We are in an era of “Hyperscale companies” such as Amazon, Facebook, Google, Microsoft and Apple that limit opportunities for startups warns Sam Altman, head of Y Combinator, Silicon Valley’s influential investment group, accelerator and educator.
The warning was part of a long 2017 YC Annual Letter:
Altman wrote: “We’re now in the era of hyperscale technology companies…
Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages.”
“I expect that they will continue to do a lot of things well, have significant data and computation advantages, be able to attract a large percentage of the most talented engineers, and aggressively buy companies that get off to promising starts."
This situation “is unlikely to reverse without antitrust action.”
Chelsea Peretti (above) a comedic actress, introduced the 10th Annual Crunchies — awards celebrating startups and VCs in Silicon Valley — and managed some decent jokes poking fun at the techie audience and coming up with some great app ideas. (The final one is a killer app — people will need full-cycle tracking of nutrients to create total body datasets. See my video here.)
Diversity was once again the bold theme of the event as seen in the careful selections of the nominees for the awards. Time and again the stage was filled with winners: startup teams of mixed color and gender.
People viewing from outside Silicon Valley would be tremendously impressed that our young startups are so progressive and clearly want to build the future the right way.
It reported its slowest rate of growth with the number of monthly active users up by just 1% or about 2 million to 304m compared with Q1. The company has lost several senior executives this year including its CEO. Twitter's share price at $34 is well below its IPO debut of $45.10.
Foremski's Take: Twitter has become better at monetizing its large numbers of users but the lack of new user momentum, and endless leadership problems have left investors exasperated with the lack of progress.
I'll be at the Startup Voodoo conference in St. Louis on June 18. Here is an interview by conference co-founder Aaron Perlut, with one of the keynote speakers: Maxine Clark, who pioneered crowd-sourcing in 1997 to build a very successful business.
By Aaron Perlut
Veteran retail entrepreneur Maxine Clark is one of our keynote speakers at the 2nd annual Startup Voodoo innovation, entrepreneurship and startups conference in St. Louis June 18.
Not familiar with her name? Well, you should be. Because while crowdsourcing is today all the rage as a means of corporate engagement with customers, Clark’s Build-A-Bear Workshop – with more than 400 locations worldwide — has been at the forefront of the concept since 1997.
Alan Boehme, CIO and Chief Innovation Officer at Coca-Cola Company, spoke at IDG's CIO Perspectives conference in San Francisco. Maryfran Johnson, Editor-in-Chief of CIO Magazine, introduced him by saying he had "cracked the code" on startups.
I was skeptical there would be much from Coca-Cola after the fallout from the innovation of "New Coke" in 1985 but I was wrong. It was a surprisingly interesting presentation and refreshingly frank in places.
Rice University, MIT and the University of Richmond, today at SXSW unveiled their annual list of ranked startup accelerators. Y Combinator was top last year but this year it reclassified itself as a seed fund.
The top 20:
Shares in Box jumped strongly in their first day of trading reaching as much as 77% above the $14 initial pricing to $24.73 and a valuation of about $3 billion. It closed at $23.23, up 66%.
The strong showing confounded some skeptics who pointed to Box's very high marketing costs, which eclipse revenues by a huge margin resulting in a net loss of $121.5 million on $153.8 million in revenues for the nine months ending October 31, 2014.
Guest post by Chris Knight
It was a packed house earlier this week, for San Francisco's first showcase of top startup talent being accelerated in by Start-Up Brasil and its government partners. The passion and elation in the air reminded me of Silicon Valley startups in the 1990s.
And judging by more than 100 VCs, bankers and corporate fund managers from the likes of Accel Partners, American Express, GE, Intel, Redpoint, Samsung and Silicon Valley Bank - many industry watchers had interest in hearing more from eleven of Brazil's top startup founders.
Huddle, the UK founded enterprise collaboration service, has raised $51 million to finance a large expansion.
Headquartered in San Francisco, Huddle is experiencing a boom in business and says the capital will help it grow at a faster rate. In 2014 it won seven of its top ten customers and business tripled from 2013.
Alastair Mitchell (above), CEO and co-founder, said, "Enterprises are frustrated with endless rounds of emails, and are discovering how Huddle lets them collaborate internally, and with external partners, and to do it inside a secure environment."
Uber senior executive Emil Michael's comments that journalists who criticize Uber should have their personal lives investigated and publicized has created yet another controversy for the ride hailing app startup.
Ben Smith at Buzzfeed reported:
The 25 winners of a startup competition that attracted 2,000 entrants, were announced this week at the Tibco Now conference in San Francisco.
(Tibco Software is a former sponsor of SVW.)
I had a fabulous time two years ago and made many new friends and contacts and came away very impressed with the local startups and the serial entrepreneurs.
Over the course of my career as a journalist I've met with many thousands of CEOs of large and small companies and I know quality when I see it. On my recent trip to St. Louis and my brief few days with the city's startup community, I was very impressed by the quality of the startups and also by the success of some.
In Silicon Valley the VCs want startups to come to them and are famously averse to driving beyond a 20 mile radius of Sand Hill Road. Their belief is that the best deal flow always comes through Silicon Valley so all they need to do is sit tight.
But that's not true, there are fantastic startup teams in St. Louis, and many other innovation centers I've visited over the past ten years. There are many excellent startups that will never come to Silicon Valley for one or many reasons.
And that means Silicon Valley VCs are missing out on having access to all the best deals. The VCs know that their biggest bottleneck is a lack of great startup teams, it's not a lack of ideas. St. Louis is just four hours away from SFO.
Dennis Lower has spent nearly three decades building research parks around the US and he's at the peak of his talents and at the forefront of a very important trend: building research parks in urban settings. The goal is to build resilient communities that generate jobs from a highly skilled workforce and the spinoffs of startups.
He's responsible for the Cortex Innovation District founded in 2002, a huge area most of which is a building site with half-finished and nearly finished buildings sprouting up between buildings already staffed with researchers.
The central goal of my St. Louis trip was to help with Startup Voodoo, the launch of a new conference focused on helping to grow the local startup community by bringing together investors, mentors, and startups to share their lessons and encourage each other to succeed.
(From my series on St. Louis startups.)
On my first day in St. Louis I was part of a panel at a meeting of the local chapter of the Social Media Club at The Wheelhouse: "The Integration of Social Technology and the Startup Mindset."
Ginger Imster (above) is Executive Director of Arch Grants, funded by four St. Louis philanthropists with the aim of encouraging innovative ventures that boost the diversity of tech jobs and the diversity of the population, in the St. Louis metro area.
Pixel Press is a local star startup because it's raised $750,000 and has a very cool technology that converts simple drawings into video games simply by using square-lined drawing paper. It has a joint project with Cartoon Network.
Bud Albers, former Disney CTO, angel investor and CEO of ClickWithMeNow.
My first meeting in St. Louis also turned out to be one of my favorite interviews, with Bud Albers, a veteran of many large corporations and mentor to many local startups.
I recently returned from 4 days in St. Louis, meeting the local startup community and contributing to a new conference, Startup Voodoo organized by local tech news site Techli and Elasticity, an innovative digital marketing agency.
Next week I'll be speaking at "Startup Voodoo" a new conference in St. Louis organized by Aaron Perlut and his team at Elasticity, a digital marketing and PR firm. I experienced some of the energy and the spirit of St. Louis at a recent dinner in San Francisco organized by Washington University, which featured CEOs of 21 startups, and attended by alumni now living in the San Francisco/Silicon Valley area.
I recently met Jeffrey Shaw (above) , CEO of Underground Cellar, a startup focused on helping wineries sell wine online. He and his team has developed a great technology platform to allow wineries to market themselves and sell their wines but it is also using its own platform to sell wine on behalf of many wineries -- using a clever business model.
Life is good for Marcin Kleczynski, from Chicago. At 24 years old, he recently raised $30 million for his anti-virus startup Malwarebytes, and he won Ernst & Young's Entrepreneur of the Year 2014 Northern California region award for emerging sector companies.
He has also spent nearly a decade in business making him one of Silicon Valley's veteran startup entrepreneurs and one of its youngest. He's has several decades ahead of him to achieve even more. Here's my notes from a recent conversation with Marcin.
NamePlace, founded by Lisa Padilla (above) CTO/CMO, and co-founder Ron Brown CEO, has come out of stealth mode with an interesting service aimed at helping thousands of cities in the US gather ad revenues from assets that they have in abundance: parks, community buildings, civic programs, Little League clubs, etc.
It's an online marketplace for offline civic marketing: a huge catalog of municipal naming rights. And it offers large brands and local businesses, a rare opportunity to be seen doing good, and seen to be involved in supporting the vitality of local communities. Here are some notes from my recent meeting with Lisa Padilla:
Casey Newton in The Verge has a great story about how Uber, the San Francisco ride app startup, is trying to sabotage its rival Lyft by hiring people to call and cancel thousands of rides.
So much for the top innovator wins in Silicon Valley. These are very unethical and sleazy tactics:
Marc Canter, a leading pioneer of multimedia technologies with his work at Macromedia 25 years ago, has launched Interface, a startup focused on authoring mobile apps across all major platforms.
Canter says he hopes to emulate the power and popularity of authoring tools he helped develop at Macromedia, which led to an explosion of creativity in producing interactive media. At the time, CR-ROM based media titles were the only way rich interactive media could be distributed and presented on a computer. San Francisco in the late 1980s and early 1990s was at the epicenter of CDROM multimedia development and Canter was its leading figure.
Sol Tzvi is CEO and co-founder of Genieo
Genieo, an Israeli startup developing AI software for consumers, has been acquired by Somoto, a publicly traded software company specializing in toolbars for monetizing users' web browsing.
The deal is worth $34.12 million — $20m in cash and the rest in shares. Aviv Levy, reporting on Globes,
In 2009 I attended The Europas Awards in London (above), celebrating the best European tech startups. It was a very boozy, rowdy, and fun event presented by Mike Butcher, Editor of Techcrunch Europe.
I couldn't make it this year but I'm sure that the 2014 awards very much the same in tone and booze. Mike Butcher was the MC, and even one of the winners was the same: Soundcloud. The other 2014 Europas winners included: FoodPanda, Babbel, Startup Bootcamp, Brainient, Supercell, EyeEm, GoCardless, DataSift, Petcube, BlaBlaCar, BigHealth, ZenMate, Bitstamp, Hailo, Evrythng, Swiftkey, FarFetch, CodeClub, Index Ventures, and Telegram.
[At the time of writing I found no US coverage of today's Europas Awards, not even at Techcrunch. I scooped the US press. It shows how little interest there is in European startups.]
It's good to see the French bringing back "entrepreneur" -- a word that the rest of the world has embraced more readily than the French themselves. It's not "très cool" to be an entrepreneur in France because the social norms frown on too much personal ambition, and corporate jobs have a higher social status.
Monday evening at San Francisco's Le Bastille restaurant I met some French founders and spoke with a couple of French business students about their impressions of Silicon Valley.
I recently met with Vineet Jain, (above) CEO and co-founder of Egnyte, which offers file sharing for enterprises, with a hybrid cloud and data center model.
My recent post about startups having to sell because they can't get to scale, caught the attention of Jain's team and we met to discuss the company's strategy. It is competing against some extremely well funded companies such as Box and Dropbox. Here are some notes from our conversation:
It’s taken a while to do it but finally NASDAQ Private Market has launched as a “new capital marketplace for private companies.”
I had the scoop on this back in late 2012. Robert McCooey (above), NASDAQ’s senior vice president of capital markets and new listings, told Silicon Valley Watcher about the plans. Exclusive: NASDAQ Plans To Unify Private Shares Markets.
AlertID, based in Las Vegas, is expanding its services. It acts as a crime alert service for about 1 million users and covers about 85% of US zip codes. It's also a messaging platform for neighborhood watch groups and local residents.
However, the 3-year old company faces competition from a younger startup Nextdoor, which raised $60m five months ago, from top Silicon Valley VC companies. I recently met with AlertID CEO Ken Wiles (above), here are some notes from our conversation:
Little Bird, an Oregon based startup that identifies experts on Twitter, has raised $1.7m in new funding, reports Lora Kolodny at Venture Capital Dispatch on WSJ.com:
Startup Grind 2014 Conference is coming up next week February 3-5. It was sold out last year as 1,200 founders took part in an intense, and highly participatory educational program on how to run a startup.
This year the speaker list is even better. And the networking is better, too.
We've been promised some of the last tickets, along with a 15% discount.
The best value is the $600 co-founder ticket deal - bring your business partner. Don't dally. I'll see you at the Computer History Museum next week.
Heather Knight’s report on SFGate.com highlights the plight of local people forced off Mid-Market Street by police.
Police Chief Greg Suhr said the influx of homeless people into neighborhoods around Market Street is to be expected - if they're moved off the main drag, they have to go somewhere.
Caleb Garling at SFgate.com is on the trail of stealth startup Zee.Aero, which is building a personal flying aircraft (above), that can park in a normal car parking space. He thinks it's probably linked with Google:
SnapChat is an "ephemeral" photo and video site that is currently widely popular by users and also very popular with investors.
Kara Swisher reports on a rumor of a deal that could value SnapChat at $3.5 billion compared with $800m just a few months ago:
The FBI's shutdown of web site Silk Road is a hollow victory in the hugely expensive war on drugs, which has consistently failed to stop the drug trade, or stop criminals from amassing huge amounts of wealth and ordering more than 60,000 murders in Mexico alone.
Silk Road had some positive aspects. The FBI admitted that Silk Road vendors provided high quality drugs. And the prices were far below the street, reducing the money fueling the trade.
Twitter claimed that an advertiser received 25 times the number of tweets it actually received and it inflated another metric by 680 million until the San Francisco Chronicle double checked the company's figures.
Jeff Elder at the "The Tech Chronicles" on SFGate.com reported: Twitter posts inaccurately high metrics about its ads, changes them after questions
Max Levchin, the co-founder of PayPal and a serial entrepreneur, spoke about his ambitions at Techcrunch Disrupt conference.
Fosmo Med is a Silicon Valley startup using a technology called forward osmosis to dramatically reduce the costs of shipping IV bags used to fight outbreaks of cholera.
Here's more details and a plea to help fund the project:
Here is a fascinating interview with Paul Graham, co-founder of Y Combinator, in Inc. magazine, by Issie Lapowsky. (Hat tip Matt Rosoff.)
When did it become the dream of young people to run off to Silicon Valley and found a startup? What happened to make kids' dreams so mundane?
Paul Graham has been working with hundreds of young business teams for many years and he has lots of interesting things to say in this interview. Here's a few extracts from: Paul Graham on Building Companies for Fast Growth | Inc.com:
Nick Statt at CNET, reports that among the latest batch of startups from Y Combinator there were a small number focused on minorities and the elderly.
Among the 49 startups at the recent Demo Day, there were four that had unique services solving "real world" problems: Beyond apps: These startups are tackling real-world problems
Thursday evening Amsterdam based Twibfy launched what it calls an "inspirational" platform that allows its users to easily collect and share collections of their own images, and images they find online.
Enigma launched today, with an intriguing service: the New York based startup offers an easy way to search through more than 100,000 public databases.
Chris Velazco at TC reports:
Josh Constine wrote about startup State this morning:
Jawbone's founding CEO Alexander Asseily thinks everyone deserves a powerful voice online, so today he's launching State, a structured opinion-sharing network where people don't need to follow you [to] see your [opinion].
I had the recent pleasure of meeting brothers Alessio and Luca Morena (above) who are co-founders of iCoolHunt, an Italian startup hoping to break into the lucrative $36 billion market for providing corporations with reports on what's trending in their markets.
Danuta Pisarenko tells me there's a bunch of Ukrainian startups in town:
I’m very excited to introduce Happy Farm, the only Ukrainian tech incubator where entrepreneurs live and work 24/7, that brings Eastern European startups to live and learn in the Bay Area for one month (Jan 28 – Feb 28), with an American board of directors from Google, eBags, Time Warner, Fotki.com, and top-notch mentors, many from the heart of Silicon Valley.
Umix.tv - social TV.
Beondesk - personal virtual desktop.
Advice Wallet - referral marketing platform.
YourSize - biometric e-passports database.
SvitStyle - women clothes aggregator.
Ugift - gift certificates service.
My TeamVoice – free professional group voice service for gamers.
Here's where you can meet them:
February 14: Falling in Love with Ukrainian Startups nestGSV 5:00 p.m.
February 18: Start Ukraine Up Runway Incubator 6:00 p.m.
The Colorado based Unreasonable Institute has taken entrepreneurship literally and put together more than 1,000 people: the founders of 11 startups, representatives from SAP and Microsoft, several dozen mentors and instructors, along with several hundred university students from 200 schools, on a ship circumnavigating the globe.
It's a project, called "Unreasonable at Sea" and will last about 100 days having set sail from San Diego in early January and calling on 15 ports in 12 countries ending in Spain in April.
I spoke with some of them during a stop in Hong Kong. Here's my notes:
San Francisco based New Media Ventures is a network of 60 angel investors that funds startups that allign with its mission to drive "political innovation."
So far it has invested about $4 million in ten startups such as Upworthy, which was featured by David Carr in the New York Times; NationalField, TurboVote and the Story of Stuff. NMV looks for startups that combine new media with technology, and are passionate about shaking up the political process through greater citizen engagement.
Fast Company's Ariel Schwartz recently profiled NMV:
I'm a big fan of the team behind today's launch of Swipp, a service that aggregates people's rating of any product, service, person, city ... anything.
Swipp's ambition is to become a global platform that connects and collects the world's "social intelligence" about anything that can be named. A "swipp" is a vote on a plus five to minus five scale.
I recently met with Swipp's co-founders Don Thorson (above) and Charlie Costantini. They've worked together in previous ventures, the most recent was Ribbit, sold to British Telecom for $105 million in 2009.
Here's some notes from our conversation:
Marcus Nelson (left) founder of Addvocate and his brother Angus Nelson, Community Manager at Addvocate.
Addvocate, a service that allows companies to gain better control and metrics over what their employees share in social networks, launched today as a "paid beta."
The startup was founded by Marcus Nelson, former social media director at Salesforce.com. He said that his inspiration for Addvocate came from his work at Salesforce and frustration with not being able to track thousands of Salesforce staff across many social media channels.
The goal is to enable Addvocate users to figure out how well their staff are doing at helping to publicize key messages, and to help those employees that are not very fluent in social media and need some guidance.
Although Addvocate is still in beta it decided to let paying clients use the service. Mr Nelson says that asking for a payment, which can be any amount determined by the client, it stops "those who kick the tires and zap our precious resources."
Big data is a ubiquitous term in a ubiquitous world of massive amounts of data but it's meaningless if it can't be converted into actionable data.
To become useful data is a tough job requiring an understanding of the underlying data and how it fits together and what questions to ask. GoodData is a company that seems to have solved some key aspects of big data, such as how to generate high quality sales leads and figure out the best ways to close deals.
I recently spoke with Roman Stanek, CEO and founder of GoodData. Here are some notes from our conversation:
A stuffed squirrel sits on the wall behind Delphix founder and CEO Jedidiah Yueh.
I meet with huge numbers of companies every year but it's rare for me to come across a company that excites me as much as Delphix - easily my choice for Silicon Valley Watcher's 2012 Startup of the Year.
Delphix founder Jed Yueh is just 37 years old and will undoubtably become one of Silicon Valley's next generation of leaders and success stories. His focus, his discipline, and his intellect are striking -- and it's these qualities of leadership that sets Delphix apart from the many thousands of startups in the extraordinary global innovation engine that is Silicon Valley.
I visited the company earlier this year shortly after it had raised $25 million in an over-subscribed C-round led by Jafco Ventures, with Battery Ventures joining existing investors Greylock Partners and Lightspeed Venture Partners.
I was impressed by the company's technologies and its business strategy. Mr Yueh is determined to build, rather than sell, one of the next great tech companies of Silicon Valley.
The consumer web has a bright future, says Dave McClure (above).
Dave McClure, the highly successful Silicon Valley Angel/Micro VC investor, published a passionate post about the prosperous future for the consumer web, and criticized other investors for moving away from the sector.
Mr McClure writes:
One of the largest startups in and around Silicon Valley is GE Global Software in San Ramon, California, a brand new division of giant General Electric, built from scratch into an organization of 400 engineers, growing to as many as 800 software engineers and researchers by year end.
Betting big on software is a key business strategy for GE. The business group's annual revenues were more than $142 billion in 2012. In 2008 they were nearly $180 billion. Software businesses have high profit margins especially if they can be applied across a large user base.
Software is a far more scalable business than services, which are constrained by staff numbers. And software can be used to help scale some types of services and save on staff costs, all great reasons for GE to invest in software.
Its goal is to create a unique asset, a cutting edge software group capable of supporting the many varied business groups that make up GE's industrial conglomerate. From monitoring jet engines to building sustainable energy projects, the breadth of GE's software needs cross a wide spectrum of applications.
It will require common software platforms that can integrate many different applications, plus development of cutting edge user interfaces, and the integration of hundreds of tools and third party technologies.
It's a massive undertaking that's being led by William Ruh, vice president and director of the Software group. He was formerly vice president at Cisco Systems, where he headed global development of services and solutions.
I visited GE Software at it's headquarters in San Ramon (above), a place that locals like to describe as being half-way between San Francisco and Silicon Valley, (if you head 30 miles east of both).
Here are some notes from my meeting with Mr Ruh (photo top).
Mark Pine is a former venture capital investor who decided to come out of retirement recently to lead Ubokia, a startup that creates flexible marketplaces around any type of product or service, with the buyers setting the terms of the deal, and with multiple suppliers then competing for those deals.
Mr Pine used to work at Sybase and OnDisplay, and at Sigma Partners, a leading VC firm.
Here are some notes from our meeting:
It was raining but a decent turnout at club Mighty in San Francisco, where Myles Weissleder's SF New Tech showcased top Japanese startups.
Myles Weissleder is one of my favorite people, he's the hard working organizer of the excellent SFNewTech events, held once or twice a month in San Francisco at Club Mighty.
These events are very high in geek-content with a roster of 5 or 6 startups, each with a 5 minute presentation followed by five minutes of questions. Myles always makes sure everyone sticks to their time. There's usually a very spirited question time because the audience is mostly fellow starters, which leads to great feedback.
It's definitely a demo/pitching event rather than a partying event. There's usually a food truck or two outside and plenty of parking.
Tonight's lineup looks great:
(The following profiles were commissioned by infosecurity ireland - an organization supported by Enterprise Ireland that helps to promote Irish security businesses. It includes a quick, sub-minute introduction video for each company.)
In San Francisco cafes and bars, even on the street, I overhear people talking about their startup ideas, business plans, and goals. And there are tons of incubators, Angels, wannabe Angels, VC firms, making investments in startups.
I'm a big fan of Khris Loux's Echo, which has a fascinating real-time media technology that will only become more important as large media and brand companies try to get their heads, and hands, around their distributed content and their communities.
The Internet is still the platform.
Paul Graham, a partner at Y Combinator a successful Silicon Valley incubator, writes that he has found a key sign of future success among the startups that are recruited into YC's twice-yearly mentoring programs.
What is this indicator?
I met with Mircea Pașoi, co-founder of Vancouver-based Summify, a service that helps people deal with information overload by figuring out the top news stories for the day based on their peer groups on social networks.
This is an increasingly crowded field: Flipboard, Techmeme, Zite, Paper.li, Percolate, My6sense, Genieo, (and our recently launched Silicon Valley Watch), and many others, all offer variations on the theme of information overload.
They all attempt to winnow the daily flood of news stories into a ranking that automatically finds the news stories you should be seeing, or that you would see if you had the time to search through tens of thousands of feeds.
Here are some of my notes from the meeting:
I recently spoke with Crowdpark, an interesting startup that allows Facebook users to wager virtual currency on football games, elections, or anything they want.
San Francisco Chronicle reports that 40 tech companies are searching for 2 million square feet of office space, the "equivalent of nearly four Transamerica Pyramids" says Mayor Ed Lee.
Bo Fishback is convinced that his startup Zaarly has the potential to remake the national economy by making it easier for people to farm out small jobs to their local community.
The company is just 14 weeks old and already has more than 60,000 users. It's most active cities are San Francisco and New York. Mike Arrington, the former editor of Techcrunch is one of the investors.
Here are some notes from my meeting with Mr Fishback:
Coordinating the work of dozens and even hundreds of people is a terrifying task but that's what Clarizen does and does it very well judging from the company's impressive growth, adding more than 200 customers a month.
It's always a pleasure to catch up with John Dillon, CEO of Engine Yard because he's a Silicon Valley veteran and that gives him a perspective into trends and key issues that less experienced managers lack.
At Engine Yard, he's smack dab in the middle of some of the most innovative software developments because his company's platform as a service, helps businesses to quickly develop and deploy applications built from Ruby on Rails. It's harnessing the power of the cloud to quickly produce and deploy advanced applications at a fraction of their former cost.
"Companies are now able to develop applications just for one use, they can be disposable. But also, quick deployment means that they can see what works and what doesn't. It's all innovation."
Corporate departments can now commission apps and use Engine Yard to deploy those apps without having to engage their data center IT staff, who are usually too busy on other projects, or maintaining existing software.
Ruby on Rails has become the language of choice for many developers because it has shown to be scalable and has been successfully used in some large corporate development projects and large consumer web services. And so the demand for Ruby on Rails specialists is soaring. Mr Dillon points out that in San Francisco, there are some 700 unfilled Ruby on Rails jobs.
But despite the popularity of Rails Mr Dillion believes there's a strong future for PHP to become a strong Rails competitor. Which is why the company recently acquired Irish startup Orchestra, because the same technologies that support its Ruby on Rails customers can be used to support PHP development.
Despite the shortage of Rails engineers in San Francisco, Mr Dillon says this is not a constraint on demand for Engine Yard services and that growth has been very strong. The company has relationships with several hundred developers that can be hired for development jobs. Also, other areas of the US don't have such intense demand, such as Portland, Oregon, where Engine Yard has connections and where there is less competition for engineers.
New York based 1010data likes to ask: "What could you do with a trillion row spreadsheet?" because it shows off the capability its technology has in analyzing massive amounts of data.
Somewhat lost in Monday's news because of Google's acquisition of Motorola, Buddy Media, a New York startup raised $54 million at a $500 million valuation.
Buddy Media helps corporations set up and run their presence on a wide range of social networks.
By Vanessa Camones, PR veteran and founder of theMIX agency.
Women have made astounding advances in the workforce in the past fifty years. Even in the tech sector, traditionally an enclave of geeky guys, women have progressed from support roles to becoming respected builders, leaders and innovators.
We're still a minority, but no longer an anomaly.
WIMM Labs today launched a modular device that shrinks a PC behind a tiny color display screen with wireless connectivity and full day battery power.
The company hopes it will become a platform for a broad range of applications, ranging from wrist watches to golf-swing monitors. It contains an accelerometer, magnetometer, WiFi, Bluetooth and is waterproof. The color display is about one-inch on each side for a diagonal screen of 1.4 inches.
Foxconn, the giant electronics manufacturer, is an investor in WIMM Labs.
I met with the team behind WIMM Labs last week for a sneak preview.
"We wanted to make the module as thin as a Rolex," said Dave Mooring, CEO. He expects watch makers to use the device but also a wide range of different companies. "We will partner with brands and help them develop unique applications," he said.
WIMM has developed a few simple apps to show off the capabilities of the module and it has a software development kit based on the Android operating system, available in the third quarter of this year.
The module is pricy, at about $200, which means initially it will be targeted at a high-end market. Mr Mooring, who used to work at Intel, says Moore's Law will bring down the price significantly.
The display features a touch screen input and it's bright and surprisingly easy to read for its size. The challenge for WIMM will be to persuade companies to develop apps for the module instead of apps for smart phones.
Mr Mooring believes that smart phone apps are too clumsy to use. "This is a glance and swipe solution, it's always on, and you don't need to find and run an app on your phone -- it takes too much time."
WINN has also developed an "App store" that its oem customers can white label and use to showcase their apps.
It is currently working with a small number of developers on applications such as SportyPal, which sells sport fitness monitoring devices.
Gligor Dacevski of CreationPal, developer of SportyPal, said: “Because the WIMM device is always on and always attached to the body, our fitness app on the WIMM Platform helps athletes in the gym or on the field, giving them immediate guidance and feedback on their workout.”
More info here: WIMM Labs
Jumio's breakthrough "NetSwipe" payment processing technology that transforms any webcam into a credit card terminal, has the potential to threaten PayPal and emerging payment startups such as Square.
A new CEO always brings a broom with them, and Larry Page's return to the job at Google includes a major sweep of management and company priorities.
One of the casualties is Google Labs, a fairly large collection of small apps and other services, mostly used to enhance current Google services, such as GMail, but also to show off some of the projects Google engineers have produced during their 20% time -- the allocation offered for non-work projects.
Veteran tech journalist John Dvorak wondered why? Google Labs is being closed.
There's a lot of competition these days to find the best startups and also capitalize on the Y Combinator model of incubation.
The film "The Social Network" has helped to make startups popular among young people the world over. It's just one factor inspiring new generations of entrepreneurs hoping to succeed through innovation and hard work.
But are they learning ethical ways of doing business?
The more we find out about Mark Zuckerberg and his behavior during the early days of Facebook, the more he reveals a cavalier attitude to ethics.
Danish startup Podio made a splashy entrance this week into the US market and I'm not referring to the torrential rains soaking San Francisco.
In a week dominated by the news of the launch of $41m startup Color Labs, it was an impressive feat. Podio, which offers apps for small businesses launched an App store and opened a pop-up store in San Francisco-- and managed to attract many of the top digerati of San Francisco.
These it's difficult to go anywhere without hearing about startups and their apps. That's natural in my job but when you start hearing "normal" people talking about apps all of a sudden then that's an interesting trend to watch.
For example, my 23 year old son Matt tells me he hears people talking about their apps and startups nearly everywhere he goes in San Francisco. He says it is a result of the Facebook movie.
His friends, and friends of friends, seem to be all working on some idea, mostly in the mobile apps space. Matt is working on several apps too, a mobile business app for local businesses is one promising project.
This is an interesting trend to watch because it is not limited to San Francisco and its Silicon Valley neighborhood. You see a big interest in startups and innovation occurring in many countries
Genieo announced its Macintosh version at the Macworld show in San Francisco. The software runs on a PC or Macintosh and creates a highly personalized home page for users, containing news of interest without any overt training of the system.
The UK newspaper the Daily Telegraph is running a series of articles about startups and has commissioned several columns. Wendy Tan White is the founder and CMO of Moonfruit, a successful UK based startup that offers hosted websites. She wrote a column answering the question "Are European startups lazy?"
Certainly, we don't have a homegrown Google or Apple - yet - but European start-ups are definitely not lazy, as some people seem to think and as TechCrunch's Mike Arrington once said. In fact, there's a whole generation of hungry and talented entrepreneurs building amazing companies.
So what's the problem? Why don't we have as many successful companies we can point to?
I'm constantly meeting companies that have moved part of their operations to San Francisco/Silicon Valley. Usually it is the CEO and/or the marketing and sales group that moves home.
Loic Le Meur, a serial entrepreneur, founder of Seesmic, did the same several years ago, moving to San Francisco from Paris. In a guest column in the UK Daily Telegraph newspaper, Mr Le Meur explains why he moved.
In the Valley, the best companies, entrepreneurs and investors are all in one place. It feels like a campus. Everything you do, from the morning run to the coffee run, is a networking opportunity.Compare this to the fragmentation in Europe, where the next meeting is always a flight away, and you can see why things simply happen more slowly over there. Thirty languages and insufficiently fluent English slow things down even further.
In the Valley, the best companies, entrepreneurs and investors are all in one place. It feels like a campus. Everything you do, from the morning run to the coffee run, is a networking opportunity.
Compare this to the fragmentation in Europe, where the next meeting is always a flight away, and you can see why things simply happen more slowly over there. Thirty languages and insufficiently fluent English slow things down even further.
He lists other advantages:
- the ability to easily higher and fire.
- investors make sure entrepreneurs still have enough shares. In Europe, Angel investors are notorious for taking too large an ownership, which limits incentives.
- the chance to build a global success rather than a "local leader."
His advice to European entrepreneurs: "find your niche and set your heart on being the world leader."
Paypal has led the way by opening up its platform but there will be lots of startups focused on digital money in its many forms in 2011.
Making payments easier and secure is a very bid deal. If you look into the history of the world, there were many times when innovation around money resulted in massive economic growth, and conversely, when there was a lack of payment options the result was economic depression.
For example, look at these innovations around money: International banking and insurance originated with the Medici families in Florence and was responsible for an explosion in international trade; the invention of bonds in Renaissance Italy led to massive creation of wealth and the financing of public works (and wars); the invention of the joint stock company in Amsterdam and Paris led to the financing of railroads, vast economic expansion, and much more; and moving off of the gold standard unleashed a ton of economic growth.
While in the UK I met with Neil Reed, one of the founders of Gigseen.tv (above), and San Francisco based music industry consultant John Coon, who specializes in music licensing.
Gigseen is planning its launch in the spring of 2011 with a video streaming service showing archives of live gigs -- from fairly recent ones, to as far back as the 1960s and 1970s. There will also be additional services such as pay-per-view of live concerts; discounted concert ticket sales; streaming of music documentaries and movies; and a weekly interview series hosted by Gen Matlock, formerly of the Sex Pistols.
The UK has a vibrant live music scene. And the audiences have varied musical tastes unlike other markets, such as the US, where people tend to stick with one genre of music.
Mr Reed is a music industry veteran with experience in producing music videos.
Here are some notes from our conversation:
- There is a huge amount of archive footage around and the music labels don't know what to do with it. Producing DVDs is expensive and people have stopped buying DVDs.
- With are talking with all the major record labels, and the independents, and the reception has been very good. We've also been talking with large music magazines who are very keen on sponsorship of live acts and co-promotion based on subscriptions.
- A lot of music labels don't even know what they have, we can become administrators of their catalogs and split the revenues with them.
- There is some amazing footage out there of concerts that have never been seen, or were broadcast just once. For example, the Berne Jazz Festival in Switzerland. It's all professionally produced to the highest standards. We will be able to stream all that amazing footage.
- The time is right for a service like Gigseen because there is now sufficient bandwidth. And people are much more comfortable with viewing streaming video because of services such as the BBC iPlayer.
- There are a lot of people in their 30s who love going out to gigs but they can't manage it because they now have kids and other responsibilities.
- By the time we launch we hope to have more than 2,000 hours of live performances.
- We also want to promote lesser known acts and nurture and develop bands, especially those that are from abroad and are trying to break into the UK music scene.
- We have our own studio and video crews so we can go out and capture live performances ourselves. We know how to do this and get it up on the site very quickly with a professional finish -- no jerky handheld cameras. We want to emphasize professional production.
- We haven't decided on subscription pricing just yet but it will be around 60 pounds a year (about $96), which is about the cost of just one major concert.
- Our target market is 30 to 65 year olds.
- We will also add material to our web site such as images of old tour programs. People will also be able to add their images and stories to the archives.
- One large record label told us they had spent nearly 2 million pounds (about $3.2 million) in the past on a similar venture to Gigseen and had to abandon it. We've spent about 200 thousand pounds (about $320 thousand) and are close to launch.
- We are currently bootstrapping the venture with help from family and friends.
The Le Web conference in Paris was very good. Loic Le Meur and his team pulled off a great two-day show with lots of good content. It was better than last year's Le Web, imho because there wasn't as many Americans and European and other entrepreneurs were able to talk about their businesses.
The format was tight with very few panels and mostly one-on-one interviews. This made it more focused and with less chance that the conversation would stray into "spam" territory as often happens on large panels.
There is a broad surge in entrepreneurism in Europe (please see: Paris Diary: Putting "French" Back Into Entrepreneur ) thanks to various government programs that encourage startups via subsidized incubators, tax credits and other programs.
German entrepreneurs tend to copy-cat other successful Internet businesses on the basis that if it works elsewhere it will work here; while French and British startups tend to follow more original ideas. Either way, you'd be hard pressed to tell the difference between European and US startup companies and their teams because they all have similar energy, ambitions, and attitudes.
One key difference however, is access to startup capital. There are fewer angel and VC investors in Europe. But this is slowly changing. Fortunately, these days you don't need as much startup capital to get started. It's only when you get into the expansion stage that you need solid backers -- many European startups have yet to face that hurdle but it is a real one and a tough one.
Here is a short video from Le Web and my client Pearltrees, a French startup.
And here is a Pearltree that curates some of the content of Le Web. If you'd like to contribute to this Pearltree you can join this "team" - a new feature of Pearltrees that brings collaboration to content curation for the first time.
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There's lots of competition for top engineers in SIlicon Valley fueled by the giants such as Google, Facebook, Zynga, etc.
Connie Loizos at PEHUB reports:
"Right now, startups are either having to pay more, relocate people [to work for them], or go the [H-1B] visa route [allowing companies to temporarily employ foreign workers]," says Chuck McLoughlin, who heads up the tech practice at SVS Group, a 14-year-old recruitment firm based in Emeryville, Calif.
The salary increase for software engineers is still quite modest: an average of about 10% but its on an upward trend.
So what should startups do? This increases startup costs and that can be tough because most startups want to bootstrap themselves before they take on investors so that they can raise their valuation. Less capital means a shorter runway.
I recently met with Andrew Volk, an ex-Yahoo product manager who has been consulting and working on his own startup ideas. He says he spent about 6 months teaching himself basic coding in Java and how to use various online development platforms.
"I kept meeting entrepreneurs who spent many months revising their business models when they could have used that time to learn some coding and pull together a prototype of their service. That's what I do. I'm not the best programmer but I've learned enough to be able to do quite a lot."
That's great advice. I've taught myself a variety of different coding skills, I'm not an expert but at least I know what I'm talking about.
This also helps in terms of talking with developers and specifying the work you want done. It stops them from pulling the wool over your eyes with technical jargon or stretching out development times. When you know how things are done it puts you in a much better position in regard to effectively working with your team, in-house or out sourced.
Knowing what the various technologies can and cannot do also means you are better able at creating new services and figuring out new types of applications.
This all made a lot easier today because development languages and tools are increasingly sophisticated, which means they are easier to use by people who don't have formal training. In the same way small business groups within an organization can now pay for cloud based IT services out of their budgets without waiting for the IT department, they can also develop the basic skills to prototype app development.
The beauty of cloud computing is that there are many aspects of development and deployment that can now be done without the need for an IT department.
[Please see my interview with John Dillon CEO of Engine Yard.]
I spent Tuesday evening with the founders of Yammer, Box.net, and Zendesk, a full report is coming. In the meantime I wanted to share a conversation with Yammer co-founder David Sacks and his pedigree at Paypal.
I have a fascination with Paypal and its alumni because they have gone on to build, and invest in some of Silicon Valley's top companies: YouTube, LinkedIn, Facebook, Zynga and many more.
Here's a partial list of PayPal achievements:
- Reid Hoffman, founder of LinkedIn and a very successful angel investor: Facebook, Ironport, Digg, Flickr, Ping.fm, Last.fm, Zynga.
- Peter Thiel and his hedge fund Clarium Capital. Not all of his bets have paid off but he is investing and funding some interesting organizations.
- Elon Musk - Head rocket designer at SpaceX and CEO of Tesla.
- Steve Chen, Chad Hurley - Youtube co-founders.
- Premal Shah - founding president of Kiva.org.
- Jeremy Stoppelman - co-founder and CEO of Yelp.
- Max Levchin, co-founder of Slide, Yelp.
- And there are plenty more in this group: Dave McClure, Jared Kopf, Eric Jackson, Keith Rabois, Ken Howery...
I asked Yammer's David Sacks what was it about Paypal that created such an explosion of Silicon Valley startups?
- He said that it was a group of people who had recruited each other because they had known each other for many years. The founders recruited people they had gone to school with, and that was repeated throughout the organization.
- Also, PayPal was one of the first companies to understand the power of virality. Paypal was used because small merchants understood the value it created, and they shared that. Understanding the power of a viral businesses is what is key to Yammer's success.
Did you leave money on the table?
It was great catching up with Sol Tzvi, CEO of Genieo and one of Israel's top women entrepreneurs.
The last time we met in San Francisco it was freezing and foggy -- a typical summer in the city. This time we meet it is a beautiful sunny, hot day, and the temperature is rising, which seems apt given Genieo's momentum.
Genieo offers a unique personalization service that has nothing to do with web services or the "cloud" but lives on your computer and automatically filters content that is relevant to you. Because it is client-side software, it offers a very high degree of user privacy - a valuable feature in a world where Internet user privacy is under threat at nearly every click.
[Please see: TRUSTe: The Complexity Of Privacy Protection On The Web]
The company is attracting attention from many of the largest US companies because of its ability to help users deal with the tsunami of media and information without requiring users to manually set up complex filters.
Sol Tzvi says that her investors in Israel are very pleased with progress and the company has raised another round of funding.
Recent developments include an iPhone version, and using Genieo to create a personalized magazine like Flipboard. And there is a Macintosh version about to be released within the next few weeks.
Ms. Tzvi says that there is a new crop of business development teams at nearly all the US Internet giants, and they are very interested in Genieo-like technologies. Also, Dell, HP and other hardware makers are pursuing similar directions -- all of which places Genieo in a very sweet spot.
But dealing with large companies takes a considerable investment of time and patience because of their lengthy internal processes. This is why Ms. Tzvi visits Silicon Valley every 6 weeks or so for a couple of weeks at a time to build and maintain key relationships.
She says that the startup scene in Israel is very large and mirrors Silicon Valley in terms of sharing similar issues and challenges.
Israel's "Silicon Wadi" (wadi is the Arabic word for a dry river bed) is the world's second largest tech innovation center next to Silicon Valley, which is impressive since Israel is a small country with a population of just 7.3 million - slightly larger than the San Francisco Bay Area with 6.8 million.
Ms. Tzvi loves to share her experience as a women entrepreneur. She has written guest posts for SVW that continue to be very popular:
Jerry Kaplan is a serial entrepreneur know for Onsale.com, Go Pen Computers, Egghead.com and his book, Startup: A Silicon Valley Adventure.
His latest venture, Winster.com was started by his wife in 2004. It's a social gaming site with an interesting twist - the games are non-competitive and designed to be minimally interesting. Yet they have attracted millions of players because they help build enduring online friendships.
The players are mostly older, single women that are largely home bound because of various circumstances and thus unable to easily build or maintain friendships. They form groups that play Winster games, and as they play they build their friendships.
The games are designed in such a way that each player relies on the other players to help them succeed in the game. Competitive play gets you nowhere.
It's counter-intuitive that such games would gain such a large following. More than two million people have played on WInster and many spend several hours a day playing with their friends.
I recently spoke with Jerry Kaplan and here are some notes from our conversation:
- The players are mostly older women who are widowed or have physical impairments that make it difficult for them to get out of their homes. The games rely on sharing and cooperation - competitive play is not possible because you need the other players. If players do engage in competitive play they tend not to be asked back by the group.
- An example of one of games is a variation on poker where players contribute to each other's hands so that they have the best hand.
- We only have ten games and the design of the games is deliberately simple and fairly monotonous. Groups tend to stick with the same game each time they play.
- Our most popular game is based on a slot machine, our least popular game is a form of Sudoku, it forces people to think which cuts down on conversation.
- As people play there is a chat screen and as they play they create very supportive relationships. They chat about their families, their illnesses, etc.
- I've had many emails from users thanking us for helping them make friends. One lady said she hadn't had a visitor in over a year, and that just the other day one of the women she met online spent the day with her. Others have said that Winster has literally saved their lives. It's hard to explain how emotionally attached people become to their groups.
- We became profitable in the fourth quarter of last year. We raised $3m earlier this year. Our revenue comes from subscriptions and virtual goods.
- Users are incentivized to recommend their friends but it's not easy to use viral means of promotion because users have a limited social circle.
[Sol Tzvi is head of Genieo, an Israeli startup. She shares her story of starting a startup. Part I is here.]
By Sol Tzvi, CEO of Genieo
Convincing others - Being a humble CEO
I enjoyed working for Microsoft for those few years in the past. I was presented with many challenges, especially at a time when securing Microsoft product was a major problem, which required prompt solving, due to Microsoft software being regularly infected by viruses.
I had multiple roles in the organization, the major one being building our customer messaging system from scratch, a system designed to deal with the frustration caused by hacker attacks on the Microsoft software. People used to hate Microsoft so much back then (now they've shifted their attention to other targets).
I loved Microsoft as a company, I loved the people around me and I loved dealing with these challenges.
However when working in corporations one too often finds oneself seeing holes when others see only walls. You find yourself knowing what the right thing to do is, yet taking forever to convince others. You spend all your energy talking to people instead of taking action.
Too often I found myself frustrated and thinking: "Oh well, when I have my own company I'll be the one making the decisions, and I'll lead all my people to the Promised Land, in my own way."
Years went by, and ironically I must admit, I've learned that in order to be a good leader one has to sometimes let other people lead.
Everybody's seeking guidelines. And still, if you choose to work with great and smart people, you must allow them the freedom of choice; otherwise you will only find yourself building another corporation, with people taking forever to convince you and each other before actually beginning to build the product.
Startup companies do not have this time to waste, and as the leader of such a company you must hire great and creative people, and make sure you allow them the space and freedom to spread their wings and take you up.
This is why, even at the earliest stage of founding my own company I realized I cannot tell people: "Hey! THIS is the right thing to do."
Instead, I knew I had to bring them around my ideas, make them understand what I want, and let them come with their own solutions -- so that they can express themselves the same way I always wanted to do myself back then.
For the longest time, my impression of people who went around raising money from strangers in order to support the development of their own ideas was that they must be arrogant. Today I know otherwise.
People who believe so strongly in their own ideas, can feel comfortable enough asking for other people's money as a means to realize their dreams. However, whether it's VC money or Angel money, it all comes from people who worked very hard for it, and therefore it must be respected.
So, I eventually found myself asking investors to believe in an idea of mine.
It took me a while to understand that it is not the idea I'm selling for the money, but it is rather me and my skills. I don't think that Genieo is the cleverest idea I ever had but I do believe it came up at the right moment, which enabled me to make it happen and lead my company to success.
Oh yes, I may fail, the investors may lose their money but they can rest assured that they've put their money into a great management team, which increases their chance of success.
When you go around raising money do not fix yourself only on the idea or on its potential. Investors are after the full package, they are looking for the right people who can make it happen.
I never spend extra money on a business class ticket when I travel around the world, I never buy fancy stuff to make me feel like a successful CEO, but I do try to spend a fair amount of money on my employees. This is the wisest investment I can make with my investors' money.
Find your partner
Never start a company by yourself. A great partnership and collaboration will always prove more beneficial than anything you can do on your own.
The greatest challenge when starting up a new company is finding the right partner. A person to walk with you all the way: "To have and to hold from this day forward, for better for worse, for richer for poorer, in sickness and in health, to love and to cherish, till death us do part" - yes, exactly like a good marriage, you must find the person who will complete you, fill in your weak spots, encourage you when you lose faith -- a person with whom you can share all your intimate thoughts on your path to success. It may be hard to do but you'd better find that great partner for this journey.
Consider as well, that your investors and employees are also partners. When they lose you lose, when they fail you fail, their success is your success.
And always remember that when you win they should all be winners, and you must make them part of the celebration by showing them your goodwill and gratitude, and give them more than you promised to give. Remember that without them you wouldn't be standing there, at that moment of success.
We can all fail, as great as we may be. Sometimes it'll be because of wrong timing, other times we may take the wrong direction. People who dare always make mistakes.
Remember that you are not defined by what you do or don't do, or by what you achieve or do not achieve. You are the reflection of the strength of your faith, and of the power of your will and diligence. This is what makes you who you are and it all has to do with the freedom you give your mind. You are the dreams you dare to dream.
Every light bright or faint, begins with a spark of the freedom of dreaming and the courage to believe. This is the difference between the creator and its opposite, the eliminator.
The road does not seem so long and hard when in good company.
- - -
Part I is here.
[Sol Tzvi is head of Genieo, an Israeli startup. She shares her story of starting a startup.]
By Sol Tzvi, CEO of Genieo
As a young CEO and Co-founder of a startup company I often find myself thinking of the path I chose and the destination I lead myself to.
Thinking of all those lonely times, when I'm traveling around the world in the middle of the night - sometimes even in the middle of nowhere really; crossing the world from one corner to another; scheduling meetings with different people from different cultures; speaking in a foreign language which forces me to concentrate not only on what I have to say but also on how to build a proper sentence, all in the cause of reaching out and touching these different cultures.
This is my idea of living: exploring, learning, teaching others, sharing thoughts and ideas, braking rules and lines I locked myself in years ago without even noticing, growing day by day and becoming the person I am today, re-inventing myself to with every new dawn - every day I am the person I am that day.
Our definition of ourselves as people is based on our past: past behavior, past experiences, past achievements. And yet, is observing a prior behavior really the best approach to understand who we really are? Well, to some extent - yes. But then this could lead us to live in a false impression and view of ourselves. After all, we humans are only trying to simplify complex questions, such as who we are.
Can we really do it?
There's been much written recently about angel investors and venture capitalists especially about the rise of the "super angels" such as Ron Conway, Jeff Clavier, Marc Andreessen, etc.
The VC community is disdainful of the angel investors and their puny funds but the angels can go into deals that the VCs cannot because they are too small for the large funds.
Today's entrepreneur has a choice: angels or VCs or none of the above.
It's worth considering the "none of the above" option because startup costs are very low.
Joe Kraus, co-founder of Excite, which was the Google of its day, told me that they needed $5m for a data center when they first started.
Today, with the ready availability of cloud computing you don't need to raise lots of capital to fund your capital costs.
Development costs are cheaper too, with high level languages and development platforms such as Ruby and even development platforms in the cloud from companies such as Engine Yard, development is quick and scalable.
Angels and VCs can be good in terms of getting access to an experienced hand in building a business, helping to recruit the right people, even mundane things like finding office space.
But a good network of mentors or board directors/advisors could provide similar help without the ownership and other terms that outside investors demand.
Bootstrapping is a viable option
Many startups could achieve a lot with just the founders pooling their credit cards for a year or so and then seek expansion capital, maybe with debt.
Sramana Mitra, writing in Forbes, says there is an assumption that only mom-and-pops businesses can be built with bootstrapping:
How very wrong! Ask Frank Levinson and Jerry Rawls of Finisar whose bootstrapped venture went public at a $5 billion valuation. Or ask Christian Chabot of Tableau Software, who raised his Series A from NEA at a $20 million pre-money valuation by bootstrapping the early stages, when typical valuations for that round are in the $2 to $5 million range.
This is a good time to reprint one of my favorite guest columns, written by serial entrepreneur Greg Gianforte, CEO of RightNow Technologies:
Seven Reasons Not To Raise VC capital
By Greg Gianforte
Raising venture capital for early stage start-ups seems to be the prevailing path for most entrepreneurs; however, most would-be founders should reconsider.
Here are some reasons why:
- If you start by selling your concept to potential prospects (rather than stock to VCs), you will either end up with initial customers or a conviction that your idea won't work. Why raise money and then find out which one it will be?
- Raising money takes time away from understanding your market and potential customers. Often more time than it would take to just go sell something to a customer. Let your customers fund your business through product orders.
- Adding VCs to the mix early gives you an additional set of masters you must serve in addition to your customers. It is always hard to serve two masters, especially in a startup.
- With no money you can't make a fatal mistake. This is a blessing. Without VC money, you are forced to figure out how to extract funds from your customers for value you deliver. Ultimately that is the only thing that really matters.
- Money removes spending discipline. If you have the money you will spend it - whether you have figured out your business model and market or not.
-Raising VC money determines your exit strategy. You will either sell the business or take it public. What if you end up with a very profitable, modest sized business that you want to just run? That is no longer an option once you raise VC money.
- You sell your precious equity very dearly before you have a proven business model. This is the worst time to raise money from a valuation perspective. I know this is a contrarian view. And some of you are saying that might be fine for a small company.
Don't forget Dell, HP, Microsoft all originally started without VC funding; you can build a big business with bootstrapping and without VC money. At RightNow, we doubled our revenue and employees every 90 days for two years before we took any outside money, and even then the employees retained more than 75% ownership after raising $32m.
Greg Gianforte is the author of:
We won't be able to have net neutrality/open Internet because the Telcos will always have the right to prioritize their own services over their own networks.
So let's have real competition to the Telcos.
But the US has Luddite Telcos. The US has some of the slowest broadband and the least penetration.
A recent FCC report found that there are 14 million Americans without access to any high speed Internet service.
S. Derek Turner, Research Director of Free Press, a lobbying group advocating universal access to communications, said:
"The facts present a sobering reality of our broadband problem. We pay far too much for far too little, and the lack of meaningful competition among Internet service providers leads to delayed investment and slow technological progress."
The Telcos control the features available in smartphones often dumbing them down. That's Luddite behavior.
The Telcos have no real competition. As Danny Sullivan over at Search Engine Land points out:
The mobile marketplace... where providers unilaterally add on $10 surcharges just because you're using a smartphone, regardless of you actual data usage?
Where you can't take your expensive device and go elsewhere?
Where they deliberately cripple parts of a smartphone's OS?
Where they decide to charge you more for using your device as a modem even if that usage still comes under the same data cap as allowed by native use of your device?
If we can't have net neutrality then let's have more competition. But where is that competition going to come from?
Building a new Telecom infrastructure is expensive. Potentially, WiMAX could vault over the Telco walls but WiMAX rollout is slow and its performance is patchy. Plus, you need the customer facing support component and the billing relationship, which is labor intensive.
Another solution is to adopt open network policies as in Europe, where Telcos are forced by law to offer their platforms to third parties. But there is no way Congress will pass such a "socialist" law, especially with the Telco lobbyists making huge contributions to political campaigns.
Silicon Valley startups are in danger
Four years ago I warned that if the situation with the Telcos isn't changed it will impact Silicon Valley startups. We need competition not net neutrality otherwise Web 2.0 dies on the vine
Three years ago I wrote:
"Last mile = Golden Mile. This Telco/Cable cartel sits smack-dab in the middle of Silicon Valley's innovation efforts. The Telco/Cable cartel control the communications gateways, they control the wireless services, and they are the most backward element in our society in terms of resisting technological progress in the US."
Between the lack of any protection on the wireless side and the qualifiers and complexity on the wireline side, young startup companies will have difficulty finding financing and building businesses of scale. If an Internet access provider discriminates against a startup directly or through its network management practices, it is unlikely the startup could afford a long and expensive process to seek redress. So this proposal favors the incumbent applications and access providers.
I can't see an easy way out of it.
Luddite Telcos seem bent on keeping us in the Internet dark ages with slow connections and expensive services that will drive innovation out of the US. Government regulation has no teeth and our politicians have incentives to keep the status quo.
Where are Cisco, Intel, HP, IBM on net neutrality?
You would think that the infrastructure providers: Cisco Systems, Intel, HP, IBM, EMC, etc would be all be big supporters for more competition in Telco markets but they remain quiet. They would sell a whole lot more kit if there was more competition.
I once asked John Chambers, CEO of Cisco, why doesn't Cisco criticize Telco policy and come out with support for more competition in Telco markets? He smiled and said, "We support all of our valued customers."
But surely Mr. Chambers, and the heads of the other tech giants, have a fiduciary duty to maximize shareholder profits?
An open Internet with healthy competition would do wonders for sales. Yet where is their voice?
Net neutrality threatens GOOG, et al...
It is worth pointing out that Google, Yahoo and Microsoft have little to gain from net neutrality. I explained in a post from May, 2006:
Why risk an open and neutral Internet and become vulnerable to smaller, swifter competitors? Yes, right now GOOG, YHOO and some of the others move reasonably fast in some markets, but as they grow larger they won't be as nimble.
If you are a well established Internet services company such as GOOG, it doesn't pay to expose yourself to any disruptive, innovative startups. Why make it easy for your future competitors by fighting for their right to a neutral Internet?
That is why you should not look to GOOG et al, to save the Internet from the gatekeeper telcos and cable companies.
The big boys can afford to pay the Telcos and in exchange the Telcos keep the startups at bay. If I were a shareholder of Google, I'd be against net neutrality and I would campaign for Google to make deals with all the Telcos.
It's clear that's where Google is headed anyway...
The situation for startups and innovation in the US doesn't look good. Maybe it is time to relocate Silicon Valley elsewhere.
- - -
Tom Abate: Speed Bumps on the Information Highway
Tuesday evening I popped into Myles Weissleder's monthly SF New Tech startup showcase -- one of the longest running and best of San Francisco's Geek events.
And it was great to see JR Johnson, CEO of Lunch.com (above) flying in from SoCal to show off some of the new community building features at his site.
I admire JR because he is a serial entrepreneur with a passion for building communities. He did very well selling Virtual Tourist to Expedia but he's not taking it easy on a boat -- he's back in the fray trying to build a new community.
Lunch.com stands out because it has a mission and it's to create a great place for conversation, debate, discourse and connection.
JR believes everyone should use their real name online and that this encourages a responsibility and a civility that leads to a better society. I like that he thinks about these things and actively involves himself in these issues.
Last year he sponsored a series of lunches in San Francisco that brought together a diverse group of people. Each lunch had a theme and each table of four or five people would collaborate on a short presentation. It was fun and very engaging.
Please take a look at Lunch.com. JR says "Lunch is your time to take time to be yourself." That's a great way to describe the site.
Also: JR's guest post on SVW: Can Facebook Unring The Privacy Bell?
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Also at SF New Tech:
Armando Biondi, CEO & Paolo Privitera, CTO
The Doochoo project is about revolutionizing the way opinions on the web carry meaning, starting with some applications, followed by a proprietary platform that will give opinions on the web tangibility and critical weight.
Peter Maude, CTO
CrispThinking offers real-time user profiling and management technology that detects, tracks, reports and actions on anti-social behavior including spamming, gold farming, bullying and online grooming. It manages the individual not just the resulting content allowing sites to scale their user management efforts. http://www.crispthinking.com
Kedar Shah, Marketing Evangelist
MotherApp has created over 400 apps for clients such as Vodafone, Standard Chartered Bank, and Financial Times. We have a Blog Engine and Application Engine that bloggers, developers, and enterprises can use to create rich, native apps for iPhone, Android, and Blackberry and have a roadmap for iPad, Silverlight (Windows Mobile), and Symbian. http://www.motherapp.com
Paul Brody, President
Sococo - Social Communications Company - delivers personal communication services that put you together with the people that matter. http://www.sococo.com
- Crisp Thinking was an unusual company because it specializes in uncovering aberrant behavior by people in virtual worlds, from spammers to child predators.
- MotherApp allows you to write a single app in HTML and it will compile the app in native code for all the top smartphone platforms. It's a Java-like promise but they seem to be delivering and developing apps for major telcos and media companies.
- Sococo has a neat visual metaphor for collaboration within virtual companies. You can see a grid of office spaces and conference rooms. You "enter" a conference room to talk with people and use whiteboards. Others in your company can see who is in meetings but can't listen to the meetings unless "in" the room.
Apps developers are rushing to mobile en masse yet there is another large market, says Joseph Puopolo, director of marketing at OPENapps, and it's web site applications.
"Web site owners need apps for all sorts of functions, such as ticketing, etc. We are offering a marketplace for such apps and a platform that allows those apps to be used on all types of web sites without requiring special plugins."
OPENapps moves beyond the "widget" concept in that it uses a site's CSS styling to automatically integrate into the site, and it pulls the application layer from the app host. This means that all upgrades, at the app developer, and at the web site are automatically reflected on the web site.
OPENapps handles all the billing and distribution and takes a 30% commission.
"For small developers we handle the marketing and distribution which is a big help, while larger companies can use us to help grow their business without much extra work," says Mr. Puopolo. ANother advantage is that unlike Apple's AppStore, developers can earn recurring revenues.
The Toronto-based company has 6 apps to demonstrate the concept and says it is in talks with more than 100 developers to add more apps over the coming months. It has a goal of at least 1,000 high quality apps this year.
This strikes me as a very good idea, an online dating site where the women are in control: HerWay.com.
According to HerWay, it is at least five times more likely that online daters will successfully connect when a woman initiates contact. By letting women make the initial connection with their potential suitors, HerWay creates an environment where women's intuition rules and connections therefore have a much better chance of turning into love. This concept is mutually beneficial as it also relieves men of the pressure of having to compete for a woman's attention, allowing them to sit back and let the ladies come to them.
For the men, they are offered tips on how to make themselves more appealing to women, how to behave on dates, and personal hygiene tips (OK, I added that one :)
Since men love statistics, the site offers "detailed profile performance reports that illustrate how their profile success rates stack up as compared to other men on the site."
Here's how it works:
The HerWay registration process takes less than a minute as users build full profiles and post pictures of themselves. Once their profile is built, female users can search the entire database of male profiles on the site and are encouraged to send free invitations to connect with men they find appealing. A woman's profile is only revealed to the man of her choosing after she has shown interest in him with a connection invitation. Once the connection is established, the male user can view, flirt and message his match.
Genieo is a client based news reader, yes, you read that right, it's not in the cloud(!) It seeks to understand what you read, what your social circle finds interesting, and also brings you content that you might not know about. It does this all without any user input at all, it doesn't require any user preference settings, keywords, etc. It is completely transparent.
Genieo runs in your web browser and is used as your start page, showing news and other information related to your interests. Future plans include an API that the user controls, that can interface with cloud based shopping services such as Amazon, etc. It only runs on Windows, there might be a Mac based version in the future.
Here are some notes from my conversation with Ms Tzvi:
- My background is ex-Microsoft, leading Microsoft's strategy on security and privacy. I've written three books on the subject. The most recent book also dealt with philosophy of security and the fear that motivates people.
- The idea for Genieo came in 2008. I came home late one night and opened up my laptop and realized that my PC didn't know me at all. I shouldn't have to tell it what interests me.
- Genieo is a client app, it does not run in the cloud because that improves privacy. We think of the PC as your 'personal cloud' because you have more computing resources in your PC than in web services.
- Users don't need to know anything about RSS or feeds. Genieo looks at what you do and picks the right RSS feeds from the publications. For example, it won't pick the sports feeds if you do not read sports stories.
- Genieo disables itself whenever there is a financial service or payment, also if there is any adult content, or any other type of personal content, it's not interested in that.
- We put a lot of effort to understand intention as well as attention, most of the things we develop are around the user's attention and long/short term interest.
- Genieo is a very small program, it works in the background, between keystrokes. It won't affect the performance of your PC.
- As soon as you install Genieo it goes to work and it gets better as you use it, it learns from you.
- We also have an iPhone app that is synced with your PC, which prevents ay duplication on your desktop.
- Privacy is very important we make sure that no information is sent outside of your PC.
- We find that our users spend typically spend 2 hours a day in Genieo, that's far more than they spend on Facebook or anywhere else.
- Microsoft is working on a similar application for Windows 8 but we're 18 months ahead of them.
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Here is recent video of Robert Scoble interviewing Ms Tzvi in Israel:
Sol Tzvi's blog: The world scenes of our mind
Sol Tzvi on Twitter
Over the years there has been much written about startup teams and how different stages of a startup require a different mix of skills and thus different teams.
I've spoken with Greg Gianforte, CEO of RightNow Technologies and a serial entrepreneur about this topic many times. He says that in the beginning you need a startup team where individuals have a broader set of skills, and as the company matures, you need to bring in people with more specialist skills.
That same thinking has been applied to the founding CEO. There is a widespread belief in Silicon Valley that founding CEOs need to be replaced with professional CEOs to take companies to the next level. And there have been many high profile examples of founding CEOs being ousted by the board or investors.
But is this the right strategy?
Ben Horowitz, cofounder and General Partner (along with Marc Andreessen) of the venture capital firm Andreessen Horowitz, has written an excellent article extolling the virtues of founding CEOs. [Why We Prefer Founding CEOs // ben's blog]
He makes an excellent case for keeping the founding CEO by listing companies that have succeeded by keeping -- not replacing-- their founding CEO.
Take a look:
Mr Horowitz believes that founding CEOs perform better because:
Professional CEOs are effective at maximizing, but not finding, product cycles. Conversely, founding CEOs are excellent at finding, but not maximizing, product cycles.
He says it is easier to teach a founding CEO how to maximize product cycles than it is to teach a professional CEO how to find new product cycles.
Also, a founding CEO can push through changes that a professional CEO would struggle with because they have:
Professional CEOS have different motives:
...tend to be driven by relatively shorter-term goals. They are paid in terms of stock options that vest over 4 years and cash bonuses for quarterly and yearly performance.
Investments in innovation do not pay out in the current quarter.
Typically, they don't even pay out in the current year. If you care about your bonus this year, you are directly incented not to make investments in new inventions as you will incur the expense, but reap no profits.
Founding CEOs are motivated by long term goals, "their emotional commitment exceeds their equity stake. Their goal from the start is to build something significant."
Mr Horowitz cites two exemptions, Eric Schmidt at Google and John Morgridge at Cisco.
However, I disagree with the choice of Eric Schmidt as an exception because the leadership role is split three-ways with the founders Larry Page and Sergey Brin -- both founders are extremely active in setting company strategy and policy. Mr Schmidt was brought in to provide "adult supervision" and prep the company for an IPO.
I think that Lou Gerstner, IBM's former CEO did a fantastic job as a "professional" CEO in transforming IBM from the world's largest computer company into the world's largest computer services company -- an important distinction. It was a ten year process that is now being replicated by others such as Hewlett-Packard and Dell. [Please see: Who Says Elephants Can't Dance]
Mr Horowitz makes the point that founding CEOs don't arrive with the skills that will make their companies successful, they acquire them. He cites two required characteristics of a founding CEO:
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Here is a PearlTree with web sites related to this post:
"I hate voicemail," says David Hayden, founder of Pana.ma, a startup that sends voice messages like Twitter sends Tweets.
I'm puzzled and also gratified. I hate voicemail too, but puzzled by the difference between what Pana.ma does and voicemail. On the surface, one looks very much like the other.
"With Pana.ma, my email is less, I text less, I have fewer meetings. It has made me much more productive," says Mr Hayden.
I'm intrigued at how a voicemail-like service can do all that. I'd love to be able to cut down on my email, texting, etc, too.
But first, some background information: David Hayden is founder of Critical Path, he was also co-founder of Magellan Search, and much more...
Pana.ma voice messaging service allows people to send voice messages to each other, up to 3 minutes in length. It is available on the iPhone, Blackberry, and Android phones.
Here are some notes from our conversation:
- Pana.ma allows you to have more conversations, but they are asynchronous conversations.
- We did some studies among teenagers and they would rather text because they don't want to have a conversation. Pana.ma allows you to have a conversation asynchronously and that makes it easier and more appealing than an actual phone call.
- Voice conveys emotion, it conveys a lot more information than text.
- We looked at the limit of a voice message, in a similar way that Twitter limits the size of messages and we settled on 3 minutes, which is probably a little too long.
- We will add a transcription service in the future.
- We have 20,000 users since we launched in January, with no publicity.
- Pana.ma has replaced meetings for me. I am exchanging voice messages all day long with my team. We rarely talk directly , and that's more productive because the PMs (Pana.ma Messages) setup the voice calls.
- We even PM when we are in the office and just a few yards from each other. It's more convenient because you can take your time to reply.
- It surprised us at how social this has become.
- You can add people to a thread or remove yourself from the thread.
- Twitter is not conversational, it is a broadcast medium. We don't consider Twitter a social network.
- We will make our API available in about three weeks.
- The experience is surprisingly pleasurable, fun, and sticky.
- You'll be able to insert PMs into documents.
- It's great at helping you manage your time. When I'm with my 9 year old son, he doesn't want to see me using my iPhone. I can quickly send a PM.
- Revenues will come from a variety of additional services such as longer messages, group tools, voice modification, archiving, etc.
- We raised a seed fund of $3 million and we will raise another round this summer.
- We have a development team of 6 people in Argentina, and there are 8 in this office.
I can see how Pana.ma is similar to a voicemail but could be much better. Texting someone is one way to avoid having a conversation when all you want to do is to communicate something. Up till now, we haven't been able to do that with voicemail.
Leaving a voicemail takes forever, first you have to wait for pickup, then sit through a message, then sit through the message menu, then when you think it's finally time to leave your message, you hear, "And to send a fax press 3... to page this person press 4."
Pana.ma saves you at least 70% of the time to send a voicemail -- and you are guaranteed not to have to speak to anyone directly. I'm going to give it a try.
Sharespost, which tracks the valuation of venture backed private companies reports that Twitter's valuation is up 11.49% this week to $1.64 billion.
This follows Twitter's developer conference this week where it announced several revenue generating plans, such as advertising, and also said it would compete with some of its more successful developers.
Facebook is up 9% to $14.63 billion. Zynga, the maker of the popular Facebook game Farmville, is unchanged at $2.61 billion valuation.
Sharespost has created an index of the top venture backed private companies: Twitter, Facebook, Zynga, LinkedIn, Tesla Motors, Serious Materials, and Linden Lab. The combined value of the index is up 4%.
The valuation of companies in private markets is not an accurate measure because of the lack of liquidity in those markets.
Seesmic is best known as a Twitter client but the company is moving in an interesting direction by turning its desktop software into a platform that enables users to publish to many platforms, not just Twitter, but to Facebook, LinkedIn, and more.
It's a great move, because we need tools where we can create content in one screen and decide where to publish it.
Seesmic will release a software development kit that allows developers to create plug ins for its software that support many different services. And developers can customize the software for specific applications or for branding purposes.
The new strategy also removes Seesmic somewhat from the constant threat of Twitter competing with its developers.
Here is Loic Le Meur, CEO of Seesmic, talking with Robert Scoble about the new Seesmic desktop software.
I had an excellent morning, drinking coffee at the Apollo cafe, and chatting with the co-founders of uberVU, a London-based startup. Vladimir Oane and Dragos Ilinca are young serial entrepreneurs on their second startup.
I missed them on my trip with the Traveling Geeks last summer to London, so this was a good opportunity to finally meet in person.
They are from Romania, and met at the University of Bucharest. They sold their first company, a web marketing company, and founded uberVU in 2008, winning the 2008 Seedcamp, a UK based funding competition. They have funding from UK investors and are in town this week to lay the foundation for moving their company to San Francisco.
Their service offers "social media monitoring" with a wide variety of tools and reports, monitoring comments, Twitter, social networks, and other sites for any brand or subject.
They offer a freemium model and so far, things are going well. But they are looking for new opportunities for what they have -- which is a large database of social media content going back a couple of years, and which could be mined for trends and other valuable information.
They said they were keen readers of SVW, and they were interested in my position that a lot of tech companies are essentially media companies. They are starting to see themselves as a media company rather than a data company, and they are looking for ways of publishing some of their data, possibly focused on verticals, such as finance.
Here are some notes from our conversation:
- London has a good startup scene but 90 per cent of uberVU traffic and users are in the US, that's why they want to move their company. Their UK investors were against it at first but now understand why it is a good idea.
- They have a 6 person development team in Romania, which means their development costs are low. They use Amazon to host their service.
- The startup scene in Romania is similar to that of Germany - mostly clones of US online businesses but the domestic market is small, it is difficult to succeed. Everyone is a blogger and also a big user of Twitter.
- uberVU has an API but they haven't been pushing it heavily, at least not yet.
- Their service is near real-time, and they don't see many use cases for having true real-time monitoring. They made the point that the recent Citibank incident, when the bank suspended the bank account of Fabulis, was a multi-day event, and that Citibank was able to respond after three days and gather positive publicity. [Fabulis vs Citibank - the numbers behind the story]
- Their service also does automatic sentiment analysis, which they estimate is about 70 per cent accurate. Which isn't bad because people doing sentiment analysis are about 80 per cent accurate.
I like the team and I like the company. They are sitting on a lot of data that could be turned into profitable business services -- social media monitoring is just one aspect of their business. But they do need partners, with an 8 person team there is only so much you can do.
(The above photo is from their business cards, Vladimir Oane (right) and Dragos Ilinca.)
Caring.com provides an online resource for helping people take care of their aging parents and it is doing very well.
Since its launch in early 2008 it's traffic has been growing at nearly 15 per cent per month, which compounds into a great upward looking curve that is hitting that magic hockey stick shape.
And it's not surprising it is successful because Caring.com has discovered a huge gap in a very large market.
The statistics are astonishing. There are more than 48 million Americans caring for an aging parent and they will spend more than $100k in that role. This compares to about 2m new brides spending $25k and 4m new mothers spending about $35k.
I spoke with Caring.com co-founder and CEO Andy Cohen. Here are some notes from our conversation:
Mike Arrington at Techcrunch has a great post on standard legal docs for startups that can save them as much as $50k in legal fees when taking investment monies. The Funded Publishes Ideal First Round Term Sheet.
The legal docs were prepared on the behalf of Andeo Ressi, founder of The Funded, a site that ranks VCs. They are designed to protect founders from some of the predatory terms used by VCs.
Woriois an interesting startup spun out of the Laboratory of Computational Intelligence at the University of British Columbia in Vancouver. Its service aims to improve search results by adding "discoverability" to each search query.
The idea is to use machine intelligence to mine a user's activities and relationships on the social web, and then produce relevant results based on an individual model of the user.
This morning I met with Ali Davar, the CEO of Worio. Here are some notes from our conversation:
- We believe that search has reached a level of maturity and that further improvements will be incremental. So what's next? We believe it is something in-between search and the recommendation services such as Stumbleupon or Digg. Our intention is not to out-Google Google.
- The web is messy. It's easy to find things when you know what you are looking for but there is a whole lot more that you didn't know was there. You don't know how much there is that you don't know. We always underestimate the extent of what we don't know. That's what our discovery engine will show you.
- We look at what you tag, what you share, what your friends recommend, and we look at what you do, and then we construct an individual model. We also look at what others are doing, tagging, and sharing.
- We auto tag pages because the way people tag is often very personal to them. Combined with algorithms and personalization technologies, we create a layer of topicality which we then marry with your informational model to deliver relevant results.
- We auto tag also to clean up the data, to get rid of spam, and also to remove the inherent ambiguity of human tagging.
- We work with whichever search engine you use, it doesn't matter.
- Our revenue model will ultimately be advertising but for now we are concentrating on maturing the service.
- We have been around for four years, the first two years part-time. We have raised $3m from angels and are now raising a Series A round.
Foremski's Take: Worio has an interesting service. It can also be used as a handy tool to help people organize their travels around the web, so in that sense, it can act like a service such as Evernote. It will keep cached pages of anything you tag or save. And you can share those pages with friends.
Getting people to use Worio is challenging because, as Mr Davar points out, "we don't know the extent of what we don't know" therefore we don't know how much we are missing when we search using key words. However, Worio has identified a key space that is under served and where there is potentially tremendous amounts of value to be found.
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Guest post by Ali Davar: Search's Quest to Capture the Zeitgeist
...Google seems to be effortlessly maintaining its vast market share. But for how long? A recent survey found 62 percent of Internet users would be willing to switch search engines and 45 percent of all respondents said "better search results" would make them switch. What are these elusive "better" results users seek? In the Internet age of real-time content, desired results are less about static information and more about tapping into of-the-moment conversations around a topic.
J.R Johnson is looking very SoCal when I meet him at my favorite meeting spot Apollo Cafe. Well dressed and well groomed, tanned and relaxed.
Mr Johnson is the founder of Lunch., based in El Segundo, Ca. It's a site that gathers like-minded people contributing reviews and recommendations on books, music, movies, etc.
It's a description that might seem to be a familiar one and it is, there are many such places online. But there's an underlying mission with Lunch. that seeks to avoid the morass of online negativity and hate and to encourage the growth of communities where people think before they type. And also, to reveal the common ground between us all.
Here are some notes from this morning's meeting:
My6Sense came out of stealth mode today and it's an interesting company. Headquartered in Israel, it has spent the past 18 months developing sophisticated AI technologies with the goal of helping people sort out the best information from all of their information.
"Information overload is not a problem, it's a challenge," says Barak Hachamov, founder and chairman of My6sense. "We can surface for you your most important information without you having to do anything."
The Web 2.0 culture is a sharing culture. Sharing links, information, news, photos, videos, music -- anything digital is being shared.
But would you share your salary? Would you share part of your income with people that influence you? Would you like to share in the income of others that you influenced?
Do you think that someone like Larry Ellison should share their compensation? You can take a poll here.
What does this all have to do with anything? It's my way of introducing you to Openyear.
I've been meeting a lot of UK entrepreneurs as part of the Traveling Geeks trip and I'm hearing a lot of the same things US startups tell me. They are looking for funding and also fed up with seeing the same people at their meetups.
Funding is a big problem in the UK because there are very few European VC funds actively investing. And very few angels. Many startups are looking to the US for funding but they tell me that most US VC firms have closed their UK offices.
One entrepreneur told me: "We're thinking of relocating some of our team to San Francisco so that we can be closer to the VC firms. Several VC firms have told us that they love our product but we are not over there. And so they wouldn't consider investing."
That was a common theme: that US VCs won't invest in startups unless they are in Silicon Valley.
I didn't have the heart to tell people that even if you are in Silicon Valley funding is really tough right now.
Talenthouse launched today, lead by Roman Scharf, the co-founder of Jajah, a succesful free telephony service.
Talenthouse aims to be the first online community for artists worldwide. It allows them to exhibit their work and also to connect with each other to collaborate on projects.
"With Talenthouse we eliminate the age-old artistic struggle for recognition and instead focus on creative excellence,” said Roman Scharf, CEO of Talenthouse. “We are filling a tremendous void felt by the artistic community."
The site has won support from international artists:
Eight top experts have joined together to launch Socialbrite - an online resource for non-profits searching for consultants and media tools to help them take their message to new audiences.
"We're here to help nonprofits master the social Web to bring about meaningful social change," said J.D. Lasica, a consultant and author of four books about emerging technologies. "There's nothing else like this on the Web for nonprofits, social change organizations, non-governmental organizations (NGOs) and educators. Socialbrite's mission is to shine a light on the best practices, social tools and strategies that will benefit each of these important constituencies."
I'm a big fan of the team behind Lunarr, a startup based in Portland, OR, and led by two of Japan's top entrepreneurs: Toru Takasuka and Hideshi Hamaguchi. I was sad to hear that Lunarr is shutting down its service by May 10.
Lunarr did well in attracting a large number of beta users for its collaborative based web service but couldn't break out into a larger market.
It must be difficult pulling the plug and closing down a company and its community of staff and users, there are a lot of people affected. But that's the discipline required in running a startup, knowing when to move on. Usually outside investors turn off the lights. In this case funding was not a problem because Toru Takasuka is one of Japan's wealthiest entrepreneurs. But it doesn't make sense to continue in a venture that has diminished prospects for success.
One of many things that intrigued me about Lunarr was its location in Portland. [Please see: Portland's High Tech Community And The Space To Think.]
Why would top Japanese entrepreneurs choose Portland rather than Tokyo or Silicon Valley? It was because Lunarr itself, was exploring the the cultural differences between Japan and the US, and its styles of collaboration in the work place.
I became good friends with Hideshi and we spent many hours talking about the cultural differences between Japan and the US and I learned a lot. I was also a guest of Lunarr on trip to Tokyo last year, along with Marshall Kirkpatrick from ReadWriteWeb, Kristen Nicole (Mashable at the time), and Bob Walsh from 47Hats.
And on my recent trip to Portland to visit Intel's R&D labs I popped into Lunarr with my 21 year old son Matt. We had dinner with Hideshi and spent many hours talking about innovation and culture. I returned home tired from the trip but inspired from our conversation and I know my son felt the same.
I wish the Lunarr team great success in their next venture. And I look forward to our next meeting.
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SmartyCard is a startup focused on the educational market for "tweens" with games that allow them to collect virtual cash they can use in virtual worlds such as Club Penguin, or to buy toys, books, and music.
Parents buy SmartyCard "points" in $10 increments and their kids have to complete a series of educational games before they can unlock and use the points as virtual cash.
"It's a way for parents to manage their kids' allowance and teach kids to learn and earn. And to make sure that at least some of their time spent online is being used well," says Chris Carvalho, GM of SmartyCard.
The company launched last month at the DEMO conference, winning an award. It is one of four game and educational ventures created by Gazillion Entertainment, which recently came out of stealth mode.
SmartyCard estimates that there are about 26 million tweens in the US, kids aged between 8 and 12 years. Its business model is to target the allowances of tweens, and to collect as much as 50 per cent of the value of SmartyCard points, in exchange for providing thousands of educational games.
"With virtual goods we can achieve an almost one for one value exchange but for most things it is about 50 percent," says Mr Carvalho. That means a $10 SmartyCard once it has been "unlocked" by a kid by winning the points, can be used to buy $5 worth of books, games, or music.
That seems like a large share taken by SmartyCard but the company says the educational value it provides would cost a lot more if parents had to purchase online educational programs.
Most kids use their unlocked points to buy a monthly membership in a virtual world such as the popular Club Penguin, and this is also where there can be a more equal exchange of dollars and points.
"It's like eating your vegetables before you get your desert, before you go play in the virtual worlds," says Aaron Burcell, VP of marketing. That doesn't mean that the educational games are dull, like vegetables.
I'm sitting with Matt Malden, CEO and Founder of Yield Software, and he's listening to one of my favorite rants: Why should I spend lots of time optimizing my content for search engines, choosing keywords, pointing out don't follow links, etc? I refuse do it. I'd rather spend my time optimizing my content for my readers and trust (hope) that the search engines optimize themselves to find my content, and so far so good.
But Mr Malden knows that for the vast majority of web site publishers, search engine optimization (SEO) is a vital part of their online marketing; along with running text-ad campaigns; and bidding on keywords in search engine marketing (SEM) programs such as Google's AdWords; and testing out the effectiveness of their landing pages. That's because the majority of their traffic comes from user queries in search engines and from organic search results. If you don't do these things consistently well, you won't get the traffic, and your business will off a cliff.
He also knows that it isn't easy, that there are huge number of variables to consider within each of these marketing areas. And that things change all the time. For example, Google changes it search algorithms on a regular basis and suddenly a top ranked site falls to page 92 on search results. You have to figure out what went wrong and try to optimize your site again.
"It took us more than two years but we now have a suite of software applications that automates most of the SEO, ad campaign management, keyword bidding, and landing page optimization that businesses need to do on a daily basis," says Mr Malden.
He demonstrates the product, which is delivered online, through any web browser. The user interface is well designed and the complexity of the underlying analysis data is simplified through color codes such as green for positive changes in marketing campaigns and red for warning signs, and the plentiful use of colorful graphs.
"We've automated most of the processes but there are things which users still need to do, such as creating different landing pages, etc. But we have simple to do lists they can follow, and we step them through each process, and where necessary, we even provide them with the code so that they can simply copy and paste it into their pages."
The SEO module is especially interesting. There are legions of SEO consultants and their ranks are growing daily because there is good money to be made. Businesses will pay $150 to $250 per hour to SEO consultants to make sure their web sites are optimized for the search engines. Then each time Google or one of the other search engines changes their algorithm they have to bring in the SEO consultants again.
The problem is that no one quite knows what the optimal amount of SEO is, and how best to implement it because Google keeps its algorithm secret. Google does tell web site owners what the best practices are, but SEO consultants make their money by promising to do more, to use tricks and techniques that boost a web page higher on the search rankings than a rival site.
If you hang out in the SEO communities there is a tremendous amount of what looks like folklore. If you do this, that, and the other, you'll rank higher. Then you have people that did do all those things, but suddenly their pages fall out of the top rankings, and they don't know why. And if you write about the snake oil in SEO, I can speak from personal experience, it is worse than the wrath of Apple fanboys.
Search engine optimization (SEO) has turned into a big business, and from what I can tell it's the modern version of snake oil. The unproven nonsense spewed by so-called "SEO experts" simply doesn't work. And worse, it's screwing up the elegance of the Web.
Yield's software does away with a lot of the mythology and snake oil in the SEO community about what is important in raising the rank of a web page. The software analyzes each page and lists all the things that are done right and flags things that are missing, and spells out exactly what needs to be done. This alone is worth the monthly subscription price of $129.
"Isn't this going to reduce the need for SEO consultants? Isn't that a good thing?" I ask. Mr Malden laughs, and smartly veers away from possibly being seen as an SEO-consultant-killer application. But maybe that should be the new definition of a killer application: software that kills much of the need for a high priced expert.
Mr Malden says that Yield's software will allow companies to check the work of SEO consultants and weed out the weak ones. And SEO consultants can use the software themselves to help augment their work and manage a larger client load.
I can see PR agencies also using the service because many are adding digital marketing services in a bid to expand their value to clients.
It's not just SEO. There is also a module for managing the bidding for keywords, and another module for testing out the design of different landing pages, and also there are many varieties of reports that can be generated.
Derek Gordon, VP of Marketing at Yield, says that the target market is small and medium sized businesses spending between $2K and $20K per month on online ad campaigns. "Usually the larger organizations already have in-house systems and people that manage the various aspects of their online marketing."
The first month is free and then monthly subscriptions start at $129 and up, depending on how many sites are managed. And there is no long term contract.
What's to prevent someone using the service for a month, cleaning up and optimizing their sites, testing out their keyword and text-ad campaigns, and then canceling?
"Nothing," says Mr Malden. "But this is a dynamic environment, things change all the time. And our software learns and gets better all the time. It has to, because people can cancel at anytime. Plus the amount of money companies are spending on marketing, our subscription price is just a rounding error for most of them."
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SVW: Is Search Broken?
Why is it that we have to help the search engines do a job they are supposed to be doing by themselves?
It's as if these searchbots are blind, and we have to lead them patiently along the street and point things out to them, while they tap away at the world with white canes.
VCs have little spare capital to invest in new startups and are concentrating on their current portfolio companies. But some startups could qualify for various government programs.
A good example is the Small Business Innovation Research (SBIR) grants, and the Small Business Technology Transfer (SBTT) grants from five agencies: Defense, Energy, Health and Human Services, National Security Agency, and NASA. The first phase funding is $100,000 and second phase funding is even better at $750,000 per grant.
Maureen Farrell at Forbes has written a good article on this topic. How To Get Uncle Sam To Fund Your Start-Up - Forbes.com
While just 13% of Phase 1 proposals are accepted, the hit rate for Phase 2 apps jumps to roughly 45%, estimates John Mills, director of the SBIR assistance program in Georgia.
If you want to bag SBIR funding, you'd better be able to communicate precisely how the research is going to lead to a salable product. "Most entrepreneurs we work with find it's a challenge to discuss how their technology is commercialized," says Mills.
Tucked away in the garage of a house on a quiet San Mateo street is where MixMatchMusic is based and that's where I met two of the three founders -- Charles Feinn and Alan Khalfin.
This startup has developed a set of sophisticated online tools that allow bands to collaborate from remote locations, and also publish their music in a format that allows their fans to remix their songs.
MixMatchMusic is busy building a community of musicians and their fans, centered around its online tools and services. Its revenues will come from a share of royalties from the sale of remixed songs and ringtones; professional web services to musicians; and advertising support from an $18 billion global B2B industry selling instruments and related services.
The idea for the company started when the founders wanted to collaborate on creating music but they were scattered around the country.
"We are all musicians and we love playing together, and we were in bands when we were at school. But these days we live in different parts of the country. We wanted to come up with a way in which we could still make music together," says Charles Feinn, CEO.
Along with the third co-founder Derek Prothro, they incorporated in February 2007 and began developing a way of being able to upload individual tracks, called stems, and mix them online. They knew that their technology would be useful to other musicians, but they also believed that bands could engage their fans by offering them an easy way to remix their songs.
Great minds think alike. Last year, supergroup Radiohead launched a remix competition that was wildly popular, with more than 6 million visitors, that generated 2,200 remixes at $5 per entry.
That was excellent news for the MixMatchMusic founders because it confirmed that they were on the right track.
"Radiohead had to invest a lot of money to develop their own software and infrastructure for their remix competition. But with our technology, we've made it possible for any band to launch a remix competition for less than $100," says Alan Khalfin, CFO.
Bands publish a MixMatchMusic competition widget that can be embedded in web pages, or on MySpace and other social networks, taking advantage of the viral support of their fans. A simple user interface, similar to that of Apple's familiar Garageband application, lets anyone remix songs from a library of stems.
"Some of the remixes from fans are better than the originals," says Mr Feinn.
MixMatchMusic has also built the commercial infrastructure to support its community of musicians and remixers--a digital rights management system that lets everyone share in any sales.
"If someone wants to buy a remix it costs $1. We split 85 percent of that among everyone that contributed stems to that remix. This helps our community to continue to create new music," says Mr Khalfin. "And it also helps calm any paranoia that musicians might have about releasing stems -- we are able to track everything." It helps that Mr Khalfin is a lawyer and specializes in music industry legal issues.
The company also has plans to offer professional services to bands that would provide them with a private online remix studio where only they and their producers collaborate on projects.
MixMatchMusic has come far on bootstrap funding of around $400,000 and it is now looking for Series A funding to help it expand.
Mr Feinn admits that these are not the best times for raising money. "But we do have some interest from potential investors, hopefully we'll have some good news soon." And it doesn't hurt that MixMatchMusic was received a coveted DEMOgod award last year at the DEMO conference, a launch pad for many successful ventures..
With or without Series A funding, the team is moving ahead and rolling out new services over the next few months, and working hard to build up its online community.
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I come across a lot of travel sites or travel related startups. Here is an interesting one: Offbeat Guides from serial entrepreneur David Sifry.
I'm a big fan of Mr Sifry (Technorati founder, etc...) and very interested in his ventures because he tends to be on the leading edge on many trends.
Here is a 9 minute video of Mr Sifry describing his latest venture at the recent monthly meeting of SF New Tech. (I had to shoot in night-mode because it was very dark.)
I just came across this video of Morten Lund, a Danish VC speaking at the recent Le Web conference. In this brief presentation Mr Lund talks about how these tough economic times are great for being an entrepreneur, and he gives some great advice for startups.
Mr Lund's advice is all the more interesting because he recently lost all his money, some 30 million Euros, on a media venture in Denmark.
I love Morten Lund's attitude. His advice is spot on. And like Loic Le Meur says, this is rare in an European VC/entreprenuer. But that goes to show that some of Silicon Valley's culture is escaping beyond Northern California.
Despite being penniless (Euro-less) you and I know that Mr Lund will be back in the lolly. Because it's not about the money - that's the secret (...that everyone knows but few have the courage to grasp).
"I've never been associated with a product that has had so much positive feedback," says Gregg Brockway, a serial entrepreneur and President of Tripit - an online service for organizing travel plans. Although the service is still in beta, it has quickly built a cult-like following especially among road warriors.
The service is simple to use, you make your travel arrangements wherever you want and email your confirmations, etc to Tripit and the service puts together a master itinerary, which can be shared with colleagues or family.
"If people had to manually enter their information we would have six users. Our technology understands the content of an email and extracts the right information. This is not an easy thing to do, there are many different email formats, email clients, and travel service vendors."
Mr Brockway is a co-founder of Hotwire, one of the most successful online travel booking sites. But he has not always been successful, his first venture, after leaving the world of private equity funds, was a startup that tried to automate doctor's offices. "That experience taught me a lot of great lessons," he says.
Tripit's revenue model is lead generation and other services. "There is a long list of things that we could do, for now, we're concentrating on improving the service and providing people with great tools."
Tripit can automatically provide information on plane delays, it will provide directions from the car rental place to the hotel, and there are more services in the future. For example, Tripit hopes to integrate its service into a large social network "so that your social graph knows that you will be in Boston, as an example."
[Personally, I'd prefer not to tell people where I'll be because I don't want to upset them and explain why I didn't have time to visit with them.]
Tripit is currently "pre-revenue" but the future is bright. Mr Brockway points out that Tripit is the only company that can provide a complete view of a person's travel, where they stay, cars rented, etc.
"Travel sites usually only have a partial view, from what a person booked with them--it is a fragmented view."
As users spend more time with Tripit, the technology learns and accumulates a better view of the travel habits of each person. That can produce significant revenues from lead generation and related services.
Tripit is being used by travel agents to compile itineraries for clients, and by travel departments within businesses.
"We thought that consumers would be our largest users but its is 80 per cent business travel," says Mr Brockway. "Business users like the report features and they also like using our mobile service. About 80 per cent of people accessing our mobile web site are iPhone users." I expressed surprise that it wasn't 80 per cent Blackberry users. "I was surprised too but the Blackberry has such slow web access that people don't use it access the Internet."
There are hundreds of online travel sites but Tripit is managing to stay neutral. "We don't take bookings so we don't compete with a lot of sites, they see us as a value add."
Tripit has raised $6m and despite the current tough times, the company is well positioned. Mr Brockway says his team is lean and well financed. "Most of the money is still in the bank."
I'm hearing VCs telling portfolio companies to cut their spending significantly, by at least 25 per cent, because of the financial crisis and its impact on the economy.
The goal is to extend a startup's "runway" its time between financing events. Most of those cuts will come from payroll by eliminating jobs and in cutting outside services such as marketing and PR.
"I wouldn't want to be in the position of raising money for a startup venture right now," said Gregg Brockway, a serial entrepreneur and President of Tripit, a startup based in San Francisco. Mr Brockway said Tripit is well financed and doesn't need to raise money. "We raised $6m and we still have most of it in the bank."
Om Malik at GigaOm yesterday reported that Sequoia, one of Silicon Valley's leading VC firm, held a meeting Tuesday with its portfolio companies.
. . . The gathering was addressed by at least four speakers, including a brief introduction by Mike Moritiz. Doug Leone was another speaker. I am still trying to nail down more details of the two other speakers. A person who handles Sequoia’s public market investments is said to have talked to the startups. The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn.
. . . They want the companies to cut costs, to figure out way to survive and emerge at the other end of this downturn, which could last years. The speakers went through each functional area of the business and told the companies how to cut costs. By holding this special meeting, Sequoia is telling its companies to put survival strategies in place and figure out ways to outlast the broader market troubles.
. . . Sequoia isn’t the only one advising its startups to tighten their fiscal belts and prepare for a gut-wrenching ride. Ron Conway, a well-known angel investor in the Valley who has invested in companies like Google, offered very sobering advice to his companies via an email earlier today.
Raising capital will be much more difficult now. You should lower your “burn rate” to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses. This is the equivalent to “raising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible.
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I'm lucky, I find an empty parking spot right outside the Thai restaurant where I'm meeting "EJ" (Evert Jaap Lugt) the CEO of Nimbuzz it's a company I'm starting to hear a buzz about.
I've no idea what EJ looks like but there's a guy waiting outside. He says "Hello Tom, there's a tall blonde guy inside looking for you."
I walk inside and sure enough a tall blonde guy bounds up and introduces himself as EJ. "I asked some guy outside if he was Tom he said he wasn't but he said he knew you." I sit down with EJ slightly embarrassed that I can't quite remember who the other guy is.
We start talking about Nimbuzz. It's a mobile VOIP and IM company founded in early 2006, HQ in Rotterdam, plus a development center in Cordoba, Argentina.
"Argentina is great, we've got about 40 people there, it's a university town, we got a lot of them from Motorola. But it is a different culture, they tend to like being told what to do by a boss but we've retrained them to think for themselves, and we give them interesting work to do rather than the boring stuff Motorola used to give them. In Holland we have a flat hierarchy, nobody likes to have a 'boss' we have a "manager' and we figure things out by ourselves."
EJ is a serial entrepreneur, which is unusual in Europe, especially in Holland. "If I was going to do a startup again I'd do it here in Silicon Valley, or Israel or in Asia - India or China. It's difficult to get motivated people in Holland, they don't want to work for a startup, they want job security and they are too comfortable."
He tells me about one Dutch guy that wanted Thursday afternoons off and to go home at 5 p.m. to spend time with his family. EJ told him he loves his family too (3 daughters) but in a startup you can't do that, you have to work hard for a few years then you can pull back.
We talk about the differences in the mobile VOIP business. "There are nearly 200 other companies in our market. The Americans don't understand the mobile market they think it is like the Internet with its standards etc. But mobile is different, with hundreds of handsets, many operators, and multiple operating systems. It's complex and you have to hash out agreements with many different parties and support many different handsets etc."
Part of the Nimbuzz strategy is to partner with social networking sites because they offer a viral distribution network. Nimbuzz offers a white label solution to the social networking sites for the web component part of their services but a branded Nimbuzz mobile component. "They get to keep the web part, which is theirs, and we have our brand on the mobile part of the service."
Nimbuzz allows mobile phone users to place free VOIP calls over their data plans, they can call call next door or across the world. They can also call users of other VOIP services such as Skype users. "VOIP and regular calls can coexist easily because if I'm calling a business partner I will use the cell phone service but if the quality is not as important I will use VOIP. Quality is dependent on how many people are using the data service at the same time."
I ask about Skype getting into the same market. "I know, you'd think they would be there already but they're not. Same with Google, I wonder why they aren't more aggressive in the mobile space."
It all comes down to focus and Nimbuzz is very focused on what it does, and so far it seems to be working, it has about 1m users worldwide. Are you making money?
"No we're burning money. We need to build up a large enough regional market and then we will do lead generation. I strongly believe lead generation is the future for what we do and eventually all mobile calling plans will be free, supported by advertising or lead generation. You buy the phone but the rest is free. We are already seeing the beginnings of that in some European markets."
What about funding? "We have some great investors, we have a new round we are announcing but Techcrunch already did it, they broke the embargo." I tell EJ that Techcrunch is becoming notorious for breaking embargoes, he shakes his head.
"We're very lucky with our investors. One of them is a large South African media company, MIH Group, which nobody has heard about but they are one of the most successful Internet investors around. About 15 years ago they decided not to invest in print anymore and they now own large shares in major Internet companies in China, Russia, Poland and elsewhere." Another key investor is Mangrove, the European VC firm which funded Skype. "Even though we had offers from other VC firms, our original investors said they wanted to do all the new funding."
EJ is in town to do some deals with some local companies, I can't say who but I did guess a couple of them. More news will follow.
After we finish the iced Thai coffees we walk outside to say goodbye. EJ heads off to find his wife who is shopping in nearby downtown San Francisco. "I like this town," he says.
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Tuesday evening I ran into Talkshoe, a Pittsburgh startup offering free teleconferencing services for up to 250 consumers at a time, over a regular phone.
Talkshoe just launched a widget that can be used within many types of established groups such as those at Yahoo, Google, Facebook, MySpace and more.
Dave Nelsen, the CEO of Talkshoe, said business is great, and that the company has been growing at over 100 per cent per quarter since the service was launched 18 months ago. It reached 3 million users in the most recent quarter.
More info here...
LinkedIn works wonders as a social networking site for business professionals- especially if you are LinkedIn founder Reid Hoffman.
Groupscope is a company that loves to map money relationships between investors and companies.
It applied its lens to answers to a question LinkedIn founder Reid Hoffman posed on LinkedIn:
What are the three hottest companies companies in Silicon Valley currently?
The answers were analyzed by Groupscope. And what did Brad Cohen from Groupscope find? Reid Hoffman is closely connected to many of the hottest companies in Silicon Valley:
It is interesting that Reid posed the question and was linked to the most common answers. I find this somewhat ironic...
...(and the people responding may or may not have known that Reid was involved in the companies they mentioned). The hottest company answers nonetheless underscore the extent of Reid’s connections in SV startups.
This is either a superb testament to the networking prowess of Mr Hoffman, or it's a testament for LinkedIn as a truly useful business networking site. I'm sure it's a bit of both.
BTW, please link in to SVW on LinkedIn, I'd like to find out more about my readers (tom at foremski.com).
By Tom Foremski for Silicon Valley Watcher
It's Tuesday night and I'm at Bimbo's nightclub in North Beach talking with serial entrepreneur Bill Nguyen about his latest venture Lala.com--a music sharing site with a twist, or rather several twists.
Mr Nguyen is animated, relaxed, and looks like he is having way too much fun. He clearly revels in what he is doing: launching another startup, being a doting father of a two year old, taking time to surf, and being able to indulge his love of music.
"Music is so important, it is how we see ourselves and how we define ourselves to the world," he says. I ask him what music was seminal in his life. He pauses, then laughs and says heavy metal. But these days his musical tastes are omnivorous and his appetite ravenous.
He mentions a band he recently discovered. "You have to listen to them, "Architecture in Helsinki" they are amazing. I've got plenty of other recommendations too."
Finding out about little known Australian bands is one of the perks of his job. Lala is a clever way to monetise the incredibly huge store of music CDs sitting in millions of living rooms.
I, like many people, am bored with my collection of CDs, I'd like to hear music I don't have. Lala lets me swap and sample other people's collections--an astounding 1.8 million titles registered by Lala users.
Through Lala I send my disks to others who find my collection potentially fascinating, and I can do the same--request their CDs. All for just $1, plus 75 cents shipping in prepaid envelopes.
For the price of one new CD I can refresh my collection ten CDs at a time. And 20 per cent of revenues are donated to the Lala created Z Foundation supporting working musicians.
Lala has been branching out into some interesting areas. It recently purchased a radio station, WOXY in Cincinnati, a cult station mentioned in the movie "Rain Man," saving it from closure. This led to the launch of "citizen radio" allowing Lala users to create their own streaming Internet radio shows. This drives CD exchanges because listeners can then send out requests if they hear something they like.
And from there, Lala is moving into streaming live performances, which is why we are talking in Bimbo's. Aimee Mann is about to come on stage and her performance will be captured by Lala.
It's a sweet deal for the venues, says Mr Nguyen because it helps them to attract hot acts. The clubs can tell performers that they have streaming capabilities automatically tied to revenue sharing of music downloads. That's attractive to performers seeking wider distribution and a share of online music revenues.
Lala is also establishing locations where local bands can come in and stream their music through Lala's network.
Soon, Aimee Man comes on, along with several special guests. Special guest John C. Reilly, the prolific movie actor comes on several times and steals the show--and doesn't give it back. Here is another person that is having way too much fun...
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It was also good to connect again with John Kuch, Lala's hard working bus dev and marcoms chief, and also a doting father of a two year old. John, like everyone else at Lala is a huge music enthusiast and constantly discovering new bands. Here is a link to his Lala radio station.
Some of Bill Nguyen's previous ventures: Seven Networks, Onebox.
Phil Harvey, news editor at the always excellent Lightreading has compiled a list of 61 video hosting/sharing sites.
Phil asked me:
Can you lead me to some thoughts as to why there are so many Web video sharing companies being funded now?
I'm keeping a list of them and, frankly, I don't get it. My readers ask me and I haven't got a clue. But my readers are used to that.
Anyway, here's the latest list:
Phil, at valuations such as that gained by YouTube, the VCs are willing to roll the dice and maybe win a similar deal. Remember, GOOG has competitors that have to compete along similar markets, and time to market is more important now than ever before. Buy it so that you don't have to build it. Yes, most of those funded will fail so that the VCs can get a small number of winners. Too bad for all the people toiling away in the future failures so that a few can win, but that's the VC way.
Great list! Thanks for putting it together.
Also, VCs move in herds, not in packs like wolves. Like herd animals they find safety in numbers :-)
Earlier this year I met with the Maxtor/Seagate data storage folks plus their partner Fabrik, Inc. And got a very early look at a new online service that blurs the line between storing your digital assets out in the cloud, or on local storage.
MyFabrik is a cool application that manages consumer media online or offline. In fact, the data storage costs online are very close to your data storage costs off-line--if you were to buy a Seagate drive.
That's an interesting revenue model. And by offering a nifty media management application, it allows a hard drive maker to add value and pull some revenues from above the (brutal) commodity marketplace of that sector.
This strategy also plays to all types of storage customers: from the hard drive huggers who need the assurance of a physical entity, to the ones that are comfortable with having their stuff in the cloud, and the ones that don't care or even want to know.
Those interested in trying out the new myfabrik online storage and sharing service can register for access to the final public beta release beginning on Monday, August 28. Following the public launch of the final service in September, access to the new myfabrik service is priced beginning at 99 cents/month, which includes 1GB of online storage space. Additional storage space may be purchased incrementally for 49 cents per GB.
The city of London wants Silicon Valley tech companies. It wants their European headquarters as part of a push to create at least 2500 new jobs this year in emerging technology sectors; and further boost the city's multi-cultural tech community.
I spoke with David Riches, Director of North America for Think London, a semi-private organisation representing the Mayor of London and local businesses. It has the resources to enable companies to set up business operations in London in as little as six weeks.
"California companies are by far the largest US investors in London. It's because we already have a large tech community of developers, with strong ties to our universities. It is a much larger tech and research community than Oxford or Cambridge. Plus we have a great market that is young, urban, and tech savvy," says Mr Riches. In other words, lots of hipsters and first adopters.
Mr Riches says that his team will help companies quickly find offices, places to live, set up the basic infrastructure of bank accounts, etc. Introduce lawyers, accountants, help in recruitment, and introductions into the local business community. He laughed when I asked if an old school tie comes with the package.
Paris is London's largest competitor for European HQs, however, French employment laws raise business costs, says Mr Riches. It should be noted that London based companies have to comply with far stricter employment laws than in the US.
London is expensive, he admits, but then again, so is Silicon Valley. What you get for your money in London is a gateway into Europe, a business culture that is more American than in other countries; and access to a talent pool that is attracting tech firms from around the world, including our own giants, Google, Yahoo, and EBay.
Mr Riches also said that there are large Indian tech firms setting up in London, and tech firms from other countries too.
This might seem like a type of cultural technology melting pot being created by the newly arriving companies--but it is more the other way around. London already has a large, culturally diverse pot on the stove and, unlike in the US, the burners are full on.
The arriving companies become part of one of the world's most ethnically and culturally diverse cities in the world. It is estimated that more than 300 languages are spoken by sizable populations in London. This means unique access to a multi-lingual/multi-cultural workforce; some companies are already using that workforce for multi-lingual call centers.
I can see how there could be many other ways to benefit from such a diverse talent pool. That's because businesses exist within a society, which means that their cultural interface is very important otherwise they, and their products/services, won't be successful. They won't hit their mark.
If you don't understand your communities you will not succeed as a business. That's why Silicon Valley Watcher reports on the business and culture of Silicon Valley. And London potentially offers businesses an understanding of many cultures in one place.
London certainly looks appealing as a business center. And its ambitions to replace its hard hit financial services sector with more enduring and rapidly growing industries is a smart move. What will determine its success will be if it can become a development center that spawns great companies. Right now, its most obvious advantage is as a marketing/sales center for tech companies.
For London to attract Silicon Valley tech companies, the Think London organisation needs to do more work with the venture capital community and stress speed to market. The VCs are the ones that are pushing the startups to outsource as much as they can, and to speed to market by globalising operations as quickly as possible.
For London to attract the emerging Silicon Valley companies, however, there also needs to be more of business environment that doesn't punish success.
For example, a year ago I met with Rob Hull, business development manager at BT, the giant British telecom group. BT is investing about $16 bn in a next generation Internet infrastructure, and it dominates the telco market. BT will help web services companies, provide billing services, etc, and split the revenues giving them 80 percent and BT keeps 20 percent.
However, there's a catch... From SVW: Silicon Valley startups told: Come to London ... BT wants your business
...should your wireless service become hugely popular, BT reserves the right to "port" the service to its machines and reverse a 20 percent / 80 percent revenue split in its favor(!)
Mr Hull says that this provision is rarely implemented. But then why have it? Seems a discouragement to me...
I cannot see how such a business arrangement would be attractive to Silicon Valley's Web 2.0 companies, net neutrality issues pale in comparison. Think London might do well to ask BT to think again on that provision.
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Please also see: Why is there no British Google? A top British politician asks...
I popped into the Museum of Modern Art Wednesday evening for the launch party for Genius, a startup that is grabbing buzz by the armful. So much buzz that a TV crew from one of the local stations was at the party, wondering if it was an example of dotcom mania making a come back.
No, it was not, but Genius has a savvy team, led by CEO and founder David Thompson, former chief marketing officer at WebEx. Mr Thompson knows his business very well, he's one of the most astute marketing executives (and I hate that term normally...) that I've met in a long long time.
The Genius product is also very clever, the way that it bypasses the the IT department and encourages users not to tell the geeks in the glass room about using the SalesGenius web service--the first in a planned suite of enterprise apps.
Smart use of proxy servers allows SalesGenius to monitor a company's best sales leads. They can view behavioral data on who visits their web sites, and help determine which sales prospects are hot. Hot leads get bumped up to the top of phone list.
I met with Mr Thompson and Heather Mosley from PerkettPR more than a week before the launch, and the more I think about the product and the business strategy I'm more impressed. It looks like a useful product and a very very smart business strategy.
And it was during a discussion with David Thompson that I had an interesting and blindingly obvious realization. I had asked why he had chosen to develop SalesGenius, as the first in a suite of enterprise apps?
He said the focus on sales is the most important part of any company and that's where the most benefit occurs from investment in the automation of the sales process.
A simple answer and it made me realise how often organisations forget this blindingly obvious fact. And I realized why CRM is probably the only enterprise software application that could ever justify its ROI and that's why CRM companies have been very successful.
But new web services threaten the old CRM stack because users can start using them instantly. And users can customize these apps without requiring IT departments and consultants.
Mr Thompson said that his experience at WebEx showed him how salespeople were using online meetings to sell products and services. Using the WebEx technology they could make 10 times as many pitches, and sell much more than before.
Since the interview, I've realized that the SalesGenius product is a crafty way to bring sophisticated web analytics into an organization, through grassroots users. And then once you get viral recognition within the company you get a shot at corporate license revenues, and sales of other online modules for other departments--all tied together for a one-view business console for the CEO.
Internet commerce is going to grow in importance, therefore strong web analytics is going to be the foundation of every company. Because web analytics determines how you sell your products, how you reach your best prospects, and the many other gazillion online interactions that future corporations will have to monitor. Web analytics is a way to get into the core of future businesses, that's the sweet spot because without strong web analytics you will not be able to run your business effectively. I have to hand it to the company, its name might turn out to be accurately descriptive rather than just hopeful ... :-)
I wouldn't be surprised if within a year WebEx or Salesforce acquires Genius. In fact, they should all join together, and they probably will at some point.
LaLa.com launched today--an interesting business that seeks to monetize your CD library. Think of it as monetizing your long tail collection of CDs you rarely play anymore...
For a buck each you can exchange each one for a CD you'd love to hear.
The people behind LaLa are led by Seven co-founder and chairman Bill Nguyen. I popped in to see Mr Nguyen and John Kuch, in business development, a couple of weeks ago to get the prebrief.
LaLa is in downtown Palo Alto in an interesting building and in a spacious office setting that has tons of natural light and high ceilings. When I walked in, Mr Nguyen was escorting out family members who had dropped by to surprise him on his birthday.
We walked into a cooler, darker conference room and sat down on foldable wenge-colored Rex chairs, and switched on the LCD projector. Up comes a user interface that is friendly and intuitive.
"We wanted to be able to give people access to a much larger library of music than ITunes or anybody else. And we have some great search algorithms that can recommend music that you didn't know you might like," said Mr Nguyen.
Basically, the service works this way: you list your CD collection and you mark each one with a "I want" or "I have" and others can browse your CD collection and request your CD(s). You get an email saying that a member wants your CD and you pop it into a pre-paid envelope, as in Netflix, and off it goes.
Similarly, you receive CDs you've requested from others. Each transaction costs just $1. And the artists get a royalty.
You get rid of a CD you weren't listening to, and you get a CD you want, and the artist gets paid about the same as if they had sold a new CD. It is win-win-win.
Clearly, the temptation is to rip the CDs and then move them on. But, should such abuse of the system take place, the artists are getting paid each time. The record companies are missing out on their cut, but hey, they already got their cut...
Check it out and let me know what you think. We have betas available for SVW readers! But sign up quickly because there are a limited number available...
Here is the official announcement:
About a year ago I was in Palo Alto, trying to get back home but I had promised to stop in early evening to Il Fornio and meet with Become.com--a shopping portal.
I remember that Tim Dyson the CEO of Next Fifteen was going to be there, and I wanted to touch base with him, but I wasn't that interested in meeting with one of many shopping search sites such as Become.com--I was determined to make it a short meeting.
You can tell where this story is headed: I ended up staying for dinner and I was very impressed with the team behind Become.com (and that's when I also met Jason Dowdell(!)) I ended up staying well past my bedtime but it was worthwhile.
Wednesday I got to catch up with Michael Yang, the CEO of Become.com--not that we haven't bumped into each other many times since last year. What continues to impress me about Become.com is the discipline and the focus of the management team.
This is a company that is very single-minded about the ecommerce opportunities that lay in its lap. And this is also, a very experienced management team, having built up My Simon.com, the shopping portal, which was sold to Cnet.
This time, Mr Yang and his partners, know how to avoid the mistakes of their first go around--and that's what makes this company and this team very interesting. They know what to do and they are executing near perfectly on a business plan that they laid out to me more than a year ago.
So stick around, an interview with Michael Yang, CEO of Become.com is on its way.
[There has been a lot written recently that Silicon Valley is back--here is part of a post I wrote in mid-November 2004.]
I've had lots of chats about Silicon Valley lately and I’m of the Bachman Turner opinion that you ain’t seen nothing yet.
When I arrived here November 8, 1984, Silicon Valley was going through the down cycle following the PC boom. A hundred PC companies wanted just 10 per cent of the market, wanting to strike it rich, as rich as the Apple IPO—the Google celebrity IPO of its day.
Hundreds of Apple staff became millionaires, including secretaries and the guy that ran the parking lot. The media coverage was massive. VCs rushed in like a herd and funded a huge number of PC companies and when the bubble popped, the down cycle was harsh. Stories about Silicon Valley’s death were constant and grinding for several years. I’ve seen several business cycles and the same thing happens in each down cycle, endless speculation about Silicon Valley’s future. What future does Silicon Valley have?
I think I can answer that question very easily—and I’ll accept any size bet on this call: when Silicon Valley comes back, it will be bigger than before. (Actually, it’s been back for a while--hence this venture.)
[I was chatting with Ron Piovesan, from Cisco on this topic recently, and he says has also seen signs of improvement. He laughed when I said I own the dotcom name: SiliconValleyIsBack.com. I said I’m serious, I do own it!]
Silicon Valley is very much like a fairground slurpy -- big chunks of ice with most of the juice at the bottom.
And there is a lot of juice accumulating, the laptops are discretely reappearing in bars and restraunts, and there are many signs of bubbly behavior.
Silicon Valley is going to have a larger impact than before. I’ve been through several business cycles and each time Silicon Valley has come back stronger.
In the shadows of Tuesday's Oracle-Sun enterprise system bundling partnership, and news from MacWorld, was some news about Ingres--an open source database company.
The news about Ingres was that Jim Finn joined the company as senior vp and head of communications--leaving a very high profile job as head of IBM Americas communications.
It was just over a year ago that Mr Finn departed from Oracle, where he headed worldwide communications. This was one of the most challenging jobs in Silicon Valley if you consider all the M&A deals Oracle was doing; not to mention working with Larry Ellison, one of Silicon Valley's top business leaders.
Ingres is assembling a stellar executive team and it's ambitions are to challenge the enterprise market leaders with open-source enterprise software. Given the high license and maintenance fees enterprises pay today, Ingres has a nice price umbrella to work under. But enterprise software is a hard sell. Here are some more of my thoughts on the company:
Ingres: Is this the dark horse of the enterprise software pack?
Startup LogLogic is targeting the dark matter of our digital times, a vast ocean of information that we never notice, at least not the users. It is the data generated by firewalls, network equipment and other IT systems.
Andy Lark, the former head of comms at Sun, is LogLogic's CMO. "There are three types of data inside corporations. There is the data in the databases, the unstructured data in emails and documents, and there is log data. And some companies, such as financial institutions, can generate terabytes of log data per week. All that data has to be stored and has to be searchable because of legal requirements."
LogLogic released what it called its third generation technology and offering Google-like searches and advanced AI techniques to locate data within terabytes of storage... sold as an appliance for quicker integration into IT systems.