Lunch Links - March 31st, 2014

Major Moves

Crossbar Incorporated is a Bay-area consumer electronics company working to usher in a new generation of non-volatile memory through "Resistive RAM" (RRAM) tech.  They'll get some help in their goals through $25M in Series C funding, joined by SAIF Partners, Artiman Ventures, KPCB, Northern Light Venture Capital as well as my alma mater, the University of Michigan.  Founder Wei Lu previously worked in the Electrical Engineering department at the University of Michigan.  

ClearStory Data, another Bay-area startup, wants to make it simple for business users to gather data from dispersed data sets across internal sources, corporate sources, Hadoop, and the Web.  They have received $21M in Series B funding, in a round led by DAG Ventures and heavyweights Andreessen Horowitz, Google Ventures, Khosla Ventures, and KPCB.  

Kitchensurfing, a startup based in Brooklyn, is seeking to make finding a private chef as easy as booking a hotel room online.  They received $15M in Series B funding, in a round led by Tiger Global Management and joined by Union Square Ventures and Spark Capital, and may raise their valuation to approximately $40M.

Personal Blogs

Joel Gascoigne, founder of Buffer, a San Francisco startup that helps you share across all social media, explains how his co-founder and himself structured themselves when the time came to use labels such as CEO and COO.

In the first week of December we were in Thailand for our second company retreat. It was during our time there that Leo and I had a lot of lengthy walking meetings around Pattaya about the structure of our roles. We talked a lot. I couldn’t think of a more perfect setting for us to figure these things out. We’re both optimistic people and despite the tough conversations we knew we’d come to a conclusion about how things should work. We had gratitude for how lucky we were to be in Thailand and had built a company to a stage where this problem had arisen.

Justin Kan, new YC partner and founder of Exec and Justin.tv, gives a post-mortem on Exec Errands, an app that sought to find people willing to do simple tasks in their spare time, and offers his own diagnosis of what he would look at differently.

Customer acquisition was hard. Lyft and Uber are viral online-to-offline businesses, because many of the times you call a ride you take it with others (who subsequently think it’s an incredible experience and download the app). Exec Errands was a not nearly as viral (and cleaning not at all), because you could use those services without ever telling anyone.

In an old post, but one that bears mentioning, Ben Milne, founder of payment network Dwolla, advises to “solve problems that piss you off.”

Q. “How much does this really piss me off?”


A. Tons. Shit, I hate this. I see it everywhere. I sign up for new services hoping it does it differently, and it never does.

Something I hope you can take away from this: 

YOU CAN’T SOLVE THE PROBLEM WHILE YOU ARE CONTRIBUTING TO IT. 

So, I know it bugs me to no end, and I know I can’t let it go. It’s not a personal issue, and the more I think about the time we all lose to this junk, the more it bothers me. This may not be true for others, but for me, if a problem:
1.   Doesn’t get me out of bed
2.   Make me lose sleep
3.   Drive me to the point of getting angry when I see strangers doing it
4.   Make me swear constantly about how obnoxious it is that I’m doing it
5.   Isn’t systemic in society (a lot of people deal with it) 

 Then I shouldn’t solve it!

Shout-out Saturday: {C}oded Bootcamp Blogger Katelyn Lewert

Over the weekend, I was interviewed by Katelyn Lewert, a student blogger for {C}oded, the coding bootcamp and app incubator space in New York City.  We sat down briefly to talk about startups, motivation, and handling criticism.

"As an entrepreneur, you always need a reason for what you do. When you are running without a purpose, it is difficult to improve yourself and continue.  But if you are running for a cause, or for teammates or family, you can find the strength to wake up an hour early, run that extra mile, train with discipline, even when you are unmotivated. Always have a motivation."

 You can find the entire interview here at {C}oded's blog.

Lunch Links - March 27th, 2014

Major Moves

Klout, the website that rates online influence through social media metrics, has agreed to be acquired for $200 Million by Lithium Technologies, a Bay-area social customer service expected to announce an IPO later this year.  Klout had previously raised $40M in venture funding over the past five years.

EnVerv, a Bay-area semiconductor company with offices in San Diego and China, has raised $15.4M in Series C funding.  EnVerv has been working to develop advanced power line communication through their "system-on-a-chip" technology.

"Social" has been an application buzzword for the past decade, but who would invest in an "anti-social app"?  Apparently Chris Burch of Burch Creative Capital, who led a $1M seed funding round for Split, an Israel-based app for "avoiding unwanted encounters" with people - such as your ex.  According to Split's website, the app gives you real time alerts when someone you want to avoid is in the area, and suggests an "escape route" to avoid seeing them.

Personal Blogs

Dan Primack of Fortune's Term Sheet commented on King Digital's lackluster IPO and what it has taught us about today's IPO buyers:

By market close, however, King shares were down more than 15% (and have fallen even further in today's early trades). Apparently folks are a bit worried that this is Zynga Part Duex, a gaming company that has tied its IPO to the moment of peak popularity for its flagship game. And it probably doesn't help that King's initial market cap was virtually identical to that of Zynga at the time of its late 2011 IPO.

So what have we learned here? Namely, that profits don't really matter when it comes to tech IPOs. Or, at the very least, they are not determinative.

Today's IPO buyers care about two key metrics:

1. Growth.

2. Total available market, into which that growth can be realized.

David Jackson, CEO of stock market analysis site Seeking Alpha, gives a short commentary on job interviews, linking to Dr. Todd Dewitt's "Reinventing Hiring".

"If you can’t afford expensive assessment centers like BMW, so what. Just sit around a table with a candidate and throw some of your work at them. See how fast they start to get it. Hire the one that gets it the fastest."

In other words, don’t ask the candidates about their capabilities, get them to demonstrate them. 

Lunch Links - March 26th, 2014 - Oculus Rift Acquisition and Candy Crush's IPO Bust

Major Moves

The big deal today, of course, is Facebook's acquisition of Oculus VR, maker of the namesake Oculus Rift virtual reality headset, for around $2B ($400M in cash and $1.6B in Facebook common stock).  Mark Zuckerberg announced the deal via his Facebook page at 5:30pm last night, giving the tech community some time to react.  Minecraft creator Markus Persson apparently disagreed with the acquisition, backing out of talks with Oculus VR about creating a Minecraft version for the Oculus Rift:

We were in talks about maybe bringing a version of Minecraft to Oculus. I just cancelled that deal. Facebook creeps me out.
— Markus Persson (@notch) March 25, 2014

Also on Twitter, Marc Andreessen of VC fund Andreessen Horowitz (A16Z) noted that A16Z had led funding rounds and excused himself from the deal due to a possible conflict of interests.  Oculus VR previously had raised $91M in Series A and Series B venture funding, and has so far provided a 20x return on that investment, according to Bloomberg.

This deal is Facebook's fourth acquisition of the year, and comes on the heels of its $16B ($4B in cash, $12B worth of stock) acquisition of WhatsApp last month.

King Digital, the digital entertainment company behind Candy Crush Saga, had a lackluster IPO this morning, breaking below their syndicate bid and falling from $22.50/share to around $20.00/share, a drop near 10%.  The drop seemed to be fueled by comparisons to Zynga's deflated IPO and fears of King's Candy Crush Saga being a one-hit wonder.

However, unlike Zynga, King has both significant profits and a profitable track record.  King's CEO Ricardo Zacconi noted on CNBC this morning that their company has been cash flow positive for 9 years, and has only taken $9M in outside capital.


Personal Blogs

After reading Zuckerberg's announcement, Fred Wilson of Union Square Ventures writes about how the Oculus VR acquisition signals Facebook's search for the "next mobile", which could be anything from virtual reality to drones.

Entrepreneur-turned-VC Mark Suster reflects on his six-and-a-half years as a venture capitalist.

Far above the rabble of today's deals, marketer Seth Godin blogs a few philosophical sentences about money vs story.

Lunch Links - March 25th, 2014

Major Moves

EDIT:  Several sources are reporting a deal for Facebook to purchase Oculus VR, maker of Oculus Rift, for $2 Billion in cash and stock.  More on this tomorrow.  


Box, the cloud content management file-hosting site, filed publicly for an Initial Public Offering under the NYSE ticker "BOX" yesterday, revealing plans to raise around $250M through the IPO.  In light of Box's propensity to burn through capital, a notable line in the S-1 states "We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future."  (You can read through the S-1's risk factor page here.) Whether that's enough to deter investors in a white-hot file sharing space remains to be seen.

King Digital, the digital entertainment company behind Candy Crush Saga, announced its intentions to go public this week, setting its IPO valuation as high as $7.6B.  Despite fears of a "dot-com"-like bubble, its important to note that, unlike Box, King has both significant profits and a profitable track record.

Dan Primack of Fortune.com offers a stat comparison of King to competitor Zynga, which had a 2011 IPO that notably fell flat.

For context, Zynga opened trading today with a $4.3 billion market cap, while King is looking for an initial market cap of between $6.6 billion and $7.5 billion (based on a $21-$24 per share IPO offering range). In the below stats, the first figure is for King Digital while the second figure is for Zynga:

2013 Revenue: $1.88 billion vs. $873 million

2013 profit (loss): $568m vs. ($37m)

2013 Adjusted EBITDA: $825m vs. $46.5m

Avg monthly active users (Q4 13): 408m vs. 112m

Avg daily active users (Q4 13): 124m vs. 27m

Monthly unique payers (Q4 13): 12.16m vs. 1.3m

Employees: 665 vs. 2,034

Palo Alto Networks buys Israeli cyber-security startup Cyvera for $200M, and Blackstone Group announces early intentions to open an office in Israel.  Recent interest in Israel's startup scene has been driven by its high GDP growth, low unemployment, and low inflation.

RelateIQ, a company looking to automate tedious manual data entry tasks in offices, raised $40M in a Series C funding round led by Redpoint Ventures and joined by KPCB and News Corp.  VentureBeat notes RelateIQ's more data-driven approach may help it unseat larger competitors in the CRM space, such as Salesforce.com.

Personal Blogs

One of my favorite VC bloggers, Tomasz Tunguz, dives into Box's S-1 filing, comparing 7 key metrics to other SaaS companies.

Marketer Seth Godin pens a lighthearted piece about musical chairs, and why he thinks teaching kids to make the team is okay, but teaching them to make a team is great.

Fred Wilson of Union Square Ventures talks ageism, and why the older generation is still relevant in a youth-centric tech field.

Lists and Lessons

MIT Tech Review lists 5 interesting things about the Box IPO, including that Box doesn't actually own or run any data canters.

FastCompany gives a few management anecdotes from Juice Software founder Kim Scott, a boss who "actually gives a damn."

Lunch Links - March 24th, 2014

Major Moves

Actifio, a Boston-area startup, just eclipsed a $1B valuation through a $100M round led by investment firm Tiger Global Management, alongside VC funds Andressen Horowitz and Greylock Partners.  Actifio works to solve the problem of "copy data" by integrating otherwise-independent data protection and recovery backup systems.  The new valuation puts Actifio alongside e-commerce site Wayfair as the only two billion-dollar valued Boston companies.

Stir, a startup founded by ex-Apple engineer JP Labrosse, raised $1.5M in a round led by Tony Hsieh's Vegas TechFund.  Stir builds kinetic standing office desks to counter the epidemic of long-term sitting in office gigs, recently nicknamed Silicon Valley Syndrome.

OPower, a Virginia-based SaaS company that promotes personalized energy efficiency action, announced terms for its IPO at $110 million by offering 6.1 million shares.

CVC Capital Partners, a PE firm based in London with offices in NYC and Hong Kong, lands investment from the Japan Bank for International Cooperation (JBIC) for its £1.8bn Asia-focused fund.  This comes on the heels of CVC's reducing its stake in Indonesian department store Matahari.

Personal Blogs

Angel investor and blogger, "Gotham Gal" Joanne Wilson showcases Cameron Houser of Given Goods in her Woman Entrepreneur Monday column.  Given Goods, a Boulder, Colorado-based online marketplace for products that give a percentage of the price to non-profits around the world, joined TechStars back in May 2013.

Speaking of women founders, YC's Sam Altman offers a long essay on "What I've Learned From Female Founders So Far", the title of which reminds me of numerous middle school essays.  Given the controversy stirred up by his predecessor Paul Graham three months ago, it's good to see Altman attempting to clarify his views.

Tomasz Tunguz, a principal at Redpoint Ventures, gives a great explanation of the "Bike Rack Effect" - why companies often get swept up in debating simple things but gloss over complicated problems.

Lunch Links - March 21st, 2014

Major Moves

Airbnb is in talks to raise another round funding, possible valuing them at a cool $10 Billion, according to Wall Street Journal.  Compare this to hotel Hyatt's $8.4 Billion valuation, or Marriott's $15.9 B.

Gigwalk, an app-based startup that allows brand managers insight into how their campaigns is working through their network of 500,000 "gigwalkers", has raised $10 Million in Series B funding.

Pley, a San Jose startup offering, of all things, LEGO block rental, has raised $6.8 Million in a Venture Round led by Allegro Ventures, valuing them at $20 Million.  Taking advantage of people's desire to access, rather than own, Pley lends their subscribers lego sets, weighs and sanitizes the sets after receiving them back, and ships them off to new subscribers.  If you're a messy builder, don't fear - Pley allows its subscribers to lose an average of 15 pieces in each set without penalty.


Personal Blogs

Angel investor and blogger, "Gotham Gal" Joanne Wilson gives a small look into Las Vegas' Downtown Project, led by Tony Hsieh of Zappos.

Venture Capitalist Tomasz Tunguz of Redpoint Ventures uses a few graphs to illustrate that obtaining Series B funding is much, much more difficult than Series A.

North Carolina-based business strategy speaker and travel photographer James Clear explains why scheduling is actually the key to creativity.


Lessons and Lists

Lisa McGreevy of Entrepreneur.com lists 5 habits of successful social media campaigns.

Inc.com interviews Seth Godin, founder of Squidoo.com christened "America's Greatest Marketer" by American Way Magazine.  Seth explains that too many forget that marketing is about the customer, not the brand.

Speaking of which, Seth Godin blogs about increasing perceived value, rather than decreasing actual profits.

Lunch Links - March 20th, 2014

Major Moves

Tango, a Bay Area social networking startup reminiscent of WhatsApp, has raised $280 Million in a Series D round of funding, led by DFJ, Qualcomm Ventures, and new board member Jerry Yang.  Notably, Alibaba Group became a major player in the funding round, marking Tango's first Chinese-based backer since they opened an office in Beijing three years ago.  Alibaba may be seeking a direct competitor to WeChat, backed by rival Tencent Holdings.

Cloudera, a Palo Alto startup that uses Apache Hadoop to provide analytic data management for enterprises, raises $160 Million in venture funding, leading Dan Primack to wonder whether an IPO may be in its near future.

Y-Combinator announces the addition of two new partners - Justin Kan of Justin.tv and Twitch.tv fame, and Tutorspree founder Aaron Harris, whose joining in October hadn't been formally announced until today.

Personal Blogs

Sam Altman, the man taking over after Paul Graham's announcement of his departure from Y-Combinator, explains he'd like to see YC fund more breakthrough technologies across all sectors.

Fred Wilson of Union Square Ventures posts about his Flappy Bird experience, powered by MIT's Scratch and Scratch Jr programming platforms.

Entrepreneur-turned-Venture Capitalist Mark Suster posts about why you should determine the outcome of a board meeting before ever setting foot in the room.

Lessons and Lists

MIT's Tech Review sheds some light on 5 secretive startups spun off by former NSA employees.

Inc.com's Adam Varccaro explains that high performance is not the same as high potential, and why failing to take potential into account can hurt your company's leadership.

FastCompany's Maryam Banikarim offers 7 Enduring Lessons from Silicon Valley 1.0.