Their Own Chores, So There's More Time For Fun And Pranks [Silicon Alley Insider]

2012-02-09T16:32:00-08:00

Kobe the dog is TaskRabbit's chief inspiration officer.

It's a fancy position for a pet, but it's well-deserved, considering the dog actually inspired Leah Busque to start TaskRabbit.

Click here to see what it's like to work at TaskRabbit→

One night on February 2008, Busque was sitting at home and getting ready for dinner with her husband when she realized she was out of dog food.

The couple wondered: Are we going to have a cab stop on the way home? Later that night, they kept talking about how it would be nice if there was a place to go to online where could name a price they were willing to pay for someone to get them dog food.

Busque quit her job at IBM and founded TaskRabbit in June 2008. The site has grown since we last spoke to Busque: since the company's series A round in May, TaskRabbit has seven times the amount of users, and the posted tasks have tripled. TaskRabbit also closed a second funding round of $17.8 million in December, and is now in seven cities: San Francisco, Chicago, Los Angeles, Boston, New York City, Seattle, and Portland. The next city is Austin, which will launch at SXSW next month.

We visited TaskRabbit's San Francisco offices to see what it's like there...

Here we are. That rabbit looks busy!

Johnny Brackett showed us around. He's talking to marketing head Jamie Viggiano. Brackett joked that most employees love TaskRabbit so much, they probably should start doing their own errands again.

TaskRabbit began serving consumers, but small businesses are beginning to see the value. Susie Cakes likes to use the service for delivery. Companies like Google and Twitter offer a discount to their employees.

See the rest of the story at Business Insider

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Google's Foray Into Hardware Will Be A Total Disaster — Here's Why (GOOG) [Silicon Alley Insider]

2012-02-09T15:56:57-08:00

It's finally clear: Google is getting into the hardware business.

Last week, word came out that it was testing some sort of mysterious entertainment device in employees' homes.

Today the Wall Street Journal reported that Google will build and market a Google-branded music gadget that will stream tunes around the home.

Google is about to finish buying Motorola, the world's biggest maker of TV set top boxes and one of its larger cell phone makers, and Eric Schmidt has said that it wasn't just for the patents.

It's even building retail stores.

Maybe Larry Page really was jealous of Steve Jobs. Or maybe Google is just jealous of Apple's revenue and profits and market cap.

Whatever the reason, this won't end well.

Google has never shown that it has any of the characteristics necessary to build, market, and sell consumer goods.

Let's take a look at all the things that made Apple one of the biggest and most admired companies in the world. Does Google have any of those things?

Design chops? Apple has revolutionized product design several times -- the iMac, iPod, iPhone, Mac Air, and iPad. Google's best design was its original home page, loved for its white space and simplicity. Google+ had some nice elements -- Circles was designed by Apple old-timer Andy Hertzfeld -- but the recent redesigns of products like Gmail, Reader, and Search have caused more anger than delight.

Shipping finished products that customers love? Apple products are designed with the customer experience top of mind -- Steve Jobs famously said that Apple doesn't listen to customers first, it figures out what they should want and then goes and builds that. Google is infamous for releasing half-finished products like Music and Google TV, slapping a beta label on them, then gradually improving them over time. That works fine with free Internet services. It does not work with products that you're trying to sell for hundreds of dollars. (Need evidence? Spend an hour with an Android tablet that hasn't been updated to Ice Cream Sandwich.)

Customer service? The Genius Bar gives Apple customers on-demand customer service for any problem with any Apple product. Google hardly provides personalized customer service to its most important customers, the advertisers who make up more than 95% of its business -- most Google ad products are self serve for all but their largest and most important customers.

Manufacturing? Apple's Tim Cook is a genius at managing Apple's supply chain. Google has done some of this with suppliers for its data centers, but that's different from setting up the parts and manufacturing necessary to build and ship tens of millions of devices on quick turnaround.

Advertising? Remember those iPod ads with the white figures dancing? Of course you do. Remember those Google+ ads with the muppets singing along to David Bowie? Probably, but not for the same reason.

Can companies change? Of course they can.

Microsoft spent 10 years and several billion dollars to get into the game business, and while it's still about $4 billion in the hole (lifetime), the Xbox is finally on a consistent profit streak and Microsoft has passed Sony.

But at least Microsoft had a long history of building and selling packaged consumer products like Windows, Office, and CD-ROMs, and even hardware like keyboards and mice.

Amazon is becoming a hardware company, but only after selling hardware through its online retail store for years. It understands logistics, advertising, marketing, and customer service, and has a huge store of data about customer buying habits which it can use to help.

Google has never successfully sold anything to consumers. Not a single thing.

Google is really good at building fast, useful, responsive software that runs at Internet scale, and at hooking up the users of that software with advertisers to make gobs of money.

That's a great business. Google utterly dominates it. There are untapped adjacent markets, too -- what about getting serious about Apps, taking its expertise in delivering online services and really applying them to the enterprise? (Is Google really going to cede that market to Box.net? Really?)

Or building YouTube into the cable TV system for the Internet?

Or even coming up with new forms of advertising for other kinds of media?

But adding a business in which it has demonstrated none of the characteristics necessary to succeed just seems utterly mad.

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This Kickstarter Project Raised Nearly $1 Million in One Day [Silicon Alley Insider]

2012-02-09T15:24:15-08:00

This post originally appeared at The Fiscal Times

It’s been a kick-ass week for raising money on Kickstarter. The crowd-source funding site saw a new record set on Wednesday by the Elevation iPhone Dock, which raised over $1 million in less than two months and beat the previous all-time funding record of $942,000 (it’s now up to $1,035,214). Today, it looks like yet another record could be broken.

On Wednesday night, San Francisco-based independent video game studio Double Fine Productions posted a new adventure game on the fundraising site with the goal of collecting $400,000, and watched the dollars start to pour in from fans. In just eight hours and 11 minutes, Double Fine had surpassed its goal. Less than eight hours later, they had doubled it. At time of publication, the total raised was over $900,000 and growing by tens of thousands of dollars every few minutes – with 33 days left to collect.

Owner Tim Schafer, who is known for popular adventure games like Full Throttle and The Secret of Monkey Island, says, although there’s huge interest from fans, he’s struggled to get any interest from big game publishers to do adventure games like this one. That’s when he turned to Kickstarter.

Kickstarter funders don’t receive any ownership of the project, and don’t see a return on their money, but many Kickstarter projects offer perks. Double Fine will give a copy of the game to anyone who gives $15 or more and a signed poster to those who give $250 or more. Donors who give $10,000 or more get lunch and a tour of the studio with Schafer and Ron Gilbert, another developer. One video game animator in Seattle, Will Christiansen, heard about it this morning and gave $100. “Everyone was passing the link around Facebook and Twitter,” he said. “As developers and gamers, we’d love to see this new model take off. It would mean a big shift in the game/publisher dynamic and could make games more interesting, innovative and independent.”

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Retail Guru Ron Johnson Dazzles In His First Media Controversy As JC Penney CEO [Silicon Alley Insider]

2012-02-09T15:00:00-08:00

JC Penney CEO Ron Johnson, who was the mastermind behind the Apple stores, is dealing with his first media controversy.

A group called One Million Moms has been trying to get JC Penney spokesperson Ellen DeGeneres fired because of her sexual orientation.

Johnson, flashing an incredibly charming smile, appeared on CBS to defend DeGeneres. He said that DeGeneres was the perfect pick to represent the new direction of the company because of her positive, outgoing attitude.

Johnson also outlined his goals for JC Penney:

• to become America's favorite store – not the biggest, not the flashiest;

• to implement a new pricing strategy that makes every day a great day to shop (the store has already lowered its prices by about 40%.)

• to become part of people's lives but not interrupt them – that means no 4am, early-bird sales on Thanksgiving.

His interview would have been almost flawless if he had not overlooked one big detail. Johnson was not wearing a JC Penney outfit for his interview and the anchor caught him. Oops.

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Groupon Finds A New Executive To Handle Andrew Mason (GRPN) [Silicon Alley Insider]

2012-02-09T14:41:00-08:00

Groupon is filling the communications hole in its executive ranks, hiring long-time public-relations executive Paul Taaffe, Bloomberg's Douglas MacMillan reports.

Taaffe is taking over for Bradford Williams who left Groupon at the end of August. He was on the job for just two months. He didn't get along with CEO Andrew Mason.

Taaffe has nice things to say about CEO Andrew Mason, including that he's incredibly talented and has matured quickly, and the two have begun working together to try and change the perception of Groupon by the public and investors.

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We Hope This Gawd-Awful Cover Letter For An Engineering Job Is Fake [Silicon Alley Insider]

2012-02-09T14:28:20-08:00

A firm called Open Source Staffing published a job listing for a contract-to-hire API Engineer position located in New York City.

According to a tipster, OSS got the following cover letter, which we sincerely hope was an attempt at humor – and not an attempt to get a job:

Dear Open Source Staffing & NYC PHP Meetup Group:

I'm super awesome and have incredible experience compared to this - it
includes the required experience below plus I am trained in MMA
fighting, am the mayor of multiple Chipotles, Starbucks, and locally
famous restaurants in downtown NYC, and I type really fast. You want
to hire me more than anything and you'll be disgusted at how fast and
responsive your API is when I'm done.

You'll have to pay me ridiculous amounts of money but after the job is
done you'll wish you paid me more to stick around because you'll know
whatever company hires me next will destroy yours. It will be worth
it, you'll feel like I just got ripped off every time you write me a
check. Each week you'll feel worse and worse and increase the amount
of money you are paying me until one day you realize there's no amount
of money that could add up to the value of my insanely awesome skills.
It's ok, it happens to everyone.

You're welcome,
David

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peHUB Second Opinion 2.9 [privateequityHUB]

2012-02-09T14:07:03-08:00

FBI interviews paint Steve Jobs as a driven, reality-distorting visionary. And Jobs had a membership to the New York Athletic Club, according to The Street.

Here’s the best press release ever. And it’s for a comic book (aka graphic novel).

BofA and four other banks reach a $25 bln settlement to end a foreclosure probe. The settlement may help some but most homeowners will have to fend for themselves.

Hey startup dudes. Cut the sexist crap, says Dan Shapiro. Here, here.

Picking the right teams keeps investors up at night, says Chris Shipman, Catalyst Investors’ co-founder.

Zynga is partnering with Hasbro to bring its toys and games into the real world.

Apple will unveil the iPad3 in March. Get ready.

Google is developing a home entertainment system that streams music wirelessly.

We’re not sure these Peyton Manning stories are true but it makes us sad.

The captain of the Costa Concordia (the one that crashed into a rock) admits he was rash.

“I didn’t inhale” and other ”Sh*T Mitt Says” from Democratic Super PAC American Bridge.

LinkedIn how has 150 million members but how many have gotten a job from it?

Mice that were treated with a widely available cancer drug experienced a reversal in their Alzheimer’s.

Now cleared of doping allegations, Lance Armstrong will return to triathlon competition.

Here's How To Use Google+'s Most Valuable Feature (GOOG) [Silicon Alley Insider]

2012-02-09T13:24:00-08:00

"Circles" is one of the only Google+ features that neither Twitter nor Facebook has been able to emulate.

Circles feature lets you share links, pictures, and videos with only the people of your choosing.

You group these people into Circles like "Family," "Best Friends," or "Work." Having Circles like these lets you truly control your privacy and who you're sharing with.

Here's how to make some Circles:

Produced by Daniel Goodman and Kamelia Angelova

• Four Great Tips For Editing Photos On Your iPhone

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Apparently Google Is Building A Music System For Your Home (GOOG) [Silicon Alley Insider]

2012-02-09T13:21:52-08:00

Google is taking a first step into consumer electronics with a home music streaming system which will debut later this year.

The Wall Street Journal reports that Google will market the system under its own brand. It would take music and stream it throughout the home over a wireless network. People would operate it using a smartphone or tablet.

The Android team has apparently been working on it for several years.

Last week, it came out that Google was testing some mysterious entertainment device in employees' homes. This could be it.

The idea sounds similar to how Apple's iTunes and Airplay can work together to stream music from a Mac to other gadgets in a house. It's also like standalone systems from Sonos, Logitech, and other companies, which have been around for years now.

If this report is true, it looks like Google is really serious about taking Apple in hardware. That's bad news for any investors who were hoping that Motorola really was all about patents.

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Great New Screenshots Of Windows 8 And Office 15 On Tablets (MSFT) [Silicon Alley Insider]

2012-02-09T13:12:30-08:00

This morning, Microsoft revealed a lot of new details about the upcoming version of Windows that will run on low-powered ARM processors, which are used in most tablets today.

Basically, this is Microsoft's best shot at the iPad.

The company also released a video with some pictures of Windows and the next version of Office running on an ARM device.

Some of these pieces have been seen before, but the shots of Office are brand new.

Check it out...

Here's the start screen. Cute dog.

You swipe to start and are prompted to enter a password.

Here's the home screen with a bunch of apps. It's part of the new "Metro" interface that was designed for touch screens.

See the rest of the story at Business Insider

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LinkedIn Just Hit 150 Million Registered Users (LNKD) [Silicon Alley Insider]

2012-02-09T13:05:00-08:00

LinkedIn now has more than 150 million registered users, the company announced today.

Around 6.1 million LinkedIn members live in New York — more than any other state — and more than 5 million of them are based in the city, according to the company.

LinkedIn adds around 10 new members every 5 seconds, according to LinkedIn's senior vice president of product Deep Nishar. It had around 135 million members as of December last year.

Don't Miss: 8 Reasons You Must Upgrade To A LinkedIn Premium Account

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7 Things Windows Phone Needs To Fix Before We'll Ditch Our iPhones (MSFT) [Silicon Alley Insider]

2012-02-09T13:04:00-08:00

We love the Windows Phone operating system.

In fact, it's better than iOS in several key ways.

We might even be on the cusp of recommending you buy a Windows Phone, if it weren't for a few major gripes we have with it.

To its credit, Microsoft has fixed a bunch of issues lately that we've been having (like the ability to sync multiple Google Calendars), but there are still some issues that are dealbreakers.

Here are a few of the reasons we still won't switch to Windows Phone.

We don't care about 100,000 apps. We want the apps we use every day.

Frankly, we don't care how many apps any given platform has.

What we do care about is whether a platform has the apps we've come to expect on our smartphones.

We use apps like Dropbox, Instagram, PayPal, Skype, Seamless, iTrans (for subway maps), SugarSync, and Mint.com every day. Until the apps we use the most are on Windows Phone, we can't possibly switch.

It's as simple as that.

Where is "search on webpage?"

We frequently find ourselves trying to find where a specific word is on a website. On iPhone and Android, this task is a triviality.

But where is this feature on Windows Phone?

This feature's absence is a daily frustration.

We also want plenty of apps that we won't always use.

Because iOS and Android have such enormous user bases, smaller companies and developers put forward their first app efforts on those operating systems.

If we visit an amusement park and see that its owners have built a map app for getting around, we want to be confident that we'll be able to download the app. We expect the app to be on iPhone, but in most cases, niche apps like these are not on Windows Phone.

Even big companies like Citi and Chase haven't yet released apps for Windows Phone.

See the rest of the story at Business Insider

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LinkedIn's Stock Takes Off After Crushing Earnings With $167.7 Million In Sales (LNKD) [Silicon Alley Insider]

2012-02-09T13:04:00-08:00

LinkedIn is reporting its earnings today!

Looks like they beat on both earnings and revenue!

LinkedIn's shares are up 4 percent in extended trading.

Here are the details:

Q4 revenue: $167.7 million vs $159.7 million Wall Street estimates

Q4 revenue up 105 percent from $81.7 million in Q4 2010

Q4 net income: $6.9 million

Q4 EBITDA: $34.4 million

Q4 EPS: $0.12 vs $0.07 Wall Street estimates

Q1 EBITDA guidance: $25 million to $27 million

Q1 revenue guidance: $170-$175 million vs $170.8 million Wall Street estimates

FY2012 revenue guidance: $840 million to $860 vs. $828.2 million Wall Street estimates

Q1 EPS guidance: $0.09

LinkedIn now has 150 million registered users.

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Here's The Crack Team Of Super-Geniuses Google Invited To Hash Out The World's Top Problems (GOOG) [Silicon Alley Insider]

2012-02-09T12:59:00-08:00

Google just hosted a series of super high-level talks and invited about 50 entrepreneurs, innovators, and scientists to the deluxe CordeValle resort in the mountains south of San Jose.

It was called Google's "Solve For X" conference, a series of talks where some of the smartest people in the world tried to tackle some of the world's biggest problems.

Google invited them to introduce radical ideas for solving the world's most complicated problems, like water scarcity and recycling electronics without creating hazardous waste.

But what's the story behind the speakers? We've assembled a list of them for you, and what they specialize in.

Adrian Treuille is a Carnegie-Mellon computer science professor.

Adrien Treuille is an Assistant Professor of computer science and robotics at Carnegie Mellon.

One thread of Adrien`s research seeks model-reduction approaches to complex phenomena such as animal morphology, human motion and large fluid systems.

Adrien has won the NSF CAREER award, and was named one of the top 35 innovators under the age of 35 by Technology Review.

Treuille spoke about collaborative science.

Andreas Raptopoulos wants to revolutionize transportation with unmanned aerial vehicles.

Andreas Raptopoulos is the founder and CEO of Matternet, which is launching a new transportation project using a network of Unmanned Aerial Vehicles.

Previously, Andreas founded FutureAcoustic, a venture that developed a new platform for music that listens and reacts to the user`s environment.

Anthony Sutera specializes in wireless technology like magnetic induction — which powers wireless charging.

Anthony Sutera has more than 20 years experience in creating and managing companies competing in the communications market.

Sutera is currently the CEO of Chamtech Enterprises, a company holding several patents on its nano, spray-on antenna technology.

Anthony founded Radeum Inc., DBA FreeLinc and was responsible for research and development and patent portfolio for the company`s Near-field Magnetic Induction technology.

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Facebook Signs Mysterious Deal With Mobile Payment Company (FB) [Silicon Alley Insider]

2012-02-09T12:47:00-08:00

Facebook looks like it's getting closer to launching its long-awaited mobile payments platform.

U.K.-based Bango announced an agreement "to provide payment services to Facebook," Bango said. But neither company is offering any more info than that.

Bango is best known as the service used by BlackBerry AppWorld to process payments.

But Bango also does carrier billing -- taking mobile transactions and putting them on your mobile phone bill. So Tim Bradshaw at the Financial Times argues that Bango might be used to take payments with Facebook Credits and transfer them to your cell phone bill so you don't have to enter credit card info.

Credits began as a way for people to spend real money to buy pretend goods for the Facebook games they play. Last year, Facebook expanded credits beyond games to things like movie rentals and Facebook's Groupon-like Deals platform. It is now the only form of payment accepted on Facebook.

As of last summer, word was that 200 million people have used Facebook Credits at least once.

Have you got some news about Facebook's upcoming mobile plans? We'd like to hear. We are discreet. jbort@businessinsider.com or @Julie188 on Twitter.

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Oracle Strikes Taleo Deal as Cloud Wars Gain Momentum [privateequityHUB]

2012-02-09T12:33:16-08:00

(Reuters) – Oracle Corp agreed to buy Taleo Corp, a maker of Web-based software for recruiting employees, for about $1.9 billion, as technology giants battle for the top spot in the fast-growing cloud computing market.

It is the latest big investment in cloud computing by Oracle, the world’s No. 2 maker of business management software, and a quick response to larger rival SAP AG’s pending plan to buy SuccessFactors Inc for $3.4 billion.

Oracle’s offer price for Taleo is 6.5 times trailing 12-month sales, a bit more than half the 12 times multiple that SAP will pay for SuccessFactors, according to Evercore Partners.

While Oracle lags SAP in selling traditional software that customers install on their computer systems, its billionaire CEO Larry Ellison has been aggressive in adding cloud-based software offerings over the past few years.

Last month, Oracle paid $1.5 billion to purchase established cloud player RightNow Technologies, whose software helps companies provide customer service.

Oracle and SAP are both trying to catch up with cloud leader Salesforce.com Inc, which was started over a decade ago by former Oracle executive Marc Benioff.

Oracle’s Ellison was an early investor in Saleforce, but Benioff ousted him from the board when he felt Oracle got too aggressive in competing with the firm.

Cloud computing refers to providing software, storage, computing power and other services to customers from remote data centers over the Web. Demand for cloud-based software is rising rapidly because the approach allows companies to start using new programs faster and at lower costs than traditional products that are installed at a customer’s own data center.

Revenue from cloud-based enterprise software is expected to be $17.32 billion in 2013, 5.7 percent of total enterprise software revenue, up from $5.31 billion in 2009, according to data from Gartner.

The online recruitment software market, an important category within the software-as-service industry itself, may grow more than 15 percent this year, according to independent market research firm Bersin & Associates.

Last year, Oracle launched Web-based versions of several of its new line of business management software programs known as Fusion Apps, which analysts say are still in the early stages of winning market acceptance.

Despite the acquisitions, it is early days for Oracle and SAP when it comes to cloud computing, as many corporate technology buyers remain skeptical that their home-brewed cloud products will hold up against products from Salesforce.com.

“SAP and Oracle are still perceived as the old guard on premise and they are not ‘with it’ in cloud,” Nomura Securities analyst Rick Sherlund said.

“They want to own this space. They want to reinvent themselves for the cloud … They are buying a position in the cloud through consolidation.”

Some analysts also questioned the rationale of the target companies in selling out since the transition to cloud-based enterprise applications is still not far along.

“We wonder if these vendors were motivated by a belief that either their core market segments were too highly penetrated and that the cost of expanding was simply too high,” BMO Capital Markets analyst Karl Keirstead said.

Large enterprises increasingly looking to acquire their more mature “edge” applications from vendors such as SAP and Oracle may also be a reason for the target companies to sell themselves, he said.

Analysts said that the Fusion Apps cloud products introduced last year already provide a fairly broad array of business management programs, which means that Oracle is under less pressure to do acquisitions to build out its portfolio than SAP, which has fewer Web-based offerings.

Taleo fills one of the few obvious gaps in Oracle’s line-up, said Morgan Keegan analyst Michael Nemeroff.

“They did not have a recruitment package. They always needed to develop or buy it, and now they have done it,” he said.

The RightNow buy filled another hole in Oracle’s portfolio.

Nemeroff said that Oracle may still be looking to purchase a company that provides Web-based payroll software, such as Ultimate Software Group Inc.

Officials with Oracle declined comment.

SAP spokesman Jim Dever said his company would discuss its strategy for expanding its cloud offerings in several weeks, after the close of the SuccessFactors deal.

“SAP is coming off the biggest year in its 40-year history. We are in an excellent strategic position to keep winning in the market, including the cloud,” he said.

The Taleo deal value of $46 a share offers an 18 percent premium to Taleo’s Wednesday close of $38.94.

Taleo shares surged 17 percent to $45.62 in afternoon trading, while Oracle gained 0.2 percent to $28.79.

Other makers of cloud-based software also rose on the news, with Kenexa Corp climbing over 2 percent to $28.71. Cornerstone OnDemand Inc 0.8 percent to $17.93 and Ultimate Software Group 0.7 percent to $66.45. All had traded much higher earlier in the session, when the Nasdaq Composite Index flirted with its highest levels in over a decade.

(Reporting by Jim Finkle in Boston and Sayantani Ghosh in Bangalore; Editing by Derek Caneyand Gerald E. McCormick)

Why Using Airbnb To Go To The Super Bowl Was The Best Decision I've Ever Made [Silicon Alley Insider]

2012-02-09T12:29:00-08:00

Airbnb is this thing where people rent out their houses or apartments for short periods of time.

So when BI decided to send me to the Super Bowl long after all the hotel rooms in Indianapolis had been gobbled up, it seemed like a perfect option.

Airbnb is one of those "sexy" start-ups that has raised boatloads of cash. But not everyone has had such a great experience using it. SAI reporter Matt Lynley tried to use the site when he first moved to New York, and it was an utter disaster.

As is the case with sites like Ebay or Craigslist, the quality of your Airbnb experience probably comes down to how lucky you get with the seller. Lynley got burned, and his experience was terrible.

On the other hand, I lucked out, and as a result my travel experience to Indianapolis was more pleasant than I ever could have hoped.

Learning how to navigate the website was simple, and it didn't take me too long to find a place once I got browsing

Like a lot of people, I leave any website that takes me more than 60 seconds to figure out how to use.

But Airbnb was generally simple. The one drawback was that the bolded title of each listing was often misleading (pretty much every one had "INDY" and "SUPER BOWL" in it even if the place was located outside Indianapolis).

But other than that, it was easy to click through and find a place.

Eventually, I settled on a place that cost $200 per night. It seems like a lot, but seeing as some hotel rooms 20 miles away were going for $400+, I'd call it a steal.

My eventual landlord confirmed my purchase after just 16 minutes

I booked my trip on Jan. 23 — less than two weeks before the Super Bowl — so I was stressed out that I wouldn't be able to find a room in Indy.

Luckily, I booked the room at 5:31 p.m., and by 5:47 p.m. my landlord had confirmed my purchase.

Boom! Just like that I was ready to go

See the rest of the story at Business Insider

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Inside The Apple Protest In San Francisco [Silicon Alley Insider]

2012-02-09T12:18:51-08:00

Responding to reports of poor conditions in the Chinese factories that make Apple products, a quarter of a million people signed a petition on Change.org and SumOfUs.org, hoping that the signatures will provoke a reaction from Apple.

Today, Change.org founder Ben Rattray and his team delivered the signatures collected through his platform to the Apple Store in San Francisco.

All 250,000 signatures were delivered to other locations including New York City, Washington DC, London, Sydney, and Bangalore.

Rattray said, "we are most excited by the capacity of an individual. This is Mark Shields, who is an Apple lover. Immediately in response to an article by The New York Times, Shields rapidly organized a quarter of a million people around the world and organized a distributed protest around the world. It's a remarkable demonstration of the capacity of individuals to advance real change."

The next stop is to escalate talks with Apple and allow consumers to directly negotiate with Apple, Rattray said. Many of the concerned consumers hope that the iPhone 5 will be the first ethical iPhone, Rattray added.

Here was the scene in downtown San Francisco as some folks delivered the petitions to the Apple Store.

After a short hello, Rattray and several members from his Change.org team handed over the petitions to Apple employee Larry Verter.

Verter kindly accepted the petitions.

One of the Change.org team members expressed his feelings non-verbally, by dressing up as an iPhone.

Dennis Ring, an Apple customer, stopped by the protest and told us, "I'm here as a consumer to see that the petitions get delivered. To let Tim Cook know they have to change their ways and set the standard for the rest of the industry."

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The Facebook IPO Could Set Silicon Valley's Real Estate Market On Fire [Silicon Alley Insider]

2012-02-09T11:53:37-08:00

Facebook's upcoming IPO will create a lot of new millionaires.

And Silicon Valley's already thriving real estate market is gearing up in anticipation of some expensive home purchases by Facebook's newly monied elite, reports Michael Cooper for The New York Times.

With the help of Facebook, Silicon Valley's hot market is even expected to rub off on some of the fringe towns in the Bay Area that have struggled to recover from a deflated housing bubble.

Jim Carlton reports in The Wall Street Journal that 72 of 102 cities or towns in the area experienced declines in home prices in the fourth quarter, compared with last year. In contrast, Menlo Park, where Facebook is headquartered, saw a 52.7 percent uptick in median home sales prices.

That increase could reverberate further out as Facebook cashes in on its new wealth. Lianne Pinkston, a Bay Area broker, told Carlton that there is reason to be optimistic about this.

DON'T MISS: These Are The 25 Most Generous People In America >

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Peter Thiel: Death Is A Problem That Can Be Solved [Silicon Alley Insider]

2012-02-09T11:50:00-08:00

Venture capitalist and billionaire Peter Thiel is financing medical research that would possibly extend the human lifespan to 150 years or more.

"There are all these people who say that death is natural, it's just part of life, and I think that nothing can be further from the truth," says Thiel.

Silicon Valley billionaires are pouring money into gene research and modifications, and Sonia Arrison, author of 100 Plus: How the Coming Age of Longevity Will Change Everything, says that recently born babies could be the first generation to live to be 150 years old.

Medical discoveries in recent years have allowed us to grow new organs, to create new body parts with 3-D printing, and Thiel says that the research he's sponsoring is on track to deliver even more breakthroughs to slow down human aging.

Watch the CBS report below.

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To Attract Investors, Put Your Best Financial Foot Forward [Xconomy VC/Deals]

2012-02-09T11:18:02-08:00

Aftab Jamil

As you have read this week about the financial details of Facebook’s IPO filing, you have no doubt stopped to think about—or daydream about—what your own company might be worth. While going public might be a distant or inappropriate goal for your own venture, Facebook’s IPO serves as a timely reminder that you should be calibrating your business and growth strategies to make your company attractive to investors or strategic partners. After all, for most startup entrepreneurs, the eventual reward comes in the form of a merger or acquisition, rather than an IPO.

The good news is that the vast majority of technology CFOs (75 percent) expect M&A activity in the sector to rise in 2012, according to the fifth annual BDO Technology Outlook Survey, released this month by BDO USA, LLP, where I am a partner and national director of the Technology and Life Sciences Practice. However, a word of warning: I’ve seen many deals derailed—with significant delays or value erosion—because of the management team’s undisciplined approach to presenting financial information.

Therefore, whether your own organization is in the market to acquire another business for strategic growth purposes, or you are working to position your company as an attractive acquisition target, there are two issues that are crucial to generating or maintaining shareholder value: Having an acute awareness of the motivating factors behind an M&A transaction, and providing an orderly financial snapshot that will answer the mostly likely questions from potential partners.

Motivating Factors Spurring M&A Transactions

In our survey, respondents predicted that the top three motivations behind M&A deals in 2012 will be revenue growth, enhanced market share, and the acquisition of new technology and intellectual property. In other words, a significant majority of CFOs believe that M&A transactions will mostly be offensive in nature. A company waging an offensive strategy isn’t necessarily engaged in hostile takeovers; rather, it means the focus is more on growth than cost-cutting. Therefore, companies are looking for acquisition targets that will fill in holes in product or technology portfolios, and are not necessarily angling to take a competitor’s product out of the market.

Financial Rigor

Understanding the motivations of other parties in a deal can put you in a more powerful position, either as an acquirer or a target. Equally important is meeting the due diligence requirements of an acquirer in an efficient and confident manner. By ensuring that reliable and accurate financial and operational information is available, companies can avoid roadblocks to the M&A process—roadblocks that can significantly erode shareholder value, if not derail the entire process. For example, although the survey indicates a positive outlook for the industry this year, respondents foresee overall revenue increases of just 2.6 percent – significantly lower than the forecasted growth in last year’s survey (10.4 percent). If you are experiencing a lower revenue forecast this year, be prepared to address how you intend to get your company back on track.

Beyond M&A Transactions

Even if M&As are not currently a part of your growth strategy, accessing capital remains a top of mind issue for technology companies. The good news is that—according to our survey—over three-quarters (76 percent) of respondents say they feel better about the ability to access capital in 2012. The hurdles to arranging debt financing remain high, but businesses with strong fundamentals and fiscal discipline are once again able to obtain credit. In fact, the majority of respondents who plan to raise additional capital this year intend to use debt financing. The key to making debt work for your company is to manage the process proactively, and avoid being forced into reactive mode.

Whether your business is planning to undertake a strategic transaction or simply needs to access capital through financing, careful planning is critical. A blend of fiscal responsibility, corporate discipline and the willingness to take measured risk are the keys to powering growth.

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Xconomist of the Week: Tim Mayleben on Building University Startups [Xconomy VC/Deals]

2012-02-09T11:09:06-08:00

Sarah Schmid

Last month, Aastrom Biosciences president and CEO Tim Mayleben and his wife, Dawn, announced they are funding a new “venture shaping” program at the University of Michigan.

Venture shaping refers to the process of systematically vetting a nifty idea for a startup, with the idea that the failure of a less-than-viable business will occur at a much earlier stage before too much financial damage has been done—a key component in supporting new businesses led by student and faculty entrepreneurs.

“My wife and I decided we wanted to give back, and we liked [managing director of U-M's Zell Lurie Institute] Tim Faley’s scientific approach to new company creation,” Mayleben says.

What the Mayleben Family Venture Shaping Program will do, Mayleben says, is help students weed out failing business ideas earlier. Grants of $500 will be awarded to approximately 25 teams of students or faculty who have an idea for a startup that they want to test or refine. Each team will then evaluate their idea for profitability and market viability through a three-step process.

“The grant is meant to encourage students to do business discovery work,” Faley says. “People are writing plans on vague ideas. That’s an interesting first pass, but go talk to the potential customers and find out what the revenue stream might look like.”

Faley calls the venture shaping program a needed bridge between the university’s 1,000 Pitches competition, which generates raw ideas, and the Dare to Dream program, which awards up to $10,000 to the most promising of those ideas.

“To get students to do the [venture shaping] work without an incentive was challenging,” Faley says. “It fills in a really nice gap.”

Aastrom is an Ann Arbor, MI-based startup that recently entered the final stage of clinical trials for its multicell therapy for patients with critical limb isschemia. Mayleben has a lots of experience developing life sciences startups. Before joining Aastrom, he served as chief operating officer of Esperion Therapeutics, which raised more than $200 million in capital under his direction before being acquired by Pfizer in 2003.

Mayleben says he has gotten to know the folks at Zell Lurie by serving as both a formal and informal advisor to the student-managed Wolverine Venture Fund for the past decade. He likes the school’s disciplined approach to failing early. He says university entrepreneurial programs fall short when they only track the number of companies created.

“The more relevant score is how many successful businesses get launched,” Mayleben says. “The venture shaping program will increase the likelihood of success, and that’s especially true for first-time entrepreneurs.”

Faley says he and the university are thrilled that the Maylebens are funding the program, and he says they’ve already expressed that they’ll entertain the idea of providing more venture shaping grants if the program grows the way Faley hopes that it will.

“Tim is a very successful serial entrepreneur, but he’s also a very thoughtful and methodical person,” Faley says of Mayleben. “That helps us when we’re trying to move students through the program.”

The first recipients of the Mayleben Family Venture Shaping Program will be announced on February 17 during the Michigan Business Challenge finals.

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HAXLR8R Opens a China-Based Accelerator for Hardware Startups [Xconomy VC/Deals]

2012-02-09T10:37:46-08:00

Wade Roush

Over the last week, 10 lucky companies have been getting the calls from HAXLR8R: they’ve been admitted to the inaugural session of the startup world’s newest venture incubator. Following the popular model pioneered by TechStars and Y Combinator, HAXLR8R will provide teams with a stipend of $6,000 per founder and about three months of mentorship, in return for a 6- to 10-percent equity stake. At the end of the session in June, companies will pitch their businesses to investors at a “demo day” in San Francisco.

There are just two big differences between HAXLR8R and all the other incubators. First, the program isn’t admitting software or Internet startups. It’s designed for companies building real stuff, rather than the usual mobile apps or consumer Web services. Second, it’s not actually located in San Francisco or any of the other typical U.S. startup hubs, like Boston, New York, or Boulder. In fact, it’s not even in the same hemisphere. HAXLR8R will gather its first class of startups at the Shiling Industrial Park in the Nanshan district of Shenzhen, a high-tech manufacturing city north of Hong Kong.

A recruiting poster for HAXLR8R

The theory behind the new program is that successful gadget builders—whether they’ve developed a toy, an appliance, or some kind of consumer device for health, fitness, or travel—will eventually have to figure out where to mass-produce their products. And chances are the answer will be China. Despite the new scrutiny being applied to U.S. consumer electronics companies over labor conditions in Chinese plants, China still has the world’s richest supply of low-cost manufacturing facilities, along with the engineers who know how to get them tooled up to make new things.

But to get something built in China, you have to know who to talk to, and the program at HAXLR8R is intended to smooth the way. Startups in the program will be “coming into an environment where they can work on their product and figure out how to manufacture it,” says Cyril Ebersweiler, one of the program’s co-founders. “They will get instant access to relationships which would take a year or more to develop on their own.”

HAXLR8R finished its selection process last week and began notifying the admitted companies. Ebersweiler says the program received “way more applicants than we expected,” from all over the world. The majority of the applications came from U.S. startups, but the organization also heard from companies in Europe, Asia, and India. The mix of applicants included “startup entrepreneurs, hackers, makers, and [people from the] open source movement; social entrepreneurs as well,” Ebersweiler says. “Most of the applicants have a working prototype.”

The 15-week HAXLR8R program starts on March 1. Teams will spend the first 13 weeks in Shenzhen, building their prototypes and gathering feedback from potential customers. Then they’ll decamp to San Francisco, where they’ll … Next Page »

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Guggenheim, Macquarie Still Vying for Deutsche Bank AM as State Street Reportedly Drops Out [privateequityHUB]

2012-02-09T10:08:52-08:00

The auction of Deutsche Bank Asset Management has apparently hit some roadblocks.

The Financial Times is reporting that State Street has withdrawn from the bidding for Deutsche Bank AM. Bloomberg reportedly earlier this week that JP Morgan pulled out.

Ameriprise is also balking at the price and could be next out, the FT says.

What does this mean? It’s more likely that Deutsche Bank will likely have to break up the business to get any sale done, the story says. The auction has been going on since November when Deutsche Bank announced it was reviewing its global asset management business. The review excludes DWS’ franchise in Germany, Europe and Asia. However, the sale does include DWS Americas as well as RREEF Alternatives, DB Advisors and Deutsche Insurance Asset Management.

The deadline for bids is this week, Bloomberg said. Bidders included Guggenheim Partners, Power Corp. of Canada, Macquarie Group and Apax Partners, according to the story.

I’m hearing that there are only two bidders left in the running for all of Deutsche Bank AM: Guggenheim Partners and Macquarie Group. There are also still bidders for pieces of Deutsche Bank AM, sources say. Power Corp., which invests in financial services, could also still be involved, one PE exec says.

In November, Deutsche Bank’s asset management had €515.63 billion (US$697.16 billion) in assets under management. Deutsche Bank reportedly wants to sell off the unit as a whole and is seeking $2 billion. But the FT says the unit will likely fetch about $1.2 billion.

Some doubt whether Guggenheim has the funds to buy all of Deutsche Bank. Guggenheim in January sold Toronto-based Claymore Investments, the ETF provider, to BlackRock in January. It was unclear how much Claymore fetched.

“Guggenheim couldn’t afford Deutsche Bank Asset Management if they had ever nickel to buy it,” an industry source says. The most natural buyer of DB AM would be a “mega buyer of scale” like Western Asset Management Co., the person says.

Guggenheim, which manages more than $125 billion of assets, would need outside help to buy DB AM, a banking source says. This would likely be a private equity firm, the banker says. “Deutsche Bank could trade on terms of revenue 3 to 4 times,” the source says.

However, two sources say Guggenheim is fundraising. One person says this is for a CLO. Another banker says that Guggenheim “can come up with the money,”

Officials for Deutsche Bank couldn’t be reached for comment. Guggenheim declined comment.

The Awesomest Valentines Day Gift [Who Has Time For This?]

2012-02-09T10:02:23-08:00

It's just a few days away! Check out this idea for your sweetheart, from Voices in Harmony...

Order your Singing Valentine here. When asked where you heard about it, say "from David's blog" and I'll try to deliver yours personally.

CalSTRS Eyes Big Commitments Through Separate Accounts [privateequityHUB]

2012-02-09T09:09:15-08:00

The $145 billion California State Teachers’ Retirement System, the nation’s second largest pension fund, is actively considering making large separate account commitments through its private equity program, a senior investment official at the fund told Buyouts, peHUB’s sister publication. The development comes on the heels of big separate account commitments from the Texas Teachers’ Retirement System and the New Jersey Division of Investment.

“We’re definitely looking at separate managed accounts,” said Pascal Villiger, a private equity portfolio manager at CalSTRS. “It’s definitely something that I think all large institutions are seriously looking at.”

Late last year, two giant commitments shook the private equity world. The first, by Texas Teachers’, involved committing $3 billion each to separate accounts from Apollo Global Management and Kohlberg Kravis Roberts & Co. These investments would be highly specialized and spread over a variety of strategies that the two firms would manage in partnership with Texas Teachers’ own portfolio managers.

A few weeks later, New Jersey pledged $1.5 billion to The Blackstone Group for three separate accounts across different strategies. This was in addition to $1 billion that New Jersey had already pledged to Blackstone Group in 2011 for its regular slate of private equity and real estate funds.

Large separate-account commitments represent a sea change in the way public pension funds, the largest sources of private equity money, are using their huge size to drive down fees and negotiate better terms. Such arrangements also highlight how the biggest private equity firms are seeking to meet their clients’ needs by expanding beyond their main buyout businesses into a variety of areas, even beyond private equity itself, such as real estate and commodities.

These separate accounts are fundamentally different from typical private equity funds in that the investments are not commingled with money from other investors, but rather focused on customized investments and strategies for just one investor.

Separate accounts are also likely to help accelerate the ongoing transformations of the largest private equity firms into generalist asset managers equipped to offer their clients a wider scope of investments beyond private equity. Blackstone, for instance, now manages $137 billion in fee-earning assets, yet only 27 percent of its assets ($37 billion) are invested in private equity, the rest being invested in real estate, hedge funds and credit offerings.

A major accelerator of this diversification of investment offerings is the fact that several of the largest private equity firms, including Apollo, Blackstone, KKR and The Carlyle Group, have gone public or plan to do so, and as such, desire a more diversified range of revenue sources that deliver more consistent returns.

Even though large separate accounts are relatively new in private equity, CalSTRS’s Villiger said there were already a variety of approaches. “There is a spectrum of flavors,” he said. “At one extreme, it’s just basically co-investments alongside a commingled fund with reduced economics. At the other extreme, in terms of Texas Teachers’, it’s a very highly customized solution.”

Kelly DePonte, a placement agent at Probitas Partners, said the recent moves by big pension funds to consider separate accounts represent much more than a desire to save on fees. “It’s also a wish for more control,” he said, “so that there is more of a conversation between the GP and LP about each individual investment.”

DePonte added that separate accounts were just one type of investment that helps pensions gain more control. “Separate accounts, co-investments and direct investments are all part of this dynamic,” he said.

CalSTRS’s move to consider large separate accounts was strongly hinted at in late January, when the pension publicly posted proposed changes to its private equity investment policy that would allow such investments. The pension’s board was scheduled to discuss the policy changes at its February board meeting.

In making its case, the proposal highlights the advantages of separate managed accounts, among them, “discounted fees and preferred terms,” adding that “almost always, management fees will be lower and sometimes carried interest will be lower too.”

The proposal strongly suggests what CalSTRS may be considering. Under the proposed policy, each separate account would be limited to 10 percent of CalSTRS’s private equity portfolio. But since CalSTRS has $21.3 billion in private equity holdings, it is feasible that separate account commitments could amount to as much as $2 billion each.

The proposals also disclosed that CalSTRS was “among the select group of limited partners which is now frequently offered separately managed accounts by private equity managers.”

To be sure, separate managed accounts would probably represent just a fraction of CalSTRS’s overall private equity strategy. Villiger said that at 14.7 percent of its overall portfolio in private equity, CalSTRS was already over its 12 percent policy target. That said, he predicted that CalSTRS would probably spend between $2.5 billion and $4 billion on private equity each year. “A sustainable pace is probably a number closer to $4 billion,” he said.

One baby step by the pension toward large separate accounts came on Feb. 7, when CalSTRS announced it would be making a $500 million commitment to a specialized infrastructure fund run by Industry Funds Management, an investment firm with $31 billion under management and which is owned by a consortium of 32 Australian pension plans.

The commitment to IFM’s Global Infrastructure Fund would be one of the largest ever by a U.S. pension fund to the infrastructure space. Christopher Ailman, CalSTRS’s chief investment officer, said in a statement, “CalSTRS is relatively new to the sector, and we wanted to get to know it before venturing beyond the fund structure.” IFM invests mainly in North American and European infrastructure projects such as utilities, ports and transportation projects.

Generally speaking, U.S. pension funds have lagged in making infrastructure investments compared to their Canadian counterparts. One of Canada’s largest pensions, the Ontario Municipal Employees Retirement System, has its own infrastructure investment arm called Borealis Infrastructure, which has made several infrastructure investments in North America and Europe, often in coordination with other Canadian pensions.

Despite a late start, however, some big U.S. pensions have already got their feet wet. The $234 billion California Public Employees’ Retirement System, the state’s other giant pension fund, recently started making one-off infrastructure investments, including an undersea electric cable that connects New Jersey with Long Island, New York, as well as a minority stake in London’s Gatwick Airport, which was in partnership with Global Infrastructure Partners, an infrastructure private equity fund.

Persistence Pays Off for Synchroneuron Founder [Xconomy VC/Deals]

2012-02-09T09:05:34-08:00

Arlene Weintraub

When Barry Fogel first started developing a new treatment 15 years ago, his main goal was to help his own patients. Fogel, a physician trained in both psychiatry and neurology, saw many patients with a movement disorder called tardive dyskinesia (TD). The condition—which can be caused by drugs that block dopamine, such as antipsychotics—is characterized by involuntary movements of the face like puckering, closed eyes, and grimacing. Some patients suffer writhing of their hands and feet, or difficulty moving their upper bodies. “At its worst, it’s quite disfiguring,” Fogel says. And there is no approved drug to treat TD.

Fogel developed a treatment for the condition in the late 1990s, patented it, and set out to try to get it on the market. On Monday, Fogel’s dream took a huge leap towards reality when his Waltham, MA-based company, Synchroneuron, announced it had raised its first round of venture capital—$6 million from Morningside Technology Ventures. It’s enough to take the drug through a substantial portion of the clinical trials Synchroneuron will need to complete to apply for FDA approval, says chief financial officer Marc Cote.

Synchroneuron’s journey from idea to Series A could be a case study in stick-to-it-tiveness—and the value of networking. Fogel, a clinical professor of psychiatry at Harvard Medical School, suspected that modulating two brain chemicals, glutamate and GABA, would relieve TD. So he did a bit of experimenting on his own patients, prescribing them existing drugs that targeted those chemicals but were approved to treat other conditions. “I established that if you modulate glutamate, in particular, the TD gets better,” Fogel says.

So Fogel developed and patented a method for using a drug called acamprosate to do just that, and in 2004, he licensed it to San Diego-based Somaxon Pharmaceuticals (NASDAQ: SOMX). But Somaxon was developing an insomnia drug, which took precedence over the acamprosate program, Fogel says. “They didn’t give sufficient resources to acamprosate,” he says. “The progress was disappointing.” Somaxon declined to comment. (A sidenote: Somaxon eventually did get its insomnia drug on the market, but has struggled to make it stand out in a competitive market.)

In 2007, Fogel got his patents back from Somaxon and began looking for an alternate path to FDA approval. It wasn’t easy: Fogel and his wife had to do all the work to … Next Page »

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Welcome Nabeel [The Gong Show]

2012-02-09T08:32:02-08:00

Nabeel Hyatt has joined Spark Capital. I’m delighted by the addition of a talented entrepreneur to our team.

I first “met” Nabeel on a winding trip down the rabbit hole of blogs in early 2007. We traded comments on blogs back and forth before meeting for the first time in person at SXSW that year. I recall being impressed by his depth in the online gaming market, and the way in which he could cut to the real story behind quantitative analytics. His Rock Band skills weren’t too shabby either.

Nabeel is a maker by nature, and he has built some very interesting companies over the years. I remember studying the Ambient Orb in my Human Computer Interaction coursework at Stanford, which was the product of one of his startups: Ambient Devices. He brings to the table a wealth of operating experience across a number of startups, and he is a valuable member of the local Boston startup community, from his mentorship at TechStars to co-founding the OpenCoffee Cambridge sessions. I know he’ll make all of us at Spark better investors as he too becomes a great investor himself, and I’m delighted to welcome him aboard.

When Green is Not Enough: Lessons from a Cleantech CEO [Xconomy VC/Deals]

2012-02-09T08:06:12-08:00

Bruce V. Bigelow

Funding for clean technology startups has increased substantially in recent years, with 323 U.S. companies raising a total of $4.3 billion in 2011, according to the recently released MoneyTree Report. In the San Diego area, the same report shows that four cleantech startups raised $78 million last year, including $15 million that went to SG Biofuels in the fourth quarter.

But sometimes it’s not enough to be green. Many cleantech startups face a basic challenge in competing against existing products that might not be as environmentally friendly, but are nevertheless well-established—even commoditized—in their respective markets.

In San Diego, sustainable design architect (and Xconomist) Robert Noble has led the development of clean manufacturing methods and technologies for manufacturing a green replacement for medium density fiberboard (MDF) structural panels—a standard material used in building construction and other industries. Noble says the proprietary process makes panels from any kind of fibrous, cellulosic material, such as recycled paper, cardboard, wood chips, corn stalks, and even cow manure. The big difference is that the replacement product, which Noble calls 3-D Engineered Molded Fiber (3DEMF), requires no petroleum-based glues or addititves, or vapor-emitting chemicals.

Ecor samples

Now Noble Environmental Technologies, a company he founded in 2005, is overseeing installation of a 3DEMF factory, showroom, and design lab in downtown San Diego to manufacture the company’s Ecor brand panels. “The tide has turned for sustainable materials,” says Jim Torti, the company’s chief operating officer.

After personally funding the company through 2009, Noble says he now has about 15 individual and institutional investors, and he’s in the process of raising another $4 million to help equip the 10,000-square foot factory and to provide some cash flow. Noble adds that he has no plans to seek venture capital. He says the time required to build large-scale manufacturing and their primary market—the building industry—”doesn’t easily fit the venture capital model for a quick exit,” which is an issue for many cleantech businesses.

Torti and Noble say they wanted to establish the company’s first production plant in an urban, mixed-use setting—an apartment building is across the street—to demonstrate … Next Page »

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Smarterer, Senexx, & Take the Interview: Some Talent Management News [Xconomy VC/Deals]

2012-02-09T07:42:14-08:00

Gregory T. Huang

Today’s West Coast announcement that Oracle is buying human resources management firm Taleo for $1.9 billion—yes, billion—puts some Boston-area talent and recruiting startups in a new light. Unfortunately, one of them is no longer in Boston…

—Take the Interview, the video-based recruiting startup and former Dogpatch Labs Cambridge resident, has relocated to New York City (SoHo to be more exact). It’s not a big surprise, as the company was part of the DreamIt Ventures startup program in New York last summer. Take the Interview, led by CEO Danielle Weinblatt, raised a seed funding round last September.

—Boston-based Smarterer, a skills-test startup that’s trying to reinvent the resume, has hit a possible inflection point. According to co-founder Dave Balter, the company had 800,000 skills questions answered online over the past year, but recently that figure increased by 250,000 in just five days. Chalk it up to focusing on who wants to use the product and then who has to use the product (employers vs. job seekers). Smarterer is led by CEO Jennifer Fremont-Smith; the company raised a seed round last year.

—Senexx, an expertise-management startup based in Cambridge, MA, and Israel, has collaborated with fellow Cambridge startup PowerInbox to build a Web application that runs in people’s e-mail systems and helps them find expertise and share knowledge within their company or organization. This is an interesting partnership between a couple of early-stage startups trying to do big things in social enterprise apps, using e-mail as the platform.

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2012 Planning / Working Together [VC Adventure]

2012-02-09T05:50:29-08:00

It’s been way too long since my last post. I was going to jump in with a post on not blogging, but thought better of it. Better to actually do than write about whether to do or not do. So much for my resolution to write/blog more this year… Hopefully this was just a January hiccup with too much travel and work to fit in regular blogging.

If you’ve read this blog you know I’m a pretty deliberate guy. I like to know where I’m headed and I like to be explicit about where that is, what’s working and what’s not. To that end, towards the end of last year I went through an exercise with each of the companies I work with to lay out both top level goals for this year as well as get some feedback on the interaction pattern between the company and me. I’ve always done some version of this, but this was the first year I was this explicit about it (and the first time I included a request for specific feedback on my working relationship with the CEOs that I work with). The email looked like this:

I’ve been thinking a lot about feedback loops recently and thought it would be helpful to touch base on how we worked together in 2011 and think a bit about anything that we need to change about our interactions in 2012 (talk more; talk less; more concentrated time together; etc.). And overlay onto that the key priorities/challenges for 2012.

With that in mind can you send me your thoughts on:
- what worked best working together in 2011
- what didn’t work (either specific situations where we weren’t on the same page or some overall interaction pattern that just didn’t work)
- what should we do differently in 2012
- what do we together need to focus on in 2012
- where can I be most impactful to the business in 2012

I appreciate your spending some time thinking about this. I’m doing the same and will respond to your thoughts with some of my own.

In terms of how I’m thinking about 2012 for Spanning I think about a couple of key ares of focus:
- [bulleted list for each company of the top 4 or 5 things I felt would really move the needle in 2012]

Obviously there are a million other things that are going to take place in the business in 2012, but these are the general areas as I’ve been thinking about it (would love your feedback on these as well).

This turned out to be a more positive exercise than I ever imagined it would be. While I’ve always talked to the companies I work with about the key goals of their business (and, of course, this is an ongoing conversation), being this explicit really helped spur some interesting conversations. More importantly I’d never asked in a systematic way to all companies in my portfolio how our working relationship and communication pattern was working for them. In the past these tended to either come up on occasion (but never aligning across the portfolio), or be something that was discussed when some kind of problem arose. I’ll write a separate post (hopefully sooner than 6 weeks from now!) about communication patterns between companies and their investors and some of the explicit things I learned through this exercise, but I’d encourage anyone reading this to consider engaging in this conversation with their investors. It changed how I thought about interacting with a number of the companies I work with, reinforced some behavior and forced me to change other behavior. And my relationships became stronger and the goals for 2012 that much clearer.

They have these super cool cabanas at the Square office [BijanBlog]

2012-02-09T05:35:42-08:00

They have these super cool cabanas at the Square office

Integrated online and physical retail [The Equity Kicker]

2012-02-09T04:30:37-08:00

The main story of retail over the last fifteen years has been the rise of ecommerce and the transfer of market share to pure online players like Amazon, Net-a-Porter, ASOS, Wiggle, and BlueNile. I think the most successful companies over the next ten years will have integrated online and offline strategies.

It is early to call exactly how an integrated online-physical offering will look, but the directional trend is becoming clear. The online players are starting to move offline. Net-a-Porter had a pop-up shop last summer, and is rumoured to be planning a permanent physical presence and now Amazon is rumoured to be have similar plans. Meanwhile, traditional retailers are integrating their offline and online strategies with in-store pick up and returns (Argos was first to do this in the UK) and by encouraging people to use the web to research products and check prices whilst in-store (take a look in Dixons next time you are in an airport).

It is easy to understand the moves by the physical retailers. They are making the obvious competitive responses to their pure online competitors, who are buy and large succeeding against both the offline and online offerings of traditional retailers. Pick-ups and returns to physical stores improve the customer experience and are a point of differentiation from their online competitors, and encouraging people to do research in-store is a recognition of what was already happening and helps get people to a purchase decision whilst they are still on premise.

The move by the online players into the physical world is more nascent, but is primarily being driven by branding. Having a physical presence lends solidity to a brand, particularly for less tech savvy sections of the population, and that is critical as online retailers look to expand their reach to all available customer segments. Techcrunch has a good analysis of the reasons why Amazon would open a physical store. This is the money quote:

The Kindle was Amazon incarnate, a way for Amazon to bring its online presence into the real world. A physical Kindle store – one that exists in a mall or popular area, even for a short period – is like the third coming. It’s basically a chance for Amazon to grab every else they have missed during the initial run up in Kindle popularity. We’re talking older folks, luddites, grumps, and folks who claim that “reading it in paper” is better. To have them walk up to a display of working Kindles, newly minted and displaying the latest Stephen King book, is the only way Amazon will convince them that going digital is the only way to go.

It will be interesting to see how this pans out. It could be that integrated online-offline strategies allow traditional retailers to regain some ground. They have been operating non-integrated online and offline businesses for some time and it will be easier for them to develop compelling integrated offerings than it will be for the pure online players to open up physical stores.

Why the Days of Facebook “Acqhires” May Be Numbered [privateequityHUB]

2012-02-09T04:18:26-08:00

A year ago in this space, I suggested that Facebook begin “supersizing” its acquisition strategy and move beyond its historically small, talent-driven acquisitions and into bigger buys that could move it beyond display advertising and into faster-growing revenue sectors, including search.

As we know now, Facebook clearly had a different idea, absorbing roughly 20 nascent startups in 2011, many of them “acqhires” involving few people.

Expect that to change once Facebook goes public this spring.

What gives me the courage to make yet another prediction about Facebook’s plans? Facebook has to feed “the Beast” – Wall Street, that is. “I don’t think Facebook has a choice,” says Sam Hamadeh, chief executive of PrivCo, a firm that follows privately held companies. “Facebook’s top-line growth is impressive but slowing. It’s not in the position to be complacent.”

A Facebook spokesman declined to comment for this article, citing the company’s quiet period.

There are plenty of companies that Facebook could acquire to speed its growth. The question is where Facebook should start shopping once it collects the roughly $9 billion it will have on hand following its IPO. (Facebook is currently sitting on $3.96 billion; it plans to raise another $5 billion in the offering.)

Many expect Facebook to address its greatest weakness first – mobile. As the company itself states in its S-1, it doesn’t currently “generate any meaningful revenue from the use of Facebook mobile products. Accordingly,” states the S-1, “if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers…our revenue and financial results may be negatively affected.”

“Ad technologies, particularly in the mobile space, are the most obvious places where I think Facebook will be making targeted acquisitions,” says Dana Stalder, a general partner at Matrix Partners in Silicon Valley who focuses on both consumer and enterprise software and services. “While Facebook accounts for a huge share of display advertising inventory, its technology stack is not nearly as advanced as what Google and even Yahoo has available for advertisers.”

On the mobile ad tech side, adds Stalder, “monetization of mobile users is both Facebook’s greatest threat and opportunity, and it’s also a place where they trail the likes of Google from a technical capability.”

Oakland, Calif.-based digital media analyst Greg Sterling, thinks one play in particular might be to acquire three-year-old Foursquare, which began partnering with daily deals companies last year and that Facebook reportedly courted in the spring of 2010, before Foursquare had raised its now $71.4 million in venture funding. Says Sterling: “If Facebook is really serious about mobile advertising, it needs to confront the phenomenon of deals and offers again in a more serious way, because those are among the highest categories in terms of consumer demand.”

Another opportunity centers around Facebook’s virtual currency Credits, which allows Facebook to extract a 30 percent “tax” on virtual goods purchases made on its platform. Credits accounted for roughly 15 percent of Facebook’s overall revenue last year, bringing in $557 million. But numerous people I’ve spoken with envision Credits growing to account for a third of Facebook’s revenue, including Sterling, who suggests that one way to make it happen is through acquiring related loyalty companies. There aren’t a lot of them yet, notes Sterling, though a smaller, representative startup might be Plink, which offers people Credits to eat at Quiznos, for example.

For his part, Hamedeh thinks Facebook might first consider acquiring anything “with any hint of taking off” and “doing to Facebook what Facebook did to MySpace.” And right now, that means defensively acquiring fast-growing social networks Tumblr or Pinterest (or both), “before Google or AOL or Yahoo do it.” (Facebook, which has historically succeeded in stomping out startups with early traction by acquiring and shutting them down, “was kind of behind the curve with those two,” he adds.)

Hamadeh would also like to see Facebook acquire Twitter, despite that Facebook would likely have to pay through the nose for the company, as well as endure possible antitrust concerns. That’s saying nothing of the fact that Twitter, still struggling to produce meaningful revenue, wouldn’t necessarily add to Facebook’s top-line growth any time soon.

“Twitter would be the biggest one to swallow,” acknowledges Hamadeh. “But [Facebook’s COO] Sheryl Sandberg came from Google, which buys companies all the time. Facebook’s CFO [David Ebersman] came from Genentech, which buys companies all the time.”

Says Hamadeh: “Facebook can do a lot with the team they have in place, and I expect by summer, we’ll start seeing some bigger acquisitions. I don’t think they can do much now, in the middle of an IPO. But after May [when the company is expected to be out], all bets are off.”

Twitter Digest: 2012-02-08 [Paul Kedrosky's Infectious Greed]

2012-02-09T04:00:00-08:00

Classic: "Albania, Albania, you border on the Adriatic" – http://t.co/XD6heii9 ->
New & remarkable Atlantic photo series: The Civil War, Part 1 – http://t.co/i4xbCYcr ->
Among the many iconic images in the Coens' Miller's Crossing: Rug Daniels – http://t.co/Gc41AAC8 ->
Contemplating leaving the theme from Miller's Crossing replaying on my fillings on for the rest of 2012. ->
That's what we really needed in U.S. electoral cycle: Someone to get out there and defend the Crusades – http://t.co/Zae8IfoQ /via @Nouriel ->
Favorite thing I read today from a bank person : "You pay your interest in the rears". [But of course you do, Mr Bond.] ->

The Black Hole Of Email [A VC]

2012-02-09T03:40:41-08:00

I have never ever been so behind on email as I am right now. I believe I am seeing about one third of all email that is sent to me. If you have sent me an email that I haven't replied to, don't be offended. You are not alone. You are in the majority.

I write these posts occasionally to let people know. The result is hundreds of comments about how I can make email work better for me. Please don't leave those comments. I don't want to make email work better for me. I don't want to hire an assistant to do email for me. I don't want to try some new magical app that will make email better for me.

I give email an hour in the morning, an hour in the evening, and I dive into it throughout the day. The result is probably three hours a day in total. That's all I'm going to give email. And it is not enough to manage the inbound flow.

So I'll do what I can and I'm not going to do more. And if that means I will miss your email, then so be it. Please send it again. That will increase the chances I will see it.

You Can Invest In Hot IPOs, But They’re Still in Charge [privateequityHUB]

2012-02-09T03:28:54-08:00

(Reuters) – A new crop of companies entering the U.S. public markets, including such high-profile offerings as Facebook, are turning the clock back on the way U.S. corporations are run.

Facebook, Groupon Inc, LinkedIn Corp, Zynga Inc and others have put in place governance provisions that go against a long-term swing towards more shareholder-friendly rules.

One stark example of this reversal is in the number of companies that have classified or staggered boards, where only a handful of directors come up for election each year rather than all of them, making it hard for an activist investor or unwanted suitor to take control of the board through a proxy context.

Another is the creation of dual-class stock structures, which allow founders and early investors to gain greater voting control than their economic interest would otherwise suggest.

In the past 10 years, many of the biggest publicly traded companies in the U.S. have been getting rid of such provisions. Currently, for example, only about 24 percent of S&P 500 companies have classified boards, down from 61 percent in 2002, according to FactSet SharkRepellent.

But there hasn’t been such a significant change among new arrivals. Of the 76 companies that went public last year, nearly 65 percent had classified boards. In 2002, 82 percent of IPOs had the feature.
Of the eight high-profile IPOs in the social networking and new media space last year, all either had classified boards or dual-class structures, with some having both.

Of these companies, Zillow Inc and LinkedIn had both, Angie’s List Inc, Jive Software Inc and Pandora Media Inc had classified boards, while Groupon, FriendFinder Networks Inc and Zynga had dual-class structures.

While new companies are generally more likely to seek protections against corporate raiders and activist hedge funds, the extent of the barriers and some of the actions taken to shore up defenses are being questioned, especially given the high-profile nature of some of the companies involved.
It has some major investors feeling dissed.

“These are companies who for one reason or another decided that they are going public, but they do not want to have to answer to the public market,” said Janice Hester-Amey, a portfolio manager in the corporate governance unit at the California State Teachers’ Retirement System.

“The big issue is that you take money from the public market, and the reason that companies do this is so that they can acquire other companies, expand their business,” Hester-Amey said. “So the money is worth some respect.”

Angie’s List, Facebook, Groupon, Zillow and Zynga declined to comment. A spokesman for LinkedIn said that “we believe our corporate governance structure allows us to execute on our strategic plans, enabling us to maximize long term value for our company and our shareholders.”

The other companies did not respond to requests for comment.

CalSTRS, a $145 billion behemoth that invests the pension funds of California’s more than 852,000 current and retired teachers, has already taken up some of its concerns with Facebook, sending a letter on Tuesday to Chief Executive Mark Zuckerberg that calls for increasing the size and diversity of its board.

Hester-Amey noted that Zuckerberg had a board that was all white, and all male, even though Chief Operating Officer Sheryl Sandberg and a large portion of its users are women.

It is particularly surprising that Sandberg doesn’t get a board seat despite being widely seen as hugely influential not only within Facebook but with advertisers and women in the wider business community – including starring at events like the World Economic Forum in Davos. She has also served on Starbucks Corp and Walt Disney Co boards.

As these newly public companies break from the trend of giving shareholders greater say, investors and corporate governance experts bemoan the lost lessons of past disasters –from Enron to Lehman Brothers – which they say at least partly resulted from boards and shareholders who wielded little power over management.

But they also say there is not much investors can do about it.

“These guys running tech companies are probably hyper paranoid,” said Eric Jackson, founder of activist hedge fund Ironfire Capital LLC. “But they have the power to insist on these kind of structures and control, and the markets are so far willing to still buy into the company.”

“Until there is a real renouncement by investors of these structures through a lower share price they will continue to do this,” Jackson said.

At Facebook, corporate governance provisions effectively give the 27-year-old Zuckerberg complete control, so much so that the Harvard University drop-out even has the right to appoint his own successor before he dies.

Zuckerberg, who benefits from Class B shares entitled to 10 votes each, has also struck voting agreements with other shareholders. Altogether, he will control just under 57 percent of the vote.

If Class B shareholders lose control of the majority of the voting power, the board will become staggered to give it an extra defense.

Another potential point of irritation for investors eyeing Facebook is the lack of influence they will have over a so-called evergreen equity incentive plan, through which the number of shares reserved for employees’ stock awards automatically rise by up to 2.5 percent every year through 2022.

“Institutional investors don’t want to see 2.5 percent of their equity value diluted every year,” said Brandon Cherry, a principal at consulting firm Hay Group. “They want to have control over when the plan increases.”

As many as 26 companies, or roughly one-third of those that went public last year, including Angie’s List, Pandora, Jive, Zynga and Zillow, had evergreen equity incentive plans, according to Hay Group’s IPO Pay Reporter data.

There are other blockages being set up too. Some 68 percent of the companies that went public last year do not allow shareholders to call special meetings, 82.9 percent do not allow them to act by written consent and all of them have advance notice requirements that make it harder to put up director nominees or other proposals on the agenda at annual meetings, according to the Factset SharkRepellent data.

It isn’t much different from the situation 10 years ago before Enron and other frauds triggered a big push for change by activist shareholders – aided by the Sarbanes-Oxley corporate reform law, which came in that year.

That law, with its rigorous rules on corporate governance and accounting, is also sometimes blamed for a drop off in the number of IPOs in recent years as companies decide to remain private rather than having to face the cost in money and time of complying with the regulations.

“It’s a judgment that the bankers and companies make, as to how much these defensive provisions would cost them in terms of investors that would be less willing to participate in the IPO,” said Richard Grossman, a partner at law firm Skadden Arps, without referring to any specific company.

A wish to protect themselves from unwanted advances at an early stage of their development is at play here as well. At Groupon, for example, the dual class stock structure will automatically end in five years.

While Facebook’s corporate governance goes against the trend, the company has also taken steps that are drawing praise from some experts.

Jeffrey Sonnenfeld, a Yale University professor and founder of the Yale Chief Executive Leadership Institute, said investors should focus on how “enormously transparent” Facebook is around its financial results.

Sonnenfeld said in structuring control, Zuckerberg likely drew lessons from Steve Jobs, the late Apple Inc CEO who was once driven out of the computer-maker he founded before returning to triumph some years later.

“This is an argument that if you are buying Facebook, you are buying into the vision of Mark Zuckerberg,” Sonnenfeld said. “If this is a risk that’s not right for you, don’t buy it.”

(Reporting By Paritosh Bansal; additional reporting by Soyoung Kim; Editing by Martin Howell)

Cat's Out of the Bag: Liquid Labs [Babbling VC]

2012-02-09T03:13:48-08:00

Well that didn't take all too long. Although it would of been nice to have been under-the-radar for a bit, it's not like we're planning on hiding anything. Liquid Labs is launched and soon we'll have more information although Mike does get the key points right to some extent.

Liquid Labs is just that: a lab. We're not an accelerator, nor are we an incubator. We're not a venture capital fund nor are we business angels. We're a bunch of investors and entrepreneurs who will be building companies. With the backgrounds that we have, it's inevitable that we will mix VC style investing with entrepreneurial style company building in a "skunkworks" like environment. We are doing this without any of the "stealth mode" crap to create hype. It's simply because we're buidling this thing from the ground up that we're taking one step at a time.I'm also super happy to be doing this together with Michael Backes, another US expat with VC experience here in Hamburg.

We'll have a site up shortly with all the juicy details. Plus we're looking for people with both technical and product backgrounds who want an environment to learn about building companies with an opportunity to earn while doing so.

Celgene Pours $15M Into Acetylon, Takes “Observer” Role on Board [Xconomy VC/Deals]

2012-02-09T03:00:38-08:00

Arlene Weintraub

New England Patriots owner Robert Kraft may still be smarting from his team’s loss to the New York Giants in the Super Bowl, but at least one of Kraft’s other organizations has some good news to cushion the blow: Boston-based Acetylon said today that it has received a $15 million equity investment from Celgene (NASDAQ: CELG), the biotech giant based in Summit, NJ.

Acetylon was founded in 2008 and backed with $40 million from several individual investors, including Kraft. The company is working on a class of drugs that inhibit enzymes called histone deacetylases (HDACs). These enzymes regulate gene expression and play a role in many cancers. Last fall, Acetylon began human trials of its lead compound, ACY-1215, in multiple myeloma. Celgene is a leader in that field with its blockbuster myeloma treatment lenalidomide (Revlimid). “Celgene has a strong strategic and market interest in hematological malignancies and other cancers, and we will benefit from their guidance and input,” says Walter Ogier, CEO of Acetylon.

In the past, drug developers have tried to inhibit several HDACs at one time, but Acetylon’s compound targets only one, HDAC6. That selectivity may cut down on side effects such as fatigue and nausea—and it was one of the main reasons Celgene was attracted to Acetylon’s research. “Acetylon has established itself as the leader in developing next generation, selective HDAC inhibitors for cancers as well as non-cancer disease indications and we believe the company’s approach could significantly benefit patients,” said Mark Alles, Celgene’s chief commercial officer, in today’s release.

Acetylon’s scientists plan to test ACY-1215 in combination with bortezomib (Velcade), made by Millennium Pharmaceuticals. “We anticipate a similar opportunity to test it in combination with [Celgene's lenalidomide] and potentially the next-generation of the drug,” which Celgene is currently testing in clinical trials, Ogier says.

Celgene’s investment in Acetylon is a pure equity deal, and Celgene will not receive rights or options to the startup’s technology. Alles will take a position on Acetylon’s board as a non-voting observer—meaning he’ll mostly have an advisory role. “They’ll have a closer view on our progress,” Ogier says. As for whether or not Celgene might become interested in forming a closer research alliance in the future, Ogier says, “anything could happen.” In the meantime, the deal “doesn’t preclude us from forming other partnerships,” he says. “I think this is good for both companies.”

Celgene has taken quite a bit of interest in the Boston biotech scene of late. On January 26, the company announced it was buying Bedford, MA-based Avila Therapeutics for $350 million. Last year, Celegene participated in a $30 million funding of Cambridge, MA-based Acceleron and it extended a partnership with Cambridge-based Agios, adding $20 million to a $130 million alliance. In May 2011, Celgene signed on to use Boston-based Foundation Medicine’s genomics testing technology in trials of cancer drugs, with the goal of identifying patients who are most likely to respond well to the medicines.

For Acetylon, the Celgene infusion kickstarts an already ambitious plan for ACY-1215. The company is currently finishing up the first stage of a Phase 1 trial, and plans to begin the combination phase of the trial later this year, Ogier says. The $15 million investment “is significant for a company at our stage,” Ogier says. “It will allow us to augment our cancer program.”

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European Buyout Market in 2011: A Slideshow of Highlights [privateequityHUB]

2012-02-09T02:30:42-08:00

The European buyout market reached 59 billion euros ($78.01 billion) in 2011, a 6.5% increase from €55.3 billion in 2010, according to the latest data published by the Centre for Management Buyout Research (CMBOR), sponsored by Ernst & Young and Equistone Partners Europe (previously Barclays Private Equity).

The data, compiled by CMBOR and covering private equity buyout activity across 15 European countries, reveals France challenging the UK as the historic European leader and topping the table of European buyouts in 2011, reaching €14 billion in 129 deals, compared to €7.9 billion in 118 deals in 2010.
Sachin Date, Europe, Middle East, India and Africa private equity leader at Ernst & Young says of the coming year for European buyouts: “Whilst the pipeline in the first six months of 2012 is encouraging, a lot will depend on the unfolding European sovereign debt crisis. The key will lie in how innovative dealmakers can be in finding the finance to fund the deals.”

Scroll down the slideshow to see CMBOR’s highlights of the 2011 European buyout market.

[slideshow]

[slide title="France Takes the Lead"]

French buyouts rose in 2011 reaching €14 billion in 129 deals, compared to €7.9 billion in 118 deals in 2010. The landmark French deal boosting figures was the acquisition by AXA Private Equity, Caisse de Depot et Placement du Quebec and Clayton Dubilier & Rice to acquire SPIE, a French industrial firm, from PAI Partners for €2.1 billion.

[slide title="Germany Underperforms"]

Buyouts rose by 17% in 2011, reaching total value of €6.7 billion, compared to €5.7 billion in 2010. Germany completed 75 deals (62 in 2010). Compared to the size of its economy; this reflects an underperformance in the German buyout market, writes CMBOR.

[slide title="UK Leads by Volume"]

In 2010 buyout value rose to €21.9 billion but the market in 2011 has plummeted to €13.9 billion, according to CMBOR. Despite the decline in deal value, the UK remained the largest country by volume with 180 buyouts.

[slide title="Sweden Scoops Mega Deals"]

The Swedes took three out of the four largest deals of last year: Bain and Hellman & Friedman’s acquisition of Securitas Direct (€2.3 billion), Com Hem’s purchase by BC Partners (€1.9 billion) and Dometic’s acquisition by Nordic Capital (€1.4 billion).

[slide title="Secondary Buyouts: Deal of Choice"]

Secondary buyouts accounted for six of the top ten deals, and often involved auctions, writes CMBOR. Secondary buyout transactions increased from 115 in 2010 to 165 in 2011 and contributed the bulk of the European buyout value at €28.8 billion (€26.4 billion in 2010).

But CMBOR cites trade sale as a more lucrative route as this type of transaction returned more than €48.4 billion to investors, almost twice the €26.2 billion returned through secondary buyouts.

[slide title="Manufacturing is preferred sector"]

CMBOR records 75 manufacturing sector transactions in 2011, accounting for 30% of all European deals by volume. By value, these accounted for 21.7% of all European deals at €12.6 billion. This compares to 24% of deals in 2010 totaling €13.3 billion.

[slide title="Debt levels rise for large buyouts"]

The average amount of debt in buyout financing for all buyouts equals 2010 figures with 31%, according to CMBOR. For European deals above €100 million average debt rose from 37% in 2010 to 47% in 2011.
CMBOR records high levels of equity to structure buyouts. Figures for all buyouts show 65% of equity employed in 2011 but deals over €100 million are at 49%.

[slide title="Exits strong in 2011"]

CMBOR records exit value up to €76 billion, underscoring the need for PE investors to clear a backlog of investments from pre- 2008, states the report.

In 2011 there were five IPOs, compared to 14 flotations completed in 2010.

The largest European exit in 2011 was Nycomed at €9.6 billion. Skype was another large trade sale at €4.6 billion.

Trade sales reached 124 in 2010 compared with 154 in 2011.

Failures of buyouts reached a high of 92 in 2009 from 64 in 2008. In 2011 there were 50 creditor exits.

Source: CMBOR

Note: The 15 countries included in the research are: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.

[/slideshow]

Follow Your Bliss -- Finding Joe [VC Confidential]

2012-02-08T22:44:43-08:00

Joseph Campbell is the most influential person to have impacted my life. He was the world's leading mythologist and had an amazing capacity to show the common threads that cut across all religions, movies, books and stories. An awesome movie just came out about him and The Heroe's Journey that I have mentioned to everyone I know. Everyone of them has referred it onto their friends. It's that moving and insightful. For anyone trying to launch a business or to find their bliss or in a life transition or..., this is a great movie to see. You can buy/stream it at www.findingjoethemovie.com. Below is the trailer for it:

Spongecell Gets $10M Series B, Continues Growth in Ad Tech [Xconomy VC/Deals]

2012-02-08T21:50:43-08:00

João-Pierre S. Ruth

In the fast-evolving advertising arena, Spongecell is a prime example of how a hard pivot with different technology in place can transform a company’s fortunes.

On Tuesday the New York company, which adds interactive functions such as video and Twitter feeds to banner ads, announced it raised $10 million in a Series B round led by Safeguard Scientifics. Spongecell CEO Ben Kartzman says the new funding will go towards product development and other needs. More importantly, though, Kartzman also says Spongecell more than doubled its revenue last year compared with 2010, as he previously expected.

As Spongecell fills its coffers, grows its staff, and expands into new territory, it is hard to imagine that four years ago the company was running out of cash, letting employees go, and searching for a new direction.

Spongecell’s current technology transforms static banner ads into more interactive tools to engage consumers. In addition to Twitter and other social feeds, Spongecell can insert video, maps, coupons, and other features in the ads to grab attention. For example, when users mouse over banner ads for the Mini Cooper the ad plays a video clip that promotes the car. “Video is the fastest-growing segment of the online ad space,” Kartzman says.

Including the latest funding, Spongecell has raised about $14 million in total from backers that include Google executive chairman Eric Schmidt. In 2010, Spongecell generated $3.8 million in revenue and Kartzman says the company more than doubled that figure in 2011, though he declined to give specific numbers.

That is a much different tale compared with Spongecell’s early history. The company, founded in 2006, initially offered a widget platform for ad agencies to use for online promotions. When that did not bring in enough business and Spongecell’s cash ran … Next Page »

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My CU Bathroom on Boston’s Fox 25 News [Feld Thoughts]

2012-02-08T20:12:42-08:00

In the “truth is stranger than fiction” category, my CU Boulder bathroom donation (well – the gift I gave to CU Boulder that resulted in me getting to name a bathroom) made the TV news tonight in Boston on Fox 25. There’s apparently a new bathroom news cycle because of William Falik’s gift to Harvard Law School for the Falik Men’s Room at Harvard Law School. While my bathroom at CU Boulder doesn’t have the same elegant name (it’s known as RRM 209 in the ATLAS Building, or the Feld Mens Bathroom on Foursquare), I’ve got a better quote: ”“The Best Ideas Often Come At Inconvenient Times – Don’t Ever Close Your Mind To Them.”

The two minute news clip, along with a Skype interview I did this afternoon, follows. MIT – my offer is still open – don’t flush it.

Harvard Law School names restroom after generous alumni: MyFoxBOSTON.com

UW Incubator: Ground Zero for Doubling Startup Spinouts in 3 Years [Xconomy VC/Deals]

2012-02-08T17:52:44-08:00

Curt Woodward

In a typical year, research at the University of Washington will spawn about a dozen promising young companies. In the next three years, the school’s new president wants to see that output double—and ground zero for a lot of those startups will likely be a new incubator space unveiled this week.

When renovations are complete, the UW’s New Ventures Facility will have space for about 25 startups, with some 23,000 square feet of space split roughly evenly between laboratories and offices.

The initial floor of office space is finished now, and the first startups are expected to begin stocking its cubicles and conference rooms in the coming weeks. Renovation of lab space will take a little longer—it’s expected to be finished in 2014.

UW officials aren’t waiting to start trumpeting what they say is another big step toward dramatically increasing the entrepreneurial output of the state’s largest higher education center. It coincides with efforts like the new W Fund, an early stage investment pool pegged at about $25 million that will concentrate on companies emerging from public universities in the state.

Young

Michael Young, the UW’s president, said the incubator on UW’s campus should help keep young companies and entrepreneurs in Washington by making sure they don’t have to hit the streets too early, where they might find a need to relocate to Silicon Valley.

“When businesses spin too quickly out of their university geography, the reasons for staying in the state begin to reduce, and all of the sudden sunny climates and higher degrees of venture capital and so forth begin to appeal,” Young said Wednesday. “And that is despite the fact that the real value-add is staying connected with the university for some period of time until it really has proved its worth, and has shown what that market niche is, and has developed that technology that truly is significant and truly is transformative.”

Rhoads

Young speaks from experience, having helped the University of Utah become a national leader in spinning out university research. Linden Rhoads, head of the UW’s Center for Commercialization, said Young’s “assignment” of doubling the school’s startup output will also focus on quality—”not just companies, but successful, thriving companies that will be a benefit to the community and a credit to the university. So really, we look at the applicants with that assigment in mind.”

Startups have to apply for the incubator, and once they’re in, will pay to rent spaces—a typical office setup would be about $220 per month, with a one-year contract. The incubator already has seven startups ready to move in, and is expecting a handful more to join the parade soon.

One of those companies is Envitrum, a startup founded by mechanical engineering students Grant L.S. Marchelli and Renuka Prabhakar. Envitrum turns waste glass that is too dirty to be recycled into bricks that can be used in finish construction, namely building facades. The bricks that Envitrum produces are 95 percent glass, but consume a third less energy to produce than typical construction bricks, while also showing that they’re stronger in tests, Prahakar said.

Envitrum is about two years old, and presently operating on grant funding. ”It’s this great green technology. But the question is, how do we actually make the other type of green?” said Ryan Buckmaster, who’s working with Envitrum through the Center for Commercialization.

As the New Ventures building fills up, that’s the kind of question that people should be asking a lot more often in the next few years.

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Is DVP’s Quest to Get Startups to Detroit Working? Ask Shawn Geller [Xconomy VC/Deals]

2012-02-08T12:29:29-08:00

Sarah Schmid

[Corrected 2/9/12, 9:05 a.m. See below.] A few weeks ago, Dan Gilbert and the Detroit Venture Partners (DVP) crew welcomed reporters for a tour of the newly renovated Madison Building in downtown Detroit. Gilbert had recently spent $12 million to turn the former theater into a sort of fantasy workspace for budding entrepreneurs, and the results of his makeover didn’t disappoint.

The building features plenty of walls that function as whiteboards, a 150-seat auditorium that seems the perfect place to host an investor pitch meeting, and a stunning rooftop kitchen and deck that overlook Comerica Park, home of the Detroit Tigers. Little flourishes, like the exposed brick and the fact that some of the graffiti found in the building during renovations has been preserved, give the space a young, slightly edgy feel. All of it is meant to transform the Madison Building into a destination for startups across the nation—and if the story of Quikkly‘s Shawn Geller is any indication, it’s working.

Geller, a native of Pennsylvania, graduated from Temple University in 2009. While in school, he was bothered by what he saw as a disconnect between the small mom and pop stores surrounding the campus and the students they sought as customers.

“It wasn’t just local stores, but even the national brands would only come on campus one day a year with student ambassadors,” Geller says, noting the cost and inefficiency of that strategy. “It wasn’t a good model whatsoever.”

Geller worked with local merchants in need of promotion to create a simple landing page where students could find coupons and send them to their phones via text message. They would then claim the coupon by showing the text message at the store offering the discount.

Word of mouth quickly spread, and Geller built up a database of about 3,000 Temple students. He then went around to different restaurants and stores and asked them what their slowest times and days were. Armed with that information, he created his first “flash deal,” where he sent a text out to his database offering the first 150 people who responded within a certain amount of time a large pizza for $5. When close to 100 students went in to the pizzeria to claim their coupons, Geller knew he was onto something.

“It was a very cool way of testing the market,” Geller says. “Groupon was less relevant then, so it was exciting to be able to drive student interest in such a short amount of time.”

Geller began incorporating Facebook social gestures into his platform and named his startup Student Coupons. Soon, friends who didn’t attend Temple were noticing the Facebook posts and asking how they, too, could take advantage of the coupons.

Geller starting working with Jason Lorimer, another Philly entrepreneur, to refine and scale up his business model. Lorimer had just begun spending time in Detroit first as a tourist visiting a friend, and then as an entrepreneur scouting for opportunities. Lorimer connected Geller with Josh Linkner, DVP’s managing partner, after he saw some common ground between the national brands Geller hoped to snag as clients … Next Page »

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Geeking Out with Evernote: The Photo Gallery [Xconomy VC/Deals]

2012-02-08T12:16:40-08:00

Wade Roush

In the nearly five years since we started Xconomy, I’ve looked forward to few events more than our Silicon Valley “Xconomy Xchange” forum last night with Evernote CEO Phil Libin, Sequoia Capital partner Roelof Botha, and Morgenthaler Ventures partner Gary Little. I’m a longtime power user of Evernote’s online notekeeping application—it’s installed on my Mac, my iPad, and my iPhone—and interviewing Libin and Evernote’s biggest investors in front of a live audience was a little bit like being a Trekkie on stage with William Shatner, Leonard Nimoy, and Gene Roddenberry. Except, Libin is funnier.

We’ve got photos from the event in slide-show form below. Many thanks to Hanno Botha, newly wedded husband of Xconomy San Francisco’s director of business development Rachel Botha, for playing Peter Parker. (Hanno and Rachel are no relation to Roelof.)

While I’m thanking folks: I want to extend a special thank you to Microsoft Silicon Valley for hosting the event, especially to BizSpark evangelist Brett Laffel, operations manager Sherree Curtiss, and Paul the A/V technician. We’re also grateful to event sponsors Silicon Valley Bank and Turnstone (which showed off its forthcoming iPad app, complete with Evernote integration), event partners Dealmaker Media and Plug and Play Tech Center, design sponsor Mixtur, and Xconomy’s regular lineup of underwriters and venture members. Ching Wu at Morgenthaler Ventures, Andrew Sinkov at Evernote, and Mark Dempster at Sequoia Capital provided invaluable help spreading the word about the event.

Quite a few people tweeted from the event. You can get a look at the conversation by searching Twitter for the hashtag #xcevernote. One of the most tweetable gems of the evening was Libin’s formulation of Libin’s Law: “In a startup, you have to multiply Moore’s Law by Murphy’s Law. Every year, there are twice as many things that can go wrong.” On the final page in our photo gallery, you’ll find a Storify compilation of notable tweets from the event.

NEXT IMAGE >>

L to R: Wade Roush (Xconomy), Gary Little (Morgenthaler Ventures), Phil Libin (Evernote), Roelof Botha (Sequoia Capital).

Photo by Hanno Botha

… Next Page »

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Akamai Buys Blaze as Web Optimization Heats Up in Boston [Xconomy VC/Deals]

2012-02-08T10:28:36-08:00

Gregory T. Huang

A young Canadian software startup with Boston investors is now part of a big Boston-area company. Ottawa-based Blaze Software has been acquired by Cambridge, MA-based Akamai (NASDAQ: AKAM) for an undisclosed cash sum.

What’s interesting here is that Akamai, the Web content delivery and networking giant, is making a move into Web performance optimization—basically tackling Web performance at the browser level (what some call “front end”), rather than the network level. Akamai has been positioning itself as a one-stop provider of a secure platform for businesses to reach customers via the Web, mobile, and cloud. That approach also includes, among other things, speeding up Web and mobile applications, as evidenced by the company’s recent acquisition of its California-based rival Cotendo for $268 million.

Today’s deal is no doubt smaller than that, but it could be an important sign of things to come—especially around Boston. Blaze started in 2010, and its seed funding came from local investors CommonAngels and Boston Seed Capital. So why sell now?

“You always have a choice of how you want to grow the business,” says Chris Sheehan, managing director of CommonAngels. “It made a lot of sense for the guys to partner up with Akamai, who’s so strong in the [content delivery network] space. When I made the investment, [Web performance optimization] was just beginning. The timing was sooner than I expected. But in the last 12 months, this whole thing has really started to take off.” [Disclosure: CommonAngels is an investor in Xconomy, and Sheehan is a board member at Xconomy.]

Blaze’s approach is to optimize the code on Web pages so as to speed up the transmission of content and render pages faster on whatever device the customer is browsing on—PC, tablet, or smartphone. This is particularly useful for e-commerce and media sites, which tend to get gummed up by lots of different pieces of code loading on them. The company’s technology (and team) will be integrated into Akamai’s cloud platform, said Rick McConnell, executive vice president of products and development at Akamai, in a statement.

In speeding up websites, Blaze competes directly with Boston-based companies Yottaa (which is also in Boston Seed’s portfolio) and SiteSpect. Google’s team in Kendall Square also released a free tool for Web page optimization in the fall of 2010.

It’s not just about making websites faster, however. All of the above companies have been trying to combine Web optimization with business analytics so as to help businesses track things like sales and customer behavior more effectively. Now Akamai is firmly in the game, and we’ll see how that affects the competitive landscape.

“It’s going to make it a lot harder,” Sheehan says. “It puts a lot of pressure on the other startups.”

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Brands are Lies [Jeff Nolan]

2012-02-08T10:14:09-08:00

Last week I was in Atlanta to support Brent Leary’s Social Business Atlanta event.

When Brent called me last year and said he was putting together an event I said “sign us up” without even knowing what he was planning. I trust Brent and have confidence in his ability to pull together an interesting roster of speakers, participants, and most importantly, an audience to engage with.

Trust… let’s talk about that for a minute. The social technology industry has come up with an entire array of words that ultimately just convey the notion of trust between and institution and constituent, or person to person. These words include the ever popular “authentic” but also words like “transparent”, “open”, and “honest”. Whatever you name you give it, it is TRUST that we are talking about and the ultimate objective for companies using social technologies to engage the world around them should be using trust as a currency for influence.

The night before the event the speakers had a little dinner and over the course of the meal I learned a lot about the audience, the market, and my fellow speakers. After dinner and the next morning I put my deck together and assembled my thoughts into speaking points. I began my presentation by sharing this chain of events and then started with:

“Why did I tell you that at 11:00 last night and 6am this morning I put my deck together for you? Well it’s because I want you to trust me and know that what I am saying to you isn’t boilerplate, scripted, or slickly presented, because if nothing else I say makes an impression upon you let it be this, brands are lies, half truths and good intentions.”

Why are brands lies, half truths and good intentions? Keep in mind that I don’t subscribe to the notion that companies are inherently untrustworthy or that the people in a company, any company, are dishonest… I am part of a company, you probably are as well. The reason why brand statements are untrustworthy is that they reflect what a company, specifically those in the leadership of a company, want to believe about their organization, not what the customers of that institution reflect back to them as their values.

50 years of broadcast advertising has conditioned people to not believe what companies tell them is the truth, which is why Edelman’s trust barometer regularly ranks “people like me” as more trustworthy than any institution. As a society we have a generalized trust issue with institutions of all kinds and yes it should concern you as much as it does me because institutions of government, private enterprise, and everything in between form the backbone of society, and the demise of institutions has historically been a leading indicator for the demise of a society.

I have been thinking a lot about the notion of brands lately, but what I have been focusing on is how the communications revolution we have been participating in, also known as social media technology, is thrusting forward a notion that companies and customers need a better way of talking to each other.

Let’s not call them consumers… please, they are people and people have an inherent desire to be treated as individuals. The construct of consumer is something that companies created to group customers together because they lacked the ability to address each customer individually. Today we can reach customers as individual people so why do we need things like focus groups, demographics, and behavioral segmentation?

Well they do serve a valuable purpose, which is to roll up things which are best addressed in the aggregate, like product definitions and advertising strategy but when it comes to customer service and a collection of marketing functions we need to drill down to the individual level and treat customers as individual people.

Another aspect of this that I find particularly fascinating is that customer are behaving in a very different way that in generations past, not only do they have needs that have to be met with products and services but they also want companies to intersect them on the basis of values. In generations past we cared a lot about what the brand symbolized, the fashion appeal of it, but today we care about the values of the people that make up the company. Wow.

Couple this with another observation I have, which is that brand loyalty is easy to achieve but hard to hold… a direct inverse of what was the case even just a few years ago when brand loyalty was hard to achieve but very durable once acquired. We quickly embrace companies and products with a profound advocacy but one slip and a company quickly gets black listed. From heros to zeros in no time flat…. just ask the Komen Foundation.

So what does all this have to do with the idea that brands are lies? Well it all came together for me with something that Dion Hinchcliffe passed around on Twitter yesterday titled “Culture Eats Strategy for Lunch“. You should read this in it’s entirety but let me quote this one passage for you.

(…in successful companies) Employees are actively and passionately engaged in the business, operating from a sense of confidence and empowerment rather than navigating their days through miserably extensive procedures and mind-numbing bureaucracy.

Just as we need to recalibrate our thinking about customers as people rather than consumers, we need to appreciate that in successful businesses today, and tomorrow’s leaders, the organization exists as a unified body of individuals acting with single minded purpose and empowered with the ability to carry forward on the basis of what is right and wrong for the organization. Wow.

OncoSec Medical Advancing Inovio’s Technology Against Cancer [Xconomy VC/Deals]

2012-02-08T07:42:51-08:00

Bruce V. Bigelow

OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

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The Shins - September new song from the shins. very happy about... [BijanBlog]

2012-02-08T06:48:00-08:00

The Shins - September

new song from the shins. very happy about that.

On References [Babbling VC]

2012-02-08T05:24:40-08:00

Getting references seems like such a common sense thing to do. For some reason, I feel that it's a valuable option rarely used. I'd even go as far as to admit that I value nothing more than references when it comes to hiring someone or working together with them. Therefore, I can only shake my head when people don't use one of the easiest tools in the box for hiring or partnering decisions.

I was myself reminded of this multiple times in the past two or three months. On many occasions I was asked to provide references. I've written often about how to use them. Always call at least one or two that are proactively given and find at least one or two (or five) that weren't given by the candidate. Call anyone and everyone who can tell you something about said person. In my situation, these people either knew a ton of people whom I did not think of or they simply did not call. I'd gander that it was the latter since folks tend to let me know that someone called them asking about me.

What an opportunity lost. I am sure there are people out there who hate my guts. Further, they would at least tell you everything I am not good at. Trust me, no one is perfect. You don't want to hire or work with anyone who seems to be. Therefore, if you only call the references which are provided, you'll get a skewed picture. BUT, if you don't call any references, you're hiring (or partnering) based purely on the song and dance that said person gives you in the interview process. You want to know a person's strengths as well as weaknesses (and do filter for the crap provided by some people since they simply dislike someone). It allows you to better position that person for success. You may choose to even pass on that person but if you do hire them, you are far better prepared to help them succeed IN YOUR FIRM.

And there, I come to the main point. Getting references is up to YOU. It is the work you should be doing to hire the best people out there and further, it's a task that helps you manage better. You want to hire AS WELL AS position your employees where they can shine. This helps them and most importantly, it helps you as their manager.

UW Opening “New Ventures” Incubator to Support Spin-Offs [Xconomy VC/Deals]

2012-02-08T05:20:31-08:00

Curt Woodward

When the University of Washington hired Michael Young to be its new president last year, one qualification that stood out was an impressive record of spinning out companies from his previous employer, the University of Utah.

Today, the UW is taking a step toward fulfilling some of that promise by opening its New Ventures Facility, an incubator offering lab and office space for startups based on the school’s research. The incubator will be run by the university’s Center for Commercialization, which recently topped off a $25 million fund for spinning out public university research.

Tech startup incubators have been erupting across the American business landscape in the past few years, as faster, cheaper, more powerful software and hardware makes it very inexpensive to start a new company and investors look for ways to place broader bets on a crop of entrepreneurs. Seattle has a branch of the prominent TechStars program, which is also partnering with Microsoft to organize a separate accelerator program for startups working on the Kinect motion and sound sensor.

The UW plans to talk in detail about the New Ventures incubator at a launch event later today, and I’ll update with more color from the scene. It promises to be a bright spot for the university amid an era of steep cutbacks in money from the state, which is still struggling with lax tax collections following the Great Recession. Tuition has already increased to compensate for less state money, and the UW is likely to soon start charging different prices for in-demand majors for the first time.

UW’s commercialization efforts already have seen several spinouts in life sciences and information technology, including notable names like Fate Therapeutics and Farecast, now part of Bing’s travel search. The Center for Commercialization also has a strong collection of entrepreneurs-in-residence, with folks like Ken Myer and Luni Libes on the roster.

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Zoora Aims to Marry Indie Designers with Shoppers Hungry for Options [Xconomy VC/Deals]

2012-02-08T05:00:32-08:00

Erin Kutz

She started her career as a management consultant, but Aubrie Pagano says she always knew she wanted to be an entrepreneur. And she was particularly energized by fashion.

So Pagano spent her free hours assisting local Boston designer Emily Muller in launching her collection, in exchange for the opportunity to get some firsthand experience in the independent fashion design space. There she discovered that designers face a particular challenge—one that would eventually inspire Pagano to create the e-commerce startup Zoora.

“Its hard for independent designers to scale because there’s a discovery issue,” says Pagano. “[Muller] has a great website buts nobody goes to it.”

And as a shopper, Pagano says she’s felt like she’s had to settle for a piece of clothing that just isn’t quite right. Women like her are the perfect customer base for independent designers, she says.

“Something that a lot of people don’t know about independent designers is that they’re really flexible,” Pagano says.

Just last Monday, Pagano opened the Zoora website to the public, to offer women clothing that they can customize to best fit their measurements and taste. Her hope is that the women who feel underserved by traditional retail will bring independent designers the traffic—and business—they so desperately need.

Zoora joins a booming cluster of Boston companies in the space of mass customization, where e-commerce platforms allow shoppers to select and tailor products to better fit their preferences. As my colleague Greg has pointed out previously, these companies offer shoppers personalized jewelry (Gemvara), bags (F. Rock), girls clothing (FashionPlaytes), men’s dress shirts (Boston’s Blank Label and Proper Cloth in New York), and even bras (Zyrra).

Pagano started working on Zoora (a name inspired by “misura,” the Italian word for measurement) last spring, and made hiring a head buyer her first move. Since then, the company has enlisted about a dozen designers (including Muller) to sell garments on the site with options for customization. Another designer is Althea Harper, a former contestant on the Lifetime show Project Runway. (Worth noting, New York fashion tech startup Send the Trend has Project Runway veteran and winner Christian Siriano on staff.)

The customizations to Zoora garments fall into two baskets, says Pagano: “made-to-measure adjustments” and “ready-to-wear tweaks.” With the first category, customers input their specific measurements, which designers take into account to create a garment that’s a perfect fit. With “ready-to-wear tweaks,” meanwhile, garments come in standard sizes, but offer different options for elements like fabric, necklines, sleeves, and hem length.

The Zoora team now consists of … Next Page »

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50 Questions: How does a VC evaluate a company’s product? [The Equity Kicker]

2012-02-08T04:18:07-08:00

Fortieth in a series of weekly posts by myself and Nicholas Lovell of Gamesbrief which answer the fifty questions you should ask before raising venture capital. We expect the series to run for a year after which we will collate the posts into a book. You can find the rationale behind the series here, and the list of questions here. We welcome your comments on any and every aspect of what we are doing.

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VCs evaluate products by looking at demos and having a play themselves, by soliciting third party opinion and by looking at whether and how customers are using and paying for the product. The balance between these three methods of evaluation, lets call them ‘direct’, ‘third party’ and ‘customer’, depends on the stage of the company, the nature of the product and the experience of the VC.

Starting with ‘customer’, unsurprisingly, the more customers and revenues a company has the more a VC will look to what they are doing to tell him or her whether the product is good. If the product is great customer numbers will be increasing, per customer usage (often termed engagement) will generally be increasing, customers will be expressing their love for the company on blogs and in reference calls, analysts will be saying good things, and the price point will often by higher than for competing products. Two caveats are appropriate here. Firstly, some products are great precisely because they are cheap, often because they have simpler than the competition (e.g. Skype). And secondly, it is possible to build a profitable company with a product that people hate but buy because it is cheap (e.g. RyanAir), although in that case I would say you have a good business, and probably a strong capability elsewhere in your organisation (e.g. supply chain management, marketing), but not a good product.

With earlier stage companies investors generally don’t have the luxury of being able to rely on hard metrics and instead have to rely on gut feel – i.e. ‘direct’ evaluation. If they have relevant experience and the product is consumer focused, or a business product that can be demonstrated, then a large part of the opinion on the product will be formed based on what they see and feel when viewing or using the product. VCs without experience (which can come from either investing or operating) often struggle to differentiate between a good product and a bad one.

Finally, investors often ask ‘third party’ experts for an opinion. This is most common when the product is deeply technical and there isn’t much to be learnt from direct observation. In this situation the expert will generally be giving a view on the technology risk as well as the product. VCs often use executives in relevant portfolio companies to do this expert review. Sometimes they use third party consultants. The expert’s opinion will most likely have a big impact on whether the VC decides to invest, and it is advisable to work with the VC to ensure the person conducting the review has the right background to understand your company and give a good opinion.

Twitter Digest: 2012-02-07 [Paul Kedrosky's Infectious Greed]

2012-02-08T04:00:00-08:00

World's 25 best ski towns http://t.co/da3Dn71g /via @SullyCNBC ->
[1202.1448] Financial black swans driven by ultrafast machine ecology http://t.co/jG7vZPwG ->
Screenwriter/director/comedian (Office/Gervais) Stephen Merchant in a Google talk – http://t.co/waUlNJa9 ->
Precisely. IPO to follow. RT @ReformedBroker: @pkedrosky She's the Facebook of broken-into foreclosed home rentals! ->
Woman charged for breaking into foreclosed San Diego homes and renting them out on Craigslist – http://t.co/7HUW6YZH ->
An almost perfect headline. RT @DrVes: Sexually transmitted allergic reaction to Brazil nuts http://t.co/RjUh3Tl2 ->

Timehop Revives Old Memories from Facebook, Foursquare, and Twitter [Xconomy VC/Deals]

2012-02-08T03:50:48-08:00

João-Pierre S. Ruth

Everyone wants to recapture pieces of the past these days. Facebook for example changed all profiles to the timeline format this year, and others in the social media space are pursuing ways of tracking the past. New York-based Timehop has developed its own technology to let individuals recall content from their personal histories, via once-day e-mails. Jonathan Wegener, CEO and co-founder of Timehop, believes the e-mails offer deeper looks into the past than its rivals in the market.

For the team behind Timehop, the technology also marks a major change from where they were one year ago. Back then, they were also working on a startup called FriendsList as part of TechStars’s inaugural NYC class. FriendsList is now defunct. And the tale of how the team scrapped FriendList and moved forward with Timehop provides an interesting case study on startup strategizing—with a dash of nimbleness.

Timehop sends its users e-mails each day that tell them what they were doing exactly one year ago, based on information gathered from their Twitter, Foursquare, Facebook, and Instagram profiles. These personal newsletters, Wegener says, offer more context than what the sources offer individually. “There’s a big opportunity in history, and no one is doing it well,” he says. Wegener says Timehop gives its users a picture of how they spent their time, whom they spent it with, and what they were thinking across the social sphere. “Effectively you’re writing a diary without really doing anything,” he says.

One-year-old Timehop raised $1.1 million in seed funding in January from OATV, Spark Capital, and individual investors who include Foursquare co-founders Dennis Crowley and Naveen Selvadurai. Wegener says the seed funding will go towards … Next Page »

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