XYDO.COM: Venture Capital

Australia's Hastie Group collapses amid financial woes

MELBOURNE, May 28 (Reuters) - Australian engineering company Hastie Group said it has appointed voluntary administrators, after an employee last week was found to have falsified the company's

Why Facebook doesn’t need a Facebook Phone (but will try anyway)

With Facebook’s recent unveiling of a camera app for the iPhone, as well as a universal app store, it’s becoming clearer to me that even if the company is planning a phone of its own, it likely won’t be as big a deal as we think. Instead, Facebook is continually proving that every phone is a Facebook phone — or at least, every phone that can run Facebook’s apps, which includes the iPhone, Android devices, and Windows Phones. That seems a far better strategy for the company too, as Facebook likely won’t have a chance in hell to pry consumers away from their existing smartphone platforms. A rising popularity in Facebook mobile consumption led the company to list mobile as a major risk before it went public. The average Facebook user spent 441 minutes (7 hours and 21 minutes) accessing the site on mobile, the company revealed in its updated S-1 filing earlier this month. A Facebook phone likely won’t make a dent against all those users already using Facebook on their phones — and I don’t think that’s what the company wants anyway. Facebook wouldn’t spend $1 billion on Instagram, the wildly popular photo-sharing app on the iPhone and Android, if it aimed to actually kill other mobile platforms. Now I won’t deny that a Facebook phone will happen at some point. We’ve been hearing about such a device for some time — most recently, it’s gone by the codename “Buffy” and is said to be developed by HTC — and it makes sense for Facebook to want a device entirely its own. But if anything, it’ll likely be a cheap mid-range Android phone that will appeal to teenagers and emerging markets, and not something that will compete with high-end smartphones. (I’d imagine it would be similar to Inq’s Facebook-focused phones, though that company ended up cancelling one of its upcoming models.) Much like how Amazon offered a completely different spin on Android with the Kindle Fire, Facebook’s phone would be a cheap and easy way for its users to climb aboard mobile. (And the fact that it will lock those users into Facebook’s ecosystem is a nice plus.) Business Insider’s Jay Yarow points out that with all of its recent apps, it looks like Facebook is putting together all of the core components of its phone right in front of us. The Facebook Camera app could easily be the primary camera app on the Facebook phone, and Facebook Messages could serve as main messaging app as well (just like iMessages, Facebook could use the app to handle both SMS and its own messages). Of course, those apps also serve as a perfect way to distract users from built-in apps on their smartphones. Yarow also points to Facebook’s rumored interest in purchasing Opera, which would give it a powerful web browser of its own. While that’s one possibility, I view Facebook’s interest in Opera in another way: It’s the perfect way for Facebook to steal consumers away from mobile Safari on the iPhone and Android’s browsers (which includes the original Android browser and Chrome for Android). If you own the browser, you own the web. Opera could also serve as the perfect engine for a hyper-social web browser that’s intimately connected with all of Facebook’s services. It’s also a particularly interesting on the iPhone, as it’s the only third-party browser that isn’t forced to use Apple’s WebKit framework. Opera compresses web content on its servers before pushing it to your device, so it bypasses Apple’s restrictions on third-party browsers. That makes Opera on the iPhone faster than mobile Safari as well, and it could allow Facebook to build a truly interesting browser of its own with Opera’s tech. Photo via Johan Larsson/Flickr Filed under: mobile, social, VentureBeat

Joining the Dark Side: Why I left engineering to become a VC

It’s safe to say that growing up I never thought I’d be a VC. It’s not that there’s anything inherently wrong with venture capital. It’s just it’s not part of what I thought being a good geek was all about. There’s a very well-defined model for becoming a successful Silicon Valley technologist. You study computer science, math, or engineering in college. Then you intern at one of the great software titans. Perhaps you routinely commit code to an open source project on Github, suffer from a crushing caffeine addiction and/or a nocturnal sleep schedule, and own a track jacket emblazoned with a tech company’s logo. But few good geeks become VCs. It’s hard to stay a razor-sharp hacker when you spend more time in Excel than you do in Eclipse, and ditching sandals for a pair of loafers can be hard to stomach. In fact, much of what the tech community thinks VC’s are like is antithetical to the image of the model Silicon Valley geek – enough so that many of my friends from college lovingly refer to my decision to become an a VC as “joining the dark side.” For most of my life it seemed like I fit well into the model of what a geek should be. I started playing with computers and programming early on (I could type before I could write cursive). By the end of high school, I knew I wanted to spend the rest of my life making technology that solved big problems, and in 2006 I entered San Jose State as a computer science and math major. I was a flip-flop clad fixture at our school’s computer science club, and I definitely spent more time on TopCoder than I did at frat parties. But when I started doing summer internships in engineering, I realized that I didn’t fit as neatly into the model geek image as I previously thought. I had the pleasure of spending my freshman and sophomore summers at Electronic Arts and SAP, and at both places I learned that building great software wasn’t just about writing well-documented code and hitting the compile button. Whether you’re building a CRM suite or a video game, making rockstar software is an interdisciplinary effort. Technology is really just a tool to solve problems, and understanding how to solve those problems and fully what those problems are, requires an interdisciplinary team. I learned engineering was only one part of the process of innovating and creating great technology. More startlingly, I learned I liked navigating and managing the product process even more than I liked writing code. I wanted to make technology that made a difference, and I wanted to explore how I could use my passion for working with people and with code. So, to use startup terminology, I pivoted. In my remaining time in college I explored the dark arts of economics and business. Exploration led to obsession, and I ended up graduating as an economics major and computer science minor. My professional life mirrored my life back at school, and I explored other roles in tech that would allow me the opportunity to work with lots of different people – engineers, managers, customers, etc. Product management turned out to be a perfect fit.. After two summers interning, I joined NetApp full time in 2010 as the company’s first NCG (New College Grad) product manager. NetApp was an amazing place to be a young PM. Having responsibility over a product line can be difficult for someone fresh from college, but I was surrounded by amazing co-workers that mentored me as I learned the mechanics of product management and cultivated my leadership skills. NetApp was an amazing experience, but after two years I decided I wanted to try something different. In my last year as a PM I started getting very interested in the startup community in San Francisco. Once a month, I drove into the city to attend a tech meetup and pitch session called SF New Tech. I found myself fascinated with the people I met there. The “make it or die trying” attitude of founders, the willingness to sacrifice everything to make a difference –the ideological drive and passion necessary to succeed in a startup spoke to how I approached technology and the tech industry. Startups also spoke to the entire reason why I was in tech in the first place. My parents ran a small dot-com in the late 90’s, and a lot of what I learned early on about the tech industry came from them and their experiences navigating the first tech boom. I wanted to leverage my background to help people like my parents and the people I met at SF New Tech. After careful consideration and some research, I realized venture capital could be a great way to become bilingual in both “geek” and “suit”. One of the first lessons I learned in venture was the value of serendipity. Serendipity is core to the success of being a VC. Finding the next Facebook or Google is firmly rooted in being at the right place at the right time, and a significant portion of being at that crucial place and time is governed by serendipity. My way into VC was fittingly serendipitous. I met my friend Adam randomly at a mutual friend’s birthday dinner, where we bonded over a shared appreciation of good drinks and cryptography. As we got to know each other a bit more, I learned Adam was an associate at a fairly unique VC firm called GGV Capital. A year after we met, Adam tracked me down – once again at a party – to offer me the opportunity to replace him at GGV. Passion is a critical resource at GGV Capital, and they’ve allowed me incredible flexibility to explore mine as an associate. We care a lot about what we invest in, and it’s critical we work with teams who are just as excited about technology and making a difference as we are – if not more. I’m very excited about big data, cloud computing, gaming, and information security, so I plan to drill deep on all of these topics and work with entrepreneurs changing the game in these fields. It doesn’t really matter whether your business card lists you as an engineer, a product manager, an entrepreneur, or a venture capitalist. Whether you hack code or write term sheets, the only thing that really matters is how you uniquely contribute to the process of innovating and creating great technology. Andrew Manoske is an associate at GGV Capital, an expansion-stage venture capital firm focused on the U.S. and China with $1 billion under management. Filed under: Entrepreneur, VentureBeat

Crowdfunding via customers is the new startup capital

When the JOBS Act was signed in April, the startup community gave itself a collective high five. Crowdfunding would enable startups to reach out to the whole world to get access to funding, not just a small cabal of investors living in a 20-mile radius of Menlo Park. But hidden in the headlines was a much more powerful underlying trend. With the JOBS Act came the creation of an entirely new class of capital that could be far more valuable to startups: customer capital. Meet the new investor class: Customers. Instead of raising capital from VCs to build a product, entrepreneurs can skip the line and reach out to customers before the product is actually produced. It’s called a pre-order, but it has a twist. In this case, the pre-order is for a product that doesn’t actually exist yet. We’ve all dealt with pre-orders before, whether it’s the new iPad or a blockbuster summer movie. But this time customers fund the idea of a product, with the hope that the object itself will someday follow. For example, the Pebble Watch raised $10 million on Kickstarter by crowdfunding from customers strictly through pre-orders. This is just the start. A big, juicy new fund. While there is a big, amount of capital available from VCs, angel investors and private equity folks, the amount of capital available for entrepreneurs when you count the customer market is much larger. And the audience is far more diverse. The customer capital pool is not limited to the commitments of LPs or how much cash a newly-minted angel investor just netted from the Facebook IPO. It’s only limited by the quality of the ideas and the absorption rate of early adopters in all segments. More importantly, the pledge of capital is available to startups before they build their product, which allows them to do important market testing before they spend a dollar of real money. Granted, crowdfunding isn’t the end-all, be-all of proving a market, but it sure beats the old model of “if you build it, they might come.” A new twist on an old model. Funding through customer capital is nothing new. Savvy entrepreneurs have been pre-selling customers for years in an effort to bootstrap businesses to profitability. It’s just that they were doing it out of necessity, not because it was the most efficient way to access capital — and certainly not because it was fun. Bootstrapping was what you did to get your minimal product out to the market quickly. It was your cost of finding out whether anyone would ever commit to buying your product. But it took a lot of time and cost to simply ask your market, “Will you buy this?” Context is king. Instead of hitting up friends and family, ask a crowd.Crowdfunding platforms have made it easier to access this funding, but it also has given entrepreneurs the context to ask this question at scale. Prior to having a crowdfunding platform, you could certainly build a website to ask your friends and fans to back your idea. But it would feel like a one-off attempt. Platforms that aggregate crowdfunding backers provide a big pool of customer capital providing entrepreneurs with customers who are particularly willing and able to accept the risk that an idea may not come to fruition. The platform already presumes risk, and for an entrepreneur presenting an idea, that is an invaluable piece of context when asking for money. The ability to query your potential customer base at scale prior to building anything addresses a lot of painful problems. First, you learn whether there is really anyone that wants your product. Your friends can tell you it’s the greatest idea and VCs can tell you it’s a horrible idea, but the only true indicator is a customer order. Second, you avoid wasting a year of your life building a product you thought someone might want, only to find out that you were incredibly off base. Of course, a crowdfunded project can’t predict every market.Mark Zuckerberg could have presented Facebook and may have not found a single backer. It happens. Crowdfunding is just one indicator, but at least it’s feedback from real customers – not theoretical feedback from pundits. The important point is that you can get feedback now, before you start spending lots of cycles, improving upon your idea in real time. Anyone that’s ever built a landing page to test a new concept on the Web (and failed miserably) knows exactly how valuable it is to test first and build the product later. A true game changer. Between providing early access to capital, testing new ideas in real time and potentially growing the entire pool of startup capital astronomically, the emergence of crowdfunding customer capital is about to change the startup game in a big way. As of now the market is incredibly nascent. Funding a watch for $10 million sounds novel and grabs headlines. Ideally that kind of traction will be old news in the next few years as more companies are crowdfunded and the records for what they raise continue to jump. In the meantime, the world just got a whole new startup fund. Let’s go do something amazing with it. Wil Schroter is the co-founder and CEO of Fundable.com, a crowdfunding platform for startup companies. Oliver Twist image provided by Corbis/Guy Ferrandis/Tristar Pictures. Related research and analysis from GigaOM Pro:Subscriber content. Sign up for a free trial.Facebook’s IPO filing: ideas and implicationsWeb startups: How to guard against security breachesFlash analysis: lessons from Solyndra’s fall

An inside look at Switzerland’s seriously ambitious startup scene

Ah, Switzerland. The land of chocolate, cow-bells, skiing and prices that make you want to cry. A place that has built a global brand on providing a safe, risk-free haven for other people’s money and not being disruptive or belligerent. Clean, orderly and wonderfully peaceful — yes, the clichés are true. Not then, you might think, a country especially suited to launching a startup — but you’d be wrong. Long a hub for high-tech and medical sciences, Switzerland now boasts an ecosystem of Internet entrepreneurs that’s blossoming as fast as the proverbial Edelweiss in spring. “I don’t know any other country on Earth that is so good at seed funding,” enthuses Johannes Reck, co-founder and CEO of GetYourGuide. His story is illuminating — after founding GetYourGuide in 2008, his team was approached by a local bank with a seed funding offer, an out of the blue reversal of roles that typifies what’s happening here. “In literally every other country in the world I’ve been to, entrepreneurs struggle so hard to get their first seed funding,” he says. “In Switzerland you have a lot of institutions who provide money, literally for free, very early on.” Government and University Funding In true Zuck style, Reck founded GetYourGuide from his dorm room at Swiss Federal Institute of Technology (ETH) Zurich, the country’s top technical school. The aim was to hook up holidaymakers with tour and activity providers at their destination, making it easy to book everything from Segway tours in San Francisco to kayaking trips in Melbourne. Now, four years later, it’s scored two million dollars in funding and is said to bring in over $10 million a year in revenue. Many of the different cantonal banks scattered throughout Switzerland, I later discovered, act as regional VC funds thanks to a novel agreement with the government, which is keen to encourage entrepreneurs to pursue good ideas. So keen, in fact, that it also helps fund countless other organizations who do the same thing. To get an idea of how, I met Dominik Wensauer (pictured right), the project lead of a program which is conducting the most complete analysis of the ecosystem to date, the Swiss Start-up Monitor. The idea goes further than the TechCity-like public map of startups available on the website though — as well as using the aggregated data to identify funding gaps and measure the support mechanisms, the project will eventually offer AngelList-like networking, benchmarking and analysis tools to the hundreds of startups that have already signed up to use it. It’s a unique, neat solution, all with the aim of building a quantitative understanding of the ecosystem and working to improve it. He showed me a graph of the number of startups his organisation has been tracking, through various sources, since 2004. It’s an impressive growth curve, thanks to an increasingly supportive ecosystem, he says. “The situation here for startups is very good, they get a lot of help,” he told me. “There are several programs, institutionalised programmes, that are very, very good. I think sometimes it might be hard to differentiate which program to use. If you want to get support, you will definitely get it.” Unsurprisingly, Swiss Start-up Monitor is partially government-funded, a chunk of support coming from the Commission for Technology and Innovation (CTI), which seems nearly omnipresent when you speak to Swiss entrepreneurs. The support that it offers, funded by central government, ranges from start-up coaching to investment through its CTI Invest arm, which links investors with entrepreneurs. Alongside CTI, Wensauer explained, are a host of smaller programs aimed at helping university spin-offs — another phenomenon that seems to define much of the startup activity that happens here. Perhaps because of an aversion to risk (a very Swiss trait, given the size of the banking sector), entrepreneurialism is being specifically nurtured within well-regarded institutions such as the Swiss Federal Institutes of Technology in Zurich and Lausanne and the University of St Gallen, one of Europe’s leading business schools. More than 150 of the startups the Swiss Start-up Monitor is tracking are connected to the Federal Institute of Technology in Zurich. For academics (or even those with the slightest connection to a university) the support available is mind-boggling, ranging from the federal government to university-backed schemes and private enterprise loans. One of the most highly-regarded national programs I came across was VentureKick, a body that has handed out over 220 grants of up to 130,000 Swiss francs to select spin-offs since 2007, with virtually no strings attached. The confusingly similar VentureLab, offered by CTI, provides targeted training modules to entrepreneurs from Swiss universities. R&D Perhaps unsurprisingly then, a research-led thread runs strongly through the Swiss entrepreneurial scene. Culturally, Swiss entrepreneurs don’t seem inclined to drop out of college to work on their startups, but curiously enough, that’s resulted in a startup scene filled with companies that have seriously lofty ambitions. In the wake of the Facebook IPO last week, Steve Blank asserted that Silicon Valley is dying because VCs have stopped taking risks on the science and technology ‘hard stuff’, instead preferring social media startups. Here though, the emphasis on a combination of world-class education and strong funding infrastructure means the proportion of high-tech, research-led products is much higher. Take Dacuda, named by several of the people I spoke to as among the country’s most high-potential firms. It launched its Mouse Scanner (pictured right) at CES earlier this year, promising to usher in ‘a new era of scanning’ thanks to digitisation technology which can stitch together images captured by a low-cost camera on the bottom of a mouse into a larger, complete scanned document. The software is based on research conducted at ETH Zurich, and is being licensed to companies such as LG to integrate — the vision, which seems perfectly plausible given the low hardware cost requirement, is that one day all mice could double up as scanners. So among the high-tech wizardry, is there space for Internet startups? “When we started GetYourGuide we were considered completely low tech,” Johannes Reck recalls. “Swiss people were very much shaped in the way that they look at business in an old-fashioned, high-technology way. This is currently changing, because there are a couple of Internet startups who were successful and had successful exits.” A look at the “Swiss Startup National Team,” a group of businesses recently selected by VentureLab to travel to the US as part of a mentorship and networking programme, suggests he might be right. Although the majority are high-tech and med-tech firms, several web startups made the cut too, including the Newscron news aggregator, gamified ‘actions’ app DidThis and philanthropic marketplace for entrepreneurs, SoSense. Zurich The undisputed hub of consumer-facing web technology is Zurich, home of ETH and its Technopark complex, as well as names such as GetYourGuide, note-taker Memonic, GroupOn rival DeinDeal and gaming platform Gbanga. Switzerland’s largest city is also the base of Google’s largest engineering office outside of the US. Inside, it’s jokingly referred to as “the real Mountain View,” thanks to the vista over the Alps. Though undoubtedly an encouragement, several people told me Google is something of a mixed blessing, giving support to the entrepreneurial community with one hand and taking with the other by hiring the best engineers. Indirectly, it’s exacerbating the blindingly obvious problem facing all startups based in Switzerland — scaling in a country where developers expect around 150,000 CHF a year as a basic salary, eating up capital as quickly as it can be found. In fact, the cost of living is a problem for most people who don’t earn the average Swiss wage of 5,979 francs (approximately €5,000, or £4,000) a month, but for founders that need to attract talent, it can be a killer. No wonder then that GetYourGuide and several other names made the jump from Zurich to Berlin once they came to scale. The flipside of the high cost of living is that the quality of life in Switzerland is incredibly high, making it easier to recruit and retain top-notch talent for those that can afford it. “Switzerland has a number of great advantages in terms of living here and building a company here, and they have to do with living quality. Many people like the idea of moving here, whether that’s on a permanent or a temporary basis,” explains Michael Näf, who heads a team of locals and expats at Doodle. With partner Paul Sevinç, Näf has built online scheduling service Doodle into one of the country’s most successful web startups, with over ten million users a month. Conceived nearly a decade ago, the pair went professional in 2007, scoring funding in 2008 and ‘partially’ exiting by selling a 49% stake to Swiss publisher Tamedia last year. Doodle’s premise is simple but incredibly useful, with a registration-free process that allows anybody to poll participants for convenient time slots, or book time in an ‘open’ diary which can be synced to other calendars such as iCal. Location The advantage of fast, punctual air and rail connections to neighbouring France, Germany and Italy shouldn’t be overlooked either for founders who will one day need to sell overseas, Näf tells me. “It helps that Switzerland is so well connected. It takes me from my office to the airport maybe 15 minutes, and that’s a big advantage.” Although Näf notes that internationalisation isn’t always as easy as it looks, it’s hard to overlook the additional language advantages the Swiss have when it comes to tackling foreign markets. Almost all Swiss startups operate in English and French, German or Italian, enabling them to build a product in Switzerland before rolling it out to one of the country’s larger neighbours. Mindful of their homeland though, many will actually begin building products for other local markets before expanding overseas, helping to build brand awareness in each language before a full market launch. “Swiss people do this better than anywhere else in the world, because they grow up with three languages — four actually (English),” Wensauer says. “Many will think about expanding in Switzerland first, even though it’s harder because of the language barrier.” Fortunately, it’s much easier to get around a language barrier when there’s a ruthlessly efficient transport system available to take you the short distance in person — and in Switzerland, that’s definitely the case. “Switzerland is really tiny,” says startup observer Sébastien Flury. “If you compare it to international cities like Paris or Berlin or London where it takes an hour or two to get to work — you’ve made the journey in Switzerland to get from one point to another in two hours.” That helps startups both to meet their customers and to meet each other, leading to a nascent networking scene that’s creating a ‘big change,’ according to Flury, a long-time observer of startups through his position as Entrepreneur-in-Residence at Jura’s startup support organisation Creapole. He speaks of entrepreneurs coming together with a new cadre of Swiss investors, with fewer who have made money in investment banking and more successful entrepreneurs who have ‘made’ it and have a better understanding of what it is to start a company. Increasingly, those mentors are turning out in force at events such as Startup Weekend, which jumped from two occurrences last year to five this year. At the most recent event in Jura earlier this month, 50 people pitched 23 ideas, and turnout is much higher at the longer-established events in Zurich and Lausanne. Networking in a country of just eight million people is pretty easy. For all of the advances, it’s clear that Switzerland has some way to go before it’s the perfect environment though, particularly when it comes to further funding. “All support provided is something good. Technology parks, support programs, are all great, but that’s for the first steps, that’s not what builds successful international companies,” concludes Flury. “To close a seed round of 800,000 to one million francs is not so tough in Switzerland — perhaps difficult, but not as difficult as finding Series A of two or three million.” And that’s not the only thing standing between the Switzerland and the dream of building the ‘Silicon Alps’. A phenomenally high rate of employment may act as a safety net for entrepreneurs willing to give it a go, but it also leads many into the trap of 9-5 work — nobody here is being forced to start a company, that’s for sure. Stock options are immediately taxed on issue (although capital gains tax isn’t payable later), making awarding shares a tricky business. The help for non-high-tech entrepreneurs isn’t as good as it should be, although that’s changing fast. And it’s a tiny market, which leads many to forfeit global ambitions in favour of a big-fish, small-pond strategy. It’s not immediately obvious that Switzerland, or more likely Zurich, will be able to overcome these hurdles in order to become a European startup powerhouse like Berlin and London. But look at the impossible railways that climb and weave their way over the Alpine peaks, and it’s obvious that this is not a country that shies away from a challenge. With the amount of support on offer here to help entrepreneurs achieve their dreams, reaching the top has never looked easier. Peter Wey, Image Focus, S.Borisov, Fedor Selivanov, Stee via shutterstock

Twilio's Nine Things

In the last MBA Mondays post talking about company culture, I wrote: It helps a lot to have a one pager that outlines the core values of the company. I just saw our portfolio company Twilio's version of that. They call it "Our 9 Things." I wish I could publish it here but I don't have permission from Jeff and so I will resist the urge. It has things like "think at scale" and "be frugal" on it. You get the idea I hope. This "guiding light" is a framework for the culture and values of the organization and each new hire should be assessed against the framework to make sure the fit is good. Well it turns out that Twilio published their "9 things" on their website this week and so I can now publish them here. I like that they published them in the form of a telephone dialpad. For those that don't know Twilio makes telephony work easily in web and mobile apps. Putting the 9 things in this format makes a statement in itself about their culture. These need not and should not be your company's values, although it is likely that you may share a number of these values with Twilio. The point is to articulate what your culture is about and put it front and center so that everyone knows what they are. Nicely done Twilio.

Twitter Digest: 2012-05-26

Usain Bolt posts his slowest ever winning time in 100m final. Weird how 10.04s even looked slow. http://t.co/Y4kMVucr -> [1205.5509] Four Degrees of Separation, Really http://t.co/GxnzQ6CI -> Enjoying a Saturday morning watching epic Stage 20 of Giro over Mortirolo and Passeo del Stelvio. Go Ryder Hesjedal! -> Joe Kraus: We're creating a culture of distraction – http://t.co/0ctyo3qr /via @bfeld -> Petition: Require free access over Internet to sci journal articles from taxpayer-funded research.https://t.co/monA7aHO -> Remarkable graphic (pdf) of Everest deaths by altitude and nationality http://t.co/ndcq8wrb ->

Venture funding plunged last quarter

Venture capitalists poured $5.8 billion into 758 deals in the first quarter of the year, according to the MoneyTree report the association prepares with PricewaterhouseCoopers and Thomson Reuters. That was a double-digit drop in both dollars and deals compared to the fourth quarter of 2011, when $7.1 billion went into 889 deals.

Venture funding plunged last quarter

Cleantech investment slows but many backers remain hopeful

The Brookings Institution last month warned that federal spending on clean technologies is drying up, with little sign of additional help coming from Congress. As tax credits and grants expire, federal support is likely to "fall off a cliff," it said, and more cleantech companies are likely to go bankrupt or be consolidated. So what does that mean for venture capital deals? Is cleantech investing dead? Or is interest shifting "downstream" from companies building power plants, electric cars and solar panels to companies focused on getting energy data into the hands of consumers and solar panels on roofs? "People are shying away from cleantech, and it's clearly slowed down," said Pierre Lamond, a partner at Khosla Ventures in Menlo Park. "In 2007, anything that was green, or claimed to be green, got investment. Now everyone is looking for the next Facebook." Khosla Ventures has a significant cleantech portfolio that includes Soladigm, a Milpitas company that makes "smart windows" for the green building market, and EcoMotors, a Detroit company building a smaller, lighter and more fuel-efficient internal combustion engine. The company still invests in cleantech, but Lamond says the firm is getting fewer pitches from cleantech entrepreneurs. The bright spots are batteries for electric vehicles and energy storage. "People are a lot more cautious. The solar sector is dead in terms of startups. Wind is dead in terms of startups," Lamond said. "Venture capitalists have to make money for their limited partners, and it's easier to make money in social media." Several deal trackers recently published their tallies for venture investing in the first quarter, which is typically a slower quarter across most sectors. As usual, the news for cleantech is complex because the sector includes industries as diverse as biofuels, electric vehicles, lighting, solar and the smart grid. Some deal trackers also include wastewater treatment and recycling in their analysis. The MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association, based on data provided by Thomson Reuters, found $951 million invested in 73 cleantech deals in the United States -- a 30 percent decrease in dollars and an 11 percent decline in deals compared with the fourth quarter of 2011. Dow Jones VentureSource found $513 million invested in renewable energy companies through 23 venture deals in the first quarter, down from 24 deals and $630 million in the fourth quarter. And the Cleantech Group found that U.S. companies raised $1.3 billion in 113 deals, down 17 percent from the fourth quarter and 36 percent from the first quarter a year ago. All agree cleantech has had a volatile year. Fremont solar maker Solyndra's high-profile bankruptcy in September cast a long shadow across the entire solar industry. Renewable forms of energy face increasing competition from cheap natural gas. And the United States lacks a coherent, national energy policy -- which means that companies often look outside the U.S. for business or struggle to adapt to markets state by state. Many cleantech watchers hoped Oakland-based BrightSource Energy, which makes solar thermal power plants, would have a successful public offering this year, but it abruptly shelved its IPO plans last month amid tepid interest from investors. There hasn't been a blockbuster IPO for the cleantech industry since Tesla Motors (TSLA) went public in June 2010. "The sky is not falling in cleantech. Don't let anyone say cleantech exits (IPOs or acquisitions) aren't happening -- they're just not happening in North America," said Dallas Kachan of cleantech research and consulting firm Kachan & Co. "China is where all the action is in cleantech today." Rob Day, a partner with Black Coral Capital in Boston, says that cleantech is suffering a double hit: federal stimulus dollars are drying up and VCs are looking elsewhere. "The category got defined by big, capital intensive projects that didn't result in returns," he said. "VCs, at least the smart ones, weren't chasing stimulus dollars in and out. But they are pulling out of the sector at the same time that stimulus dollars are being withdrawn -- and that's not good." Some say cleantech investing is just shifting -- and becoming smarter as the industry naturally matures. "I think cleantech is alive and well, and we see new deals every day -- early stage, mid-stage," said Nancy Pfund of DBL Investors. "By no means is cleantech on life support. There's been a difficult political environment for cleantech over the past year, and there's been volatility in the stock market. But plenty of companies are still coming to us." Last week San Francisco-based Sunrun announced it has closed a new $60 million round of funding, led by Madrone Capital Partners and existing investors Accel Partners, Sequoia Capital and Foundation Capital. Sunrun, which provides financing for homeowners who want to install solar panels in 10 states, has raised $145 million in venture capital to date. "Often the best time to invest is when other folks are running the other way," said Sequoia Capital partner Warren Hogarth. "The cost of natural gas will go back up. Japan just shut down its nuclear reactors. Globally there's still strong demand for cleantech. It's a matter of being patient." Campbell-based Coulomb Technologies, a leading player in the race to install public charging stations for electric vehicles, secured $47.5 million in a fourth round of funding earlier this month. The funding round, led by venture capital firms Braemar Energy Ventures and Kleiner Perkins Caufield & Byers, was oversubscribed. "This is a software company that just happens to be in the electric-vehicle market," said Dan Ahn of Voyager Capital, an investor who has served on Coulomb's board since early 2010. "It's very easy for venture firms to say that the cleantech space is dead. Maybe the reason why you didn't make money is because you didn't make good investments." Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.

The Experience Economy

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Electric cars equal $1 a gallon gas for life + $1,200 cash a year

Car buyers are notoriously fond of focusing only on the purchase price of new vehicles, without much thinking about the total cost of ownership. For electric cars that may cost twice or more what a similar-size gasoline vehicle does, that’s a problem. Still, two separate pieces of evidence begin to make a compelling case for the huge running-cost advantages of plug-ins. They’ll prove useful in conversations over the next few years, as friends, relatives, and neighbors question electric-car buyers about their new vehicles: why they did it, how much hassle it may be to plug in, and–of course–how much it cost. Gasoline vs. electricity price in $/gallon equivalent, under 3 scenarios (by Max Baumhefner) First is a post entitled Buck-a-Gallon Gas for Life? Author Max Baumhefner, a Natural Resources Defense Council staffer, simply plots the equivalent cost of gasoline and electricity under different oil-price scenarios. Gasoline is high, higher, or very much higher; electricity stays cheap regardless of what happens to oil prices. Even more compelling is a chart (at top) from the Edison Electric Institute, showing the volatility of gasoline prices and the minimal variation in electric costs over the same period. In other words, plugging in your electric car to recharge it is the equivalent of paying a dollar a gallon for gasoline–forever. Second is State of Charge, a study issued last month by the Union of Concerned Scientists on a variety of electric vehicle issues. (We’ll cover more of that study later on.) It found that electric-car owners in 50 of the largest U.S. cities who cover 11,000 miles a year will save from $750 to $1,200 annually compared to traveling the same distance by buying gasoline at $3.50 a gallon. While most early electric car buyers have other reasons than saving money, the running-cost advantage has to be better explained if plug-in cars are to reach a broader audience. And while payback may still be hard to achieve, the lure of “buck-a-gallon gasoline forever” or “$1,200 a year in your pocket” may be enough to get fence-sitters more interested in plug-in cars. Whereupon they may go for test drives, and discover one of the benefits that automakers (inexplicably) haven’t focused on: Electric cars are simply nicer to drive. What do you think? How would you make the case that electric cars can save someone money? Leave us your thoughts in the comments below. This article originally appeared on Green Car Reports, one of VentureBeat’s editorial partners. Filed under: green

I’m Finally Recovered From My 50 Mile Run

On my run this morning along the Charles River, I decided I was finally recovered from my 50 mile run on 4/7/12. The end of my run brought me by the Hatch Shell and I smiled, even though it was muggy, cloudy, and there were too many people around. I’m now sitting in the Ritz Bar (they now call it the Taj, but that doesn’t work for me) a few hours later with Amy doing some writing while she reads. I took a break and decided to write up how the last seven week have been for me emotionally. Basically, they’ve sucked. I wrote The Physiological And Emotional Fallout Of My 50 Mile Race two weeks after the race. I was tired, struggling with depression, but feeling like I had turned a corner. It was a nice fantasy – after a month I was still having wild mood swings, feeling very tired most of the time, totally uninterested in running, and generally feeling overwhelmed by my travel, work, and all the people around me. I’d been through this before in my mid-20′s when I was very depressed for several years while running my first company. This was different – I haven’t felt depressed, but it was just over the horizon. Instead, I had a steady low grade anxiety all the time which would spike up for a few hours before dissipating. I’d feel ok and then suddenly be exhausted and want to take a nap. Or I’d just feel like canceling all my meetings and going home. I knew the feelings would pass, so I just rolled with them when they came up, but I didn’t deny their existence. Other than sleeping a lot, Amy tells me that I’ve been fine the past seven weeks. Low energy, but not noticeably in distress, crabby, or difficult. I haven’t done a survey of the people I interact with on a regular basis, but I’ve been open about how I’ve been feeling and I assume the people close to me have been giving me some space. I’ve been keeping up my typical work pace with one exception – I’ve been sleeping in many mornings as I just haven’t been able to drag myself out of bed at 5am. I felt something noticeably shift two weeks ago. Amy and I had a couple of wonderful days together in Chicago and then I flew on Sunday to New York. I spent the afternoon with a close friend whose wife is very ill, just sitting, talking, and enjoying being together. I went out to dinner with two CEOs we’ve funded and then had a good night sleep. I woke up Monday morning feeling a little flat, but by mid-day I felt normal and attributed it to being sad for my friend and his wife. I felt fine during the rest of my NY trip, I flew to SF for an extremely enjoyable dinner, and then spent the past 10 days in Boulder. While it has been very busy and there is a lot of pressure coming from different directions, I’ve felt very normal the past two weeks. I’ve had a few anxious moments, but they are all tied to specific events and easy for me to process. My normal temperament is very stable and mellow, even when the shit is flying everywhere, and I’ve felt generally back in that zone. I’m running again and enjoying it and I haven’t felt like curling up in a ball in the corner of the room in at least two weeks. As I’ve written before, running the 50 mile race was an amazing experience. But I’ve decided not to do it again while I’m working at the level and intensity that I work at. The training was too much but more importantly the recovery has just been way beyond what I feel like I want to process again anytime soon. So – it’s back to marathons for me, which I know makes Amy smile.

The paidContent Interview

It's memorial day weekend. We are at the beach with our family and I am taking it easy after a hectic week. I did a bunch of interviews and talks last week. It felt like I was in front of an audience at last a half dozen times in the span of four days. So I am going to take a short hiatus from writing this weekend and run some video here. We will start with the interview I did with Matthew Ingram at the paidContent 2012 conference. Matthew focused the conversation on the challenges that traditional media/entertainment has had in working with the changing technology landscape and the tech community. I don't think I said anything that the AVC community hasn't already read or heard from me before. But I do think we did a decent job of framing the issue and laying out some likely paths forward from here.

Why early-stage investors should be pumping up their startups with data

“Startups are the sum of the decisions made by the people who run them,” Future Simple founder Uzi Shmilovici wrote in a recent post. Uzi’s absolutely right — the earlier startups begin collecting data, the better their decisions will be. There’s only one catch: Most startups don’t have expertise in Analytics. The time startups spend on developing clear success metrics, actionable campaign tracking, and automated reporting is time they DON’T spend developing a minimum viable product and pivoting to find their market — effectively leaving startups with limited or no real ability to compete on analytics. The Big Idea What if VCs provided centralized analytics and data management resources as part of their investment in startups? Giving startups the tools and resources they need to compete on analytics would give investment firms and their startups a huge competitive advantage. Startups would grow revenue faster, reducing their level of technology debt, and giving them access to specialized skillsets typically available only to better-funded players. Investors would see a significantly enhanced probability of return. A/B Testing and Statistical Modeling Startups that are actively working to find their market niche have a huge advantage with access to statistical modeling and analysis resources. Extreme examples exist — such as Demand Media’s use of machine learning to build a billion-dollar business by beating Google at its own game. However, even a simple A/B test can easily return gains of 10%; a one-to-one marketing model may increase conversion by well over 20%; a price optimization study may return 30% or more incremental revenue. A business rule optimization, gained from detailed analysis of customer behavior, can be a complete game-changer. Most startups don’t have the resources or bandwidth to kick-start an analytics group. With access to centralized analytics services early in their life cycles, startups can maximize conversion opportunities, conduct site tests with minimal investment in development hours, and bank strategic data-capture opportunities for future returns. Set Up Databases with Growth in Mind Startups are anxious to get things done quickly, which frequently leads to setting up an open-source database so they can start throwing records at it immediately. While this works in the short-term, it leads to scalability issues and lost opportunities to store transactional and behavioral data. It’s at this point in the startup’s lifecycle that it makes sense to evaluate the existing database schemas, identify opportunities for strategic expansion and optimization, and plan appropriately for anticipated growth. This vital investment reduces the amount of technology debt the startup carries and, if done effectively, provides greatly enhanced ability for the startup to identify otherwise-unseen market opportunities and inflection points that suggest a potential pivot. Offload the Distractions Startups are beset by distractions that can be a huge drain on productivity. These are activities that experts can provide more efficiently and more effectively. Three prime offenders: Web Analytics. Few organizations make tagging a formal or required part of their release process; it often doesn’t get done. Instituting a clear process in the early stages helps integrate a data-driven culture into the startup’s DNA. Search Engine Optimization. It’s often thought of as “get your meta tags right and produce a lot of content;” a more strategic implementation purposely directs internal page-rank flow toward specific marketing objectives. This provides a framework for VCs to provide high-level marketing guidance while making it easy for startups to determine “which marketing efforts go where.” Database administration. Performance tuning, backup, and data security are vital tasks that require significant, ongoing time commitments. Expert implementation reduces the risk of a data breach or unrecoverable data loss. Putting It All Together Startups with the resources, infrastructure, and expertise to effectively compete on analytics will have a significant competitive advantage. VCs have the opportunity to improve their ROI — and to differentiate themselves — by providing these resources. By adding centralized analytics and data management resources as part of their investment in startups, VCs will be positioning themselves — and their startups — for maximum growth and success. Jeb Stone is a 14-year Internet veteran with depth in database marketing, business intelligence, predictive modeling, and marketing research. He has established and led the applied analytics organizations at leading Web properties including Match.com, Selloscope, Socialyzer, and FareCompare. Jeb holds a PhD in experimental psychology with a specialization in marketing. [Top image credit: Zurijeta/Shutterstock] Filed under: deals, VentureBeat

The (not so) daily news

I have more conflicts than a Louisiana politician when it comes to the news of the New Orleans Times-Picayune reducing its frequency from seven to three days a week: I was in charge of digital content in the parent-company division that started its sister site, NOLA.com; I worked on Advance’s Ann Arbor project; I was involved in the early stage of its Michigan project; and I’m working with Advance on another effort — though I am privy to nothing about New Orleans today. So take anything I say with a grain of salt the size of the Gulf of Mexico…. Still, I can’t not comment on the news. Mathew Ingram and Ken Doctor will take you through the economic reality at work in New Orleans and Advance’s Alabama and Michigan markets: The cost of printing seven days a week is becoming unsustainable. It’s still profitable to print two or three days a week, not because those are the only days with news but because newspapers are still in the distribution business and those are the most lucrative — still-lucrative — days to distribute inserted and printed ads. That could change again when and if (a) newspaper circulation falls below the critical mass needed to distribute coupons and circulars and (b) local advertisers become more savvy and finally move online themselves. Then printing and distributing paper will become even less profitable, even less sustainable. That’s when print could — mind you, I didn’t say “will” as I’m not predicting the form’s demise; I repeat, “could” — disappear. By then, newspapers had better be ready. That is, they had better have become digital companies. That is the essence of the digital first strategy: become sustainable, successful online companies that can survive without (or with) print. And grow again from there. That’s the process we’re witnessing here — that and a continuing cutback brought on by falling circulation and advertising revenue; not a new story, of course. This is a most difficult transition. Guardian editor-in-chief Alan Rusbridger has been talking about this transition for years. Back in 2005, he talked about buying the last presses. Later, he talked about trying to move his newspaper over what he called the green blob — the great unknown that stands between declining print and ascending digital. That is the job of the editor and publisher today: to make that transition. Shifting content, staff, readers, and advertisers from print to digital is necessary. Improving digital is necessary. And rethinking print is necessary. If profitable, I think there could continue to be a role for print. In the Guardian’s case, I’d propose that it follow the very successful model of Die Zeit in Germany and publish once a week as the Weekend Observer, turning the Guardian into an online-only, worldwide brand, which is pretty much already is. See, I’m not against print. But we have to make print beside the point. Of course, it’s not the manufacturing and distribution we should care about preserving and advancing. It’s the journalism and service. It’s not the past we want to protect. It’s the future. You can argue with the strategy undertaken by any newspaper company undergoing this difficult transition. But better a transition than the alternative.

The paidContent Interview

IFC plans to invest in Malaysia's Khazanah healthcare arm

KUALA LUMPUR, May 26 (Reuters) - International Financial Corp (IFC), a member of the World Bank Group, is planning to take part in the planned $1.5 billion listing of Malaysia's Integrated Healthcare Holdings (IHH) in a move to help validate IHH's emerging markets strategy, according to IFC's official website.

Twitter Digest: 2012-05-25

Today in self refuting sentences: "Simply run {MA} and click on 96) to toggle to Advanced Search" -> Speaking of dueling FB algos, this: http://t.co/itWN54xe -> When the algos really went at it over FB last Friday reminds me of Close Encounters when computer & aliens did tonal sequence duet. -> Now Coveted – A Walkable, Convenient Place – http://t.co/zDlg0NZI /cc @richard_florida -> Just wrote a non-code email making extensive use of regular expressions. Yeesh, I can be geeky. -> The Verge reviews Samsung Galaxy S3. Shorter version: great hardware/perf; big; & a little Samsungy. http://t.co/qM3ew5jN ->

US Economy: IS that the inflation you want?

)”]inflation (Photo credit: [s e l v i nOf course many consumers instantly abhor the idea of inflation spilling over to politicians getting to believe in their actions having an actual effect on theEconomy targeting inflation. However, as we and certain powers that be at the Fed in the US and RBI back home in India have posited many a time despite targeting a manageable inflation, some inflation can be good for the Economy. Apart from what me, others and Krugman might believe about the growth imperative consequent on inflation, spending’s direct positive impact on stimulating healthy interest rates and economic activity led growth and perhaps the mathematical certainty that near zero interest rates have limited Fed’s control over the Economy..there may well be more to inflation building up into a object of desire for most western nations as banks sap out the bilious stimulus and everyone in europe is well near the end of their purse strings. Wow, as long winded sentence construction goes, that one is probably what the doctor ordered for summarising another global economic pique we are facing. Gasoline inventories in the US are not rising but Crude inventories are at their highest. The Dollar has been decimating every other currency in the last two weeks and the Euro has been falling on its own (lack of) steam. However, we forgot to detail an important thing in this war against policy akers who want to shut out inflation and are perhaps happy with a long bout of deflation, the way they use the gridlocked Congress in the USA. as another news magazine with a nominal grasp or a titular gnat of “Economics” just mentions on the cover, the detail is in the kind of inflation we have been getting to. A 2008 cover of The Economist Food prices have taken an awfully long time to come to a place where they can be seen to be cooling off and despite our endless optimism in this recovery cycle, it sis probably far ahea do f where it should be except in our Asian economies where the produces of farm goods are still dubious of the “Growth paradigm” of urban expansion as they leave Farming for better employent elsewhere. Oil prices hare still not coming down for the consumer, neither in the US nor in India or other Asian stops where growth continues despite the cost of inputs brought back to above par by a depreciating currency, keeping both sides of the globe permannent floating underwater, submerged by hope and by degrowth in the same Related articles How to Apply a Modern Monetary Theory Solution to an Economic Downturn (Guest Voice)(themoderatevoice.com) India vs China : ( A likes comparison) Chinese inflation ticks down to 3.4%(india.advantages.us) India Investment Post : The 2013 Agenda(awardz.wordpress.com) How can you cash in on inflation!(loans.msn.bankbazaar.com) Inflation Can Help to Stimulate a Depressed Economy(economistsview.typepad.com) Shall We Target Inflation with Fiscal Policy?(wallstreetpit.com) The Economy Will Get Better When It Gets Better(theamericanconservative.com) India vs China : ( A likes comparison) Chinese inflation ticks down to 3.4%(awardz.wordpress.com)

New VC fund raises $105 M for media communications startups

The Canadian tech scene's knight in shining armour is spreading the wealth again. Sir Terry Matthews rides to the aid of tech startups once again with a new fund that targets promising MCT firms. 5/22/2012 2:39:00 PM Sir Terence Matthews , knighted by the Queen in 2001, has just raised $105-million through a new venture capital fund targeting investments in early stage firms in media communications technology (MCT). His Ottawa-based VC firm, Celtic House Venture Partners (an ode to Matthews's Welsh roots), announced the closure of the fund today. Lead investor was Ontario Venture Capital Fund, with additional institutional investors being Teralys Corp., Export Development Canada, and Business Development Bank of Canada. Celtic House, with additional offices in Toronto and Montreal, manages a total portfolio of $425 million across three VC funds. It was founded in 1994. In a recent speech in Winnipeg, the Welsh-born Ottawa-based Matthews said not enough successful Canadian entrepreneurs are investing in startups , bemoaned the hollowing out of Canada's startup scene after several young firms were acquired by U.S. companies, and applauded $400 million in startup funding announced in the federal budget. Matthews is one of the most successful tech titans to come out of Ottawa, having founded companies such as Newbridge Networks Corp. and Mitel Corp. Proclaimed by U.K. media as the first ever Welsh-born billionaire, Matthews was ranked the richest Welshman in 2011 with a net worth of about $1.72 billion. That put him ahead of better known Welsh compatriots actress Catherine Zeta-Jones and crooner Tom Jones (no relation), ranked tenth and twelfth respectively.

Icahn Discloses Stake in Chesapeake Energy

SAN FRANCISCO (MarketWatch) -- Activist investor Carl Icahn blasted Chesapeake Energy's board Friday after disclosing his investment fund has taken a 7.56% stake in the troubled oil and natural gas company. Icahn seeks to remove at least four Chesapeake directors. He wants to pick two new directors and let Southeastern Asset Management, Chesapeake's largest shareholder, nominate the other two. "The basic function of a board is to oversee management and to hold it accountable. We believe the board has failed this duty in a dramatic fashion," Icahn said in a letter to Chesapeake's board. Icahn also opposes Chesapeake's board appointing a new chairman without shareholder approval. CEO Aubrey McClendon, with whom Icahn recently met over dinner to discuss securing a board seat, was stripped of his chairman role by the company's board a few weeks ago. "Having the current board select a new chairman without shareholder approval and without allowing for shareholder representation is akin to asking the fox, who has plundered the hen house, to choose another fox to assist it in standing guard over the remaining hens," Icahn said. He went on to say Chesapeake has some of the "best oil and gas assets in the world" but its hard-hit stock doesn't reflect the value of the company's business. Chesapeake shares closed Friday at $15.81. The stock is down 49% over the last 12 months. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

Dimon Agrees to Testify, Without Committing to Specific Date

While Jamie Dimon, the chief executive of JPMorgan Chase, has agreed to testify before a Congressional committee in June to discuss the bank's recent multimillion dollar trading loss, he hasn't committed to a date.

Facebook games now playing in News Feed and Timeline

Leave it to Facebook to invent yet another way to keep us all glued to the site. The social network has made the status update stickier with the addition of embedded games that people can play as they skim the News Feed or a friend’s Timeline. Friday, Facebook launched “feed gaming,” or the ability for users to anonymously play miniature versions of Facebook games in the News Feed or on Timeline with just a single click. Feed gaming is both a feature for application developers and users of the social network. Application developers, with a few code tweaks, can now embed sample versions of their games into the story updates users already post to Facebook, and thus use the game-lets to hook new users. So Joe Gamer plays Angry Birds as he normally would, but now when he gets a score he’s especially proud, he can post an update to Facebook challenging his friends to try and one-up him. The status update gets distributed, via News Feed and Timeline, to Joe’s friends who can then play the same level inside the update. Game makers actually have a few choices here, so keep an eye out for mini-games, game replays, and level high-score challenges. Angry Birds, Idle Worship, Tetris Battle, and Bubble Witch Saga are a few games already employing feed gaming, Facebook engineer Gareth Morris said in a blog post on the new feature. The addition of in-feed gaming is the logical next step for the social network, which has openly expressed interest in helping its games grow. Carl Sjogreen, director of product management for Facebook Platform, said at a conference in February that games are the reason millions of users keep coming back to the site. “It’s critically important to us that games are successful,” Sjogreen said at the time. “We have a whole Platform team focused on just making sure games are going well. That includes building games-specific features … to create discovery for games.” Of course, this all boils down to a new paradigm for game discovery on the social network. Facebook games find you and beg for just a second of your attention. A second turns into the promise of a few coins and soon you’re off installing the full version of the application to collect your rewards. Next you know, you’ve wasted away the workday trying to beat your buddies. Genius, right? Photo credit: Matt Harnack/Facebook Filed under: dev, games, social

Facebook testing new “star your close friends” feature

Facebook users who logged in last night may have caught a glimpse of a new feature on Facebook. The largest social network in the world is testing “Star Your Close Friends,” an experimental feature that will ensure you see more of your closest friends’ status updates. Star Your Close Friends is simple and intuitive to use. A new area simply appears at the top of your news feed with the title “Don’t Miss the Good Stuff.” When you move your mouse over images of friends, revealing a grey star. A click, and the star turns yellow, and you’ve starred that user. Now more of his or her status updates will appear on your Facebook wall. A Facebook representative contacted by VentureBeat told us that Facebook is trying to help users customize what status message they receive: “Yesterday we started rolling this out for some users to help them easily group their close friends into a list.” Facebook seems to be fairly intelligent about who it presents to users as potential “star-ees.” When I saw the feature last night, the friends I most often interact with were shown by default. But people can also search for specific friends to add ones that are not seen. One important thing to note: Your friends will not know whether or not they’ve been starred, eliminating a potentially sticky privacy issue. This new feature potentially solves two problems for Facebook: unseen status updates for close friends, and easy friend categorization. A starred friend. The first has been a problem for some time. As we know from Facebook itself, only 10 percent of your friends may actually see any given status update from you. The challenge is so severe that Facebook was actually testing a feature to allow you to pay to ensure that your status updates were noticed. But now, Star Your Close Friends will allow people to make sure they see important news from the friends they care about most, solving a large part of that problem, if only from the perspective of the person getting the status updates. The second problem, friend categorization, is more of a competitive pressure from Google+. Circles, the way Google+ helps you categorize your connections, has widely been admired and praised. Facebook tried to address this with Smart Lists, but not with any great degree of success. Star Your Close Friends, however, is extremely simple and quick — in fact, it’s easier and more intuitive than Circles. Instead of multiple circles, overlapping circles, and circles with different levels of status update visibility, Star Your Friends is simple and binary: friends are either in or they’re out. And a single click is all it takes. After starring friends, Facebook adds a new list in the Friends: Close Friends. A helpful pop-up tells you that “Now you can jump straight to your close friends’ photos and news. You’ll also get notifications whenever they post.” Interestingly, Facebook seems to be trying to limit how many friends you star. Not by imposing a hard limit, but by visually indicating in the interface that the user is almost filling up a limited space. Here’s what you see as you add friends before hitting the recommended maximum, and what you see after continuing to add friends. The +2 seems to indicate that you are possibly adding more than Facebook recommends. Star Your Close Friends is a very interesting new development. Would you welcome this change? I know I would. Photo credit: UggBoy/Flickr Filed under: social, VentureBeat

Facebook’s next big buy could be browser maker Opera

Facebook may be looking to buy browser maker Opera Software, according to a new report. A source told Pocket-lint that the social network wants to expand into the browser space and is looking to acquire Opera to do so. VentureBeat cannot independently confirm Facebook’s interest in Opera, and Facebook declined to comment on this story. Opera is a Norway-based public company traded on the Oslo Stock Exchange. The company reported revenue of $46.9 million in the first quarter of 2012, and has roughly 700 employees spread across eleven offices, including a satellite office in the U.S. Opera makes an extremely popular mobile browser, including Opera Mini for iPhone. Opera Mini had nearly 200 million users across Opera branded, co-branded, and operator-branded installs of the mobile browser in Q1 2012. While details on Facebook’s Opera interest are slim, we are certain that Facebook wants a piece of the browser pie, especially on mobile. In fact, months ago we heard a whisper that the social network was actually building its own browser. That rumor makes sense when you consider a few things. First, the company is expected to release a Facebook-branded phone this summer running some type of custom Facebook operating system, said to be a fork of the Android OS. It follows, then, that Facebook would want to control — read: profit from — how users browse and access its social network on mobile. A Facebook phone running a Google browser doesn’t sound quite right, now does it? There’s also this key detail: Facebook’s head of product Blake Ross, if you recall, co-founded Mozilla Firefox and helped build the Firefox browser. The browser guru came to Facebook after his startup Parakey was acquired by the then young social network back in 2007. But back to Opera. Here’s the kicker: Opera makes money on mobile, the very place that Facebook desperately needs to monetize now that it’s a public company. The software maker said it made $3 million in first quarter revenue from its mobile consumers — up 253 percent year-over-year — and $1.8 million from mobile OEMs. The company also netted $6.9 million in Q1 2012 revenue, up 303 percent year-over-year, from mobile publishers and advertisers. “Opera expects to monetize this user base and the billions of daily web page traffic generated by these users to a greater extent in 2012 compared to 2011 from advertising, applications and search,” the company said in its earnings report. But the fat lady has yet to sing in this acquisition play, so stay tuned. Filed under: deals, mobile, social

Dell in talks to buy Quest Software - report

May 25 (Reuters) - Dell Inc is in talks to buy Quest Software Inc, which had earlier agreed to be bought by Insight Venture Partners for $2 billion, Bloomberg reported, quoting sources.

Benchmark In San Francisco

Today Benchmark Capital announced with Mayor Ed Lee our long-term commitment to the City of San Francisco, opening a new office on the top floor of the Warfield Theater, in the heart of the Tenderloin district. It’s our intention to create a counterpart to our existing office on Sand Hill Road in Menlo Park, in keeping with the new spirit of entrepreneurship in the city. Follow the Customer Our move to the city speaks to this change in the entrepreneurial landscape. Two out of every three new investments we have made since 2009 have been in San Francisco. Our partners currently sit on more than 20 boards in San Francisco including Twitter, Yelp, Instagram, Uber, NewRelic, Zendesk, Dotcloud, Asana, OpenTable, DemandForce, NextDoor, ServiceSource, Lithium, Marin Software, 1Life, Second Life, Coverity, EngineYard, Couchsurfing, Grockit and Pipewise. Benchmark’s model of working shoulder-to-shoulder with entrepreneurs who aspire to change the world requires we be close to our customer, the entrepreneur. Our approach requires us to be available 24/7 to our entrepreneurs. In the past decade, this commitment increasingly means being in the city. Our center of gravity is no longer limited to the 5-mile radius around Stanford, and now includes fundamentally the 3-mile radius around Yerba Buena Gardens. What Changed? So, what changed in the last decade? We see several major factors driving the rise of San Francisco. 1. The primacy of Interaction Design The new digital landscape in which entrepreneurs operate is no longer dominated by sales-driven cultures, or by the need to deploy and maintain infrastructure. Instead, amazing products, products that are often bought rather than sold, dominate this new landscape. Designers of these products are increasingly in direct touch with their users. We have spoken of this product-driven versus sales-driven change, and it impacts every sector we invest in. Design moves to the center. We believe designers are choosing urban life in the city over suburban life elsewhere. 2. A deeper talent pool Google pioneered the bus service, and by 2007 25% of its company was being ferried to work. Other companies followed suit. Young engineering graduates could now live in an urban environment, get work done on the commute, and enjoy the pleasures of city life at night and on the weekends. This has expanded the pool of exceptional engineers in San Francisco and many of these people have either started their own companies or joined growing startups. The new wave of companies based in San Francisco is producing a generation of engineering leaders who have real ties to urban life. 3. A new model of production With the advent of the cloud and the proliferation of tools for distributed work, engineers can innovate anywhere in the world. Coding has become more social, more urban; it’s no surprise that the two leading companies in that initiative are both based in San Francisco (Atlassian and Github). This mode of production removes the need for the “bay of cubes”, the norm for many south bay engineering teams. 4. Re-urbanization movement in the United States The New Yorker had a fantastic piece on the re-urbanization of our country a few years ago. After decades of flight to the suburbs, American workers are waking up to the benefits of urban living, trading long commutes and larger houses for the dynamism and diversity of raising families in the city. 5. San Francisco government policy For all the positive forces, there is obviously a long list of things that need to improve in San Francisco. Transportation, crime, blight, tax codes, and education, to name a few. Enter Ron Conway. Ron moved to the city in the mid-2000’s, and took an interest in re-making San Francisco as the Startup Capital. He helped identify and catalyze massive support for Ed Lee as Mayor, attracting a number of firms including Benchmark in that support. Ed brings pragmatic, forward-looking views — in a city notorious for self-interest and cronyism, he operates in an endearing, selfless manner. Ron’s leadership took organizational form with the launch of sfCITI (@sfciti on Twitter) at the beginning of the year, creating a sustained effort to seize the opportunity in front of the city to become the innovation capital of the world. The Challenge & The Opportunity Despite the positive momentum, San Francisco’s rise could easily fall back and fragment if major changes don’t occur. One of the biggest challenges city-based startups face is the potential for distractions in city life. We’ve found open, contiguous floor space materially helps achieve the collective sense of mission and deeper commitment that avoids such distractions. Unfortunately, many of the offices in SoMa are chunked-up, and work against these cultural goals of young companies. But if you go west along Market Street, to the tenderloin and the civic center area, wonderful open floor space abounds. Yet this is ground zero for urban blight. The Warfield Our inspiration for the Warfield location comes from restaurateur and OpenTable board member Danny Meyer. Danny taught us in the context of opening new restaurants to seek locations before there is a “there there” and to play a civic duty in transforming abandoned or disfavored urban areas: “One of the things we love to do is come to a neighborhood before the rest of the world does. We did that with Union Square. We did that with Gramercy Tavern in the Flatiron district. We come down here to Battery Park City, there’s a real dearth of restaurants down here.” So, like Twitter last year, we saw an opportunity to go into a tough neighborhood, and to be part of the transformation. Twitter’s new headquarters are at 10th/Market (80kft+ floor plates), and the Warfield is at 6th/Market. We look forward to seeing you at the Warfield. Just don’t go to the door on the left or the right….

The inside story: How Facebook panicked and botched its IPO

There’s been a ton of coverage about the Facebook IPO disaster, but very little of it looks at the crucial point two weeks ago where things went terribly wrong. It’s becoming increasingly clear that Facebook itself messed up at that juncture. Facebook CFO David Ebersman The screw-up resulted in a major disappointment in Facebook’s stock debut: The stock’s 15 percent decline since the IPO last Friday may not in itself be tragic. But worse, lawsuits are flying saying that legal guidelines weren’t followed. And there’s the sad fact that regular mom-and-pop investors were apparently left with the more losses on average than large institutions who got privileged information. This all was aggravated by a separate annoyance: glitches in the Nasdaq stock market trading process, which caused delays in trade and cancel confirmations, among other things. However, based on a number of interviews VentureBeat has had with observers and other sources close to the process, it’s apparent that Facebook itself may be most to blame for the fallout. Facebook chose to be more furtive in public announcements about its business than it was in private talks with large investors. The decisive action by Facebook came on May 9, three days into the “roadshow,” which is the time when Facebook and its bankers visit major investors in hopes of getting them to buy the IPO stock. On that day, Facebook’s executives, led by chief financial officer David Ebersman, signed off on new language in the company’s updated IPO prospectus. In that May 9 update, Ebersman decided to use vague language when describing how the company’s second quarter was looking. According to the filing, specifically on page 57, Facebook said that it was experiencing the same trend in the second quarter that it had seen in the first quarter, that growth in “daily active users” (DAUs) was increasing more rapidly than the growth in ad impressions, driven by many users’ shift to mobile devices. The exact wording is here: Based upon our experience in the second quarter of 2012 to date, the trend we saw in the first quarter of DAUs increasing more rapidly than the increase in number of ads delivered has continued. We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed, and in part due to certain pages having fewer ads per page as a result of product decisions. Now Facebook is generally growing quickly — and its ads are growing, even if they are growing more slowly on mobile — and so this update itself didn’t send any alarm bells to most investors, and it shouldn’t have. After all, Facebook had long warned about this mobile problem, ever since the first IPO prospectus filing on Feb 1, that revenues could be negatively affected by its huge mobile growth, because monetizing mobile hadn’t been proven. (Indeed, VentureBeat was the first to report this on the day of the IPO filing.) Facebook’s lawyers may, in the wake of the legal mess it has gotten into, try to argue that the new May 9 language about “DAU’s increasing more rapidly than the increase in number of ads delivered” pointed to something more significant than Facebook had released before. But the reality is that this wording was just too vague to be construed by normal people as meaning anything more than what had already been mentioned before. The sad things is, this was such an important update for Facebook, its team must argued about it a hundred times before publishing. So why was it written as though it was purposefully trying to obfuscate? More on that in a sec. There’s been sloppy reporting about the May 9 update, by the way. The WSJ, the leading publication for many bankers, for example on Thursday implied that the May 9 update was the first time Facebook disclosed that the mobile risks “may negatively effect results.” But the WSJ is wrong. That wording had been in Facebook’s S-1s from the beginning. Take a look for yourself at the original February filing. (See pages 5 , 13, and 46.) The fact is, there is nothing within the S-1 update on May 9 that would give normal investors the sense that there had been a material change about Facebook’s revenue prospects. The more significant point is, on the next day, May 10, Facebook made private statements to a select group of banking analysts, telling them the revenue prospects had changed. This was arguably material information at the time — a big no-no. Here’s what happened on May 10: Facebook got on the phone with a select group of 21 analysts, including analysts of its IPO underwriters, and briefed them on what was really going on behind the S-1 update. Facebook executives guided those analysts through much more explicit material than the S-1 update contained, according to our sources, saying that Facebook now expected the second quarter to be on the “low end of the range” of the financial guidance Facebook had previously given them. VentureBeat has confirmed this wording with someone with direct knowledge of those talks. Of course, this new information prompted the analysts to take a look at the guidance Facebook had previously given to them, then estimate where the “low end” was, and revise their own forecasts accordingly. They did this beginning on May 10, as disclosed by leaks to Reuters. The banks now forecasted 30.4 percent year-on-year 2012 revenue growth on average, instead of the 36.7 percent growth previously expected. (Compare that to 2011, when Facebook’s revenue grew 87.9 percent year-on-year to $3.71 billion.) Let’s back up for a second. When Facebook gave its original guidance to analysts in March and April, at the start of the IPO process, it was on firm legal ground in doing so. Indeed, this guidance is a normal part of the process, described in good detail by Henry Blodget, himself a former Wall Street analyst, in his good post about the IPO process Tuesday. He covers a lot of ground that I won’t go over again here. However, Facebook’s subsequent guidance to analysts, made on May 10, “to the low end” of the earlier guidance, was not on firm legal ground, because this was clearly new information not already in the S-1. It was also clearly different than the general guidance made originally to analysts. The bankers’ downgrades beginning May 10 were significant, as we previously reported, and were shared with a limited circle of investors. The analysts also released lower earnings-per-share estimates, as well as lower revenue forecasts for the second quarter. The estimates ranged between 5.4 percent to 7.3 percent lower revenue for the second quarter than previously. Here’s are the second quarter revenue estimates, as leaked to Reuters: Morgan Stanley — $1.111 bln (new) from $1.175 bln (old) Bank of America — $1.100 bln (new) from $1.166 bln (old) JPMorgan — $1.096 bln (new) from $1.182 bln (old) Goldman Sachs — $1.125 bln (new) from $ 1.207 bln (old) Of course, this clearly became material information for investors. Facebook and its bankers, led by Morgan Stanley, were forced to respond to questions from key clients about the changed reports. We see that these key investors, once informed by these roadshows and reports, started to slash the number of shares they intended to buy. One example was Los Angeles-based Capital Research & Management which cut the number of shares it wanted after talking with the company and underwriters, according to the WSJ. But not every potential investor was privy to these revised reports. The mood of investors in IPO stock The question of what constitutes “material” information is an interesting one. The definition of material information is that “which would be likely to affect a stock’s price once it becomes known to the public.” SEC guidelines are that a company is not allowed to issue information that is materially different from that already in its S-1 prospectus. Now we’re hearing from sources that Facebook is arguing that guidelines around what constitutes materiality is disputed when it comes to the issue of financial guidance. Facebook could arguably say it didn’t know if its new guidance on May 10 was going to end up being material or not. Indeed, the Facebook IPO is unprecedented because this sort of change in guidance has never happened before, at least it has never happened this late in the IPO process. But precisely since that is the case, because Facebook was on shaky unknown ground, because SEC guidelines haven’t been tested specific around this particular area, Facebook should have made doubly sure to err on the side of caution. Indeed, a source at one of the underwriting banks we talked with could not give us a clear reason why Facebook should not have updated the S-1 with firmer trend data. (For more on this topic, see Bloomberg’s reporting on material information. It’s good as far as it goes, but it’s missing a clear reference to the fact that Facebook chose a weaker statement in its S-1 update than what it gave to analysts afterward.) We’re seeing all kinds of reporting about how the IPO legal process is a mess, and it’s true that IPO guidelines are frustrating. SEC guidelines do not allow analysts to print anything between when an IPO prospectus is filed until 40 days after the IPO. Yet they’re allowed to speak verbally to a select few of their clients. The bizarre rules are a result of previous regulation, created a decade ago, after abuses made by investment bankers in written reports during the dot com era. What Facebook should have done on May 9 is either update the S-1 with clearly-stated quantitative data, go forward with the IPO, and deal with the lower stock price — or else pull the IPO filing altogether and wait for a better quarter so as to get a better stock price. So why didn’t Facebook do either of those two things? Well, that’s the $100 billion question. One can only imagine the huge amount of pressure that the company was feeling. Facebook, a web site that prides itself on being able to see real-time data about users, traffic and advertising, clearly knew how the quarter was progressing. The roadshow came halfway through the quarter, and Facebook’s update on May 9 was clearly a sign that it realized it needed to say something about its deteriorating revenue situation. Now the following is just speculation, but it’s possible Facebook felt that if it was too explicit, the wording could torpedo the healthy IPO it had put so much work into (indeed, the CFO had been preparing for the IPO for at least a year). Facebook bear Sam Hamadeh This is interpretation taken by Sam Hamadeh, chief executive of PrivCo, a company that issues research about private companies. He says Facebook should have been clearer about the shift to mobile users, and tried to quantify the potential revenue in some way. Instead, he says, Facebook executives — led by Sheryl Sandberg and David Ebersman — initially appeared during the roadshow to blame the first quarter drop mostly on seasonal trends, and he bases this on sources he’s talked with who were present during the roadshow. He takes the skeptical view, which is that Facebook executives buckled under the pressure, and decided to try to sweep the seriousness of the mobile ad revenue situation under the rug, at least when it came to the S-1. It’s true that Hamadeh has been consistently bearish on Facebook, almost predictably so, and so it’s important to keep in mind he presents just one view. Whether or not this is true — that Facebook decided to say the bare minimum because it feared the consequences of doing otherwise — it’s the events that followed that made Facebook’s fumble on May 9 look so devastating. That subsequent analyst downgrades — and the realization that mobile problems were bigger than expected — suddenly shed a new light on previous Facebook actions on the mobile front. And this light doesn’t make Facebook look so good. Back on April 9, but already in the second quarter, Facebook announced a deal to acquire Instagram for $1 billion, and reports emerged afterward documenting that Zuckerberg had moved to seal the deal in a matter of days. Could this have been driven by panic reaction to internal metrics? The motivation around the Instagram purchase is relevant because it was so important in mobile. Facebook clearly had seen mobile usage growing quickly, and in particular had noticed Instagram’s mobile photo-sharing usage becoming a bigger and bigger portion of all stories posted on Facebook. This of course directly tracked the negative mobile trend in revenues, since photos are so hard to monetize with ads. And then there’s the Facebook acquisition of AOL mobile patents that came on April 23 for $550 million. Was this another panicked move, driven by a growing mobile problem, the seriousness of which only Facebook was aware of? That’s just the beginning. There are more questions than answers raised by the timeline released by PrivCo’s Hamadeh Tuesday evening on this site (scroll down). On Wednesday, May 16, two days before the IPO, Facebook chose to increase the IPO share offering by 25 percent. These 83.8 million extra shares came from insiders, including folks like Peter Thiel and Jim Breyer, who are on Facebook’s board, and who are almost definitely privy to the company’s true financial position. They more than doubled the number of shares they intended to sell. The private equity arm of Goldman Sachs, one of the lead underwriters, doubled the number of shares it offered for sale. Of course, no intent can be drawn from these actions alone. There may be other reasons they chose to release the extra shares. But it looks really bad given that Facebook executives now knew that the most U.S. investors weren’t fully privy to Facebook’s real, downgraded revenue outlook. “This stinks to high heaven,” says Hamadeh, of the extra share allotment. Facebook also set the number of shares it planned to offer to normal mom-and-pop investors — known as retail investors — to about 25 percent, much higher than is normal for IPOs. The cap was also raised for individual investors, so that they could now own 5,000 shares, up from 500 shares. Finally, Facebook CFO Ebersman decided to set the price of the IPO at $38, at the very top of the price range, which itself had already been increased from an earlier range. This, even though Morgan Stanley has since made statements that the $38 price took into account the lower revenue guidance data. Confused? You should be. The underwriting banks and Facebook have stayed mum on further commentary. The rest of the story is known: Since trading started Friday, Facebook’s shares have fallen hard. They opened at $42, and then fell and have languished in the low $30’s. Facebook shares closed at $33 yesterday. Facebook had misjudged demand, and it now has a lot of angry investors. Facebook now has a bunch of investigations and lawsuits on its hands. Investors filed suit Wednesday in Manhattan federal court and in San Mateo county superior court in California, alleging that the company and underwriters failed to properly disclose changes to analysts forecasts made at the underwriting banks. Facebook faces claims that could be at least $1 billion or more. To add insult to injury, as less-privileged investors complained about their investments going south, it emerged Wednesday that the main underwriting banks made $100 million in trades from the IPO, over and above the $176 million fee they charged for the process. Facebook declined to comment for this story. Yes, the legal process around IPOs is incredibly frustrating, and urgently needs to be looked at closely for ways to be reformed. But it’s also clear Facebook should have much been more forthcoming about its real financial fundamentals. If it had, it could have avoided this mess. [Chart image credit: Yahoo; Mood image: Kevin Dooley, Flickr] Filed under: deals, media, mobile, social

Fun Friday: Routines

Someone suggested to me in the comments this past week that this fun friday be about Routines. If I could recall who it was, I would give them credit. Maybe you can identify yourself in the comments. In any case, we are going to talk about routines today. Every weekday that I am in NYC, I start my day at 5am. I get up, walk upstairs to my office, take my synthroid, put on some music (turntable or tumblr/ex.fm mostly), read the morning news (twitter #discover, techmeme, hacker news), and then open up Typepad and start writing about whatever comes into my head. When that is done, ideally by 6am, I post a song of the day on tumblr, and then do some email. On tuesday and thursdays I do yoga from 7am to 8am, and I try to get out on my bike a few days a week as well. I mostly ride up the hudson river park bike path but sometimes I will ride down. When I am not exercising, I wake Josh up at 7:20am and then head downstairs to eat breakfast. My breakfast staple is Kashi Cinnamon Harvest Shreaded Wheat with a sliced banana on it. Then I get on my Vespa and ride to work. If it is too cold to ride the scooter, I walk to the L train and take it to Union Square. I like to stop by Tarallucci and get an espresso at the bar Roman style. Then I go to work. Work is usually 8:30am to 6:30am. It is meetings back to back to back to back. Then at 6:30pm, I head home, either by scooter or subway, and have dinner with my family. I don't work after dinner. I will do homework with my son or watch sports with him (or both). I am in bed by 10am. I might read a bit on the iPad or Kindle Fire but I am almost always asleep by 10:30pm at the latest. I will make an exception these coming weeks to watch the Thunder hopefully beat the Spurs and the Heat. That's my routine during the week when I am in home in NYC. I stick to it. I am not an organized person. But I am a disciplined person. My routine is the key to me getting things done. What are your routines?

Evonik owners confirm intention to float before summer

FRANKFURT, May 25 (Reuters) - The owners of Evonik , the RAG foundation and private equity firm CVC, on Friday confirmed they plan to list the shares of the specialty chemicals company on the

Yahoo! TimeTraveler: a travel app whose time has come

Question: what would you do with six hours in Amsterdam? Dubai? Barcelona? That is precisely what Yahoo TimeTraveler was created to answer. A few years ago I stopped for six hours in Amsterdam en route to a conference in Cairo. I took the train from Schipol airport into the city, picked up a ride on a canal boat, dawdled through the ancient streets by the Oude Kerk, and toured the Anne Frank house. But did I see the best of Amsterdam? Hard to say. Yahoo, which seems to be on a bit of a roll in the past few weeks, releasing “killer” mobile browsers and reinvigorating Flickr groups, released TimeTraveler for iPhone and iPod Touch today. With TimeTraveler, I’d have had a much better chance of seeing the best of Amsterdam that fit in my 6-hour slice. Using TimeTraveler is easy: input your destination, your starting point, and the time you have available. TimeTraveler will do the rest, finding points of interest, tourist destinations, and historic monuments. It will then map them into an itinerary tailored to your available time and desired route, which can be shared with friends via email, Facebook, or Twitter. Yahoo calls it “timed travel” … hence the app’s name. Part of the technology behind TimeTraveler is, interestingly, Flickr. Apparently, photos uploaded to Flickr with date, time, and geographical metadata are used in the calculation of what destinations you can expect to visit within a set period of time. As Shouvick Mukherjee, a vice-president for Yahoo India told The Business Standard, Time Traveler “computes through Flickr images which people have uploaded in the past and tells him the destinations he would visit, say in an hour.” Another clever feature is the ability to save your trips in the cloud. Once you publish your trips to Yahoo, they are accessible online as a permanent record of your adventure. Available cities include London, New York, San Francisco, Bangkok, Rome, Paris, and 23 more. More are undoubtedly on the way. Actual time travel, alas, is not. Image credit: Dave Highbury/Flickr Filed under: mobile, social, VentureBeat

When should you give up on an idea?

Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This is a tough question. There are lots of examples that support seemingly contradictory theories. Instagram pivoted before launch, and Pinterest refused to pivot for years. Many other startups pivoted too early or kept working on dead-end ideas for too long. If the pre-product/market-fit phase of a startup is about efficiently testing hypotheses, then continuing to test an idea only makes sense if you have a strong theory about what has gone wrong and how things will improve. Specifically, you should have a theory about: 1) how to modify your product, 2) how to modify your marketing/distribution strategy, and/or 3) how external events (a new technology wave, cultural events, regulatory change, etc) might make your product take off. In other words, you need a plausible argument as to why the future will be different than the past. Another way to think about this is using what Jeff Bezos calls the “regret-minimization framework.” Imagine you do give up on your idea. Have you explored most of its plausible implementations? Are you confident that another entrepreneur won’t come along and make it work? You’ll regret it more if you nearly created a big company than if you spent an extra six months iterating. Finally, beware of the temptation to get distracted by new shiny ideas. When you are deep in the weeds, new ideas seem refreshing but this is usually the false signal of “uninformed optimism” that accompanies all new things.

Pinterest Hires Facebook's Barry Schnitt to Lead Communications

Pinterest has hired Barry Schnitt as its new head of communications and public policy. Schnitt had been at Facebook for the past four years, and eight more before that at Google. He’ll start at Pinterest next month. (Excuse the inside baseball, but from a press perspective, Pinterest has been nearly impenetrable lately despite its wide usage and impact.)

A Poor Investment? VC Firm Targets the “Underbanked”

There’s a lot of money in poor people. KPMG reports that America’s 88 million consumers who are “unbanked” (no bank account) or “underbanked” (no credit) earn $1.3 trillion a year. At least one venture capital firm is out to make money helping them out. Despite the huge dollar amounts controlled by the underbanked, most financial institutions want nothing to do with them - too much hassle and not enough profit potential. Core Innovation Capital has decided to help. The Minnesota-based VC firm has raised $45 million in funds it plans to use to back startups that give low-income consumers somewhere to go for financial services other than the local check-cashing shop. “We operate as a ‘double-bottom line’ fund,” explains Core Innovation managing partner Mike Harris. “We seek excellent financial returns and a positive social impact on the lives of the underbanked." Emerging Middle Class The market opportunity is real, Harris says, and so is the social need. “This is an important category to target. It’s the emerging middle class of the United States.” There are more check-cashing outlets in the U.S. than there are McDonald’s and Starbucks combined. They target low-income people and charge very high fees. And in the eyes of many observers, they’re self-perpetuating: They grow their market as they serve it by making poor Americans even poorer. You may have thought debt bondage was a problem only in rural India. But it’s happening at a strip mall near you. “When someone who is underbanked goes to pay bills or cash a check, what happens to them? They have to pay a fee,” Harris says. “They don’t get air miles or cash rewards like you and me. They pay $2 to $15 in fees just to pay a bill. Or they pay 2% of their paycheck just to convert it to cash. Go to a payday lender and see what the interest rates are. It’s ridiculous. It’s a vicious cycle.” Core Innovation has funded three startups so far: SavvyMoney, a website with free tools where people who are in over their heads can start digging out of debt. Plastyc, which offers prepaid, low-fee, FDIC-insured bank accounts in the cloud, accessible online or via smartphone. L2C, a credit-scoring company that uses alternative data to identify responsible consumers who should get credit but don’t because they’re not on the banking radar. “Companies we invest in help people go from a vicious cycle to a virtuous cycle - and still make money doing it,” Harris says. “These are tech-based companies, innovators that are providing real value to consumers and developing long-term relationships with customers.” To find more companies like that, Harris and his Core Innovation partner, Arjan Schutte, have launched an annual competition, the Underbanked Innovators Challenge. This year’s four finalists are Helping Loans, Juntos Finanzas, TIO Networks and Sociogramics, a project of Match.com founder Gary Kremen that uses text messaging to bring personal finance tools to first-generation U.S. Latinos. Putting their compensation where their mouth is, Harris and Schutte peg their pay as VCs to the social impact their investments make. They collect information from their portfolio companies and submit it to an independent audit committee, which then helps to determine the partners’ compensation. Image courtesy of Shutterstock.

European Startups Need To Get A Valley Education, And Fast

This is guest post by Julia Szopa , program director at the blackbox.vc incubator in Silicon Valley which specialises in moving European startups into the US. It is not uncommon for European entrepreneurs to come to the Silicon Valley to learn how to launch globally. However, they often play “the startup game” by the wrong rules. With scarce venture resources in Europe, founders learn to compromise way too much and accept what’s typically unacceptable by those who build great, successful companies with global potential. Having talked to dozens of entrepreneurs from outside of the U.S. shortly after they arrive to take their first steps in Silicon Valley, I have observed a set of common false beliefs that most of them share. Even if they have great products, great teams, and endless motivation for working hard in their startups, the crucial first step for them should be to get rid of some misconceptions about the startup game… ASAP. Co-owning the company with your team is crucial to its success As Tim Draper noticed during his recent visit at [Blackbox Connect: http://blackbox.vc], the concept of co-ownership is often misunderstood and underestimated outside of the Silicon Valley. Giving stock options to employees with a vesting schedule, which is one of the most natural ways to establish a real sense of ownership and motivate, often takes the last place on their lists of priorities (if at all). There are countries, like Denmark, that explicitly discourage entrepreneurs from giving shares to employees, as their [tax laws: http://www.arcticstartup.com/2012/04/05/entrepreneur-tax-denmark] impose an additional 25% tax on any shareholder in possession of less than 10% of a company. In case of an exit, a stock-owning employee would owe the Danish government around 67% of what he’d made by investing his blood, sweat, and tears into building a successful startup. Many entrepreneurs from Europe often point out that potential employees they talk to usually don’t even recognize the value of owning shares in a startup. In the culture of scarcity the short-term tangible benefits matter much more, and too few success stories among their peers make them believe that having shares in a startup could not really bring any profit. Giving away too much for seed money limits your agility Standards of equity amounts given away to investors, angels or advisors in Europe are incomparable with those in the Silicon Valley. While the well-established YCombinator asks for somewhere between 6%-8% for $11K-$20K, there are multiple local acceleration programs in Europe that take as much as 10% for as little as $10K of seed funding. I’ve also met entrepreneurs who have given away 35% of their company during the seed round and they weren’t just rare foolish exceptions. While sometimes it’s crucial for startup founders to raise whatever seed money they can, they need to understand that giving away that big of a share of the company to investors will make it harder for them to raise future rounds of financing. Furthermore, it also minimizes the incentives to reap meaningful rewards, as it sets the frame for inequitable partnership between the entrepreneur and the investor. There are a couple of totally legitimate reasons for small markets VCs to demand more equity for less. First, they count on small exits, as the markets are smaller. Second, they have few competitors, so they simply can ask for more and still get a good deal-flow. But that doesn’t mean that the entrepreneurs have to accept these rules of the game, just because they have to prove the concept on the home market. Of course, having achieved decent traction in home country definitely makes entrepreneurs look more legitimate in front of the VCs from the Valley, but it doesn’t prove anything about their capabilities to scale to the global market. Thus the very common assumption that “first we need to prove ourselves locally, and then go global” is not always true. Sometimes it just makes more sense to start globally, and then localize (as most of the Silicon Valley startups do). Making quick decisions doesn’t always mean you are desperate Whenever a VC invited to give a talk at Blackbox Connect mentioned that it takes her or him around 4 weeks to close a deal with a start up, the audience reacted with huge disbelief. How come it can take such a short time? while back in their home countries they would talk to VCs or angels for months before they get funded. Apparently SV is much faster with making decisions, and the entrepreneurs are expected to act quickly too. Being able to make a decision fast is not a sign of desperation. Thinking small doesn’t protect you from failure Almost all of the companies that come to the Valley from a different startup ecosystem bring here the fear of failing with their startup. They pitch their tiny little projects — an app for this, an app for that — believing that maybe they will not change the world, but at least they’ll build something in order to start playing the startup game and move forward. And if they fail, that will be just a tiny little failure — much easier to digest. Non-US startups must learn that failing is always an option. While small failure is less painful, no big win comes from playing it too safe. To succeed in the world of global business, they must adopt the Silicon Valley mindset. That means making fast decisions, taking bigger risks, giving shares to everyone in the company, and being smart about financing their company growth.

Huddle Lands $24M Series C To Go Big On Enterprise Cloud Storage And Collaboration

Huddle, the six-year-old company that makes cloud collaboration software for the enterprise, has closed on $24 million in new funding, bringing its total equity funding to $40 million. The new round, which serves as Huddle’s Series C, was led by Jafco Ventures, with DAG Ventures participating along with previous backers Matrix Partners and Eden Ventures. WebEx founder Subrah Iyar also pitched in. Huddle’s last funding round, a $10.2 million Series B, was closed two years ago in May 2010. Huddle is co-headquartered in London and San Francisco and opened an office in New York City this month that will serve as a sales hub. According to the company, its revenues have tripled in size each year since its 2007 launch and had four quarters of record growth in 2011. The new money will be put toward growth: Huddle now has 100 full-time employees split between the UK and the US, and expects to triple its staff over the next twelve months, a spokesperson says. 80 percent of the Fortune 500 uses Huddle, the company says, and its customer list includes firms such as Procter and Gamble, Saatchi & Saatchi, NASA, and PriceWaterhouseCoopers. Huddle does not disclose its revenue, but co-founder Andy McLoughlin told TechCrunch’s Ingrid Lunden in February that the company was profitable. Huddle’s most direct competitor in size and function is probably Box, the Silicon Valley-based company that also makes enterprise cloud storage and collaboration software.

Prediction Startup Recorded Future Raises $12M From Balderton And Google Ventures

There’s a lot of talk these days about what you can do with “big data.” Here’s one of the more eye-catching uses: A startup called Recorded Future pulls data from around the Web to give customers a better handle on — that’s right — the future. The company just announced that it has raised $12 million in Series C funding from Balderton and Google Ventures. Balderton partner and former Business Objects CEO Bernard Liautaud is joining the board. Recorded Future says it’s continually scanning “tens of thousands of high-quality, online news publications, blogs, public niche sources, trade publications, government web sites, financial databases and more.” Then it analyzes that content and visualizes the data in a way that should help you answer questions about what’s ahead. For example, the demo video below includes mentions queries like: Where are world leaders traveling next month? What’s going down in Mexico City over the next 60 days? Which source best predicts correct Apple product releases? The Recorded Future website suggests that the company is targeting three main use cases — financial services, competitive intelligence, and defense and intelligence. The company has now raised a total of $20 million, with past investors including In-Q-Tel (the venture arm of the CIA), IA Ventures, Atlas Venture, and Google Ventures. Co-founder and CEO Christopher Ahlberg says Recorded Future is coming out of “semi-stealth mode” today — a fuzzy term, since the company has already attracted some customers (including the Defense Department) and headlines, but one that suggests we’ll be hearing more from the company soon.

Live Blog: Goldman Sachs Annual Meeting

Goldman Sachs's chief, Lloyd C. Blankfein, will probably face questions on some shareholder proposals, including one concerning the cost of the firm's lobbying efforts.

Following Goldman Sachs on Twitter

The Wall Street bank, which recently announced it was looking to hire a manager for social media, is ready to announce that it will be sending messages via Twitter.

China's CIC eyes up to $2 billion stake in Alibaba Group: sources

HONG KONG (Reuters) - Sovereign wealth fund China Investment Corp (CIC) CIC.UL is in advanced talks to buy an up to $2 billion stake in Alibaba Group ALIAB.UL, sources told Reuters, as the Chinese e-commerce powerhouse looks to secure the last of the funding it needs to buy back part of its stake from Yahoo Inc (YHOO.O). Yahoo and Alibaba struck a deal last week whereby the Chinese company agreed to buy back up to half of the 40 percent stake in itself held by Yahoo for $7.1 billion, valuing Alibaba at $35 billion. Alibaba is raising $4.6 billion of that target through an issue of preferred shares, bank loans and the sale of a stake to existing shareholders - Singapore state investor Temasek Holdings Pvt Ltd TEM.UL and DST Global. Another $2.5 billion in cash would allow Alibaba to fund the full $7.1 billion purchase. Sources with direct knowledge of the matter said CIC's $2 billion purchase of the Alibaba stake would help the e-commerce company complete its funding for the Yahoo purchase. Alibaba is also in talks with private equity firms that would assist in funding the remaining $500 million, sources said, including Bain Capital, Blackstone Group LP (BX.N), and Hony Capital. The sources declined to be named because the discussions were private. Alibaba, Blackstone, CIC and Hony all declined comment. Bain could not immediately be reached for comment. (Reporting by Stephen Aldred and Prakash Chakravarti; Additional reporting by Nadia Damouni in NEW YORK, Chyen-Yee Lee in HONG KONG and Gui Qing Koh in BEIJING; Editing by Denny Thomas, Michael Flaherty and Chris Lewis)

It’s Morning in Venture Capital

This article originally ran on PEHub. If you prefer the super short version – I’ve summarized the post in the final section. Many observers of the venture capital industry have questioned whether its best days are behind it. They are frustrated by the past decade of subpar returns for the sector. The most recent report to weigh in on the troubles of the industry was produced by the esteemed Kauffman Foundation. There are obvious reasons the industry has had less-than-desirable returns, including: massive over-funding of the sector, huge increases in inexperienced venture capitalists that took a decade to peter out, and the massive correction in the value of the public stock markets that closed many exit opportunities for half a decade. I can’t help feel a bit of rear-view mirror analysis in all of “VC model is broken” bears in our industry. I have been close to the tech & startup sectors for more than 20 years and I can’t think of a period in which I felt more optimistic about the innovation and value creation I see in front of us. Looking ahead at the next decade I am excited by what I believe will be viewed as one of the best and most rational investment periods for venture capital due to seven discrete factors: 1. The number of startups being created has increased by an order of magnitude Cloud computing and the open source movements have brought down the costs of starting a company by more than 90%. If you want to understand the details of why this is, I covered it in detail in this post, Understanding Changes in the Software Industry. This has led to the creation of incubators, accelerators and seed funds. From this we have seen a commensurate boom in the number of startup companies. When I was graduated from university in 1991 it was only the really committed who eschewed the corporate world for creating tech startup businesses. When I came out of college LA Law was one of the most popular shows on TV and made being a lawyer sexy, so most of my peers made that career choice. But in 2012 a visit to any major college in America will show you the massive increase in aspirations of our young talent to become the next Mark Zuckerberg and build a future Facebook. The movie, “The Social Network” might have had more of an impact on creating future entrepreneurs than any other event of the past 5 years. Thank you, Aaron Sorkin! Contrary to some press reporting, the boom in startups, the creation of accelerators and seed funds as well as the deserved popularity of AngelList do not signal doom for our industry. They are, in fact, great news for traditional venture capitalists. The most successful of these businesses will still need venture capital to scale their businesses. They need a combination of capital and experience to separate from the rest of the pack – the low cost of starting a business means it is even more vital to become the market leader more quickly. What the explosion in startups really means for our industry is a much bigger pipeline of potential deals if we VC’s can be patient. Yes, it’s true that FOMO (fear of missing out) is driving some irrational behavior and valuations amongst uber competitive deals and well-financed VCs. I’ve written in detail about that in this post, “On Bubbles, And Why We’ll Be Just Fine.” It doesn’t seem too irrational for seed or A deals, just a bit higher than the norm. And by the C round it seems like investors feel more confident in setting a fair market value. But in a race to be sure you don’t miss the next Pinterest, some people are paying huge premiums for “market risk” B rounds. Some will pay off, others will not. For those patient enough to source great companies at reasonable prices and prepared to weather the next inevitable downturn, I believe firmly there will be economic rewards for discipline and patience. 2. The number of venture capital funds has shrunk by two-thirds To really assess what opportunities the VC industry has over the next decade, one needs to first look at some of the root causes of poor returns in the past decade. The Funding Problem In 1998 there were around 850 VC funds and by 2000 there were 2,300. Thomson Reuters data shows that around $10 billion of LP money went into VCs per year pre bubble. By 2000 the total LP commitments had mushroomed to more than $100 billion. Everybody knows that most funds are 10-year funds (and that strangely 10-year fund really means 12-year funds). So it is unsurprising that an over-funding environment and the commensurate returns hangover would have lasted until about – well – 2012 Just why does over-funding dampen returns? For starters we saw a huge influx of inexperienced managers enter the VC industry proving clearly that being a VC is not a purely quantitative job. But on micro level, over-funding also creates performance problems for specific companies. In a rational funding environment you might see 3 or 4 great competitors slug it out over the market, each with enough funding to prove their performance until the next milestone where the market decides whether they deserve more funding. They compete on features, price and execution. In an over-funding environment companies are encouraged to eschew revenues in a land grab to acquire eyeballs, clicks, page views or whatever other vanity metrics give VCs the false comfort that they’re sitting on a gold mine. Try charging customers for your product when you have 12 competitors giving the product away free finances by $20 million of VC. The Exit Problem And of course the funding problem coincided with the stock market correction that took away most exit options for years to come. IPO markets had burned an entire cycle of retail stock investors and many institutional investors to boot. The numbers of potential buyers had decreased dramatically both because large companies were shedding jobs and because many past buyers simply lacked resources to make acquisitions. And in a market with too much capacity (too many startups) the leverage was completely in the hand of buyers at M&A activity finally picked up. So of course returns from 2000-2010 were subpar on average for the industry. Today’s Normalization Fast forward to 2012 and none of these conditions hold. While the number of startups has increased exponentially, the number of active venture capitalists has shrunk by more than 2/3rds in the past decade to less than 750 today and still shrinking. Put simply, more deals and fewer venture capitalists mean better access to deals, more stability for winners and great returns for the best in our industry. Money flowing into our industry has also massively downsized. LP contributions to VC firms shrunk from 2000 and by 2005-2008 had stabilized to around $30 billion per year. By 2010-2011 this had shrunk by half again, averaging under $15 billion. It’s also worth noting as data would suggest from this SVB venture funding report, lower costs to build tech & operate businesses implies the possibility of lower loss ratios in portfolios. It will take some time to prove out this hypothesis, but the data above suggests it may be the case. So it’s hard to make a compelling argument that the performance on average in the past decade will prima facie have any predictive powers in determining the next ten. In fact, the market conditions would argue for quite the opposite, which is what makes rear-view-mirror analysis so blurred. 3. There are 20x more consumers online In 1997, the year the Kauffman Report begins its analysis; there were 70 million users online globally. In 1998 it was 150 million, 1999 250 million and by 2000 it had crossed 350 million. Even at this staggering pace it still represented less than 6% of the world’s population. By the end of 2011 the Internet population was estimated at 2.3 billion, with 275 million in North America alone (source: Internet World Stats) and an astounding global penetration of 33% of the world’s population. Considering how much world poverty exists this penetration rate is truly mind-boggling. Put simply – doing business online is significantly more valuable than it has ever been. There is no sector of the economy that isn’t being transformed by the online community that is now voraciously consuming media, applications, communications and buying global products. To ascribe past poor performance in our industry to the current market situation we face is myopic. 4. We’re online all the time and at high speed It’s not just that more people are online, it’s that we’re online all the time. Internet usage a decade ago was less than 1 hour per day and was restricted to narrowband communications. Today we’re online 3.1 hours per day on average, and that’s excluding the other 13 hours a day where we have our mobile devices, our connected TVs, our iPads and Kindles and soon our cars connected to the web. The ability to interact, transact and disrupt is an order of magnitude greater at broadband speeds than at 56k dial-up modem speeds. Just how transformative is broadband? As of January 2012 consumers were watching 4 BILLION video views per day on YouTube. A decade ago the idea of even watching video online would have been laughable. THAT is disruption. And as the recent VC fundings of Maker Studios, Machinima, Movie Clips, Big Frame and Fullscreen will attest – opportunities for massive growth in our sector are anything but moribund. The video industry will be disrupted just as books, newspapers and music before it. And retail, financial services, hotels, the auto industry, taxis, flowers and every inefficient or protected industry out there is being altered by technology changes that change market dynamics and create opportunities for the innovative, the nimble and the risk takers. 5. Mobility really changes everything It’s not just that we’re connected to the Internet at higher speeds and for longer; we’re actually always tethered to the web. In fact, the majority of Americans are now carrying computers in their front pockets. The opportunity to transact at the point of purchase increases the sheer number of revenue opportunities. This world of local meets retail meets digital advertising portends to technology disruption and with it VC opportunities. This never existed a decade ago. Heck, this opportunity didn’t exist three years ago. According to Google data 30% of all restaurant searches now come via mobile devices. Our societal behavior is now to look up things we want to book or purchase at the point & time of need. The desktop web introduced banner ads that offered “brand advertising” opportunities akin to television. Mobile devices deliver “bottom of funnel” sales opportunities that deliver real & immediate economic results. Search for a restaurant, book a table, eat in 30 minutes. Search for movies times, book your tickets, see a show. Bottom of the sales funnel. The mobile world brings enormous business opportunities and changes to business models that were unthinkable when VCs made investments ten years ago that produced the last decade of results. And the future? Nearly 25% of US users access the web primarily through only mobile devices and these are our youth and thus our future. It is estimated that more than 30% of all YouTube videos are now being consumed on mobile devices and I’ve seen actual data that shows in some youth genres mobile video consumption now exceeds 50% of video views. When you look at the developing world this is the majority of users (due to lack of landline infrastructure) and it portends future opportunities in payments, entertainment, application development and services. This doesn’t seem like the end of VC to me, it feels more like the 2nd inning. 6. Everybody is now payment ready Often overlooked in the importance of what has changed during the past decade is that we’re all payment ready now. We’re all one-click away from buying, watching, renting or ordering just about anything. When you order an Amazon Kindle it comes pre-configured with your user name already configured into the device so that you can click a single button and buy shit. And buy people are doing en masse. It’s not a tablet – it’s an order entry device! A decade ago most of the country was fearful of entering their credit cards or using mobile banking. Today all of our banking and payment information is accessible online and we are one-click from buying from Amazon, iTunes, the AppStore and PayPal. Businesses are also one-click from advertising through Google and now Facebook. Web businesses can now grow revenue before they can even afford sales people. This trend is often overlooked yet the results or palpable. When businesses really work – they explode financially at a pace that we haven’t seen in history and with limited investments to prove out this case. If you think back to just the past couple of years we’ve seen enormous growth on limited capital in businesses like Words With Friends and OMGPop (both now Zynga) as well as Angry Birds. This has spawned growth in related VC-backed businesses like Burstly, TapJoy and Flurry who help enable real-time transactions in mobile apps. The whole ecosystem grows rapidly because the distance between, “I like this application” and “give me an upgrade” is one click with none of the traditional abandonment that comes with having to pull out your credit card. Consider this: 5 years ago VCs were debating whether US consumers would ever adopt “virtual goods” in the way that Asian consumers did and thus saw the popular rise of QQ (TenCent) in China (which did $5 billion in revenue in the past 12 months). Virtual goods are in fact booming on a global basis and in many instances deliver a much higher ARPU than advertising revenue. 2012 virtual good revenue is expected to top $12 billion this year. [thank you to Kidlandia for the chart] And here’s the thing – 55% of the entire market of purchasers are 15 years old or younger. There is no stronger evidence of the power of one-click purchasing (as these people clearly don’t have credit cards). Imagine how these consumers look in 10 years time. Will they really even understand cash? Unimaginable to you? Just remember that 10 years ago you had no: YouTube, Facebook, iPhone or iPad. In fact, you were cool because you had a Palm Pilot while your friends still used a Filofax (yes, you know I’m on to you). 7. We’re all socially linked And finally it can’t be ignored that we’re not only payment ready, but we’re socially connected. Look at the rapid adoption of Groupon, LivingSocial or Instagram as proof of how rapidly businesses can grow through viral means. It’s not just that businesses can monetize more easily, when people like products or services they are diffused more rapidly through the population than has ever been the case. Nowhere was this more evident than the rise of Zynga, one of the fastest growing companies in history. But this is also spreading through non-game types of businesses. Evidence Fab: Just 18 months ago they started selling products and through a unique offering and a flawlessly executed social model they are reportedly on par to cross $100 million in sales in 2012. That type of growth on limited VC dollars was unthinkable a decade ago. Morning in VC These seven factors are leading to better and more sustainable opportunities in venture capital than have been present at any time in our investment histories. We have lower costs to create companies – leading to more early stage innovation. We have a more normalized venture market with less capital and fewer firms. We have consumers who are online at higher speeds and for more of their days. People are connected all the time and when they’re mobile. Each of these pocket computers is payment ready & social linked. Given these seven factors – it’s hard to look in the rear view mirror and imagine you can see the future. I believe it’s truly morning in the technology sector. And I remain convinced this bodes well for our venture capital industry. Top image courtesy of Fotolia.com

DealBook: Regulators Ask if All Facebook Investors Were Treated Equally

Lawmakers are questioning a process in which the banks involved in Facebook's I.P.O. shared a negative outlook about the company only with select clients.

Congress to probe Facebook, underwriters for answers

Add the House and the Senate to the growing list of parties with serious questions and concerns about how Facebook, its underwriters, and the NASDAQ handled the most anticipated initial public offering in recent history. Both the Senate Banking Committee and the House Committee on Financial Services are now officially looking into issues surrounding the Facebook IPO. The committees will be conducting briefings with all involved parties, spokespeople confirmed in statements to Reuters. The committees have yet to schedule hearings or publicly state what specific issues are under review, but we suspect they’re especially curious as to wether Facebook and its underwriters violated securities law in the run up to its offering, as has been alleged in a shareholder class action lawsuit. “Effective capital markets require transparency and accountability, not one set of rules for insiders and another for the rest of us,” Senate Banking Committee member Sherrod Brown told Reuters. “There’s a lot that we don’t know about this IPO, but a lot that we do. We know that the SEC must fully investigate and take appropriate action if it discovers any violations.” The Financial Industry Regulatory Authority and the Securities and Exchange Commission said Tuesday that they will review allegations of impropriety around Facebook’s IPO. The congressional inquiries follow a tumultuous week for Facebook, which saw its share price plummet on Monday and Tuesday and only rebound slightly on Wednesday to close at $32. To make matters worse, as Wall Street shows signs of uncertainty about the company’s future, Facebook shareholders are more than a little disgruntled about being left out of the revised earnings estimate loop. They’ve filed a class action lawsuit against the social network and its underwriters for allegedly disclosing material information to select investors. Facebook declined to comment on this story. Photo credit: f-l-e-x/Flickr Filed under: deals, social

Facebook IPO Post Mortem – Killer – but not for the reasons you think !

1. Say goodbye to the individual investor on Wall Street. Whatever positive impression they had of the IPO market and the stock market in general was just torched to the ground. When everyone you know associated with the stock market is telling you and the media is confirming that this could be a huge IPO that will make money for those lucky enough to get shares and the opposite happens, goodnight. All confidence in the stock is destroyed. Put your money in the bank or if you want to gamble, at least slot machines in Vegas pay out 98pct. 2. The Valuation Bubble in Silicon Valley is bursting – but not for the reasons you think. Historically IPOs function as a means of getting stock to outsiders. People who were not sold/assigned/granted shares could only buy shares once they reached the public markets. The new secondary markets in private shares changed that. They allowed outsiders to purchase shares in a market with very little liquidity. The demand for shares outstripped the supply and you know what happens when demand outstrips supply ? The price goes up. So shares of FB on secondary market went up and up and up. (Just as LinkedIn had done before them, but it greater volumes) When it was time to go public the IPO had to be priced higher than the prevailing share price on the secondary market. To make matters worse, those folks who bought shares in the secondary private market, driving up the share price now had the shares they wanted to buy , so they were no longer going to be the buyers the IPO counted on to eat up shares in the open market. Can you imagine how pissed you would be if you bought a boatload of Facebook thinking you got in at a better than IPO price only to watch the price on the open market post IPO drop below the price you paid in the private market ? Ouch. The law of unintended consequences is that the dynamics for how private companies are valued and are able to raise Pre IPO rounds could quickly change if the prices and volumes on SecondMarket and its competitors declined significantly. 3. I always laugh at all the pundits /analysts who try to tell you what any non dividend paying stock is worth. Its a function of supply and demand. Its never fundamentals. Read what I wrote a long time ago about the stock market. In the case of facebook they put an ENORMOUS number of shares into the market. Too much supply. Valuation has no relevance what so ever. Conventional wisdom says the buyers of stocks will try to determine the value of a stock before they buy or sell and make the appropriate rational decision. Not even in a Richie Rich cartoon does that happen. 4. Mobile is going to crush Facebook. The logic for Facebook’s price decline is that they have a problem in mobile. They can’t offer all the games they can in a browser. They can’t offer the same ads or branding opportunities. All true. From the Wall Street Journal : “As more people gravitate to smartphones and tablets, they’re increasingly forgoing the desktop to the access the Web. Between 2008 and 2011, the percentage of U.S. adults who accessed the Internet from PCs daily grew to 62% from 54%. In the same period, the percentage of daily mobile Internet users rocketed to 26% from 4%, according to Forrester Research. “People see this modality of consumption shifting from the PC to mobile,” said Matt Murphy, a venture capitalist at Kleiner Perkins Caufield & Byers. “On top of that, mobile feels like it’s much more the kind of wide open that anybody can win kind of arena.” All true as well. However the same is absolutely true for every ad driven internet site. They face limitations in what they can offer on mobile vs what they can offer through a PC brower. Look at the Google search results on mobile. No where near the number of results. Thats fewer click and CPM opportunities and ZERO display ad opportunities. Of course Google has Android, but that still isn’t generating much , if any revenue for them and it isnt currently designed to. And then lets not forget Youtube. Everyone is supposed to be dumping TV and heading to video right ? Well how can that be if most online consumption is headed to mobile ? With so few mobile users having unlimited data plans, and that number most likely declining, then what is Youtube going to do when users start complaining and going nuts over the fact that they are having to pay for the data they use to watch Youtube mobile ads ? How many youtube ads have you seen on a mobile device lately ? Which leads to a much broader question. Just what percentage of PC Online usage will mobile displace ? Is it feasible that people will “cut the broadband cord” and live exclusively off of their mobile internet access ? Why not use your mobile as an in home hotspot rather than paying for 2 internet connections ? If you avoid streaming video and downloads its easy to stay within your caps. Do you know anyone that has cut their broadband access to go exclusively mobile internet ? Bottom line, if you think mobile will displace online usage from PCs then you should immediately short Google and other ad plays and buy TV stations and networks. If you can’t buy an ad effectively on mobile and no one is using a PC to connect to the internet any more, then the only way to reach an audience is going to be via good old tv. And all that over the top video noise, forgettabout it. I wonder what Netflix thinks about mobile vs pc online consumption ? 5. And in the interest of disclosure I bought 150k shares of FB. 50k shares at 33, 50k shares at 31.97 and 50k shares around 32.50. Its a trade, not an investment. Kind of like buying a Mickey Mantle, a Hank Aaron and a Barry Bonds Rookie Card knowing there is a card show in town next week

Why Startups Need to Control Their Own Destinies

Jesse Draper is creator and host of The Valley Girl Show, through which she’s become a spokesperson for startups and helped pioneer the way of new media content distribution. Formerly a Nickelodeon star, Draper is now CEO of Valley Girl‚ where she oversees the show and runs technology blog Lalawag.com. Silicon Valley is finally starting to have a real impact on the health care industry, and Practice Fusion, an Electronic Medical Records (EMR) company, is leading the way. In addition to replacing paper charts, its free, web-based product helps doctors with everything from appointment scheduling to prescription management. With major VC backing and vocal support from investors like Peter Thiel, the managing partner at Founders Fund and former CEO of PayPal, the company is positioned to scale quickly and dominate the digital health care revolution. According to Ryan Howard, founder and CEO of Practice Fusion, the startup already has 150,000 users and 34 million patients under management. That represents about 10% of the U.S. population and averages out to about 70,000 patients a day. It’s also connected directly to over 70,000 pharmacies across the U.S. SEE ALSO: Why Digital Medical Records Could Save Your Life How has Howard managed this rapid growth? “Everything comes down to people,” he says. “The right person can figure out the right process and system to implement.” He also acknowledges that when you’re fundraising, growing and hiring at a fast pace, there’s a certain amount of blind trust involved. “If you meet a venture capitalist, and you meet them for three meetings, and they put cash into your company and come on board, it’s like going to Vegas and getting hitched. The flaw with that is that in Vegas you can get divorced, but with board members you can’t.” In our interview, Howard advises aspiring entrepreneurs to “control your destiny by maintaining control.” According to Howard, that means “your composure, the way you address your team and work with them, the way you structure your board, all these things are super critical for the long term success of your company.” Sounds like a healthy health care company to me! More Video from The Valley Girl Show Why Sharing Is the New Search [VIDEO] Why Entrepreneurs Should Never Wait to Follow Their Dreams How One Startup Is Reinventing the Mail More About: health, healthcare, practice fusion, Startups, valleygirltv, videosFor more Business coverage:Follow Mashable Business on TwitterBecome a Fan on FacebookSubscribe to the Business channelDownload our free apps for Android, Mac, iPhone and iPad

KPCB’s Chi-Hua Chien: The Next Wave Of Tech Disruption Will Hit Commerce

Technology has helped to level the playing field across a wide range of industries, letting more individuals come to the table in fields such as publishing, entertainment and, of course, building web startups. And according to Kleiner Perkins Caulfield and Byers partner Chi-Hua Chien, the next space ripe for a big tech-powered wave of democratization is commerce. In an on-stage conversation with David Kirkpatrick at the TechCrunch NYC Disrupt conference Wednesday afternoon, Chien explained how tech has helped flatten a number of previously stratified spaces. The mid- to late-90′s saw the democratization of information — companies such as Google made data available to everyone, no matter where or who they were. After that came the democratization of distribution, with services such as Twitter and Facebook allowing anyone to broadcast their content and potentially attract an audience. The democratization of computing has occurred as well, with billions of people in the world now having access to computers because of the availability of low-cost mobile devices. Up next? The world of shopping and selling. “We’re now entering an era around the democratization of commerce,” Chien said. The past, he said, has been about “mass aggregation,” with companies such as Safeway and Wal-Mart rising to the top of the commerce space by simply being the best at aggregating a suite of products into one space. These big companies also built up their own brand names to make shoppers feel secure in buying things from them. Today, though, we are starting to “see an unwinding of aggregation of commerce as technology starts to disrupt” the industry, Chien said. “If you think about what a Wal-Mart does, it aggregates credibility and inventory,” Chien said. Credibility is the Wal-Mart brand name, and the inventory is simply products and storage. Today, credibility can be established by smaller players via social media, and real estate and inventory can be outsourced much easier. Chien pointed to two Kleiner Perkins portfolio companies to illustrate this movement: Square, which he said is democratizing becoming a merchant, and Zaarly for democratizing the ability to do a particular job. In a short conversation off-stage, he told me that Gumroad is also one of the Kleiner-backed startups that is leading the way toward big commerce disruption. Looking at Kleiner Perkins itself, Chien not surprisingly declined from discussing the lawsuit filed by investment partner Ellen Pao (the news of which TechCrunch was the first to break yesterday) during his fireside chat. But, he did shed some light on the firm’s larger strategy, in particular its increasing focus on making digital investments, after a few years of being more well-known for making moves in the green tech space. “In the last five years, [Kleiner has] added four investing partners focusing on consumer digital,” Chien said.

The Facebook I.P.O.'s Potential Legal Exposure

The success of shareholder lawsuits is likely to come down to whether there was information provided that needed to be disclosed to all investors and whether Facebook should have given more specific details.

YuMe Adds Another $10 Million From WestSummit Capital

Online video advertising startup YuMe has picked up another $10 million in financing from China-based investment firm WestSummit Capital, closing out a $22 million strategic round that was first announced last November. The round was led by Samsung Ventures and also included Translink Capital. YuMe founder Jayant Kadambi confirmed the raise, and told me by email that the funding will be used primarily to expand into more connected devices. YuMe provides a platform for delivering ads against online videos, but has recently been adding support for connected TVs. “[W]e are using to expand our Connected TV business across OEMs and publishers globally. We are continuing to expand our business out of our Chennai development labs, as we see tremendous media business growth opportunities across all of Asia,” Kadambi wrote. That’s the primary reason for Samsung’s interest in YuMe, as well as a previous strategic investment from Intel. Other YuMe investors include Menlo Ventures, Accel Partners, Khosla Ventures, BV Capital, and DAG Ventures. Altogether, YuMe has raised nearly $75 million since being founded in 2007.

Airtime nabs $25M weeks before launch, snaps up social experience startup Erly

Sean Parker’s mystery video startup AirTime is set to debut on June 5th, but that’s not stopping the company from making news today. AirTime has received $25 million in second round funding led by Kleiner Perkins, and it has acquired the social experience company Erly, TechCrunch reported last night. The company later acknowledged the news on its blog (but didn’t reveal the funding amount). Other investors include Andreessen Horowitz, Accel Partners, Google Ventures, and Social + Capital. Erly was founded by former Hulu CTO Eric Feng, who could potentially bring much to the much-hyped AirTime. Beta testers have reported that Airtime is like Chatroulette with a layer of interest mapping, and with his experience building Hulu Feng could help the company to scale and build a robust community. “Erly brings demonstrated consumer products expertise, video experience, and technical leadership to Airtime, and we couldn’t be more proud to welcome the newest members of our family,” Airtime wrote on its company blog. Parker joined up with his Napster co-founder Shawn Fanning to create Airtime, which previously raised $8.3 million in funding. Filed under: deals, media, VentureBeat