• Is Tony Fadell in Nest’s Way?

    Screen Shot 2016-03-30 at 12.05.13 AMLast week, we witnessed something fairly remarkable. A major Alphabet executive — Nest Labs CEO Tony Fadell — publicly shamed the cofounder and employees of Dropcam, the connected camera company that Nest had acquired in 2014 for $555 million.

    In an article in The Information, Fadell said that he didn’t think Dropcam cofounder and CEO Greg Duffy had “earned” the right to report to him directly. Fadell also explained away an exodus of Dropcam staffers by suggesting they were subpar. “A lot of the employees were not as good as we hoped,” he told The Information. It was “a very small team and unfortunately it wasn’t a very experienced team.”

    Fadell may have been reacting to comments by Duffy, who painted a highly unflattering portrait of Fadell in the same article. However, Fadell’s comments and his poor performance underscore what an ill fit Fadell is for Alphabet and why Alphabet needs new leadership at Nest.

    It wasn’t supposed to be like this, of course. Nest was acquired by Google for $3.2 billion in January 2014, a feat that earned Fadell plenty of accolades. Worried about competition and in awe of Fadell, who’d created the iPod as an Apple SVP, Duffy concluded that selling was his smartest play when Nest came knocking that spring.

    Despite what seemed like a handsome payday for everyone involved with Dropcam, the bet soon looked like a poor one.

    As we’d reported here in November 2014, not only did Duffy’s beloved VP of marketing almost immediately leave Nest over an apparent culture clash, but numerous employees we interviewed, along with scathing write-ups by former employees on Glassdoor, pointed surprisingly to trouble.

    “Everything revolves around the CEO,” wrote one Glassdoor reviewer at the time. “It’s a dangerous mix of cult of personality and Stockholm syndrome. Comments like ‘[Fadell is] the next Steve Jobs are not uncommon, while people proudly say things like ‘I’m used to Tony screaming at me.’”

    It wasn’t just the different management styles of Fadell and Duffy, whose organization was one-eighth the size of Nest and who was well-liked by his employees. There was suddenly an inability to get anything meaningful done. One Nest employee described to me a “huge meeting culture, to the point where anyone at the director level or up spends their entire day in meetings, many of them duplicative meetings about the same subject, over and over to the point where a lot of people have complained.”

    Things remain much the same 16 months later, suggests The Information, whose report says Nest’s culture of micromanagement has more recently led the firm to plaster its offices with the phrase “Step Up” to ostensibly encourage lower-level employees to take more initiative.

    More here.

    Connie

    ,
    , , , , ,

  • Same-Day Delivery Takes One On the Chin

    oofOver the weekend, eBay took down a standalone app for its $5 same-day delivery service “eBay Now.” The company, which continues to make the service available online, is “rethinking how it wants to handle the high costs associated with running same-day delivery services,” reported TechCrunch.

    It would be a mistake to declare same-day delivery economically unfeasible because of eBay’s sudden ambivalence about it. It’s tempting, though.

    Despite the glut of same-day delivery services to materialize in recent years – from Google and Amazon to Deliv and PostMates – same day delivery services continue to face major challenges.

    The biggest hitch appears to be the limited base of customers who are willing to pay more for faster service. Bargain hunters on eBay may be especially averse to additional fees. (Only a fraction of a small retailer’s sales come from customers who also opt for same-day delivery, as Reuters noted last week.) The same seems true of Walmart, which launched its same-day delivery pilot program in 2011 and is still testing it in just three markets.

    But they’re hardly alone. According to a recent business intelligence report by Business Insider, only 2 percent of all shoppers living in cities where same-day delivery is offered have availed themselves of the services. Meanwhile, 92 percent say they’re willing to wait four days or longer for their e-commerce packages to arrive.

    Very possibly, not all of these consumers have been educated about the new offerings they could be using — dazzling applications through which workforces are now mobilized with a few taps of a smart phone. And same-day delivery margins are surely better than during the dot.com era, when companies like Webvan invested heavily in infrastructure.

    Whether they’re good enough appears to be an open question. For example, even with an extremely efficient fulfillment system, the same-day delivery company Instacart marks up its goods meaningfully over standard grocery store prices.

    Someone seems likely to figure out how to bring the various pieces together at scale. Uber, whose logistics system grows more sophisticated by the day, may be the strongest candidate for the job.

    EBay has piles of data at its fingertips, too, though. That it’s cooling to same-day delivery after two years of experimentation — and planning to focus more on helping shoppers buy items online that can be picked up in stores — is worth slowing down to consider.

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

    Connie

    , , , , , ,

  • Elad Gil on Angel Investing, AngelList, and His New, Stealth Startup

    elad-gilBy Semil Shah

    In 2009, Elad Gil sold his company, Mixer Labs, to Twitter, where he worked another two-and-a-half years as a VP before plunging back into the world of startups — and startup investing. Recently we talked with Gil about how, more precisely, he’s spending his time these days.

    ​As an individual investor — what stage do you prefer to invest in today, and how has that changed over time?

    I’ve always been pretty stage agnostic as an investor, which I think is a bit contrarian in the individual angel market. Most of my investments have been seed rounds, but I’ve also invested in a reasonable number of Series A, B and C rounds.

    One of the reasons I’ve always invested in a broader range of companies is my background as an operator. My role at Twitter was effectively to help scale the company. Since I was involved in a lot of aspects of managing hockey-stick growth — internationalization, user growth, scaling recruiting process, M&A, analytics, product, etc. — a number of later-stage breakout companies have asked me to get involved as an investor or advisor as I have been through the same terrifying growth curve they are now seeing.

    From a purely financial perspective, I only invest invest in companies that I think may have anywhere from 10x to 1000x upside left. Obviously that’s easier as an early-stage investor.

    How do you plan to use a platform like AngelList in the future, if at all?

    AngelList is going to transform whether branded individual angels eventually transition to larger firms. If an individual angel has the access and deal flow, we’re very close to the day where they can effectively run a fund in a friction-free manner on top of AngelList. AngelList helps with the fundraising, as well as takes care of the ongoing back office — accounting, legal, fund set-up, carry management, etc. — for the angel. Already, you see people like Scott and Cyan Bannister and Gil Penchina making use of AngelList as an LP and back-office platform.

    For newer angels, AngelList provides any angel the opportunity to have an instant fund — in other words, the syndicate — back the angel. The angel can take carry this on, while AngelList manages that person’s back office. So it may also create the opportunity for new angels, with much less personal capital, to start effectively a micro-VC firm. I wouldn’t be surprised if some interesting dynamics emerged on the platform, like if every YC batch had one founder who raised an AngelList-based fund to invest in all of his or her YC batch mates. Maybe [AngelList] turns YC into an inadvertent launching pad for micro-VCs as well.

    You’re working on a new startup. Without giving up too many details, can you share what space you’re working in and what you anticipate happening in the industry over the next three to five years?​

    My prior startup was a developer platform product that Twitter acquired. More recently I co-founded a genomics company and, in particular, software to make genetic testing and genomics widely available. This industry has seen a 10,000x drop in cost over the last few years, but software and other aspects of these services haven’t kept up. While I’m skeptical that anything fundamental has shifted in biotech as a whole to make it more attractive investing-wise, I’m very bullish on the shifts occurring in genomics.

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

    Connie

    , , ,

  • Elad Gil on the Angel Investing Lifecycle

    Elad GilBy Semil Shah

    Elad Gil is like a lot like other smart, accomplished Silicon Valley angel investors. His credentials include an advanced degree from M.I.T. He has worked at both small and big companies, from Plaxo to Google (where the mobile wireless team he started acquired Android). He’s also an entrepreneur himself, starting Mixer Labs, a service that helped developers build geo-location apps.

    When Twitter acquired the company in 2009, Gil stayed on as a Twitter VP for two-and-a-half years, becoming an active angel investor — or a “startup helper,” as he describes himself on LinkedIn — more than two years ago. Unlike a lot of his peers, Gil is content to remain an angel investor for the foreseeable future, too, for a variety of reasons. We’ll delve into some of them early next week. In the meantime, here’s Gil on why angel investors tend to pursue certain, predictable trajectories.

    There aren’t many true individual angels left. Why is that?

    It seems like there is a natural lifecycle to individual angel investors, especially if they stop being operators. At some point many individual angels who were successful investing chose one of two paths — raise your own fund, or join a traditional venture firm. This isn’t something I’m planning on, but many have, and I think this transition has a few drivers:

    1.) People want leverage on time or run out of capital. If you’re an individual angel writing small checks, eventually you may realize you are investing an enormous amount of time working hard for your portfolio companies. But you may not have a lot of skin in the game relative to other, less engaged investors. In my own case, there are a number of companies I am involved with where I have put in a lot more work then people with 10X or even 100X the financial position. At some point, angels may want to have more leverage on their time. If an angel is putting in so much work, why not also participate more in the upside by investing a larger amount? Or, an angel may want to expand their role to be able to lead seed or larger rounds and to set terms. This is actually starting to be enabled by AngelList.

    Alternatively, you may at some point tap out financially or be too illiquid to keep investing your own money. This supposedly happened to Elon Musk for a period when he had all his capital tied up in SpaceX and Tesla and neither company was public. So raising a fund or joining a VC is a way to keep investing without tying up all your own cash.

    2.) People want to learn or do something new. Some institutional venture capitalists have a really strong process or perspective on investing. Benchmark and Sequoia are two that come to mind. Some individual angels feel they have a lot to learn at these institutions. [It’s also the case] that many individual angels don’t take board seats or get involved with other aspects of a company, and joining a traditional venture firm allows them to do things they have not done before.

    3.) People stop operating. Running a company can be exhausting. Many individual angels are often former operators. Once an entrepreneur or executive gives up their day job, they may want to still to be involved with startups day to day. A firm — either their own or one they join — provides them with a regular outlet and a job without the soul-crushing 24/7 grind of an operating role.

    4.) People get lonely. It’s nice to have other people to bounce ideas off of. As an individual angel, if you spend time bouncing investment ideas off of other angels, you may be violating the confidentiality of the startup — or you may fall into group think. An institution provides people with a framework for tapping into other folks regularly and having a firm and culture to be part of. (That said, I hear that many VCs feel they are “lone wolves” and the job of the VC is not one where you spend a lot of time with your partners. I guess all things are relative.)

    5.) Prestige. Some people are really attracted the societal prestige associated with being a venture capitalist. It is sort of like the people who join Goldman Sachs straight out of school so they can brag about it to their friends.

    One of the cool things about Silicon Valley is the ongoing cycle of capital and talent. The pool of individual angels keeps getting renewed and refreshed as entrepreneurs or early hires at breakout companies make enough money to start angel investing. A small handful of these folks end up either generating a sizable brand or a good return and reputation, many of whom then transition into VC. (Of course many individual angels end up loosing money and dropping out before building a reputation, so there is also the “dark side” of being an angel).

    Y Combinator has its own interesting version of this, where a number of YC alumni cycle back as partners at YC and/or raise their own funds. So YC is functioning as a farm system for its own investors, which reenforces it.

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

    Connie

    ,
    , , ,

  • Googler #25 and Others Respond to That Khosla Interview

    Larry PageSunday afternoon, I wrote a column about a new video that features investor Vinod Khosla interviewing Google founders Larry Page and Sergey Brin. I noted the interview was not going to be well-received outside of tech circles, where it was uniformly applauded. For example, asked by Khosla about rising income inequality in San Francisco, an issue that’s been linked in the public mind to Google, Page called it a  “governance problem.” Page also talked at length about a future in which machines replace human workers without addressing who will keep those workers afloat financially.

    I didn’t realize the piece would be quite so controversial, but a number of readers reached out this morning, complaining that I was unfair to Page. Adrian, for example, said that my “coverage of the Page / Brin interview is righteous and disappointing. You are bashing Page for not feeling guilty for and not self flagellating in public over being rich. Seems like you think some contrived displays of guilt and some vague promises of being a better ‘corporate citizen’ (whatever that means today) would have been better than his attempt at a thoughtful response / analysis.”

    Meanwhile, Graeme wrote, “I could really do without the stereotypical political commentary. I can get that from [we’ll just skip this part of Graeme’s email] or [and this] or the shitheads at [you get the point]. Yay let’s cheer on political terrorists attacking people in their homes or on their way to work! Fuck those smart people and their work ethics!”

    It also seems worth steering readers to a response sent my way this morning by Google’s 25th employee, David desJardins, who is now a private investor. Specifically, desJardins had wanted to talk about “Abundance,” the book Page cited when speaking to Khosla about the free time we’ll all enjoy when our jobs disappear.

    While desJardins said he agrees that “human ingenuity and exponential growth are exceptionally powerful tools for solving a wide range of problems and challenges,” he disagrees completely that “human society has been, and is, on a trajectory to harnessing those tools to address our biggest problems and challenges.”

    Here’s more of desJardins’s email, published below with his consent:

    [Abundance authors Peter] Diamandis and [Steven] Kotler make many arguments about the power of innovation and human ingenuity with which I agree. However, they then make an essentially utopian argument about how deeply and rapidly these tools are being used and will be used to address current and foreseeable problems.  In this area, I claim that they are wildly optimistic.  The question is not whether human civilization could harness its ingenuity and creativity to solve all of the problems they discuss—of course it could.  The question is whether it will.  And as to that I think their optimism is totally unwarranted.

    They only arrive at an optimistic conclusion by cherry-picking the evidence.  They trumpet a few anecdotal examples of dedicated and resourceful individuals making big contributions to society with only modest costs.  The problem is that the examples they use are mostly notable for how rare and unusual they are.  As Larry Page says, but they ignore, 99.9999% of people aren’t working on stuff that can dramatically improve the world.  That means we’re only generating 0.0001% of the innovation on critical problems that we could be generating.  And that’s just not enough.

    The role of government is hardly mentioned anywhere in the text.  In the U.S. today, we’re slashing public investment that isn’t driven by a pure profit motive.  Of private investment, the vast majority is profit-driven rather than public-benefit-driven.  This is yet another reason that the fraction of human ingenuity that’s actually being applied to our biggest challenges is really small.

    The assumption in the book is that self-organizing, self-motivating, self-actualizing individuals, left to their own devices, can and will independently address virtually all human problems.  But this is a subject on which we have considerable empirical evidence, and the evidence is much less encouraging than they would have it.  Corruption is rising in most parts of the world.  Exploitation of people by others is rising in most parts of the world.  The vast majority of innovation is directed to trivial problems rather than to big problems (the world invests far more in treatments for erectile dysfunction or skin wrinkles than in treating any of the most widespread diseases).  People whose lives could be dramatically improved by a 60-watt bulb, have been in that position for decades and they still don’t have the bulb.  The observation that we could give them that bulb (or a 6-watt LED replacement) doesn’t mean that we will—what makes anyone think we are going to start making a serious worldwide effort to address human needs when we have never done that so far?

    The authors suppose that as the “bottom billion” are lifted out of abject poverty, they will become consumers and their needs will be valued and met.  But that’s wildly optimistic.  The bottom billion are far, far behind the graduates of even the worst U.S. schools in terms of their knowledge and education and preparation to compete in the world economy.  The economic value of their labor is going to remain near zero for the foreseeable future.  By the time they make it to third grade, they are going to need a postgraduate degree to be prosperous.  It may only cost a few dollars to prevent malaria or to give someone a light, but it costs tens or hundreds of thousands of dollars (and takes generations) to educate people to the level where they can make really significant contributions to society.  Most of the jobs that people can do without a significant education are disappearing and becoming obsolete.  The bottom billion aren’t getting richer and more educated as fast as the world economy is leaving them behind.  

    The arrow of accumulation of human knowledge is pointed in the right direction.  But the arrow of organization of human society—the extent to which we serve humanity rather than exploit it—is pointed in the wrong direction. 

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

    Connie

    , , ,

  • StrictlyVC: July 7, 2014

    Hi, everyone, welcome back. Hope you had a terrific break!

    —–

    Top News in the A.M.

    A quick heads up: the TSA says that it will no longer allow U.S.-bound passengers to board flights at certain overseas airports with uncharged electronic devices.

    —–

    Missed Connections: Larry Page on Income Inequality

    Over the long weekend, Khosla Ventures released a video of its founder, Vinod Khosla, interviewing Google’s founders, Larry Page and Sergey Brin, who rarely participate in joint speaking engagements.

    Page and Brin come across as charming in different but complementary ways. Page plays the straight man, responding earnestly to Khosla’s questions about Google’s priorities. “I guess we feel that, right now . . . the actual amount of knowledge you get out of your computer versus the amount of time you spend is still pretty bad. And I think our job is to solve that,” he says.

    Meanwhile, Brin is like the smart-alecky brother who cracks wise at Page’s expense. When Khosla asks the founders about machine learning, Brin drapes an arm around Page, saying, “Well, look, this is our latest model right here. See? Not perfect yet but doing pretty well.” The crowd bursts into laughter as Page buries his face in his hands. (We also laughed, watching it online.)

    For all the founders’ endearing chemistry, the interview is far from a public relations coup for Google, whose gleaming private buses sparked San Francisco’s so-called “culture wars” last winter. In fact, the video might serve as further evidence that Google’s CEO and co-founder doesn’t think very much of the growing wealth disparity between tech workers and everyone else.

    Consider Page’s response when Khosla somewhat timidly asks him about “short-term issues like you see in San Francisco,” such as “people not appreciating that people who are part of the ideas economy … are doing much better than people who aren’t.” Page might have used the question to assert Google’s interest in being a good corporate citizen. Instead, he effectively dismisses the idea that Google has any responsibility for San Francisco’s growing divide between rich and poor.

    “This kind of thing is really a governance problem,” says Page, “because we’re building lots of jobs, lots of office buildings, and no housing. So it’s not surprising that [has] caused a lot of issues. You also have a lot of people who are rent controlled, so they don’t participate in the economic increase in housing prices. It actually hurts them. It doesn’t help them. So I think those problems are more structural and very serious problems. We’re not really on a path to fix those problems in this area.”

    Page sounds more out of touch when Khosla asks him about the consequences of machines replacing human jobs. “If you really think about the things that you need to make yourself happy – housing, security, opportunities for your kids – anthropologists have been identifying these things — it’s not that hard for us to provide those things,” he tells Khosla. “The amount of resources we need to do that, the amount of work that actually needs to go into that is pretty small. I’m guessing less than 1 percent at the moment.”

    Because everyone needs to “feel like you’re needed and wanted and have something productive to do,” one solution might be to “just reduce work time.” Page then adds, “Most people like working, but they’d also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, if you had a coordinated way to just reduce the workweek.”

    Simple, right? Not exactly. Page sidesteps the economic consequences of reducing employee hours in an economy in which most people still live paycheck to paycheck. Does he expect companies to pay their employees the same amount of money for less hours? Should the government foot the difference? He doesn’t say.

    Judging from the interview, Page wasn’t prepared to talk at length about social issues. After all, this wasn’t a sit-down with the Washington Post. He and Brin were being interviewed by Khosla, a fellow billionaire, at an intimate CEO summit.

    But it’s probably time to ditch the platitudes of “Abundance,” a book by serial entrepreneur Peter Diamandis that describes a world in which everyone’s quality of life will continue to rise thanks to the exponential growth of technology. (“I totally believe we should be living in a time of abundance,” Page tells Khosla.)

    At the very least, Page might pretend for a moment that he’s not worth $30 billion and consider how his words might sound to those who are working to make ends meet and, in many cases, failing. It’s worth remembering that more than 45 million Americans are right now living in poverty.

    We know Brin was just joking when he said his friend Page was a robot. Now it’s time to prove it.

    —–

    New Fundings

    Bonobos, the seven-year-old, New York-based fashion brand that started selling menswear direct-to-consumers online and is now expanding into physical “guide shops” where customers can try on the company’s clothes, has raised $55 million in Series D funding led by Coppel Capital. Bonobos’s earlier investors Accel Partners, Felicis Ventures, Forerunner Ventures, Glynn Capital Management, Lightspeed Venture Partners, Mousse Partners and Nordstrom also participated in the round, which brings the company’s total funding to $127.6 million. PandoDaily has more here.

    FXiaoKe, a three-year-old, Beijing, China-based mobile sales management tool, has raised $10 million in Series B funding led by Northern Light Venture Capital, with firms Huaruan Venture Capital, Boya Capital, and IDG Capital participating. FXiaoke previously received “several million dollars” in Series A funding from IDG Capital in July 2012, says China Money Network.

    GeneWeave Biosciences, a four-year-old, Los Gatos, Ca.-based diagnostics company that aims to help doctors more quickly identify and fight drug-resistant organisms, has raised $12 million in Series B funding led by earlier investor Decheng Capital. Other previous investors, including Claremont Creek Ventures and X/Seed Capital, also participated in the round, which brings the company’s total funding to $25 million, shows Crunchbase.

    Hansoft, a nine-year-old, Uppsala, Sweden-based company that makes project management and and collaboration software, has raised $10 million in Series A funding from Hasso Plattner Ventures and the Nordic venture capital firm Creandum.

    HiWiFi, a 16-month-old, Beijing-based maker of “smart” routers, has raised $10 million in Series B funding from Kleiner Perkins Caufield & Byers and the Taiwanese semiconductor maker MTK, according to reports. The company had previously received “tens of millions” of dollars in Series A funding from GGV Capital and Innovation Works, according to China Money Network.

    Hungama Digital Media Entertainment, a 15-year-old, Mumbai, India-based aggregator, developer, publisher and distributor of Bollywood and South-Asian entertainment content, has raised $40 million in new funding led by Bessemer Venture Partners, reports VCCircle. Earlier investor Intel Capital, which poured an undisclosed amount of funding into the company in 2012, also participated in this round.

    Lmbang, a 1.5-year-old, Shenzhen, China-based online social platform for young mothers to share their experiences, has raised $20 million in Series B funding led by Greenwoods Asset Management. Earlier investors Morningside Ventures, Matrix Partners and K2 Ventures also participated.

    Matterport, a three-year-old, Mountain View, Ca.-based company whose 3D reconstruction system allows users to construct 3D models of physical objects and interior spaces, has raised $16 million in new funding led by DCM, which was joined by Jerry Yang’s AME Cloud Ventures. Earlier investors who also participated in the round include AMD Ventures, Felicis Ventures, Greylock Partners, Lux Capital, Navitas Capital, Qualcomm Ventures and Rothenberg Ventures, as well as Crate & Barrel founder Gordon Segal and Sling Media founderBlake Krikorian. The company has now raised $26 million to date, shows Crunchbase. The WSJ has more here.

    ParkTag, a 2.5-year-old, Berlin-based mobile app whose community of users help each other to find parking spots, has raised $680,000 from Germany’s High-Tech Gründerfonds, a semi governmental venture fund; the KfW Bank group; and numerous industrial groups, including Deutsche Telekom and Siemens. TechCrunch as more here.

    SpaceWays, a new, London-based self-storage business, has raised an undisclosed amount of funding from the German startup backer Rocket Internet, which hired the founders to create the service, reports Reuters. SpaceWays, which launched in London last week, it reportedly “looking to transform the self-storage market into an on-demand business more like package delivery.”

    Synchroneuron, a three-year-old, Waltham, Ma.-based biopharmaceutical company that’s developing new therapies to treat tardive dyskinesia and other neuropsychiatric disorders, has raised $20 million in Series B funding from Morningside Technology Ventures. The company has raised $26 million altogether, all from Morningside, shows Crunchbase.

    Traity, a two-year-old, Madrid and San Francisco-based online reputation startup, has raised $4.7 million in Series A funding led by Active Venture Partners. Other investors in the round included Horizons Ventures, KRW Schindler Private Ventures, Bertelsmann Digital Media Investments, Lanta Digital Ventures, 500 Startups, Lisa Gansky, Juan Lopez, Matthew Bothner and Dalibor Siroky. TechCrunch has more on the company here.

    —–

    New Funds

    Edison Ventures, a 28-year-old, Lawrenceville, N.J.-based venture firm that focuses on expansion-stage companies in the Eastern U.S., will begin raising its eighth fund later this year, reports VentureWire. Reportedly, the firm will target around $250 million, roughly matching the size of its seventh and six funds. Among Edison’s newest portfolio companies is Trialscope, a Jersey City, N.J.-based company whose software helps clinical trial sponsors comply with legislation and internal policy, as well as to register their clinical trials and disclose their results. The company raised $10 million last month.

    Runa Capital, a four-year-old, Moscow-based venture firm, is targeting $200 million to $300 million for a second venture fund that it’s currently raising, reports VentureWire. Serguei Beloussov, the firm’s cofounder and senior partner, says Runa plans to invest the new fund mostly outside of Russia because of Russia’s still small (comparatively) customer base for IT services. Among the firm’s newest portfolio companies: Ecwid, a Moscow-based company that enables merchants to add an online store to their existing website or mobile site.

    Santander, one of the largest banks in Europe, is launching a $100 million venture fund to back startups in the financial-technology sector. The London-based fund will operate as a standalone unit and have a global focus.

    —–

    IPOs

    DreamSky Technology, a five-year-old, Shenzhen, China-based third party mobile game publishing platform, has filed to go public on Nasdaq to raise up to $115 million in funding. THL A19 Limited, a company controlled by Tencent Holdings, is the company’s largest shareholder, with a 26.6 percent stake. Dream Data Services, meanwhile, owns 22 percent; Legend Capital owns 20.4 percent; and Redpoint Ventures owns 16.6 percent.

    —–

    Exits

    Expedia just agreed to acquire Australia’s Wotif Group for $658 million. Skift has more here.

    Novus Biologicals, an 18-year-old, Littleton, Co.-based supplier of both outsourced and in-house developed antibodies and other reagents for life-science research, has been acquired for $60 million in cash byTechne Corp., a publicly traded company that does business as Bio-Techne. More here.

    Wilocity, a seven-year-old, Sunnyvale, Ca.-based company that builds multi-gigabit wireless chipsets, has been acquired by Qualcomm for undisclosed financial terms that some reports peg at $300 million. Wilocity had raised $55 million from investors, including Benchmark, Sequoia Capital, Tallwood Venture Capital, Atheros Communications, Marvell Technology, Jerusalem Global Ventures, and Vintage Investment Partners.

    —–

    People

    Chris Dixon, a general partner at Andreessen Horowitz, tweeted out some funny (and probably fairly true) advice over weekend, writing that “If you are wondering why big tech company bought small tech company, a good default answer is: phones.” He then added, “In fact, you could probably go to a tech cocktail party and answer every question with ‘phones’ and you’d sound pretty smart.”

    Jason Goldberg, the CEO of richly funding and flailing Fab, has a new furniture site called Hem that he says it’s going to be fabulous, telling a skeptical reporter: “I’ll tell you what I told our investors: We never signed on to building a two-year business . . .We signed onto build a business over 10, 20 years.”

    —–

    Job Listings

    Syracuse University is in the market for an entrepreneur, business executive or venture capitalist to serve as an assistant professor. (The job is full time, with a renewable annual contract.)

    —–

    Happenings

    Allen & Co.‘s annual Sun Valley conference kicks off on Tuesday.

    —–

    Essential Reads

    How Twitch’s founders turned an aimless reality show Into a video juggernaut.

    Wired reports on Google Map hackers, who “can destroy a business at will.”

    The Life and Death of “The Internet’s Own Boy.”

    —–

    Detours

    Inside the Viper Room, Hollywood’s most exclusive poker game.

    A new report finds that higher intelligence is linked with rural-to-city migration, and with city-to-suburb movement.

    James Suroweicki asks: Why are the super-rich so angry?

    —–

    Retail Therapy

    No cloud hanging over your head? You might try this one.

    Paddle ball set, now on sale.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

    ,

  • Missed Connections: Larry Page on Income Inequality

    Brin, Page, KhoslaOver the weekend, Khosla Ventures released a video of its founder, Vinod Khosla, interviewing Google’s founders, Larry Page and Sergey Brin, who rarely participate in joint speaking engagements.

    Page and Brin come across as charming in different but complementary ways. Page plays the straight man, responding earnestly to Khosla’s questions about Google’s priorities. “I guess we feel that, right now . . . the actual amount of knowledge you get out of your computer versus the amount of time you spend is still pretty bad. And I think our job is to solve that,” he says.

    Meanwhile, Brin is like the smart-alecky brother who cracks wise at Page’s expense. When Khosla asks the founders about machine learning, Brin drapes an arm around Page, saying, “Well, look, this is our latest model right here. See? Not perfect yet but doing pretty well.” The crowd bursts into laughter as Page buries his face in his hands. (We also laughed, watching it online.)

    For all the founders’ endearing chemistry, the interview is far from a public relations coup for Google,  whose gleaming private buses sparked San Francisco’s so-called “culture wars” last winter. In fact, the video might serve as further evidence that Google’s CEO and co-founder doesn’t think very much of the growing wealth disparity between tech workers and everyone else.

    Consider Page’s response when Khosla somewhat timidly asks him about “short-term issues like you see in San Francisco,” such as “people not appreciating that people who are part of the ideas economy … are doing much better than people who aren’t.” Page might have used the question to assert Google’s interest in being a good corporate citizen. Instead, he effectively dismisses the idea that Google has any responsibility for San Francisco’s growing divide between rich and poor.

    “This kind of thing is really a governance problem,” says Page, “because we’re building lots of jobs, lots of office buildings, and no housing. So it’s not surprising that [has] caused a lot of issues. You also have a lot of people who are rent controlled, so they don’t participate in the economic increase in housing prices. It actually hurts them. It doesn’t help them. So I think those problems are more structural and very serious problems. We’re not really on a path to fix those problems in this area.”

    Page sounds more tone deaf when Khosla asks him about the consequences of machines replacing human jobs. “If you really think about the things that you need to make yourself happy – housing, security, opportunities for your kids – anthropologists have been identifying these things — it’s not that hard for us to provide those things,” he tells Khosla. “The amount of resources we need to do that, the amount of work that actually needs to go into that is pretty small. I’m guessing less than 1 percent at the moment.”

    Because everyone needs to “feel like you’re needed and wanted and have something productive to do,” one solution might be to “just reduce work time.” Page adds, “Most people like working, but they’d also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, if you had a coordinated way to just reduce the workweek.”

    Simple, right? Not exactly. Page sidesteps the economic consequences of reducing employee hours in an economy in which most people still live paycheck to paycheck. Does he expect companies to pay their employees the same amount of money for less hours? Should the government foot the difference? He doesn’t say.

    Judging from the interview, Page wasn’t prepared to talk at length about social issues. After all, this wasn’t a sit-down with the Washington Post. He and Brin were being interviewed by Khosla, a fellow billionaire, at an intimate CEO summit.

    But it’s probably time to ditch the platitudes of “Abundance,” a book by serial entrepreneur Peter Diamandis that describes a world in which everyone’s quality of life will continue to rise thanks to the exponential growth of technology. (“I totally believe we should be living in a time of abundance,” Page tells Khosla.)

    At the very least, Page might pretend for a moment that he’s not worth $30 billion and think how his words might sound to those who are working to make ends meet and, in many cases, failing. It’s worth remembering that more than 46 million Americans are now living in poverty.

    We know Brin was just joking when he said his friend Page was a robot. Now it’s time to prove it.

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

     

     

    Connie

    , , ,

  • StrictlyVC: June 27, 2014

    Good morning! Hope you have a stellar weekend, everyone.

    —–

    Top News in the A.M.

    Aereo investor Barry Diller: “It’s over now.”

    Facebook: We’ve been fighting bulk search warrants in court.

    —–

    My Best Friend, Google

    In yesterday’s New York Times, columnist Farhad Manjoo wrote, “One way to think of Google is as an extremely helpful, all-knowing, hyper-intelligent executive assistant.”

    And it’s only getting smarter. As Sundar Pichai, top banana at Google’s Android division, tells Manjoo of the near future: “If I go and pick up my kids, it will be good for my car to be aware that my kids have entered the car and change the music to something that’s appropriate for them.”

    It’s an exciting prospect, though I must admit that so much connectedness raises some questions, such as which song from “Frozen” Android will choose: “Let it Go” or “For the First Time in Forever”? What if just one kid wants to hear “In Summer”?

    If a fight breaks out in the back seat, I hope Android will turn up the volume so I don’t have to listen to my children screaming and punching each other.

    Here’s another thing: I am generally a good, straightforward person, but occasionally, when my husband thinks that I’m working tirelessly in our home office, I’m really downtown shopping at Neiman Marcus. If our Dropcam or Nest thermostat alerts Google to the fact that I’m away, and the GPS in my phone provides the rest of the clues as to my whereabouts, I wonder about some of the implications. For instance, could Google maybe send me a discount code while I’m at the store? That would be terrific.

    Google cofounder and CEO Larry Page tells Manjoo that people get “so worried about these things” like Google’s tracking us and profiting from our every move online and off that we could miss out on the “benefits” of this new “context aware” world over which Google suddenly looks to have iron-clad control.

    But with Page and Google cofounder Sergey Brin at the helm of this “single, hyperaware computing system,” what’s to worry about?

    The fact is I am done wasting time, changing the music in my car to suit a couple of little tyrants who happen to belong to me. I have more important things to do, and Google knows it, because it has already scanned this content of this email.

    —–

    New Fundings

    Chloe & Isabel, the 3.5-year-old, New York-based jewelry company that connects its customers through their own social selling experience, has raised $15 million in fresh funding led by Softbank Capital, at a valuation of more than $100 million, reports VentureWire. The company had previously raised $17.5 million from investors, including General Catalyst Partners, First Round Capital, Felicis Ventures, Floodgate and individuals Ashton Kutcher, Mike Duda, Andy Dunn, Kirsten Green, and Ron Conway, among others, shows Crunchbase.

    CrowdTwist, a five-year-old, New York-based company that sells loyalty and analytics software to marketers, has raised $9 million in Series B funding led by StarVest Partners, with investment from earlier backers, including Fairhaven Capital and SoftBank Capital. The company has raised $16.2 million altogether, shows Crunchbase.

    Distractify, a 1.5-year-old, New York-based new media startup that competes with the likes of Upworthy, has raised $7 million in Series A funding led by Lightspeed Venture Partners. Other participants in the round included Lerer Hippeau Ventures, Advancit Capital, and CAA.

    Dune Medical Devices, a 12-year-old, Caesarea, Israel-based medical device company, has raised $14 million from undisclosed investors for its cancer detection devices in a tranche that is expected to reach $21 million. The company had previously raised roughly $50 million from investors, reports VentureWire. Apax Partners and Boston MedTech Advisors are among its earlier investors.

    IgnitionOne, a 10-year-old, Atlanta, Ga.-based digital marketing technology company, has raised $20 million in Series B funding led by SoftBank Capital. Earlier investors ABS Capital Partners and Brown Savano — a company that buys private company shares from founders and early investors — also participated in the round. The company has now raised roughly $68 million.

    Performance Lab, an 11-year-old, Auckland, New Zealand-based maker and marketer of real-time exercise measurement analysis and virtual coaching software, has raised an undisclosed amount of funding from Intel Capital.

    Plumgrid, a 2.5-year-old, Sunnyvale, Ca.-based network infrastructure software vendor that helps secure cloud networks for public and private clouds, has raised $16.2 million in Series B funding led by Longworth Venture Partners. U.S. Venture Partners, Hummer Winblad Venture Partners, Qualcomm Ventures and Swisscom Ventures also participated in the round, which brings Plumgrid’s total funding to $29 million.

    Sport Ngin, a 5.5-year-old, Minneapolis, Mn.-based company that helps sports organizations build websites and mobile applications, has raised $25 million in Series D funding led by Piper Jaffray Merchant Banking and Causeway Media Partners, with participation from existing investor ICON Venture Partners. The company has raised $35.1 million to date, shows Crunchbase.

    Tastemade, a two-year-old, Santa Monica., Ca.-based food video network company, has raised $25 million in Series C funding led by Liberty Media and Food Network parent Scripps Network Interactive. The company has raised $40.3 million altogether, including from Comcast Ventures, Redpoint Ventures, and Raine Ventures, shows Crunchbase.

    Wickr, a two-year-old, San Francisco-based company that makes a self-destructing and encrypted messaging app of the same name, has raised $30 million in Series B funding led by Jim Breyer’s Breyer Capital, with participation from CME Group and Wargaming. The company has now raised $39 million altogether, all of it this year.

    —-

    New Funds

    500 Startups, the seed-stage firm, is embracing new federal rules for public fundraising, the first big-name organization to make use of the new rules. The firm plans to raise up to $100 million for its third fund, and it has partnered with the New York-based online investment platform Seedinvest to do it. The WSJ has more here.

    First Round Capital, the eight-year-old, seed-stage investment firm with offices in Philadelphia and San Francisco, has closed a fifth fund of $175 million, up just slightly from its $160 million previous fund. The firm also announced that New York City-based partner Phin Barnes is relocating to San Francisco and that Wiley Cerilli, founder of former portfolio company SinglePlatform, is joining as a venture partner. The WSJ has more here.

    MassMutual, founded in 1851 and one of the oldest businesses in Springfield, Ma., has committed $6.5 million to help out the region’s newest start-ups. MassLive.com has much more here.

    —–

    IPOs

    Alibaba goes with the NYSE.

    GoPro, the 10-year-old maker of high-definition video cameras, saw its shares soar 31 percent yesterday on their Nasdaq debut. The company now has a market value of $3.9 billion — nearly equal to that of Domino’s Pizza, notes the WSJ.

    —–

    Exits

    Expedia has agreed to acquire the European car-rental reservation company Auto Escape Group from Montefiore Investment and Auto Escape Group’s management. Terms of the deal weren’t disclosed. Skift has the story here.

    Submodal, a five-year-old, Laguna Beach, Ca.-based Web design and software development studio, has been acquired by Tustin, Ca.-based Mophie, maker of the popular mobile battery case. Terms of the deal were not disclosed.

    —–

    People

    Venture capitalist Marc Andreessen shares a surprising detail about his firm’s funds with Vox, telling the outlet: “We basically have a 15-year lockup on our money, which is longer than you used to do with private capital. One of the reasons why our funds are so much larger than venture capital funds used to be is because we have to have the firepower to finance companies through the point of time where we take them public.”

    Bill and Melinda Gates deliver a moving address to Stanford University’s 2014 graduating class, telling the students, “Sometimes, it’s the people you can’t help who inspire you the most.”

    Venture Capital Dispatch interviews billionaire doctor Patrick Soon-Shiong, who has launched and sold two biotech behemoths and now heads up Nantworks, a venture that combines artificial intelligence, semiconductors, cloud databases, a supercomputer, nano-optics and fiber-optic cable. Says Soon-Shiong, who invests heavily in publicly traded biotech stocks, “The evolving tools of science, and their promise, have never been as exciting as right now . . . It’s not a bubble.”

    Former WSJ tech reporter Ben Worthen has quietly left venture capital firm Sequoia Capital, reports Fortune. Worthen, who joined the firm roughly a year ago as its head of content, is now editor-in-chief and content director of Ready State, a Silicon Valley-based marketing company. Fortune says he will be replaced at Sequoia.

    —–

    Job Listings

    StepStone Group in San Diego is looking for an associate to focus primarily on small market buyouts, venture capital and growth equity.

    —–

    Data

    CB Insights takes a look at 347 venture-backed companies using Hadoop.

    —–

    Essential Reads

    Foursquare is about to start charging some businesses for access to its database of restaurants, shops and other venues, as it tries to wring revenue out of the information it has gathered over five years’ worth of “check-ins.”

    A new piece of software from Carnegie Mellon University can automatically edit out the boring bits of video and allow you to watch just the interesting parts.

    How India can keep startups from moving to Singapore.

    —–

    Detours

    Punk rock icon Bob Mould, playing guitar last week in Oakland, Ca.

    How the Clintons went from “dead broke” to superrich.

    Fast Company tried designing its own Iron Man suit. It wasn’t pretty.

    The power of two.

    —–

    Retail Therapy

    Leave the hoi polloi in your dust this summer with Blade.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • My Best Friend, Google

    Larry Page and Sergey BrinIn yesterday’s New York Times, columnist Farhad Manjoo wrote, “One way to think of Google is as an extremely helpful, all-knowing, hyper-intelligent executive assistant.”

    And it’s only getting smarter. As Sundar Pichai, top banana at Google’s Android division, tells Manjoo of the near future: “If I go and pick up my kids, it will be good for my car to be aware that my kids have entered the car and change the music to something that’s appropriate for them.”

    It’s an exciting prospect, though I must admit that so much connectedness raises some questions for my own young family, such as which song from “Frozen” Android will choose: “Let it Go” or “For the First Time in Forever”? What if just one kid wants to hear “In Summer”?

    If a fight breaks out in the back seat, I hope Android will turn up the volume so I don’t have to listen to my children screaming and punching each other.

    Here’s another thing: I am generally a good, straightforward person, but occasionally, when my husband thinks that I’m working tirelessly in our home office, I’m really downtown shopping at Neiman Marcus. If our Dropcam or Nest thermostat alerts Google to the fact that I’m away, and the GPS in my phone provides the rest of the clues as to my whereabouts, I wonder about some of the implications. For instance, could Google send me a discount code while I’m at the store? That would be terrific.

    Google cofounder and CEO Larry Page tells Manjoo that people get “so worried about these things” like Google’s tracking us and profiting from our every move online and off, that we could miss out on the benefits of this new context aware world over which Google suddenly looks to have iron-clad control.

    But with Page and Google cofounder Sergey Brin at the helm of this “single, hyperaware computing system,” what’s to worry about? (They will live forever, correct?)

    The fact is I am done wasting time, changing the music in my car to suit my kids. I have more important things to do, and Google knows it, because it has already scanned this content of this post.

    Photo: Peter Foley/EPA

    Connie

    , , ,

  • A New Startup by Orkut Buyukkokten (Yes, that Orkut)

    Orkut Buyukkokten. photoOrkut Buyukkokten, the Turkish engineer who is best known for building Google’s early social network, also named Orkut, has left the company after nearly 12 years to co-found Hello, a still-stealth social network that’s been flying under the radar for the last three months — though likely not for much longer.

    Buyukkokten hasn’t yet responded to an interview request sent yesterday afternoon, but Hello’s site describes Hello as a “one-of-a-kind community of users who celebrate friendship, imagination, self-expression, and authentic engagement in a safe environment.” It goes on to encourage users to “[e]ngage in targeted social exploration and content sharing with fascinating connections that relate to the diverse parts of your personality.”

    StrictlyVC is still trying to learn more, including who has funded Hello, but its ties to Google run strong. Apart from Buyukkokten, the startup’s domain, Hello.com, was long owned by Google, which had used it for an early, Snapchat-like photo sharing service called Hello that it shuttered in 2008. Google held on to the domain until last month, when it reportedly transferred Hello.com to John Murphy, Hello’s co-founder and chief technology officer. Murphy, like Buyukkokten, also spent roughly a dozen years as a software engineer and manager at Google. (One of the only other employees listed on LinkedIn as working at Hello, Benjamin Douglass, is also a former Google engineer.)

    Meanwhile, in January, a San Francisco-based company called Hello quietly raised $10.5 million from 44 investors, according to an SEC filing that shows a target of $18.2 million. The one individual listed on the filing is James Proud, a South London native who arrived in San Francisco several years ago by way of the Thiel Fellowship program, a two-year fellowship for applicants under age 20. As a Thiel Fellow, Proud developed and sold his startup, GigLocator, which aggregated live music listings, for an undisclosed amount in 2012.

    Is it just a coincidence that two companies with ties to powerful Silicon Valley nodes would both be operating in stealth mode less than fifty miles away from each other? Perhaps. After all, this is Silicon Valley, where entrepreneurs routinely operate in their own little worlds. And more to the point, StrictlyVC can’t tie them together as of this writing. (We reached out to Proud and Murphy for comment, but to no avail.)

    Whether these companies are connected or not, one thing is certain: Buyukkokten’s Hello seems ready to raise its public profile. This past Saturday night, sources tell me that Buyukkokten bused 200 people from San Francisco down to Hello’s Palo Alto headquarters for a launch party. If it was anything like Buyukkokten’s past affairs, we may be reading about it soon on Gawker, too.

    Connie

    , , ,

StrictlyVC on Twitter