April 20, 2012 in News
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June 20, 2013 in News, TechCrunch
Lazada, the e-commerce site founded by Rocket Internet in a bid to build the “Amazon of Southeast Asia,” announced today that it has landed another $100 million from returning investors Holtzbrinck Ventures, Kinnevik Investment AB, Summit Partners and Tengelmann Group, as well as new investor, Belgian-based family-owned investment holding company Verlinvest. This is the largest single round that Lazada has raised to date, and brings its total amount of funding raised since its launch in March 2012 to more than $236 million.
News of Lazada’s latest and biggest funding round comes just one month after Zalora, Rocket Internet’s Southeast Asia-facing fashion retail site, announced that it had also raised $100 million in a round led by many of the same investors, including Rocket Internet, Summit Partners, Kinnevik Investment AB, Verlinvest and Tengelmann Group. The two rounds are among the largest ever for e-commerce startups in the region.
Lazada operates in Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The site has a lot of room for growth in the region, but also a lot of catching up to do because, according to its own estimates, 99% of Southeast Asian consumers still prefer to do their shopping offline.
CEO Maximilian Bittner told Reuters that Lazada’s latest funding will be used to improve logistics and the company’s supply chain, a key factor in the the site’s growth across the region, especially since key rival Amazon announced earlier this month that it would ship some items from the U.S. to Singapore and India for free. Like Amazon, Lazada offers a mix of books, household goods, consumer electronics, toys and sports equipment. The company is also readying the launch of its iOS app, an important move because many Southeast Asian consumers bypass PCs and rely solely on their mobile devices for Internet access (Lazada already has an Android app).
Rocket Internet’s continued investment in Lazada, Zalora and its other e-commerce sites in emerging markets represent a departure from its previous strategy operating as a “clone factory” that copies high-growth online sites and then flips them for a profit–often to the very businesses cloned (for example, when Rocket Internet sold Citydeal to Groupon in 2010).
Instead, Rocket Internet is now focused on positioning itself as an e-commerce leader in emerging economies with rapidly-growing middle class consumers.
Other retail sites Rocket Internet has launched in emerging markets include fashion site Lamoda in Russia (which raised $130 million in funding earlier this month), Zappos clone Namshi in the Middle East, home furnishings site Mobly in Brazil and African retail site Jumia.
June 20, 2013 in Fast Company, News
James Gandolfini died today at age 51 of a heart attack, an HBO rep confirmed to Variety.
No one did murder quite so creatively as the creators of The Sopranos. And no one outside of the Corleone clan brought hits to life like Tony Soprano, played by Gandolfini.
Here’s a fitting send off for the man whose iconic gangster character sent off so many.
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June 20, 2013 in News, Pando Daily
I had a lot of conversations after my post on Southland about why I chose not to talk up the low cost of living in the South as a reason it should attract more startup attention. I can’t tell you how many government officials bring this one up as a huge advantage over notoriously expensive places like San Francisco and New York.
In addition to low costs of living, there are very real tax advantages to being based in Tennessee or Nevada and likely other states that I know less about. And given my near constant complaining about San Francisco and California’s downright hostile attitude towards startups, you’d think that one would be appealing.
But there’s a reason I never talk up taxes or cost of living as a reason other startup ecosystems will take off: Because none of the people who really matter give a shit about these things.
Facebook founder Dustin Moskovitz said this best at one of our very first PandoMonthlys. Someone in the audience asked why he didn’t start Asana in a place like Nevada, and he was almost confused by the question. Here’s how he answered it:
The clip took on greater meaning the week after our talk when Eduardo Saverin — another Facebook founder by way of a lawsuit — renounced citizenship to avoid taxes just before the Facebook IPO. It showed a sharp distinction between the way Saverin thinks and the way Moskovitz thinks.
To put it bluntly: The kinds of people you want in a new ecosystems aren’t the Eduardo Saverins. They are the Dustin Moskovitzes. In the early days of Facebook, it was Moskovitz who left Harvard to move to the Valley and build Facebook into something great. Saverin stayed back East and hedged his bets. It was Moskovitz (and Mark Zuckerberg) who didn’t to throw banner ads all over the site to maximize immediate revenue. It was Saverin who wanted to do that. And it was Moskovitz and Zuckerberg who earned their billions by building a company.
Great entrepreneurs aim for the best case scenario and optimize for taking as much risk out of the equation as they can. Prioritizing where your headquarters are off of pure-cost aims for the worst case scenario, at the risk of putting your company farther from investors, potential acquirers, and talent — three things that could have very real consequences on your ability to scale or even just stay in business.
Note even the irascible Bryan Goldberg is noisily leaving California because of regulations, but building his company in New York. Not exactly a haven of cheap operating costs. He’s optimizing for the less arduous ecosystem where he can also have the tools he needs to build an online media company, not, optimizing for cheap and going to, say, Nevada or Detroit.
Ecosystems should just stop making this argument. You’re never going to get top entrepreneurial talent, and you can only attract people not aiming high enough, who are motivated by money and things and not building something great — the mercenaries, rather than the missionaries. Take a lesson from the daily deals space which got overrun by bargain hunters and rabid couponers who would never translate to customers paying full price.
Aim for the dreamers, not the bargain hunters.
[Illustration by Hallie Bateman]
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June 19, 2013 in News, TechCrunch
As has been written ad nauseam, we’ve seen a lot of activity in the wild and wacky world of cryptocurrency of late, thanks primarily to the tech industry’s new obsession with Bitcoin. Depending on whom you ask, digital currency like Bitcoin will either be worth nothing in 10 years, or its value will make Warren Buffet weep. It’s a polarizing topic at its very essence, but one thing is for sure: So far, venture capitalists are loving this emerging market, and startups are beginning to follow suit.
In late May, we introduced you to the Bitcoin market’s latest growth milestone: The launch of BitAngels, the first multi-city angel network and incubator dedicated exclusively to digital currency startups. Appropriately given its focus, BitAngels is a distributed network of angel investors and entrepreneurs that came together over the course of a few days in the wake of the Bitcoin 2013 Conference.
At launch, some 60 angels had joined the network and had pooled together just under $7 million in Bitcoin, which the founders planned to invest in $20K chunks, or increments thereof. While BitAngels isn’t a formal fund per se (so the Bitcoins are soft-circled, not in escrow), all involved are accredited, experienced investors, many of whom have made themselves available as advisors.
Like Bitcoin itself (or not, depending on the day), the angel network and incubator is growing like crazy. One month removed from launch, BitAngels has doubled its number of investors to 120 and has added nearly $10 million in capital to its reserves, bringing its total to just under $18 million.
Behind this steady growth, the network announced that it is has officially completed its first investment. Its first $100K investment went to BlueSeed, the “seasteading venture” that incubates startups in international waters not far off the coast of Silicon Valley. Naturally, its offshore incubator has drawn a handful of Bitcoin companies, as they aren’t subject to any regulation from Uncle Sam during their seafaring incubation.
The angel network and incubator for cryptocurrency startups is the brainchild of Engine.co founder David A. Johnston and SocialRadius CEO/Marketwire founder Michael Terpin, along with four additional founding board members Gyft CEO Vinny Lingham, Memory Dealers CEO and “Bitcoin Jesus” Roger Ver, Tradehill CEO Jered Kenna and angel investor Sam Onat Yilmaz.
BitAngels also tells us that it is in the final stages of due diligence with three other Bitcoin startups and, although it can’t yet reveal their identities, the founders expect to fund one or more of them in the next 30 days.
For more, find BitAngels at home here.
June 19, 2013 in News, Pando Daily
Electrical outlets are practically begging to be forgotten. They’re often discreetly tucked into corners, hidden behind furniture, or buried beneath a tangle of cords few dare to touch. They’re commodities that, like so many other objects deserving of that title, are only remembered when they aren’t around — otherwise they simply accept your laptop chargers and television cords and air fresheners before disappearing once again. Modern life would be a whole lot dumber without these basic outlets, but the objects themselves are about as “smart” as the candle wax they helped replace.
That’s starting to change. Companies like Belkin have been developing “smart” outlets like the WeMo Switch, which can connect to the Web and control electrical flow based on myriad external stimuli, while others, such as LivingPlug, have developed products like INLET that are just smart enough to make sure your kids don’t get electrocuted when they shove paperclips and forks into your walls. Your outlets might become just a little bit smarter after all.
“Perhaps our biggest goal, in a way, is that we want people to realize that the outlet is more than just the duplex,” says INLET co-creator Sam Leichman. “It can be more useful and it can add more to the living environment.” INLET is the first step towards Leichman’s and his partner Charley Curran’s attempts to build a smarter outlet, and currently focuses on child safety features and the ability to mitigate “phantom energy loss” caused by devices drawing energy when they aren’t in use. It’s not quite as smart as the WeMo product line, but it’s not quite the dullard you’re used to, either.
Though Leichman hopes that INLET will change the way people think of their electrical outlets — his goal is to make it so that “just as you wouldn’t think about having a cellphone without a case, you wouldn’t think about having an outlet without a cover” — he notes that such a change isn’t likely to happen in his lifetime. There are simply too many buildings with traditional outlets, too many people who don’t care enough to replace them with a smarter solution, and too little attention given to electrical outlets in order for there to be a large change. Duplex outlets have been good enough for over a century — you can’t just flip a switch and make them go away. Pun intended.
Which leaves Belkin, LivingPlug, and every other company hoping to work with electrical outlets with just one option: Creating literal “plug-and-play” products that build atop traditional outlets without being able to replace them. While other companies hoping to bridge the gap between the physical and digital worlds are hoping to move beyond their own hardware and focus on building cloud-based platforms, companies working with electrical outlets will be forced to remain accessories for the foreseeable future. It’s fitting that a category meant to turn the Internet into “the new electricity,” as Berg CEO Matt Webb puts it, is unable to use the Internet to improve its counterpart.
But that doesn’t mean that electrical outlets are doomed to remain neglected in the dark. Like smart locks and connected light bulbs, these accessories are trying to bring commoditized devices to the forefront once again. You probably don’t care about your locks, or your light bulbs, or your electrical outlets until they stop working — companies working to improve those objects are hoping that they can make ‘em just smart enough that they’ll be worth offering your attention. I’d say that they’re trying to “illuminate commodities,” or “unlock the future,” or “spark change,” but that’d just come off as trite, wouldn’t it? So I’ll just leave it at this:
These companies are trying to build excitement for objects that have been afterthoughts for an incredibly long time. While that might not be as exciting as making a cuckoo clock react to tweets, it’s certainly worth at least a bit of attention.
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June 19, 2013 in News, TechCrunch
Palo Alto-based ScaleIO is one of a new generation of startup storage providers that’s using intelligent software to help big companies streamline and converge their data storage operations at scale across thousands of servers. On a mission to re-imagine the very operations of enterprise data centers, the startup’s tech takes aim at the core business of storage giants like EMC and IBM. In fact, ScaleIO claims that its block storage technology offers 80 to 90 percent savings compared to the bigs.
Well, it appears that at least one of the bigs has been listening and wants the startup’s tech for its own. TechCrunch has learned today that EMC, one of the largest data storage providers in the world, has agreed to buy ScaleIO for $200 million to $300 million. The news was first reported by Avi Schneider at Israeli blog GeekTime, and as the deal is reportedly still in the final stages, according to our sources, neither EMC nor ScaleIO would offer official comment on the news when reached by TechCrunch.
While the terms of the reported deal are still unclear, if this range holds true, it’s a big win for both sides — and, following the likes of Waze, it’s another big exit for Israeli tech startups. In EMC’s case, the storage giant has been taking a turn toward a more AWS-style infrastructure, and the ScaleIO acquisition gives the company access to the startup’s “block storage,” an adaptable, multi-use data-storage technology that makes it easy to scale across thousands of servers.
In other words, ScaleIO’s software uses the hard disk on application servers to create high-performance, shared virtual storage array networks (SAN), which offer the easy scalability and elasticity of “block storage.”
With the cost of hosting coming down and the quality, speed and elasticity of cloud computing on the way up, small and medium-sized businesses have been moving to cloud hosting infrastructures (like, say AWS) at a breakneck pace. In turn, larger companies are increasingly consolidating their own clouds into massive data centers. These clusters continue to increase, resulting in all sorts of cost- and management-related headaches for the companies that manage these data centers.
That’s why EMC has been moving to a more AWS-style system and the reason why ScaleIO’s technology holds appeal for the storage provider. What’s more, with the consumerization of IT, and employees now using a wide range of consumer-friendly applications and tools at the office — not to mention bringing their own personal devices — along with the rise of the Internet of Things, infrastructure providers like EMC are going to have to be able create a bridge between connected devices and consumer and enterprise clouds, among others.
This means not only more big data and more servers, but a sort of industrial web. As data centers consolidate and startups turn to cloud hosting services, the bigs will have to adapt, offering the things clients have come to expect, such as database management, capacity planning and scalability, while maintaining uptime. Doing so in a smooth manner is becoming critical to the millions of applications, tools and businesses housed in these data centers.
For EMC, the ScaleIO acquisition follows its purchase of network storage system provider Isilon for $2.5 billion in 2010, and marks its second acquisition of an Israeli storage startup in the last 12 months. The company scooped up Flash storage pioneer ExtremeIO in May of 2012 for $430 million.
The move also represents a fairly early exit for ScaleIO, which just raised $12 million from Greylock and Norwest Venture Partners in December as part of its first round of financing. However, the startup was built by a veteran team that has designed and developed storage software apps for companies like IBM, NetApp and Xtremio, which, of course, was just acquired by EMC.
The challenge for ScaleIO, as Alex wrote in December, has been in scaling its business — one that’s largely controlled by resellers that have long-standing relationships with the big players. While ScaleIO CEO Boaz Palgi said at the time that he has had “no problem selling direct to customers,” scaling the business and selling direct will no longer be as much of a concern.
As part of its Q1 earnings in April, EMC announced that 50 percent of its storage revenue “now comes through indirect sales,” and at a $52 billion market cap and doing $22 billion in revenue, ScaleIO now has plenty of scale at which to test its mettle.
Overall, the ScaleIO acquisition represents the impact that cloud services are having on EMC. The company has faced its own challenges competing with AWS. Adding a software storage capability gives EMC a better capability to offer a service that can help it compete better with the cloud kings.
June 19, 2013 in News, TechCrunch
When we first discovered that MakerBot was looking to partner with Stratasys, I was a bit non-plussed. MakerBot, as I’ve noted before, has a certain indie cred that makes this move a bit unpalatable.
But, at the same time, it’s immensely important.
Stratasys makes expensive, industrial-quality 3D printers. They are the “big iron” of the 3D printing world. Items printed on Stratasys hardware are as solid as anything produced by, say, injection molding, and the resolution make them indispensable for engineers and designers. In short, Stratasys is making mainframes and MakerBot is making the Apple I. While I’m loath to claim that Bre Pettis is Woz (let alone Steve Jobs), he is a charismatic leader who makes 3D printing fun, something the folks at Stratasys probably could never do.
And, like Apple, MakerBot had to ramp up. By signing with Stratasys, MakerBot will be able to maintain its breakneck speed and growth. The company recently opened a 50,000-square-foot space in Brooklyn where it is assembling machines and it has office space in downtown Brooklyn overlooking the Brooklyn Bridge. They have made it big with very little investment — they recently closed a $10 million round and were nosing around for more before this news — and they suffered from some severe growing pains along the way, especially in employee satisfaction. This purchase gives the company some breathing room, at the very least.
Could MakerBot have made it without selling? Possibly, but it wouldn’t have been pretty. Home 3D printing is taking off. It’s not ubiquitous, to be sure, but it’s a method to turn bits into atoms that will become increasingly important in a post manufacturing world. Sadly, VCs are still suspicious of hardware startups (but that’s changing) and MakerBot could have gotten a few infusions of cash to help them glide to cruising altitude. Now they’re already there.
Many will say that MakerBot sold out. Many will complain that the company lost open-source roots. Many will claim that there are better printers out there. None of these claims are absolutely false, to be clear, but things are not as cut and dried as we like to think. MakerBot took something simple and made it amazing. They sold when they had to, especially considering issues with quality control and support, and I trust Pettis will bring the open-source ethos to Stratasys headquarters and tell them it’s off limits. 3D printing isn’t new, just as computing wasn’t new when Apple hit the scene. MakerBot, like Apple, made it accessible.
[image via MakerBot]
June 19, 2013 in News, TechCrunch
The reveal of the Xbox One didn’t go as Microsoft hoped. Gamers loved the system, but hated the absurd restrictions placed on the games. But Microsoft listened and just today reversed its stance on some of the more ridiculous policies. Good for them. Good for us.
I mean, the outcry was hard to ignore. The memes, the tweets, the visceral anger was everywhere. Even the talking heads on nationwide morning talk shows were debating the curious DRM restrictions.
Gone is the daily Internet check. Gone is the very limited region locking. Games can now be rented and traded and passed among friends just like always. Things are essentially back to normal, for better or worse.
This move was clearly to save face and eliminate potential digs Sony and Nintendo could (and would and already did) take at the Xbox One. The last thing Microsoft needs is Sony pointing out that the PS4 doesn’t require an always-on Internet connection like the Xbox One.
Microsoft didn’t have to reverse its stance. It could have taken the potshots and rolled out, touting the Xbox One’s features alongside the forward-thinking requirements.
After all, the company has historically been pretty good about not responding to consumer feedback in a timely manner. Just look at Windows 8. Or Windows Vista. Or Xbox Live. The company has a long history of doing whatever the hell it wants.
Even with the crazy restrictions, the average consumer would have probably purchased the Xbox One anyway. Gaming forums and Twitter represent just a small (if noisy) portion of the One’s target market. And with the One launching months from now, in the midst of the holiday season, the talk would have quieted down before it hit Walmart’s shelves.
The Xbox One still requires a Kinect to always be connected, and today’s reversal removes some of the more novel features like game sharing from the system. But at least Microsoft is listening and responding quickly. That’s new. Gamers wanted to love the Xbox One but Microsoft made it impossible. Now things have gotten slightly better.
[Image via Flickr/dalvenjah]
June 19, 2013 in News, Pando Daily
As you read first on the Wall Street Journal, Paul Carr’s NSFWCORP has raised more money. Hooray! Also: Thanks for the exclusive, jerk.
At least we’ve got the backstory for you here during our latest installment of WITN. We shot this one during our most recent LEAN IN! trip to New York, so there’s a baby involved. But there’s also talk of funding rounds, profitability v. growth, and various other smack-talk.
And for those who will be annoyed at Paul holding the camera wrong at the beginning — don’t worry, he figures it out…eventually.
Enjoy!
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June 19, 2013 in News, Pando Daily
A scene from Kaban’s game “The Godfather.”
Kabam, a maker of “massively multiplayer social games,” is in the market raising a $50 million round of outside funding to provide liquidity for employees, according to people familiar with the matter. Kabam has already raised at least $125 million in VC backing and is considered to be an IPO candidate.
However, thanks to the disaster that is Zynga, the IPO markets aren’t exactly friendly to gaming companies at the moment. The landscape for M&A exits isn’t too friendly either. EA has been on the sidelines since CEO John Riccitiello stepped down in March. And Kabam’s games, which are expansive and targeted to hardcore gamers, aren’t a “Disney kind of asset,” one banker said.
Kabam “could have easily IPO’ed two years ago when the consumer Internet was doing better,” one investor who looked at the deal and passed said.
Steve Swasey, VP of Corporate Communications for Kabam said the company is considering liquidity options for employees but would not confirm a dollar amount or the timing of such a deal. Investors are eager to back the company, he said, emphasizing that no new shares were being issued and that any deal would be in line with “making Kabam the best place for employees.”
Kabam began putting out feelers for the round in March, according to our sources.
The challenge will be around valuation: Kabam’s last round of funding, an $85 million Series D done in 2011, was raised in frothier times with a valuation to match. That round, led by Google, valued Kabam at $500 million. Even for a company that is performing well and growing, the valuation apparently scared off some investors. All in, Kabam has raised $125 million from Canaan Partners, Betfair, Redpoint Ventures, Intel Capital, Pinnacle Ventures, Performance Equity Management, SK Telecom Ventures and Google Ventures. It has also acquired five companies.
Kabam was profitable on $180 million in revenue in 2012, growing 70 percent over the year prior. The company has an estimated $20 million in cash on its balance sheet. It doesn’t need a cash infusion, but employees would like to cash in on the seven-year-old company. The problem is that even for a good gaming company that is performing well, there is no obvious exit on the horizon.
Kabam has been talking to industry players about some sort of exit for a year. Last September, CEO Kevin Chou declared Kabam was preparing for an IPO. Then in December, Warner Brothers invested in Kabam via secondary share, buying out an early investor.
Kabam is known for its hit game Kingdoms of Camelot. The company got its start as a sports community that would leverage Facebook but quickly pivoted to a social gaming model. It basically took Zynga’s model of social, community-driven games and applied it to hardcore gamers who are willing to spend more money on virtual goods. Like Zynga, Kabam relies heavily on Facebook for its livelihood, attributing 80 percent of revenue to the platform. Correction: Kabam says that it now generates 70 percent of its revenue independently of Facebook on Kabam.com and via its mobile apps. Unlike Zynga, its users are more loyal and willing to spend money. The challenge Kabam faces is distinguishing itself from Zynga to Wall Street investors.
In April, the company established a Kabam Western World Developers Fund, $50 million fund to help bring Asian games to western markets.
Despite the grim IPO markets for gaming companies, one of Kabam’s peers is feeling lucky: London-based Midasplayer International Holding Co., which makes the casual game Candy Crush Saga, is rumored to have hired J.P. Morgan, Credit Suisse and Bank of America to prepare for a public offering, according to the Wall Street Journal.
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