A good CEO should take risks, but shouldn't have to do "big, crazy things" too often, according to Mark Zuckerberg.

The Facebook CEO offered this management advice in two parts in an interview with Y Combinator president Sam Altman.

When Altman asked him for the best advice that controversial board member Peter Thiel had ever given him, Zuckerberg quoted him as saying, "In a world that's changing so quickly, the biggest risk you can take is not taking any risk."

He continued by saying that if a company is "stagnant" and doesn't make changes, then it's "guaranteed to fail and not catch up."

In the same interview, Zuckerberg also cautions that CEOs shouldn't feel like they need to make huge product changes often. That's because that's a sign the company wasn't forward-thinking enough, listening to its community, and evolving as it should have been.

"So I actually think when you do stuff well, you shouldn't have to do big, crazy things, right?" he said.

He uses Facebook's $2 billion acquisition of Oculus as an example. Ideally, Facebook wouldn't have needed to buy the company, because it would have already had the right talent inside Facebook. But, making big moves when they are necessary — like buying Oculus — is better than being too proud to make changes, he said.

It's interesting to look at Facebook's recent roll-out of Instagram Stories, which works almost exactly like Snapchat Stories, through this lens.

Facebook said at the launch of Instagram Stories that its community had signaled that it wanted the feature. Although it's easy to burn Facebook for copying Snapchat, the company realized that people loved ephemeral content and made the change, not caring about the inevitable calls of "copycat."

Here's his full quote on doing crazy things:

"We bought the Oculus team for a lot of money. I actually view that as if we'd done a better job of building up some of the expertise to do some of that stuff internally, then maybe we wouldn't have had to do that, but instead we hadn't done that. And the Oculus team is by far the most talented team working on that problem, so it just made sense to go make this big move. But I actually kind of think as CEO it's your job to not get into a position where you need to be doing these crazy things. Of course it's inevitable over the period of doing stuff, you can't be ahead of everything. So it's better to make big moves and be willing to do that than have pride and not do that and never admit that you could have done something better in the past. But I think when stuff is working well, you're learning incrementally and growing that way."

And here's what else he said about taking risks:

"I mean a lot of people, I think, think that ... Whenever you get yourself into a position where you have to make some big shift and direction or do something, there always ... people are going to point to the downside risks of that decision, and locally they may be right. For any given decision that you're going to make, there's upside and downside, but in aggregate if you are stagnant and you don't make those changes, then I think you're guaranteed to fail and not catch up. So to some degree, I think it's really right that over time the biggest risk that you can take is to not take any risks."

You can watch the whole interview here:

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London-based food delivery startup Deliveroo has abandoned plans to force riders to sign a new contract that they argued could have seen them earn less than half their current salaries, the company announced on Tuesday.

Riders were initially told that they would have to sign new contract terms, or no longer be able to work for the firm, which has developed a platform that allows people to order restaurant food to their homes and offices.

Funded with $475 million (£365 million), Deliveroo has traditionally paid its 3,000 couriers in London £7 an hour + £1 for every delivery, as well as a contribution towards petrol costs for those riders using motorcycles. But the four-year-old company sent out an email last week outlining plans to roll out a new payment scheme trial for 280 couriers in London that would see them earn £3.75 per delivery.

Protests have been taking place outside Deliveroo's office in Central London over the last week, with couriers arguing that the proposed contracts would result in many of them earning barely half the National Living Wage of £7.20 an hour.

With the situation showing no sign of dissipating, Deliveroo confirmed on Tuesday it will allow couriers to work under their existing contracts instead of being forced to take part in the new trial pay scheme.

The Independent Workers of Great Britain (IWGB) Union, which has been helping to organise the strikes, described the breakthrough as a victory for those who had refused to work on its social media accounts.

It posted the following update to its Facebook page on Tuesday:

"**Breaking News**
--- VICTORY TO THE DELIVEROO STRIKE ---

The delegation of drivers have just exited the Deliveroo head office, having finished negotiations with Management. They agreed to the following:

- No victimisation
- No new contract
- Even if drivers have signed the new contract already, it no longer has effect and you are not bound to it
- This will be a trial until 14th September when Deliveroo will meet again with workers to assess the month's pay
- If you don't want to be on the trial, you WILL have to move zone, but you will be able to move to any zone of YOUR choice and be guaranteed the same hours you are currently on."

Couriers who took part in the strikes have also been reassured that their jobs are safe, according to the IWGB Union.

"We truly believe – and have seen in previous trials – that average rider fees will increase," wrote Deliveroo CEO and cofounder Will Shu in a blog post on Deliveroo's website on Tuesday. "Indeed, in areas where we have launched this trial, rider fees have increased by over £2 per hour. In addition, riders have earned more than what they previously made, in aggregate, working less hours.

"But if riders wish to stick with the old scheme, we simply ask them to move over to a neighbouring zone, no more than two miles away. Signing the new pay-per-delivery service agreement will not be compulsory during the trial – if riders want to continue working in their zone under the pay-per-delivery trial to see how it works for them, they can do so."

Deliveroo uses an army of self-employed cyclists and motorcyclists to get food from A to B. The couriers provide their own transport and smartphones and are not eligible for sick pay or holiday pay. One courier wrote on The Guardian's website: "After an accident or injury we are on our own."

Shu added: "We have been listening to our riders to understand what matters and how we can make Deliveroo work better for them. Ultimately, if this model doesn't work for our riders, it doesn't work for us."

While couriers can opt out of the trials, the UberEATS rival is still pushing ahead with them and the vast majority of couriers seem to be willing to give it a go, according to the company.

A Deliveroo spokesperson provided the following statement on Wednesday:

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Each company has its own office culture, different traditions and perks for its interns.

We interviewed current interns at a handful of the biggest tech companies to give you a feel for what it's like to intern with them today. 

Since not all of the interns had permission from their companies to share their experiences, their names have been changed to protect their identities. 

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Uber

Role: Fusion/Strategy Intern at Uber

Major: Computer Software, Private Research University 

How he landed the internship: John had been following Uber's career page and applied for the Fusion/Strategy internship online when he saw an opening.

After a recruiter reached out and he passed an initial phone screen, John spoke with two potential managers in separate hour-long phone interviews where he was asked how we would lead a team through a theoretical scenario. 

John had already done several past internships and tried his hand at running his own startup before applying to an internship with Uber. "I think Uber was mostly just looking for people that were self-starters that were willing to work hard and were hustling in every aspect of their lives," John said. People that "are going to take ownership, not people that are just going to come punch a time clock."

Interning at Uber: John said Uber has a strong sense of cultural values, from the CEO down.

"I always see TK — Travis Kalanick, our CEO — strolling around the office jumping into product meetings. He wants to feel involved even though it's a large company."

John said he and his coworkers at Uber are "always trying to make big bets around what the next big thing is." Everyone is encouraged, even interns, to challenge what is being done.

"The best idea will win, even if it come from an intern or if it comes from someone higher up," he said.

While John conceded that there are many incredible tech companies to work with, he's really enjoyed working at Uber because he's trusted to take a lead on projects. As a strategy intern, John regularly coordinates with people from around the world via conference calls, and heavily in Brazil leading up to the Olympics. As an intern, John was on a team that worked on strategic logistics.

Working Hours: John said that interns are encouraged to work 40 to 50 hours a week. Personally, he tried to keep his work closer to 40 hours a week, but would stay later if there was anything he ever needed to finish. 

Overall Program: At Uber, breakfast, lunch and dinners are all catered. Depending on the team they work with, students are provided a stipend for housing and Uber credits for most of their transportation needs. 

While Uber has exploded, John said it has retained the feel of a startup because, as the company continues to expand globally, there are new challenges to tackle in every new country and culture.

Despite not being as well known as an emerging market as its neighbors India and China, the Southeast Asian region saw a notable run-up in venture capital deals through the course of last year.

Part of the activity has been driven by China- and India-based investors, including corporates that are beginning to show increased interest in Southeast Asia as they grow operations internationally.

For example, just last April Chinese e-commerce giant Alibaba expanded into Southeast Asia by acquiring a majority share in regional online selling platform Lazada. Additionally, Sequoia Capital India and Sequoia Capital China have both made several investments in the region.

To better understand key players, we used CB Insights data to identify the 14 most well-funded tech companies based in Southeast Asia.

Topping the list was Singapore-based ride-hailing Grab, followed by e-commerce platforms Matahari Mall and Tokopedia.

Overall, e-commerce firms in particular tend to be quite successful in the region, with those companies accounting for around half of regional firms with more than $50M in equity funding. Another notable trend is that those well-capitalized firms are mostly based in either Singapore, Indonesia, or Malaysia.

See the full list below:

SEE ALSO: 33 companies that are working on self-driving cars

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“Chat bots” broke onto the tech scene earlier this year with a torrent of hype, but most have so far failed to live up to it.

Part of that is because many consumer chat bots seem like just another repackaging of an app. You chat with a robot instead of pushing buttons, but you didn’t really get anything new.

“They don’t feel like a net efficiency gain,” David Cancel, former HubSpot exec and CEO of Cambridge startup Drift tells Business Insider.

Drift is trying to use chat bots to provided something new, Cancel says. Its “Drift Bot” works as a concierge for businesses when potential customers arrive at places like the company's website. Its goal is to make sure these people are routed to the right person.

“It wants to get out of the way as soon as possible,” Cancel says.

Drift Bot is, in some ways, meant to replace the online form. “Online forms transferred the work [of initial intake] from company to the [customer],” Cancel says. Drift Bot makes the labor feel more 50/50. It pops up, asks a few questions, and gets you where you need to go. It’s like reaching a digital operator.

Cancel says Drift is trying to use the “artificial to make something feel personal.”

How it works

Drift Bot uses your words and actions to determine who within the company to route you to.

And Cancel's goal is to make Drift Bot smarter, both by improving the artificial intelligence aspects and by letting companies give more fine-grain roles to employees. Cancel also wants to keep the cadence of his time at HubSpot, which releases features at a ferocious pace.

Drift Bot lives on many different platforms: web, HipChat, Slack, email, and so on. And you can set up rules for what platforms you want it to route through. For instance, your potential customer might be chatting on your website, but Drift Bot could route their messages to an employee on email or Slack, depending on your preference.

What businesses is Drift targeting?

“The Fortune 500,000,” Cancel says. “Mid-market, as many businesses as possible.” Cancel says Drift Bot has already signed up over 6,000 businesses, though not all are paying, as it’s priced as a freemium model.

Drift has also raised $15 million in funding from CRV, General Catalyst Partners, NextView Ventures, Founder Collective and angel investors including Brian Halligan and Dharmesh Shah of HubSpot.

The future

The ultimate goal of Drift is to integrate AI and human workflow in a way that helps businesses snag customers. Cancel says that all the best bot initiatives he’s seen have been in the human-assisted AI realm. That's where Drift is playing.

“I don’t get a lot of the bot stuff,” Cancel says. “It’s cool engineer stuff, but it doesn’t solve a problem. Everything looks like a toy.”

Cancel thinks the best way to push beyond toy status is to make something that can hook into existing, human workflows. A bot doesn’t have to do everything, it just has to actually be useful.

SEE ALSO: 3 founders spent a year building a Slackbot that makes sales jobs easier, and they raised $2.6 million from a who's who list of investors

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When Daniel Freedman was selling cyber security software, he had to convince people to buy a solution to a looming problem they couldn't foresee.

Years later, Freedman is now tackling a problem that not only most people have, but one that's also top of mind to fix right away: going to the gym.

Unlike scaring people into cybersecurity, Freedman realized that most people have a common problem of wanting to be more in shape, but there's never a one-fits-all solution.

Yet, Freedman isn't looking to totally replace a workout routine. Instead, his new startup BurnAlong, which he co-founded with PayPal veteran Mike Kott, is meant to plug the gaps on those days when you're too busy to make it to the gym with friends.

"Our message is not 'Forget your local gym, you can do everything at home.' We believe the two go hand-in-hand,"Freedman told Business Insider.

BurnAlong works by having a local fitness instructor either record a class or host one live on the site. Then, you log in with your friends to watch it at the same time. You can see up to five people, instructor included, on the screen or you can just take classes by yourself. All of the videos are designed to be done with minimal workout equipment at home — a barre class, for example, can teach you how to use a chair instead.

"It’s the same as when you're with friends in a class. You can look at them. you can joke with them. You can push each other. You can have a laugh together," Freedman said.

Freedman is hoping to find a hit with people who normally do online workout videos but also with those gym-goers who rely on their friends to keep it fun and hold them accountable. 

Beyond helping friends hold each other accountable, Freedman hopes BurnAlong will make people more eager to try their local gyms around them too. 

"I think a lot of people don’t go to the gym because they think 'I'm not going to get it,'" Freedman said. "With this, you get to familiarize yourself with a local gym and a local person. It’s like you learn the dance moves. It doesn’t matter whether you’re wearing mascara or how high you’re lifting your leg. It’s like let’s do this. And let’s do it together."

BurnAlong was born out of Freedman's transition from living in Manhattan and always playing soccer with friends to starting a family in Baltimore and watching his windows of free time shrink. He wanted to work out with friends, but the schedule of classes no longer fit his schedule of life. 

BurnAlong is meant to fill the edges, when you might have a few minutes free after bed time or before the kids wake up to be able to squeeze in a work out with friends, Freedman says. And instead of popping in a workout DVD by yourself, BurnAlong is designed to make it feel natural to be working out with friends, either in person or online.

Thousands have already tried it through its beta program, and it's rolling out to the general public in September. Membership starts at around $10 a month and that includes all of the classes.

"When you look at a lot of things in the fitness industry, you see people who look like super models and guys who have six packs and look like they’re off the cover of GQ magazine," Freedman said. "People want something that’s more authentic. With our experience, it’s not a Hollywood production. If someone slips, it’s fine. It’s a place where anyone is comfortable no matter how you look."

SEE ALSO: The app that college kids once were crazy for has realized that anonymity isn't everything

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Silicon Valley is increasingly paying attention to the companies that are being built at a startup factory in South London.

Entrepreneur First, as the startup factory is known, has already caught the attention of Twitter after Magic Pony Technologies, which was built at Entrepreneur First, was acquired by the social media service for $150 million (£114 million) in June.

Now, Facebook has been named as the host of Entrepreneur First's next demo day — another indicator of interest in the startup incubator by a Silicon Valley giant.

The demo day, which will take place at the social media giant's UK headquarters on September 6, will be attended by some of the biggest investors in Europe and there's a good chance that a number of Facebook representatives will sit in on the pitches too.

Previous Entrepreneur First demo days have been held at Entrepreneur First's incubator space — a former biscuit factory in Bermondsey, South London — and tech conference space CodeNode.

Founded by Clifford and Alice Bentinck in 2011, Entrepreneur First provides deeply technical people with £17,000 in pre-seed funding so they can build a technology startup. In return, it takes an 8% equity stake in the company that is created.

The 75 startups that have previously graduated from the programme have been backed by the likes of Index Ventures and Y Combinator. Collectively, these startups are now worth more than $500 million (£385 million), according to Entrepreneur First's website.

Business Insider contacted Facebook to see if it plans to invest in any of the startups but did not immediately hear back.

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London startup Dice has raised $6 million (£4.5 million) for its music discovery and gig ticketing app, bringing total investment in the company up to $10 million (£7.6 million).

The app, founded in 2014 by Phil Hutcheon, allows people to trawl through a list of upcoming gigs in their area and purchase tickets at face value without paying the booking fees that other ticketing websites add on. The app also stores tickets so that users don't have to wait for them to be posted or print them off themselves.

The Series A funding round was led by Evolution Equity Partners, with participation from existing investors White Star Capital, Designer Fund, and Kima Ventures, along with several music industry angel investors.

Dice said it will use the capital to further develop its app and fund the company's expansion across Europe and North America.

Since launch, over 700 musicians have sold their tickets on Dice including Taylor Swift, Disclosure, Jamie XX, George Ezra, Skepta, Jack White, Four Tet, and Justin Bieber. Tickets sold via the Dice app are sourced directly from artists, promoters and venues. 

The company, which has 42 employees and is actively against touting, has previously been backed by DeepMind founders Demis Hassabis and Mustafa Suleyman who sold their AI company to Google for a reported £400 million in 2014.

It's also got the support of Matt Miller, whose design studio, ustwo, created the Monument Valley app.

"I would never have backed Dice without Phil," Miller told Business Insider earlier this year. "Phil is the man we’re betting on. He is incredible and finding those great founders is not easy."

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Guns are three times more likely to kill someone than fire, but at schools and offices throughout the US, it's a fire alarm that's mandatory, not a gunshot detector.

That's a risk for people that Jake Popper wants to change. 

Popper and his cofounder Peter Street created the AmberBox, a combination fire alarm and gunshot detector.

The alarm is trained to be able to identify audio signatures of gunshots, whether it's a hand gun or semi-automatic rifle. So far, Popper told Business Insider that it's never had a false alarm.

However, it doesn't just sound an alarm if it hears gunshots — after all, that could be devastating to have people rush the halls. 

Instead, when several are installed throughout a building or college campus, the alarms form a mesh network. If an alarm starts to pick up the gunshot noise, it can send an instant notification to the building manager and the police about the location of the shooting based on which alarms are picking up gun shots.

From there, Popper says it can also trigger lock downs on the emergency system to keep a shooter from entering other parts of buildings or start evacuations — whatever the emergency plan is for the specific building.

Popper started AmberBox after spending the last year in the US and feeling like the number of shootings in places like night clubs and office parks was “only accelerating.”

"This is an increasing risk for businesses, and there’s no solution available,” Popper said in a pitch to investors at Y Combinator’s Demo Day.

The lack of solutions available is why he started AmberBox. Right now, each detector costs $50 a month and has seen interest from universities to financial institutions, Popper said.

The fire alarm of the future is already live in one government building in California, and it's currently being installed throughout Santa Clara University.

SEE ALSO: One of Peter Thiel's fellows created a new startup that will fund your lawsuit

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There's finally some good news in an election season that Silicon Valley leaders have already deemed a "disaster for innovation."

On Friday, the Department of Homeland Security proposed a new rule to make it easier for foreigners to stay in the US for up to five years to build their startup.

The change will grant the US Citizenship and Immigration Services (USCIS) the ability to "allow certain international entrepreneurs to be considered for parole (temporary permission to be in the United States) so that they may start or scale their businesses here in the United States," the USCIS says.

For foreign startup founders to qualify, they must own at least 15% of the startup and have started the company in the US within the last three years. There's also a requirement that the startup has raised at least $345,000 from prominent investors or received at least $100,000 in grants.

Rather than trying to pass a new act through Congress, the proposed rule is an extension of the US Citizenship and Immigration Services so it doesn't have to go to a vote. Instead, anyone has 45 days to publicly comment on the rule.

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Silicon Valley is a great place to create the next world-changing business. But for founders with no connections, it can be an intimidating place to break into.

Business Insider spoke to 10 top-tier venture capitalists about what advice they give to aspiring entrepreneurs looking for a way into the tech industry.

Here's the advice from some of the best on how to break into Silicon Valley:

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Breaking into Silicon Valley is about connections.

"Start by finding the best connections to a few seasoned Silicon Valley entrepreneurs, Angels or VCs via your contacts, LinkedIn or other means. Get a warm intro to them, meet them and pick their brains. At the end of the meetings, ask them in turn to intro you to other folks who can be helpful and then meet those folks. Rinse and repeat! Voila! You will have the start of a good SV network. The awesome thing about Silicon Valley is that most people are willing to 'pay it forward' and be helpful to smart folks who are starting on their entrepreneurial journey. "

— Ajay Chopra, Trinity Ventures

Have a point of view.

"Sometimes folks who are trying to build relationships come off as bland, because they're afraid to express a point of view. But I'm much more impressed reading a blog post or email that shares a thoughtful, opinionated point of view. Even if I disagree with the conclusion it proves the person cares about something. Shows me how they think and communicate. Demonstrates that they did the work to get more than superficial on an issue. Those are all qualities which I correlate with success in Silicon Valley."

— Hunter Walk, Homebrew

Identify individuals who could dramatically increase the chances of your business becoming successful.

"You are always one amazing advisor/partner/investor away from achieving the uber connectivity that will help get to you success in Silicon Valley. You have to believe in this. I've met so many individuals who've done extremely well thanks to the amplification effects of having just one phenomenal relationship."

"Identify individuals who could dramatically increase the chances of your business becoming successful. The person you're looking for will be just as passionate about your area of interest as you are. Look for them on LinkedIn and at professional meet-ups. And don't just title-shop. For example, associates at VC firms might not be able to write you a check (yet), but they can be incredibly strong advocates. Get hold of them; impress them. Be persistent (in a nice way)."

— Niko Bonatsos, General Catalyst

First Round Capital was one of the first investors in Uber, and has made some early bets on other high-profile startups like Warby Parker and Blue Apron.

Recently, the firm published a FAQ for young companies seeking funding.

A lot of information in it is specific to First Round, but there's also an excellent section on the five often-overlooked qualities First Round looks for in entrepreneurs.

They are:

• Delaying gratification — founders must be willing to give up comfort, like a high-paying job at a big tech company, for many years to build something valuable. First Round wants to see if you've got a demonstrated capability for delayed gratification, like skipping spring break to work on a long-term project.
• Admitting you don't know everything — Some founders try to have an answer for every question, and insist there are no possible risks to their business model. First Round prefers founders who know what they don't know, and admit it.
• Good storytelling– If you can't explain your story to First Round, they doubt you'll be able to explain it to customers, future investors, or the press.
• Founder-market fit – You don't necessarily need experience in the area you're trying to tackle with your startup, but you need a good argument to explain why you're capable of winning there. "We’ve lost a ton of money betting on seasoned enterprise founders pursuing consumer ideas, and vice versa," the firm warns.
• Speed – They want to see that you're executing very fast even during the limited time window they're considering an investment.

Read the whole FAQ here-->

SEE ALSO: This startup sold $2 million worth of sleek 'smart' suitcases in its first 4 months

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Penny Kim, a marketing professional with a one-month career at a Silicon Valley startup, shared a detailed account of one of the ugliest startup stories we've ever heard.

Her tale started with a job offer in July of $135,000 a year plus equity and a $10,000 signing bonus for relocation expenses. (She was moving from Dallas for the job.)

It ended with her dismissal in August after she filed a complaint with the Division of Labor Standards Enforcement over failure to properly pay her, and an account of her month at the startup — which she did not name — on Startup Grind, entitled, "I Got Scammed By A Silicon Valley Startup." Her story has been a big topic of discussion on Hacker News for the last couple of days.

Business Insider spoke to Al Brown, former CTO and one of the founders of the startup, which was called 1for.one and JobSonic and recently renamed itself WrkRiot. (He's the one Kim called "Charlie" in her story.)

Brown confirmed much of her account, even the most outrageous accusation: The CEO she dubbed "Michael," whose LinkedIn profile identifies him as Isaac Choi, gave employees fake receipts for money wire transfers to convince them the company had paid their back wages when in fact it hadn't.

Until this week, the company was still in business and still had employees, Brown says. It's unclear if it still is or does.

When one of the company's advisers heard Kim's tale, he published the company's name, posted an apology letter, and declared he was no longer associated. Shortly after that, the company's website went offline.

The CEO and cofounder has not responded to Business Insider's requests for comment through multiple channels — email, social media, and phone.

The company's website, Facebook, and Twitter accounts were not online as of Tuesday morning, and its LinkedIn page has no contact information on it other than a headquarters address.

Caught in the lie

The most startling allegation is that the company tried to trick employees into thinking it had paid them back wages when it hadn't. In her account, Kim wrote:

"Thursday, August 4th was D-Day ... That afternoon in the office, Michael emailed each employee a personalized PDF receipt of a Wells Fargo wire transfer with the message: 'Here is the receipt. It has been calculated for the taxes on your semi-monthly salary and signing bonus. The money is arriving either today or tomorrow. I am sorry about the delay.'"

If the money didn't arrive in their accounts, the CEO told employees, it was a problem with the employee's bank and they needed to sort it out on their own.

Because the company was a month in arrears with their salaries at the time, and because this was such an odd way to get paid — not a payroll check, not even a cashier's check — an intern grew suspicious, Kim reported.

The intern quickly discovered that the receipts were fake. Someone had pulled an image of a wire transfer receipt from a Google search and photoshopped one for each of the 17 employees to make it look as if it came from a lawyer and was going into their accounts, paying the proper wages.

But the person forgot to change the details on the image, like the date on the bottom of the form, which said 2014. The intern and other employees confronted the CEO about it.

Meanwhile, Brown knew nothing about the wire transfers or any of the books, he told Business Insider.

He developed "lack of trust" issues with his cofounder around this same time, and a week ago on Monday, he quit the company.

"I'm out $230,000 plus expenses from April and back pay," he said. "I got pretty hurt here."

Brown met Choi through a trusted acquaintance. He's the brother-in-law of a former employee, someone he worked with and knew well. But Brown admitted a big mistake: He didn't do an extensive background check on his partner before launching the company.

The startup was still in the friends-and-family stage of funding, and looking for angels and seed investors.

Choi had promised Brown that he was investing $2 million of his own money into the company, but he had really put in $400,000, Brown says.

As Kim recounts, the CEO had convincing stories about why the rest of his funds were delayed, all while promising that he would have the money any minute, Brown says.

The startup was founded in November, and "everything was fine until April," Brown said. Employees and bills were being paid on time, "and we were growing."

By the end of April, the company was running short on cash and hadn't secured a seed offer yet.

"Every week, [the CEO] said the money was coming, but something happens — a long list of stories. I broached it in May and June with pointed questions, and I was not getting good answers," Brown said.

Two employees pitch in another $65,000

But Choi was so believable that he talked two employees into "loaning" the company cash, Kim wrote and Brown confirmed. One employee loaned the company $50,000 and another $15,000, Brown says, and that's how the company made its next payroll.

"I didn't find this out until August," Brown said.

Choi had told him that the cash came from a $500,000 loan his lawyer helped them secure. Brown had met the lawyer and, at that time, believed that the company had the remaining $500,000 in the bank.

But Brown says that in truth the company had plowed through $695,000 — between Choi's original $400,000, Brown's $230,000, and the employees' $65,000 — and didn't have a $500,000 loan from elsewhere.

An actual angel investor did invest in August, Brown says, allowing the company to pay its employees the month of salaries it owed them for July.

He adds that the company paid Kim's salary in full, which she confirms in her account, although Kim says she never got the signing bonus and has a quibble with the severance amount.

Rite of passage

Brown has been telling his side of the story, including posting a lengthy reply on Hacker News.

"To this day, I don't understand the game plan from the CEO. Why accelerate into a brick wall? None of it makes sense," Brown wrote.

One person on Hacker News offered this explanation:

"Welcome to the club. It's pretty much a rite of passage here to spend some time with a psychopath VC, a completely self absorbed CTO with a rich investor dad that fuels his fantasies, or an idiotic CEO with an ego problem, and to pay the price for it (just time if you're lucky, time+money if you're not)."

For her part, Kim said that if she had heeded the many red flags she saw at the company, she could have saved herself some heartache — but, she writes:

"There's this default human condition to trust others and give the benefit of the doubt ... There is also a default human condition to not give up ... I haven't given up on Silicon Valley or California, and I sure as hell haven't given up on good people."

Business Insider has reached out to Choi multiple times to hear his side of the story but have not heard back. We'll update this post if we do.

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Compass, the real-estate startup trying to use tech to shake up the industry, has raised $75 million in fresh funding, bringing its total to $210 million.

The round, which was led by Wellington Management Company LLP, values the company at over $1 billion, according to a person familiar with the raise. A report last month from The Real Deal said Compass was seeking a valuation of between $1.2 billion and $1.3 billion.

While Compass functions like a traditional broker, the company's promise is using technology to reduce the time and friction of buying and selling a house or apartment.

Pushing toward this, last month Compass released an app designed to replace "stale" quarterly market reports with more dynamic information. In the app, buyers and sellers can search by standard things like neighborhood, number of bedrooms, price range, and so on. But they can also look at more advanced metrics, like year-over-year analysis of median price per square foot, days on the market, and negotiability.

This app complements Compass' established agent-only app, which is what first impressed Todd Chaffee, a general partner at Institutional Venture Partners, about the company, he told Business Insider last year when discussing his firm's investment in Compass. IVP also participated in the current round of funding.

Compass has expanded rapidly since it branched out of New York in September. It now has a presence in Washington, DC; Miami; Boston; the Hamptons; Cambridge, Massachusetts; Beverly Hills, California; Malibu, California; Pasadena, California; Santa Barbara, California; and Aspen, Colorado.

It represents about $7 billion in annual sales, according to the company.

But doubts have lingered in the industry about how much Compass is actually using tech to elevate itself beyond a traditional broker, according to The Real Deal. However, sources in that report speculated that Compass would have trouble raising $50 million, when in fact the startup was able to snag $75 million and up its valuation.

"‪I like the founders, and I'm impressed with their progress," Salesforce CEO Marc Benioff, a Compass investor, told The Real Deal last month.

Compass has over 900 agents and almost 300 employees.

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Ask any startup founder: The process of securing cash for a new startup is a harrowing, time-consuming process that can involve meeting dozens upon dozens of potential investors, with no guarantee of success.

It's a huge distraction from actually running a company, during the days where your involvement is most needed.

This is a problem that Alex Mittal and Boris Silver are very well acquainted with, as former startup founders themselves.

"It's a very repetitive, inefficient process," Mittal says.

That's why, four years ago, they started FundersClub — what they see as a better, more humane way for startups and investors to find each other, taking advantage of very Silicon Valley ideas like network effects, crowdsourcing, and the power of the web.

"Software is eating the world; FundersClub is eating venture capital," Mittal says.

FundersClub has been called the "Kickstarter for Venture Capital." Using FundersClub, would-be financiers all over the world can get in on the high-risk, high-reward world of Silicon Valley startup investing, even if they're not part of the traditional "old boys club" of the venture capital scene.

Now, FundersClub has just shy of 18,000 members — individual investors from all over the world — who have made 247 early-stage investments in 195 companies. That includes Silicon Valley high-flyers like Slack and Instacart. It looks like FundersClub is working as intended.

Top Silicon Valley firms like Andreessen Horowitz, Sequoia, and Kleiner Perkins Caufield Byers have all followed on to early FundersClub investments. From July 2012 to March 2016, FundersClub reported unrealized net IRR of 37.1%.

And on Friday, FundersClub announced the launch of FCVC Advisors — a new arm of the business to keep the momentum going by letting institutional investors like hedge funds, endowments, and foundations to get in on the action.

Not exactly Kickstarter

Mittal says the Kickstarter comparison is "understandable," but only half-right: FundersClub has an in-house staff that does the same due diligence and vetting as any other venture capital firm. Those 18,000-ish members basically scout for prospective deals, but FundersClub won't list it on the platform unless it passes muster. 

Plus, the average FundersClub investment amount is around $250,000, Mittal says. So the firm is focused on smaller, younger companies with big opportunities in front of them, in order to get the most bang for their members' buck.

"There's actually a high standard, a bar that has to be cleared," Mittal says.

Furthermore, to join the FundersClub "network," you need to be properly vetted and certified as an investor. With members making an average investment of $10,000 in each company, and a high risk that a company could go bust and leave investors with nothing, FundersClub isn't for everyone.

"We're very transparent about the risks," Mittal says. 

Advantages to each

For both sides, there are clear advantages.

For startup founders, they get access to that 18,000-member strong network. If a FundersClub-backed founder needs an introduction at, say, Facebook's Oculus, they can log on to the website, see if any of their backers works there, and ask for an introduction. Plus, it takes less time than the traditional hustle for capital, especially at the early stage.

And for those investors, it gives them access to the Silicon Valley startup scene. The traditional FundersClub investor is usually well-off, but definitely not obscenely so — meaning that, unless they're lucky enough to know a guy who knows a guy at the earliest stages of building a company, it's hard to get a foot in the door and use startup investments to diversify your portfolio.

"That kind of access previously wasn't possible," Mittal says.

Now, with the launch of FCVC Advisors, FundersClub is taking the same principle and bringing it to the more traditional sources of venture capital, including funds and foundations. Typically, larger institutional foundations, or LPs as they’re called, opt to invest their money in VC stalwarts like Sequoia and Andreessen, but there’s still a line out the door just to participate.

"The problem is that it's very lonely at the top," Mittal says.

By using this new institutional arm to bring in larger investors, FundersClub can add them to the network and keep that train rolling. Startups get easier access to those institutional investors; those institutional investors get more direct access to startups. That's important, as startups take longer to enter the public markets.

Most of all, though, Mittal says it's just furthering FundersClub's mission of reinventing venture capital — a model that he says hasn't changed much since the '60's — for the modern web era.

"We want to be the Sequoia of the internet," Mittal says.

SEE ALSO: It's way too early to say whether Silicon Valley's highest-profile investor is a success or a failure

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Cargomatic has had a rough ride in 2016 so far.

The Venice, California-based "Uber for truckers" has seen several key members of staff — including its CEO, CFO, and COO — all head for the exit. It has laid off 50% of its staff, more than 50 people.

Multiple sources inside the company tell Business Insider the company is running out of cash, having struggled to raise funding.

They also revealed the company's huge, unpublicised pivot away from the strategy that made it sexy: Now the so-called tech platform relies on data being manually inputted by its staff. The company is currently dependent on just one customer to stay afloat.

This is the story of how a once-promising tech startup went drastically off course, burning through nearly $15 million in investors' money and bank loans, while deliberately running the business at a loss. As the company continues to spiral down, one of its cofounders is jetting around the world on vacation and employees use a private Slack channel to look for new jobs.

The dream: A tech platform to connect truckers with space in their vehicles with people who want to ship freight quickly

In theory, Cargomatic is a really good idea. Trucking is currently a human-run business, controlled by people calling each other on the phone and sending emails and paperwork manually to confirm that trucks have made their deliveries. Automating that system with software could potentially earn someone a fortune.

Cargomatic's core product is an Uber for truckers. It matches companies who need goods moved with truck drivers able to move them. Like Uber, it solves the "excess capacity" problem beloved by Silicon Valley entrepreneurs: Truckers, like car drivers, often travel from A to B with spare room in their vehicles. Both Uber and Cargomatic simply let them know if anyone is willing to pay them to occupy the free space.

A shipper logs on to Cargomatic.com or one of its apps, enters details about what they are shipping, where it is going, and when it needs to get there. Cargomatic pre-verifies its drivers to ensure they have the correct paperwork. Qualified drivers see the job pop up on their app, and the first to click "book it" gets the work.

The short-haul "less-than-truckload" (LTL) business has revenues of about $77-billion-a-year, on journeys of 200 miles or less. The wider US trucking industry is huge. It is the way a majority of freight is transported in the country. In many US states, more people are drivers than any other type of occupation. VCs have been interested in the space due to the sheer size and fragmentation of the companies within it — there are probably about 500,000 trucking firms, ranging from companies with just two trucks and a phone, to huge fleet haulage businesses.

Around 27 tech startups that match truckers with loads — both full-load and less-than-truckload — have raised more than $180 million in venture backing since 2011, according to research firm Armstrong & Associates. Some of the biggest trucker/shipping tech startups: include Otto, which was acquired by Uber in August, Convoy, Transfix, Cargo Chief, and Trucker Path.

LA-based Cargomatic was founded in 2013 by friends Brett Parker and Jonathan Kessler. The two were introduced by Parker's wife.

Parker comes from a trucking and logistics family. His father Allan owns The Triangle Group, a 44-year-old company that delivers apparel to retailers' distribution centers. He grew up working in the family business and from 2009 to 2013, Parker Jr. was the managing partner at the firm.

Around 2012, Parker shared an idea with Kessler.

As the LA Times reported in 2014, Parker lamented the time-consuming chore of finding and vetting drivers. He wanted a service that could connect him to pre-verified drivers without the time suck.

Kessler, a perma-tanned marathon runner who the LA Times describes as "an adventurer and technology tinkerer who's gone from being an Alaskan fisherman to building button-making machines in Ecuador" was on board with the idea.

Kessler was a popular, Messiah-like figure inside the company. One former employee described him an "electrifying,""first in, last out, kind of guy."

"He was a nice guy to have a beer and a chat with, how could you not like him?" said another, who was more cynical about Kessler but nevertheless appreciated his impact on the company.

Cargomatic became the eighth startup Kessler had been involved in. 

His last startup was a technology company that aimed to connect smartphones with TV sets before the idea of "second screening" had become the norm. According to Kessler's LinkedIn, Hand Eye Technologies raised money, built a proof-of-concept model, and filed provisional patents, but pivoted to become a mobile app development consultancy, working with customers including Nokia, Intel, and Sephora.

Prior to founding Hand Eye in 2006, he was in the founding team at audio and video codecs company Camino Networks. Just eight months after Camino was founded, its parent company Sonoritt was sold to Skype for $27 million in stock (back when Skype was owned by Ebay) in 2006.

Between 2002 and 2005 he was director of client services at web search and visualization company Groxis, which ceased operations in 2009.

Having spent years trying to make his mark in Silicon Valley, Kessler believed a move south to "Silicon Beach" to create a disruptive shipping logistics company would be the way he could finally hit the big time.

Cargomatic begins raising money and expanding outside Venice

Kessler and Parker raised an undisclosed seed round from Acequia Capital in April 2013, followed by an official $2.6 million seed round in June 2014. The round included participation from the investors including Canaan Partners, SV Angel, Acequia Capital, Structure Capital, Sherpa Capital, and Winklevoss Capital.

That year, with around 20 office staff, Cargomatic claimed to run more than 100 deliveries a day, with the average driver hauling more than 1,000 pounds of freight each time, while the average shipper would pay about $120.

Cargomatic made money by charging a fee to both sides — the trucker and the shipper — usually around 20% of the transaction.

As the business began picking up customers, at the turn of 2015, Cargomatic announced its Series A investment: An $8 million round led by Canaan Partners, with involvement from 13 other investors. It brought the company's total funding to $12.1 million, although it never publicly revealed a valuation.

Cargomatic would go on to use that investment to expand East, launching its first New York office in the summer of 2015.

Dan Harman was hired from 3D printing company MakerBot, where he was director of international sales, to lead the New York business. In addition to its California roots, Cargomatic now also handled shipments in Greater New York, New Jersey, Connecticut, and Pennsylvania.

In an interview with Crain's magazine announcing the office opening, Harman and Kessler noted the challenges of trucking in New York versus Los Angeles.

"'It’s logistically quite complex,' Mr. Harman noted.

Trucking lingo also varies by coast. Some terms have entirely different meanings, he said.

Another difference: tolls, which don’t exist in Los Angeles.

'We have to deal with water crossings—bridges, tunnels—and massive amounts of traffic,' Mr. Harman said of New York.

'And let’s not forget snow,' Mr. Kessler chimed in. 'We did not have to worry about snow in L.A.'

'Or even rain,' said Mr. Harman."

As it turned out, Harman would leave Cargomatic just a year after joining, when the New York office was shut down.

Kessler: We are "a couple of years ahead of rivals"

But in 2015, Cargomatic was scaling rapidly. In December, the company went on to launch in San Francisco.

Asked at the end of 2015 where he saw Cargomatic in five years, Kessler said: "We plan to continue to improve and expand our service in the markets we currently serve, while seeking out opportunities for expansion in other markets in the U.S. and internationally."

Kessler became increasingly bombastic in interviews. In a March 2016 article with Trucks.com, he dismissed Cargomatic's rivals. First, he was asked about Convoy, a Seattle-based startup that uses tech to connect shippers with truckers. At the time, Convoy had raised $2.5 million in funding from investors including Marc Benioff, Drew Houston, and Bezos Expeditions. Its total equity funding is now at $18.5 million.

Of Convoy, Kessler said: "We have more coverage than they do. We’re in more places and we’ve been doing it longer. We know more about the business. We’re a couple years ahead of where they are."

Kessler added that rival app Trucker Path was "really just an app for truckers to use to help find truck stops." He called Cargo Chief a "technology-enabled long-haul broker"— Cargomatic didn't compete there because it focused on short-haul shipments.

Layoffs hit — 50% of staff are shown the door

A month later, Cargomatic fired 50% of its staff— around 50 to 60 employees in total across two rounds of layoffs.

Some employees had sensed something was up when a big recruitment spree — the company was moving so fast on hires its recruiters could barely keep up — came to a "dead stop" around February 2016.

One former employee told us: "I think everyone had a sense that something was amiss when management implemented a sudden hiring freeze with no explanation. But no one could have expected something of this magnitude. Everyone that was laid off was given no warning whatsoever. They were completely blindsided."

When asked for explanations, managers were simply told the company was looking to "do more with less," the source added.

In an emailed statement at the time, Kessler told Business Insider:

"The Cargomatic marketplace continues to expand and has enjoyed year-over-year growth since our founding in 2013. Key to growing a successful company is knowing where to staff appropriately at different growth phases. Sometimes that means making difficult decisions, and to that end, we recently reduced the size of our marketplace operations and inside sales teams."

He added that the reduction in staff had allowed the company to build out its enterprise sales department, pointing to recent hires, and that the company had made additions to its engineering team to "automate tasks that previously had been handled manually."

"Cargomatic remains laser-focused on developing world-class technology that provides increased efficiency, transparency, and affordability to the trucking industry," Kessler said.

Cargomatic had quietly pivoted away from being an Uber-like app to being a traditional brokerage business

Pointing out that Cargomatic had hired enterprise sales staff was telling. Uber doesn't need a sales team. Why would the so-called "Uber for truckers"?

As it turned out, there had been weak demand for Cargomatic's core product. Adoption of the app had been slow and the challenge of working in the less-than-truckload space is that you need to have density in order to succeed.

Cargomatic instead became a traditional brokerage business, relying on enterprise accounts and calling and taking meetings the old-fashioned way. As DC Velocity pointed out, this saw it enter a crowded segment and the move "alienated" brokers who had expected to be partners with Cargomatic, not competitors.

In particular, Cargomatic shifted into the "drayage" business — picking up containers from the port. For outside investors, the pivot looked like a success. The average container price was around $550, compared to an average sale of just $40-45 on the app. Revenue was growing at a clip.

Despite its "Uber for Truckers" nametag, the majority (sources estimated around 90%) of Cargomatic's business had nothing to do with the app, which now pretty much just functioned as a facade for the underlying brokerage business. It wasn't looking like a tech startup any more.

What's more, while Cargomatic was demonstrating top-line growth, the bottom-line was looking seriously unhealthy.

One of Cargomatic's clearest flaws was its lack of concern for margins.

The sales team could sign-up customers at a negative margin, yet still receive a bonus as they were rewarded on billings, rather than the actual money it made for the business, according to former employees. The goal was to take a margin of around 10% from each transaction, but in the desperation to gain and retain customers, those margins were often reduced to the low single digits, or fulfilled above cost.

One former employee said: "The margins were always negative. You hire me to move freight for you, you pay me $100, but then I need to pay costs that could be $150 to $200. We were actually paying to move freight. That was crazy, in my opinion."

Despite this, the sales team would still take their bonuses — pushing the negative margins down even further.

This kind of behavior — paying for growth to get better penetration and visibility with customers — is reasonable for a large, well-funded startup (like Uber). But there has to be a clear path in which customers can be gradually moved up the price scale, or costs moved down, so that in the long run the extra volume of business the company acquires becomes profitable.   

There's a clear problem with this strategy in trucking: What if they don't turn into repeat customers? Lots of Cargomatic's customers were simply businesses that needed to move excess freight. It's a random, rather than cyclical, need that would not guarantee repeat sales.

Cargomatic struggles to raise a Series B and Kessler is ousted as CEO

Investors took notice. In 2016, Kessler was charged with pitching the company around Silicon Valley in the hope of raising a Series B round.

"Investors would look at the top line, but they would also look at the profitability of our accounts and saw we were super top heavy — savvy investors saw that," one former employee said.

Kessler was ousted from the CEO role a month after the layoffs in May by the Cargomatic board. The company said he had moved to the position of chief product officer, while still remaining on the board.

Cofounder and president Parker sent Business Insider this statement at the time:

"It is common in the maturation of a fast-growth technology company to have the visionary founder move to a new role. The change does not affect our continued expansion and our prospects have never been more positive. With the backing of Canaan Partners, the recent addition of seasoned logistics executives and an increased focus on enterprise sales, we are poised for growth in 2016 and beyond."

But in reality, "adventurer" Kessler booked out and traveled the world, as chronicled on his Instagram account.

Kessler's exit hit many employees hard. When Kessler left, a part of the culture disappeared from the young startup too.

Board member Richard Gerstein becomes the de-facto CEO

In his absence, new leadership came in from the outside. Richard Gerstein, a board member, whose title was executive chairman, became the de-facto CEO (although he's not listed on the company's website). Gerstein — who was barely seen in the office and would instead conduct team meetings over video call as he was often abroad, dealing with his other businesses — was not as popular amongst the majority of staff members, and neither was Parker, whose position now seemed elevated.

Gerstein was described by a former employee as an "old school guy." He is currently a president at venture capital firm Finca LLC. Prior to that, he had worked at the international rail logistics firm IntelliTrans for 22 years.

Sources said he was not particularly interested in the tech side of the business — the part that drew many employees to work there — whether it was the type of product Cargomatic was trying to sell, or the kind of tools the company was using. He wasn't happy Cargomatic was using HR software Zenefits, for example, telling staff in one meeting he would prefer if all employee information was kept in a filing cabinet.

One former employee said: "If you watch a movie about the cliche American boss, who just wants to fire everyone, he's that cliche American boss. He's not a leader or an entrepreneur, he's a boss."

Former employees described Parker — who at least was in the office every day, unless he was at meetings, and did have a small group of allies within the company — as an internally competitive salesman, whose bonus structure was "legendary."

Like the rest of the sales team, he was rewarded based on gross sales, rather than profitability. Parker attached himself to some of the largest accounts Cargomatic had on its books.

But his sales technique was criticized by some former employees.

One said: "In these meetings he would say: 'This is what we do and how we are trying to change the industry,' but they were more infomercials. Sales don't come from those meetings. We got no sales, we just got business cards."

Another said of his style: "He has the tendency of saying a lot and letting everyone get confused and not relaying anything ... he is disorganized, barely understands the tech world. He can't sell to tech-oriented people nor explain it to non-techies."

"We were throwing out everything that made Cargomatic sexy" and "real-time" data was inputted manually

One of Gerstein's first major moves was to fire the company's popular COO, Sean Whiteley, a tech executive the company had hired in June 2015 from secure healthcare messaging startup TigerText. It was another decision from the board that didn't go down well with employees.

One former employee described Whiteley as "a very good person, a solid guy: honest and trustworthy." Another said: "Sean is really popular around LA. He's really well-known around here and he is an awesome dude, very energetic."

Senior staff began leaving in their droves. Notable departures included the VP of operations and the VP of engineering. Staffers were increasingly unhappy that Cargomatic was moving away from being a tech company and that the senior management, most of whom now only had experience in the old-school logistics industry, were trying to turn it into a traditional logistics setup.

"We [were] throwing out everything that made Cargomatic sexy and replacing it into a simple logistics company," one former employee told Business Insider.

Most freight companies don't use any kind of tech platform — they know when something arrives at the warehouse because the warehouse manager calls them to let them know the delivery has arrived. The dream of Cargomatic would be to offer customers real-time data so they knew exactly where their shipments were. Customers fell in love with the idea that they could see their shipment on their way to its location in real-time.

It wasn't the reality. Cargomatic staff would manually input the data each day. Rather than being integrated, shipping data from the LA port, for example, was grabbed manually and put into the shell of the product. When the warehouse manager made the call, a Cargomatic employee would update the system manually.

"Yes. Everything was manual. Our mobile applications were constantly sending the wrong type of data and the operations team need to fix them all the time inside the system. Our containers system was just a glorified spreadsheet where nothing is automated," a source told us.

Another said: "It was a show-game. Customers thought this process was automated but we were asking people behind the scenes to make it look automated."

Rather than develop its own trucker management system (TMS), for example, which the engineering team had been working on, Cargomatic began licensing a software package called Mercury Gate instead. Before he was forced out of the company, Whiteley had advocated that if Cargomatic wasn't going to create its own software, it could at least opt for a better-known platform that more of its customers used instead. But he was overruled by the rest of the board. Gerstein also happens to sit on the board of Mercury Gate.

There were other operational issues. Customers kept disputing their bills. Cargomatic threw temporary accountants at the issue.

Staff even nick-named them "temporary accountant one,""temporary accountant two," as so many temps flew in and out of the building asking questions.

"It was an absolute clusterfuck," said one former employee.

As Cargomatic's situation became increasingly messy, sources within the company told us customers were left in the dark about the changes.

One former employee said: "It's not being communicated at all. Richard told everyone ... that we should never ever talk to the media and never talk to customers about what's happening inside the company."

This reporter's name was mentioned specifically as a member of the media staff members shouldn't speak to. A source told us that Parker mentioned this so much that employees were increasingly suspicious he had been the source of the leak for our initial layoffs story earlier this year.

"You'd sit in a meeting and the lights were out in the room"

With the company's popular leader on vacation and other employees heading for the exit of their own volition, the mood within the company was bleak.

"Morale is so low that people are coming in mostly to collect their paychecks and wait for the inevitable. We have a private Slack channel in which we circulate possible job positions, ask for referrals and vent about the lack of management inside the company," an employee told us in July.

A former employee said: "You'd sit in a meeting and the lights were out around the room. They were disengaged, everyone was in their own battle. Some of these people I felt sorry for. They'd take on a job, sign a one-year lease on an apartment in an expensive area, then find out later they were out of a job. It was a tough place to be. It was very difficult on staff to be in an expensive area and at a company that was floundering."

Meanwhile, one customer was kept incredibly well-informed of Cargomatic's operations.

CEVA Logistics, a transportation and logistics company with offices in more than 160 countries, became Cargomatic's biggest customer. CEVA operations personnel were often seen inside the Cargomatic offices. Routes for truckers were planned within CEVA's office. The rumor among the staff was that Cargomatic was actively trying to be bought by CEVA — a huge company, but another account that was also being run at a negative margin.

"I'm pretty sure Richard [Gerstein] will make Cargomatic worth something, even if that means killing the business and getting acquired by CEVA," a former employee told us.

A CEVA spokesperson said the company does not comment on its suppliers or speculation.

Just two months of cash left

Cargomatic secured a bridge round of a couple of million dollars at the beginning of the year 2016, plus a $3 million bank loan, according to a source. The company's runway was supposed to last through November.

But in August, The Wall Street Journal reported that the company's interim chief financial officer Seth Klein had resigned and that Cargomatic had just two months of cash left.

Hrach Simonian, who sits on the Cargomatic board and is a general partner at its biggest investor, Canaan, brushed the matter off. He told The Wall Street Journal: "The fact that there’s two months of cash left is irrelevant. They have [an] indefinite runway … There will absolutely be a new cash infusion in the company in short order."

Simonian's other deals at Canaan include grocery delivery service Instacart, crowdsourced real estate data startup Compstak, real estate crowdfunding company RealtyMogul.com, and Washio, the LA-based on-demand laundry service that went out of business earlier this week.

Meanwhile, Gerstein told The Wall Street Journal, with an attitude somewhat indicative of his opinion on tech: "There’s a perception in Silicon Valley that you can just start with a blank piece of paper and you don’t need to know the rules. That might work in some industries, but not in freight transportation. To scale this company, we need people who have knowledge of the traditional technology in manufacturing and distribution."

The day the article was published, Gerstein held an all-hands meeting, dialing in from abroad.

According to sources, Gerstein berated staff about the WSJ article and told them they shouldn't be talking to the media about the company. Gerstein named random people in the room and demanded they repeat back to him what he had just said. "He treated them like children," said a source with knowledge of the call. 

Right now, it's unclear what's going to happen to Cargomatic. It has no CEO, no CFO, and no COO. Gerstein is only in the office around once a month. Many current employees are planning their exits and the mood inside the office is increasingly sour, according to sources. There is no sign of a Series B. A source estimated "99%" of Cargomatic's business currently comes from CEVA, and CEVA alone.

Parker, Kessler, Gerstein, and Simonian have all not responded to Business Insider's repeated requests for comment.

Ricardo Salgado, the CEO of on-demand truckload shipping startup Loadsmart, said he hopes the issues at Cargomatic don't cast a shadow over other companies claiming to be the "Uber for X." He outlined some of the challenges in the "Uber for trucking" space.

"The industry is changing rapidly because of new technology but the adoption curve is slow. This is not an industry where you have a Snapchat, where you give the app access to your contacts and have 150 million active users. It's B2B and adoption is lower," Salgado said.

"Lots of people describe themselves as the 'Uber for trucking,' but I disagree with that completely because moving people is much easier. With Uber, you just have the rider and the driver — two parties. And one in every 200 times there's an operational issue: the rider left their cell phone in the car and he just writes to support@uber.com and they figure it out."

"When you're moving freight, you have six different players touching the cargo. The cargo is worth X, there's insurance, the driver, the dispatcher, pick-up at the warehouse, drop-off with the warehouse manager, sometimes there's a broker, a shipper. Things happen all the time — the cargo is not ready, the truck broke down, the driver needs to rest because he drove 12 hours — all that type of stuff makes it more complex than on the consumer side."

So what does the future look like for Cargomatic?

One former employee predicted: "Cargomatic will shrink a lot. It will focus a lot more on being a logistics brand, using third-party software, or just using whatever they had before, then eventually get sold or fold."

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For an entrepreneur looking to launch a hardware product, crowdfunding platforms like Kickstarter or Indiegogo can be a game changer.

But Josh Udashkin, founder of smart suitcase startup Raden, says he made the decision early on that a Kickstarter would be a bad idea.

“I didn’t want [the product] to be too engineer-driven,” he explains to Business Insider.

He says that with crowdfunding, the tendency is to introduce a few features that can blow you away in an introduction video, not toward designing a product that people will love in the long run.

This phenomenon, and unrealistic expectations about the ability to deliver those features, has likely led to the many high-profile flameouts crowdfunding sites have had over the years. Take this drone company for instance, which went up in smoke after raising $3.5 million.

Udashkin says he didn’t want the pressure to over-design his suitcases, so he didn’t go for crowdfunding. However, this presented a bit of a challenge when he was trying to raise money.

Venture capitalists want to see traction, he says.

“Some of them wanted to see that Kickstarter,” he says. That’s because for hardware startups, one of the big ways of telling if people actually want the product is through a Kickstarter.

Instead, Raden had to rely on a compelling prototype and Udashkin’s selling skills. Raden ended up raising $3.5 million from First Round Capital, Lerer Hippeau Ventures, and private investors. This was enough to finance its first production run without preorders.

But other smart luggage startups have taken the opposite approach. After failing to raise enough money on Kickstarter last year, Modobag, which wants to make luggage you can literally ride on, has taken to Indiegogo. The startup has so far raised over $300,000 in this new venue.

SEE ALSO: This startup sold $2 million worth of sleek 'smart' suitcases in its first 4 months

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Silicon Valley is a place that prides itself on innovation.

Yet, somehow in the Valley's pursuit of shiny new tech, it has decided that being "innovative" is the same thing as being "totally original."

Copying another startup's idea is seen as an inferior, unoriginal get-rich quick play. Acknowledging that you used a competitor's idea is unheard of.

Take for example the reaction when Instagram's CEO Kevin Systrom deigned to admit that he'd taken an idea from Snapchat and put a different spin on it. TechCrunch wrote an entire story around the moment, declaring him the "one honest person in tech."

Yet, last week, I spent two afternoons listening to 92 startup pitches from the graduating class of Y Combinator, Silicon Valley's premier startup school that churns out a class of companies twice a year. 

Each startup only has a few minutes to run through the highlights of why their idea is a billion-dollar idea and laced throughout these presentations is a common phrasing, "we're the X for Y."

For instance:

• Squire is the OpenTable for barbershops. 
• JustRide is the GetAround for India. 
• SimpleCitizen is the TurboTax for immigration. 
• Flutterwave is the Stripe for Africa.

At first, it's easy to dismiss these as a herd of copycats, doomed to fail because they are not the Uber or the OpenTable or the Stripe. I know it's easy to dismiss. I'm often one to roll my eyes whenever I hear any startup describe itself as the  "Uber for X." I'm not alone. I've heard countless investors complain about the lack of original thoughts or new ideas among entrepreneurs.

However, listening to the 92 pitches I realized that just because Valley insiders conflate "innovation" with a "totally original" such thinking only benefits Silicon Valley — and that's starting to change.

Applying Silicon Valley outside of Silicon Valley

Of the startups that presented at Demo Day, 30% of companies, or around 31, had been formed outside the US in 16 different countries, a new record for a Y Combinator batch.  

Take Innov8, a co-working startup based in India. 

During its presentation, it went through the business opportunities in India for co-working, and then finally got to the kicker of what sets it apart: Design. It would've been easy enough to swap the name "WeWork" in for Innov8 throughout the presentation — and one investor I spoke to chided the company for not innovating on the idea more. 

While it's simple to dismiss the idea as belonging to another company, it's harder to appreciate why it might work in a different country or different sector as a new successful business. 

Innov8, for example, already has its coworking spaces up and running — and now Y Combinator is partnering with them on conferences to attract more Indian entrepreneurs. 

Squire, the OpenTable for barbershops, may sound like another reservation system on the surface, but it's actually replacing barbershops' dependency on Square and other payment processors, making it a one-stop shop. A company like Square doesn't have the resources to focus on building tailored software for niche verticals, whereas a company like Squire can own the whole market by filling pain points in just the one industry. 

Comparing your idea to a well-known one doesn't cheapen the idea, but can enrich it. As the Atlantic once explained, Disney creators didn't understand the plot of the "Lion King" until its writers called it the Hamlet for lions. They certainly didn't start out to make a Shakespearean adaption with zoo animals.

Unique ideas

Listening to the 92 pitches, I realized how easy it was to cast-off the copycats without taking the time to realize the unique idea behind each one.

Quero is taking the Expedia model and applying it to Brazilian universities, making it easier for students to find a college they can afford and receive a higher level of education. There's nothing cheap behind it.

Going back to Instagram's CEO who admitted the company copied an idea from Snapchat, Systrom was adamant that you can't just recreate another product, but you can apply what's awesome about it to your own business and move the idea forward from there.

An "Uber for X" startup may be a bad copycat attempt, but it could also be a billion-dollar business if the entrepreneur picks the right "X" and can build a company out of it.

"Gmail was not the first email client. Google Maps was certainly not the first map. The iPhone was definitely not the first phone," Systrom told TechCrunch. "The question is what do you do with that format? What do you do with that idea? Do you build on it? Do you add new things? Are you trying to bring it in a new direction?"

SEE ALSO: Here’s the best way to prepare to be a startup founder, according to a Silicon Valley veteran

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Food delivery platform Takeaway.com is hoping to raise €175 million (£146 million) in a stock market listing that will take place in the coming weeks.

The Dutch company, which is a rival to Britain's already-public Just Eat and Germany's Delivery Hero, announced on Tuesday that it is planning to IPO on Euronext — the Amsterdam stock exchange.

It intends to use the money to fund its growth, as well as pay for marketing and development of its mobile app and website.

Founded in 2000, Takeaway.com has created a platform where restaurants that already offer food delivery can upload their menus and take orders. There were 30,486 restaurants on the platform at the end of June and seven million active customers at the end of March.

The company operates in France, Belgium, Germany, Poland, Switzerland, Portugal, Luxembourg, the Netherlands, and Vietnam. It closed down its UK business last month in order to concentrate on other markets, providing it with approximately €1 million (£836,000) per annum in additional capital, the company said.

While announcing the IPO, Takeaway.com said it made a loss of €11.5 million (£9.6 million) in the first six months of 2016, on sales of €50.5 million (£42.2 million). The company's sales growth rate has averaged over 50% annually since 2013.

Jitse Groen, CEO of Takeaway.com, said in a statement: "Takeaway.com started in 2000 in an attic in the Netherlands and has grown to become a market leader in online food delivery in Continental Europe.

"Over the years, we have developed a scalable, secure and global IT platform, which has enabled us to increase the number of partner restaurants delivering food and the number of consumers ordering food from them. We see significant opportunities for further growth as people order more and more food delivery with their mobile devices from home or wherever they are.

"I am very pleased to announce the intention to float today, as I believe this to be a pivotal next step forward to realise our future growth potential. The listing will provide Takeaway.com with additional capital to strengthen our operations and to fund our marketing efforts with the aim of enhancing our proposition to our consumers. We intend to bring Takeaway.com to the next level, in collaboration with our partner restaurants and our highly motivated management team and staff."

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Pronto, a London-founded healthy food delivery startup, is shutting down after running out of money to sustain itself, according to The Times and The Truth About Equity Crowdfunding blog.

Founded in 2014, Pronto reportedly struggled to raise a new round of funding in the last week and is terminating its operations as a result.

The company will cease trading from September 2016 and is looking for a buyer.

Pronto raised $1.6 million (£1.2 million) last August and £800,000 on crowdfunding platform Seedrs in June but it needed more capital in order to compete with the huge marketing budgets of companies like Uber and Deliveroo, who have raised $12.5 billion (£10 billion) and $200 million (£152 million) respectively.

"It is with deep regret that I must inform you that we have had to make the decision to shut Pronto," reportedly wrote Pronto founder James Poulter in a letter to shareholders. The full letter can be read below.

Jeff Lynn, the founder and CEO of Seedrs, provided The Truth About Equity Crowdfunding with the following statement:

"Pronto raised money on Seedrs earlier this year in a round led by prominent institutional investors Seedcamp and Playfair Capital. As planned, the Pronto team invested the funds into a hyper-growth strategy, but unfortunately despite their hard work they have had to make the difficult decision to cease trading. It is always unfortunate when a company fails, but failure is a common part of early-stage ventures due to their nature. Alongside Seedcamp and Playfair Capital, Seedrs will work with the business to ensure any remaining assets are distributed to shareholders and those investors with eligible EIS investments are able to claim their tax relief. We will as always keep Seedrs investors informed throughout the process."

The termination of Pronto comes less than two months after rival firm Take Eat Easy filed for administration.

Pronto did not immediately respond to Business Insider's request for comment.

Here is Poulter's full letter to shareholders (via The Truth About Equity Crowdfunding):

All

It is with deep regret that I must inform you that we have had to make the decision to shut Pronto.

To be honest, there was hardly a decision; there was no choice. It was now our only option. As, over the last week we have had all fundraising options fall through. And now it would be wrongful for us to continue trading. We have had very lofty goals for this business. Goals that we knew, and have been clear, required significant funding to allow us to execute.

I have not managed to raise any of these further funds.

I think I will write in more detail about some things, however, right now, there are a brief few things I would say.

- You backed something that worked, and could have been unbelievably huge. There are no words that could understate the impact Pronto could have had.

- My entire team has given everything a human could be asked to do to make this work.

- There was no 'fat' in the business that we could have trimmed to give us any longer, everyone and everything was critical.

- As with everything Pronto, there is a lot more involved with our wind up than just sending everyone home, so closing will take some time.

- There are a number of parties that may be interest in our technical talent + technology. We have the most advanced tech for last mile delivery that is operating in London. However, our tech being entirely proprietary is designed exactly for our purposes. And as there is no one doing what we do in London, or trying to, and as repurposing it is probably impossible, there is more interest in just the technical team itself. I am pushing and will update if anything positive comes from this.

Finally, I am vividly conscious of every £ you have given.

Vividly conscious and thankful. I am writing this to an overwhelming portion of individuals who know my team or I, personally, and I can only again reiterate how much we thank you for your trust.

I am entirely sorry that I have not made this work.

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