Thursday, March 27, 2014

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. 

Wednesday, March 26, 2014

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:



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.

Tuesday, March 25, 2014

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.


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."


Monday, March 24, 2014

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.

Friday, March 21, 2014

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.

Thursday, March 20, 2014

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.


Thursday, October 31, 2013

Product Review: The Mailbox App

Mailbox:  Starting with the end in mind.


Today I'm expounding on the Mailbox App, one of the staples in my ever-expanding search for the most efficient products to save time.  I'll describe a few of the key value propositions of the product, but I don't want this post to be exclusively a feature review - there are many, many, many examples of that already.  Instead, I'd like to focus on the steps that got Mailbox to launching the beautiful product it has now, and what Mailbox did well in product management along the way.

Addressing The Problem

When I worked at RPM Ventures, I was assigned to help portfolio company Eden Park Illumination, a high-tech plasma lighting startup, with a product launch in the film industry.  At the recommendation of Eden Park's Chief Marketing Officer, I met with film studio managers and lighting technicians to find what customer pains they saw in the film lighting industry, and how Eden Park's product delivered value to them.

Knowing your customer's problem is always vital, and Mailbox's motto, "Put email in its place", strikes at the quintessential problem of inboxes today - too much clutter.

Do I mark it as unread?  High importance?  Flag or star it?  Add a tag?
To address this problem as quickly as possible, Mailbox gives you a large, blue button on the top of your inbox, with the title "Help Me Get to Zero".  It gives you a simplistic method of sorting mail - archiving everything but the tasks at hand, turning your daily email into a To-Do list of sorts, with simple swipe-right swipe-left motions to mark emails as completed, or resend them to your inbox at a later date.  And, if you reach "Inbox Zero" for the day, you are rewarded with a picture of the day, seen through the Mailbox background logo.  Simplistic and clutter-free, Mailbox hit the nail on the head in knowing its users' main problem.

Executing The Pivot

For those who remember, the team behind Mailbox wasn't originally working on email simplification.  Back in 2011, their original product, Orchestra, gave users a collaborative To-Do list that could attach conversations to specific items.  By 2012, they paused development on Orchestra, after finding email as the larger consumer pain.  Last month, they shut down Orchestra altogether, freeing up developers to focus on Mailbox.  TechCrunch describes their shift like this:

In fact, the company was a case study in what a well-executed pivot should look like – it realized early on that the product wasn’t breaking out to become a mainstream hit, so the team took their initial learnings and applied them to a new area. Orchestra [...] inspired the team to treat emails basically like to-do’s when they moved on to building what then became Mailbox.
The idea of turning email into a To-Do list was brilliant for Mailbox, but was only possible from observing their Orchestra users and pivoting to a greater need.

Surviving The Acquisition

For an out-of-the-box application, Mailbox fit Dropbox pretty well.


Sometimes, when a startup is acquired by a larger company, product development slows to a crawl while internal reorganization takes precedence.  For a consumer-focused digital startup, this can be deadly.

As an example, over the summer I was introduced to Giftly, an app startup that sends digital location-based giftcards to your friends and family far-away.  I liked their product pitch enough to buy a Giftly for my dad to a restaurant near him for his birthday.  Shortly afterwards, Giftly was acquired by Giftcards.com, and hasn't quite recovered.  Their app hasn't been updated since April, despite several 1-star reviews complaining about basic functionality glitches.  Their online presence has been negligible, with only a single original Tweet and zero blog posts since the acquisition.

Luckily for Mailbox, their acquisition by Dropbox didn't slow their product development at all, and they even launched an iPad application just two months later.  Soon, Dropbox offered 1GB of additional space to Mailbox users who would link their account to Dropbox, providing a legitimate reason to download Dropbox on a mobile device - I had never thought about connecting my Dropbox to my phone until I could attach documents from Dropbox directly to emails in Mailbox.  The acquisition provided a tide which lifted both boats, making it trendy and feasible to complete all your email tasks from your smartphone.

Launching The Vision

Phew!  KPCB readers, are you still with me?  Good, because we're getting to the heart of why Mailbox is my favorite digital product:  The Launch.

Over the past summer, I got to work alongside Kurt Skifstad, the VC entrepreneur-in-residence who founded Kontextual, a data-analytics platform for enterprise resource planning.  Kontextual was in the process of launching an upgraded platform to its users, beginning with a few well-known users who could find major bugs without risk of leaving the platform, termed "friendlies" (I was one of these friendlies, shown here testing the beta before the product release).  In Kontextual's rolling release, I discovered the importance of finding the right speed to release a product into the market - too slow and you lose the patience of the user base, too fast and you risk being burned by unforeseen glitches.

Mailbox's product launch was beautiful.  Despite being relatively new, they had gathered a significant amount of hype before the release of this application, including 1.2 million views of their demo video, and 250,000 pre-launch signups.  Their product had the personal support of MG Siegler, General Partner at Google Ventures, and he supported them with teasing blog posts.

Rather than releasing the product to everyone at once, Mailbox delivered the product in a first-come-first-serve manner, giving priority to those who had followed the app for a long time (friendlies) and giving themselves time to fix major bugs before rolling out to early adopters, the early majority, and eventually the mass market.  To appease users who were waiting, the app showed a screen marking your place in line:

Can you imagine all of San Francisco waiting behind you?


Not only did this give users an idea of when they would receive the product, it reinforced the idea that Mailbox was the "next big thing" by showing a growing number of people "in line" behind you.  When users (such as myself) finally received the product, it worked cleanly and exactly as advertised.

It takes a lot of mess and stress behind the scenes to launch effectively - but, as Mailbox proves, nothing is as beautiful as a simple, functional product.

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Matthew Nicholas, Eclectic Entrepreneur, can be reached at mattnich@umich.edu, or on Twitter @MattAtMich.