• Heads Up: Navdy Raises $20 Million Series A Round

    Navdy-Projectin-HUD4Navdy, a 20-person, San Francisco-based company, has spent the last two years working on a head-up display that can be installed on the dashboard of any car and aims to make driving safer by getting people to look ahead at the road, rather than down at their phones.

    Its vision is about to be fulfilled, too. After taking more than 17,000 pre-orders for the product on its site, amounting to more than $6 million in sales, the company says it’s ready to start shipping the first version of the Navdy to customers in the second half of this year. (Pre-orders cost $299; the device will retail for $499.) In fact, investors are so excited about the company’s future that they’ve just given the company $20 million in Series A funding.

    Earlier this week, we spoke with Navdy founder and CEO Doug Simpson to learn more. Our chat has been edited for length.

    You’ve sold a lot of a product that hasn’t shipped yet. Did we miss your Kickstarter campaign, or did Navdy do this exclusively through its site?

    It was all done on our own site. We wanted to have more control over the user experience, and we have a [fun, product demonstration] video that’s done well, with more than 1.4 million views – that’s a big success factor. It’s a problem that people can identify with, and it’s an experience that feels magical, and I think that came across in the video and people got excited about it.

    How will big will the product run be, and did you always intend to begin shipping in the second half of this year?

    It was not always the plan. We were targeting the first half the year, but the preorder campaign was way more successful than we thought it would be, which made things more difficult, including [regarding] the supply chain. We’ve also continued to [integrate feedback] from a lot of usability testing and made iterations that have taken longer than we expected, but the result is that we’ve made some great improvements in the product. It was a difficult decision to disappoint people with a delay, but it would be worst to disappoint them with the product itself.

    As for production capacity, it will take less than a month to get through the orders we have now; after that, we’ll be producing between 20,000 to 30,000 units per month.

    And where will they sell?

    From a channel perspective, we’ll be able to take orders online this year, and next year, we’ll roll out to other channels, including traditional consumer retailers like Best Buy. We don’t have anything to announce, but the number of retailers and distributors who’ve [reached out out to us] is over 2,000.

    You’ve probably gotten a lot of feedback regarding which apps people want Navdy to include and those they don’t. Have you made any big changes based on that feedback?

    Not really. Our original plan was to focus on three use case: navigation; communication – meaning call control and text messages; and music control, and the feedback we’ve had is that those are the categories that are important to customers. Music control is a lower priority than the first two, so that’s helped us prioritize our development efforts.

    The obvious concern with Navdy is that it will be rendered obsolete by newer cars that have this kind of technology baked in.

    One of the surprises of the pre-order campaign is that lots of OEMS have already started contacting us about partnering. That’s always been our strategy, though we thought it would take time to get their interest. It will be a long process, but either way, we always plan to offer a direct-to-consumer product, too.

    What proof you have that your product will make driving safer?

    As part of user testing, we’ve taken a look at cognitive upload, the distraction of interacting with our product versus the phone. We’re also working with insurance companies and car companies on some of those aspects as well. There’s a lot of evidence to support that head-up display technology itself — developed by the military and used now by all commercial airlines – is safer.

    What’s next? Is there a product line in the pipeline?

    Yes, we really want to focus on making the in-car experience great, and we think we can expand beyond just this initial product, but right now, we’re very focused on [the first version] and the second version will build on that. I can’t really share more than that right now, though.

    Connie

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  • Duo Security Raises $30 Million More, Led by Redpoint

    Jon OberheideDuo Security, a five-year-old, 100-person company that sells its cloud-based two-factor authentication software to thousands of organizations, including Facebook, Twitter, NASA and Uber, has just raised $30 million in Series C funding led by Redpoint Ventures, with participation from Benchmark, Google Ventures, Radar Partners and True Ventures. (The Ann Arbor, Mi.-based startup has now raised around $50 million altogether.)

    Last week, we chatted the Duo Security’s cofounder and CTO, Jon Oberheide, about how his company is using mobile devices as a second form of authentication, and what comes next.

    Some major company’s information is breached every week it seems, yet there are also other two-factor authentication services out there tackling the problem. What makes yours different?

    First, we think the existing security is broken. Underlying information technology has shifted out underneath existing security technologies and they aren’t relevant anymore. In the past few decades, your security model was built within the physical walls of your organization, then people began accessing the same device but they weren’t necessarily in the building, which made phishing for those employees’ names and passwords easy. Poor hygiene across multiple sites was the problem we were trying to solve, and we succeeded in ensuring that your identification couldn’t be stolen.

    Then mobile devices came along and now everyone uses their own favorite products.

    Yes, and those mobile devices aren’t under the control of an IT administrator. You have these cloud services that are being controlled by third parties. IT departments have gone from saying “no,” to partnering with [various parties] to ensure their [devices’] secure enablement.

    And you have a new edition that you say works even better than what your customers have been using. How so?

    Our new platform edition allows companies to establish what security policies are acceptable and customize protection at the point of entry. It can stop break-ins regardless of whether hackers have a user’s name or password by analyzing a company’s policies for each log-in attempt, including the location of the user, the reputation of the IP address, and what level of device health they want to admit into their enterprises. It addresses, for example, the employee who might forget his phone at the bar. A company can require that a full encryption and screen lock [are activated] to prevent someone else rom picking it up and trying to access corporate information. Or, if you’re a domestic company whose employees primarily log-in from Starbucks, you might want to block access to China or Russia, where a lot of hackers come from. You just click a box and it’s done.

    How much more will this new edition cost customers?

    On a per user, per month basis, we currently charge $3; our platform edition wil cost $6 per user per month because we’re providing a lot more value to companies that we think justifies [the price hike]

    Connie

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  • One of Craigslist’s Biggest Threats to Date: VarageSale

    VarageSaleIt’s accepted wisdom that nothing and no one can destroy Craiglist, the San Francisco-based local classifieds marketplace whose success has continued unhampered for roughly 20 years, despite many newer entrants with far snazzier technologies.

    VarageSale might just be different. At least, the 50-person, Toronto-based outfit is gaining enough traction that last month, Sequoia Capital and Lightspeed Venture Partners sank $34 million into its operations.

    What makes the startup, which claims to have millions of users, so promising? A few things, according to cofounder Carl Mercier, who sold an antispam company to security-software maker Websense in 2009 and founded VarageSale with his wife, Tami Zuckerman, in 2012. For starters, users have to be accepted onto the platform by volunteer moderators in the many communities in which VarageSale now operates. (The company has quietly spread to cities in 42 states and in every Canadian province.)

    As key, seemingly, the conversations that happen behind the scenes between Craigslist users — the harried “I’ll take it!” emails, along with the privately asked questions and price haggling — are instead displayed in Twitter-like feeds at VarageSale. It helps build interest in users’ items, suggests Mercier; it also builds community.

    We talked with Mercier this week. Our conversation has been edited for length.

    You say VarageSale has millions of users. Is that single-digit millions? And how many items are selling on the platform each month or year?

    We have millions of users who view billions of items of month. For competitive reasons, we’d rather not be more specific. But 50 percent of our mobile users open the app every day, which is very unusual for a commerce app.

    What are they returning to check out?

    Typically people are coming to the site for information about a specific category they’re following — like clothes for a two-year-old boy, or smartphones. They also come back all the time because they want to make sure they don’t miss that treasure, or because they posted an item and there are 10 people who’ve expressed an interest in it.

    Do you do anything to slow the pace of transactions to foster those conversations? It’s interesting that people don’t just sell to the first interested party.

    It’s more akin to people putting their towel on a beach chair at 6 a.m to reserve it. Maybe the first person to express an interest [lands the item], but once they ask a question, then we see other people become interested — sometimes tens of them.

    You don’t enable people to transact through the site, though. Like Craigslist, that happens offline. Might that change?

    We really want to focus on building up our local communities right now — growing our user base and coverage. That’s where we feel like we’ll have the biggest impact.

    I’d read about VarageSale meet-ups. How do most people come together?

    It really depends on the people and the communities. Sometimes people meet in a parking lot or at their house; sometimes, our moderators organize events every one or two weeks.

    Given your emphasis on community, VarageSale sounds like a hybrid of a number of things, including Craigslist and NextDoor. Maybe even Airbnb? Are people selling home items alone, or are you starting to see other things, like neighbors alerting others to their available in-law unit?

    Hah, no. Airbnb is really good at that. Some people are renting properties [on the platform], but we mostly focus on physical goods.

    You’ve just raised a lot of money. Is this an employee-intensive business? How will you use the capital?

    Building strong communities isn’t something that we can just press a button and it happens. It’s definitely hard work that involves a lot of human intervention. We probably won’t be hiring 1,000 people, but we think we’ll add 30 to 40 employees in the next year. We already have a small presence in Europe, Australia, and Japan that we’re growing.

    Will your eventual business model center on transaction fees? Local advertising?

    Revenue isn’t a priority for us. We want to focus on improving user experience and we have great partners [in our venture investors]. With the money we now have in the bank, we have runway for a few years.

    Connie

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  • Joya Raises $5 Million to Make Messaging More Fun

    JoyaThree years ago, Michal and Vlada Bortnik, former Microsoft employees who met on a soccer field in Seattle, had a host of problems every time they gathered up their two young daughters and tried communicating online with far-flung family members.

    The couple decided to do something about it, founding Joya, a mobile video communications company whose two newest messaging apps allow users to record playful messages of up to 30 seconds in length. One app, FlipLip, allows users to play with their voice and insert their face in a variety of county-fair-like cut-outs, including a princess, ninja and bear; the other, Cleo, invites people to make video selfies using filters designed to make them appear more attractive.

    Whether the apps take off remains to be seen, but Facebook certainly thinks they’re promising. The couple was among 39 other developers to work with the company in advance of the rollout last month of its Messenger Platform, for which it hopes developers will build apps that integrate with Facebook Messenger.

    Facebook’s apparent endorsement could prove especially meaningful as it attempts to turn Messenger into its own ecosystem. (Yesterday, as you likely read, Facebook launched a standalone Messenger app for the web with the hope that people will use Messenger both inside and outside of the social network.)

    Certainly, Joya’s traction caught the attention of Battery Ventures and Altos Ventures, which have just provided the now seven-person company with $5 million in Series A funding.

    As for what’s next, the pair — now based in Palo Alto, Ca. — say to expect more apps this year that will continue their focus on making quick, online messaging easier and more enjoyable.

    They add that for now, they plan to make their existing (free) apps better and more tightly integrated with Messenger.

    “It’s very rare that platforms like this come out with such large audience,” says Michal Bortnik, noting that according to Facebook, Facebook Messenger now has more than 600 million monthly active users.

    “We’ve developed many concepts that never saw the light of day,” he says, “but we now have a clear product and a clear story: How can we make communications more personal and fun . . . We have something that’s growing.”

    Connie

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  • A VC Adds a Thesis: “Wrist First”

    Peter RelanPeter Relan, a veteran of Hewlett-Packard and Oracle, has spent the last decade nurturing young companies at his YouWeb incubator in Mountain View, Ca. At first, he focused on mobile social gaming companies, investing $2 million across a variety of startups and enjoying at least one big hit when OpenFeint, a social gaming network, was acquired in 2011 by the Japan-based Internet media company Gree for $104 million.

    In 2013, Relan began raising a separate $10 million from wealthy individuals for a program within YouWeb called 9+, an incubator and accelerator that focuses on marketplaces, wearables, and so-called Internet of Things technologies.

    A number of highly promising companies are again emerging from the outfit, insists Relan, including the online video gaming company Hammer & Chisel, launched by OpenFeint founder Jason Citron. (It has raised $12 million in funding from 9+, IDG Ventures, Accel Partners, Benchmark, and Tencent.)

    Relan also points to GotIt, a seed-funded photo-based on-demand marketplace that’s begun talking with investors about a Series A, and the “connected kitchen” startup Camellia Labs, founded by former Salesforce senior engineering manager Guarav Chawla. (“Everybody in Silicon Valley who’s in the design business is stumbling over themselves, trying to be the product design shop for [Chawla],” says Relan.)

    Still, what’s capturing much of Relan’s attention these days, he says, are “wrist-first” technologies — apps developed expressly for smartwatches, which he expects will represent a huge opportunity over the next couple of years as the Apple Watch streams into the marketplace.

    One of his bets, for example, is on a nascent company called Awear, whose app enables users to send and receive SMS messages with a couple of clicks. It doesn’t sound terribly revolutionary, but it represents a “10x” leap in terms of speed, says Relan, who notes that it’s a lot easier to tap a watch than “fish a phone out of your pocket or handbag, then unlock it, open the right app, and respond.” (Awear first launched on the Pebble smartwatch and 10 percent of Pebble customers have downloaded the app, says Relan.)

    Relan thinks the possibilities extend far beyond communications, too. “Think of games that are easy to play in one or two clicks. Or the B2B app that notifies an executive that he received 400 orders during an important meeting. Or an app that can deliver an EKG to your doctor with the tap of a button.”

    Smartwatches may have low computing power, he notes, but smartwatches combined with the power of the cloud begin to look pretty compelling.

    More, says Relan, he has seen this movie before.

    “When the iPhone was just being introduced [and we began focusing on mobile social gaming], the hard-core gamers laughed at us. They said, ‘[The phone] is tiny. It has no keyboard, no controls.’ But I said it would be 10 times more convenient to play, and now mobile social gaming is multibillion-dollar industry.”

    “Whenever a new platform succeeds, it’s because it improves [on the status quo] by at least a factor of 10,” Relan continues. The Apple Watch might not be 10 times better than the smartphone, but he fully expects it to let users do things 10 times faster — and that’s enough to get him excited about what’s next.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

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  • Andreessen Horowitz Bets Big on Tanium — Again

    Orion HindawiTanium, an eight-year-old, Emeryville, Ca.-based company founded by father and son David and Orion Hindawi, has landed $52 million from Andreessen Horowitz less than a year after raising $90 million from the Sand Hill Road firm.

    Somewhat amazingly, it hasn’t touched a penny of it, either, says Orion Hindawi, the company’s CTO.

    In fact, Tanium — whose security and systems management software can deliver all kinds of information about every machine and device running on a corporate network within seconds – has been profitable since 2012, and it’s growing fast, says Hindawi. Last year, it increased its total billings by 400 percent and grew its employee base from 25 to 175. It plans to employ between 500 and 600 people by year end.

    So why raise quite so much? Two reasons, says Hindawi. The company is seeing an “immense amount of opportunity” that it wants to “even more aggressively” pursue — particularly in international markets like Japan, England, and Australia, where its business has begun to take off.

    Tanium has also mapped out how much it needs to survive for three years without revenue in the case of a “black swan” event. “I like real cushions,” says Hindawi, who cofounded an earlier company with his father called BigFix that launched in 1999. BigFix survived the dot com boom and bust, eventually selling to IBM in 2010 for a reported $400 million. But the downturn also made Hindawi acutely aware of how challenging it is to survive lousy market conditions.

    Not that he needs to worry this time around, seemingly.

    Andreessen Horowitz is so taken by Tanium’s technology that despite its enormous investment in the company, it owns “substantially less than 25 percent,” says Hindawi.

    Perhaps it’s no wonder that Hindawi thinks highly of Andreessen Horowitz, too. He points to the expertise of of Andreessen partner and former Microsoft executive Steven Sinofksy, who sits on Tanium’s board. (“Usually, I’ve dealt with VCs who didn’t have direct knowledge of our space,” Hindawi says.)

    He also cites Andreessen Horowitz’s “executive briefing center,” a low-flying, 50-person unit that focuses narrowly on bringing in customers to the firm’s enterprise portfolio companies.

    It’s “one of the most amazing things I’ve ever seen,” says Hindawi, who says that half of Tanium’s customers have come from its own pipeline. The other half, he says, have come through Andreessen Horowitz.

    Connie

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  • A Startup Takes on Rakuten

    SuperpointsIndustry watchers are well-aware that Rakuten, the Japanese e-commerce giant, has made a wave of investments in U.S. startups in recent years as it looks to enhance its portfolio of technologies, acquiring Buy.com, Slice and eBates and making big bets on Pinterest and Lyft, among other companies.

    According to Ryan Koonce, the founder and CEO of San Francisco-based Superpoints, Rakuten is also making a name for itself as a company that willfully disregards trademarks and intellectual property. Koonce’s bootstrapped, six-year-old online loyalty rewards company filed a lawsuit yesterday against the $23 billion conglomerate, accusing it of trademark infringement, unfair competition, and unfair business practices.

    At issue, says Koonce, is Rakuten’s use of “Super Points” in the marketing of its own, newer loyalty rewards program, despite a ruling by the U.S. Patent and Trademark Office that denied Rakuten’s attempts to trademark the language on the grounds that there was likely to be confusion with Superpoints’s trademark. Koonce only learned of the undertaking after being served documents that Rakuten was trying to have Superpoints’s registration canceled.

    Koonce says he reached out to Rakuten numerous times afterward, including providing someone in Rakuten’s marketing department with Superpoints’s deck to show that Superpoints would be willing to work with Rakuten. “We wanted to see if there was interest in talking about how we could turn lemons into lemonade,” he says.

    The New York-based representative said the deck would be sent to Japan, says Koonce, adding, “We never heard back.”

    Rakuten did not respond to a request for comment yesterday.

    For Koonce, his dispute with Rakuten isn’t a trivial matter. Koonce says he has spent “many long nights and time away from my wife and kids trying to build the best site I can. I also have a significant percentage of my net worth tied up in the company.”

    Competing with a web giant over his trademark was something that never occurred to Koonce, who has founded a number of startups over the years, including the social media marketing company Popular Media, which was funded by Sequoia Capital and acquired in 2010.

    That’s partly because it doesn’t happen very often in Silicon Valley, where people tend to play nice to preserve their relationships. But a trademark attorney at one of Silicon Valley’s largest and most-respected law firms also calls it “unusual for a big, sophisticated company to take on a little guy” because it doesn’t make good business sense. “The likelihood of confusion would be a deterrent for most honorable companies, because you don’t want to expose your shareholders to a liability.”

    Adds the attorney, who asked not to be named but doesn’t know or represent Koonce: “This sounds like an exceptional situation to me . . . Even though [Koonce] may just be one guy, he has legal rights, and he can [sue] a second comer who takes [his brand].”

    If there’s a silver lining for Koonce, it’s that he looks well-positioned to win his case — or at least a settlement. Because he has been using his brand since 2009 and further received trademark approval for it back in 2011, he should “have a presumption of national rights” in the U.S., says the attorney.

    Companies of all sizes generally have an incentive to negotiate a resolution sooner than later, too. “Even a company with trillions of dollars has budgets and has to rationalize economic decisions,” says the attorney. “No one wants to throw money and time and resources into litigation.”

    In the meantime, Koonce is thinking about crowd-funding his legal fees if it becomes necessary. “The thought of fighting with a $20 billion conglomerate like Rakuten is not something I’d wish on my worst enemy. But I have no choice,” he writes in an email.

    “It wears on you,” he adds. “The only way to make it is through sheer grit and tenacity.”

    Fortunately, he says, “I have that in spades.”

    Connie

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  • Did Pinterest Just Change the Game?

    pinterestIn tech, employees often join startups with the idea that they might become millionaires if those companies go public or are sold. But even experienced startup veterans often underestimate the costs involved in exiting one’s stake. Purchasing equity that has appreciated can run into the hundreds of thousands of dollars — if not millions — and most startup documents only give employees 90 days to exercise their fully vested options once they move on.

    Pinterest is rejecting that age-old program. According to Fortune, the digital scrapbooking company recently told employees that if they’ve been an employee for at least two years and leave the company — or are let go — they’ll have up to seven years to exercise their vested options.

    Presumably, Pinterest is trying to attract the best and brightest by offering them more freedom than a typical startup payment package would allow.

    Whether other startups follow suit anytime soon remains to be seen. There are plenty of reasons things work they way they do, including that it’s often in a startup’s best interests to be able to reclaim equity if an employee can’t purchase his or her shares within 90 days of his or her exit. Machiavellian as it may seem, companies might also want to retain their leverage over talented employees to keep them right where they are.

    And there are other arguments to preserve the status quo. For example, you could imagine companies’ unwillingness to provide financial information to a lot of former employees who might be entitled to it under the law, yet who might have gone on to work at a competing company.

    There are also plenty of secondary buyers capable of providing employees with some liquidity.

    Of course, anyone who has been through a secondary sale can attest that they involve plenty of pros and cons. Demand and supply have to align. Many buyers want information rights that can give them assurance about the startups in which they’re investing, yet many companies don’t want to provide that information. Secondary buyers also tend to drive a very hard bargain because they know it’s not a liquid market.

    Our bet? As more companies take their time in going public and those golden handcuffs become more onerous for employees, something is going to give. Trying to maintain the same kinds of controls won’t remain feasible forever.

    Pinterest employees who wait to exercise their shares may face a much bigger tax bill years from now. But they’ll also have much more time to line up a secondary buyer or otherwise plan to raise the capital to buy their shares and deal with that tax hit.

    It’s going to be very hard for other startups to compete with that kind of advantage. Over time, it might prove impossible.

    Connie

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  • Ben Thompson on What Xiaomi Gets Just Right

    Ben ThompsonBen Thompson, a Taipei, Taiwan-based writer with a sharp understanding of consumer tech, has attracted a loyal and growing base of readers to his one-man media company, Stratechery. Thompson has also become something of a thought leader in Silicon Valley over the last year, largely because of the perspective he enjoys from his perch halfway across the world.

    Last night, at a San Francisco dinner hosted by the venture firm GGV Capital, Thompson — who’s in the U.S. for an Apple event this Monday — shared some of his thoughts with investors and entrepreneurs as they sipped wine and enjoyed a series of carefully prepared Cantonese dishes.

    Among the topics raised was five-year-old Xiaomi, the fast-rising Chinese company that became the top player in China’s competitive smartphone market last summer, as well as the world’s third-largest phone maker. Thompson didn’t address the long-term prospects for Xiaomi, which raised $1.1 billion in funding at a stunning $45 billion valuation in December. But he did talk at some length about why he thinks it shouldn’t be underestimated. From his comments last night, edited lightly for clarity:

    “Whether [I’m ‘long Xiaomi’] is a separate question from why I think the company is interesting.

    Xiaomi is very highly valued right now, but they’re a company that a lot needs to go right for them to succeed. Then again, in 2012, if you said a lot would need to go right for them to get to X by 2015 — well, a lot did go right. They’ve executed very impressively to date.

    Why they’re interesting as a company is that tech companies get so caught up in scale, and the efficiencies that come with them, that they tend to treat entire markets the same. Not Apple, which has demonstrated that you can definitely segment markets, [and not Xiaomi, which has done the same].

    If you view the whole world as one market, you have this view that on one end, you have people who really love technology and will spend a lot on their phone and you give them the highest end sort of thing. And [you think that at the other end of the spectrum], you have someone who just doesn’t care, who walks into the AT&T store and buys whatever they’re told to buy and they get some crappy knock-off phone or whatever it might be.

    But too many tech companies treat that [latter] person the same as the person in the developing country who is also buying a cheap phone. And they’re exactly the opposite. If you’re a young person and you’re interested in technology but you don’t have much money, you’re very different from someone who will just walk into a store [with no agenda]. What Xiaomi did was treat that person [like a sophisticated buyer]. “You want something that’s super customizable that you can dig into, and we’re going to meet you at a price point that’s approachable for you.”

    It’s no wonder they just obliterated these other phone companies that are offering a knock-off of last year’s model at a low price. Like, which would you rather buy? A phone from a company that’s giving you what you want, or last year’s Samsung? The low-income market is different, but it’s the same in that there are also geeks there who want something interesting there, and there are people who don’t care there. You don’t think about [customers] in terms of money. There are different segments — people who are on the super cutting edge and people who aren’t — and that’s fine as long as you don’t treat it as one monolithic kind of thing.

    I kind of feel like tech in general is too much in love with scale when often what’s interesting is at the margins — identifying a niche and serving it and figuring out how to scale it later. Too many companies think about scale from day one and they end up making a mediocre product that tries to serve everyone and does it very poorly.”

    Connie

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  • In a Heated Market, a Secondaries Player Casts a Wide Net

    world_600wWhen Manhattan Venture Partners publicly launched last month, the merchant bank joined a growing number of players who are matching investors with startups that are in no apparent rush to go public.

    Talking recently with StrictlyVC, plugged-in investor and AngelList cofounder Naval Ravikant opined that it’s “possible that the amount of secondary trading going on in Silicon Valley under the covers is going to match the amount of primary financing soon” as household names like Uber and Airbnb and Dropbox move more slowly than expected toward IPOs.

    Perhaps it’s no wonder then that Manhattan Venture Partners is casting its net far beyond the Bay Area. Last week, we talked with the firm’s cofounder, Jared Carmel, and its chief economist, Max Wolff, about which markets, exactly, the new outfit is chasing.

    Most of the so-called unicorns are headquartered — broadly speaking – in Silicon Valley. But you’re also looking elsewhere. Why?

    JC: We’ve expanded overseas because we’re starting to see demand for what we do from [India-based] Flipkart and [China-based] Xiaomi and the like. Those companies aren’t current customers, but [the China-based e-commerce giant] Alibaba was one of the big positions we took last year. We had a significant amount of shares that came from an executive last April, prior to its [September] IPO.

    MW: We see the center of gravity in pre-IPO tech companies beginning to drift both south and east from the U.S., which is pretty consistent in terms of the global economy as it drifts more toward the global south away from the U.S. and Europe. It’s much more advanced in the global macro sense than in the private company sense. Today and in the foreseeable future, Northern California will remain at the center of a lot of this activity. But right now, as large and aggressive as Uber’s [$40 billion] valuation is, it’s still $5 billion less than the valuation of Xiaomi, a handset maker that no one in the U.S. has really heard of outside of the business press. We’re at a moment historically where we’re living in the long shadow of the largest tech IPO ever – Alibaba, which, by the way, when we first began talking with people about it long ago, they thought was a [brand of] hummus.

    Culturally, are secondaries seen as an acceptable practice in China and elsewhere? Obviously, in the U.S., they were long stigmatized as a last resort for troubled companies.

    MW: There’s more acceptance of secondaries and more acceptance of high, late-stage valuations than at any time in the recent past. We’ve seen large [foreign] institutional investments into secondary shares really since Facebook, and given that many of those investors – who’ve also backed LinkedIn and Tesla and Twitter – made money, we’re seeing them come home and really start to introduce [secondary investments] to the whole market.

    JC: It’s still pretty new in the U.S., so it’s even newer in many countries, and I don’t think it’s as well-understood or accepted as in the U.S. But as we’re starting to see companies get into seven-plus years in their lifespan, they’re seeing that their best employees are heading off to other projects and companies and they’re beginning to understand that a secondary or liquidity program can also act as a retention tool.

    You’re also talking with U.S. companies. What are you seeing? What’s hot? What’s not in terms of institutional demand for secondary shares?

    JC: Games [companies] have really been in the doldrums, owing to private and public investments that didn’t necessary end well in recent years. Social is definitely deeply out of favor. Another sector that people are much less excited about are flash deal sites. Red hot: privacy and private messaging and driver logistics companies.

    Connie

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