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The ex-CEO of Just Eat has joined one of the food delivery startup's first investors as a VC

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David Buttress

David Buttress, the former CEO of food delivery startup Just Eat, has joined venture capital firm 83North as a general partner.

In his new role, Buttress will aim to identify technology startups in Europe and Israel that have the potential to grow to the same size as Just Eat, which debuted on the London Stock Exchange in 2014 and now has a market cap in excess of $5 billion (£3.85 billion).

"When we started Just Eat in March 2006 I was 29," Buttress told Business Insider. "I'm nearly 41 now. For the last 11 years, I’ve done nothing but think about takeaway. While I've loved doing that, there comes a point where there are other things you want to think about."

Buttress, who remains a Just Eat shareholder and a member of the Just Eat board, added that he's keen to get to look at startups in fintech and robotics, adding that he thinks Europe beats Silicon Valley in these industries.

It's not all that uncommon for startup founders and CEOs to move on to join venture capital companies and 83North, which has $800 million (£616 million) under management, was one of Just Eat's first investors so it's an obvious choice for Buttress.

Also worth mentioning is the fact that Buttress was already an advisor to 83North and an active angel investor before taking the new role. One of the companies he invested in was none other than 83North itself, according to The Times

83North helped Just Eat to raise a £15 million round in 2011 that allowed the company to acquire rival businesses in France, Italy, and Switzerland, The Times reported. Three years later, at the time of the IPO, 83North's stake in Just Eat was reportedly around 5.7%, or £77 million. However, this was cut to 4.2% as part of the 260p-a-share IPO and 83 Norther went on to sell the rest of its shares at higher prices.

The VC has also backed the likes of iZettle, which allows independent sellers to take secure card payments with their iPhone, iPad or Android device, and notonthehighstreet.com, which sells personalised posters and other customisable products.

Buttress, who left Just Eat in March, will be based at 83North's London office and will work alongside 83North's five existing general partners. He will initially only work two and a half days a week.

"Just Eat was incredibly demanding," said Buttress, who has two children and another on the way. "I wanted to balance things up in 2017. I'll do part time for the rest of this year and then in 2018 I’m going to ramp up. I've sort of reversed the working life balance."

Laurel Bowden, general partner at 83North and a board member at Just Eat, said in a statement that Buttress' experience in scaling tech startups has the potential to benefit "every entrepreneur in the world".

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Apple just bought a company that tracks your sleep (AAPL)

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beddit

Apple has made a move to get in bed with you.

The iPhone maker has acquired Beddit, a startup that makes a sleep sensor. Beddit notified customers on Monday of the acquisition, alerting them that their data will now be collected in accordance with Apple's privacy policy. CNBC first spotted the update to the Beddit's webpage.

Apple didn't immediately return a request for comment. The company sells Beddit's sleep monitor for $150 in its store.

Beddit's sensor looks like a thin rectangular pad that users place between their sheets. Working with a corresponding watch or iPhone app, it tracks users' heart rates, awake time and snoring. Based on that data, the app calculates a sleep score and can wake users up at an "optimal" time based on a smart alarm.

Apple Watch users have long wanted to have sleep tracking built into the device. Beddit's app was one of the many that served as a workaround. Beddit has removed a page that linked to the app from it's web site; however, the app was still available in the Apple Watch App Store Tuesday afternoon.  

Late last year, Apple refocused the marketing for the Apple Watch around health and fitness. The move appears to have paid off; last quarter sales of the smartwatch were double that of the prior-year period. 

Rumors suggest Apple might double down on this focus on health, possibly by building a glucose monitor into the watch.

Given Apple CEO Tim Cook's obsession with his Apple Watch -- which he claims helped him lose 30 pounds in a year -- the acquisition of Beddit could signal that Cook was on the hunt for something to help him sleep too. 

SEE ALSO: Two of the biggest questions hanging over Uber's legal fight with Google are 'likely' be decided this week

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The 28 coolest tech companies in Berlin

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Junique founders

With its techno nightclubs, hipster coffee shops, and eccentric residents, Berlin has developed a reputation for being one of Europe's coolest cities.

The German capital — once described as "poor but sexy" by former mayor Klaus Wowereit — may be arty but it has struggled to compete with other German cities such as Frankfurt and Hamburg when it comes to economic output.

There are signs, however, that this is starting to change, thanks in part to a surge in the number of technology companies that are now based in Berlin.

From tech giants like Google and Facebook to local success stories like music streaming service SoundCloud and to-do list app Wunderlist, Berlin is spawning a diverse range of technology firms that employ thousands of people across the city.

Here are 28 of the coolest tech firms in Berlin:

28. Daheim

Daheim is a social startup that's aiming to help refugees across Germany to learn German. The startup's platform allows refugees from countries like Iraq and Afghanistan to have a Skype-like video call with a German-speaking person who is happy to try to help refugees to learn the language.

Founded: 2016

Funding: Between €60,000 (£49,000) and €70,000 (£58,000)

Number of staff: 9 (volunteers)

READ MORE: Daheim is on a mission to help refugees to learn German



27. Heuro Labs

Heuro Labs comprises a team of 10 computer scientists, quantum physicists, and mathematicians developing an artificial intelligence platform called Cognitio. The company states on its website that its mission is to make machines intelligent and autonomous so that humans can focus on other tasks.

Founded: 2014

Funding: Not disclosed

Number of staff: 10



26. Tech Open Air

Tech Open Air is a summer festival in Berlin that aims to combine tech, music, art and science. The idea for the festival was conceived in 2014 and has since been backed by SoundCloud cofounder Alex Ljung, Wunderlist cofounder Christian Reber, and Factory cofounder Simon Schäfer. Tech Open Air also holds a series of other events in cities around the world, such as Tokyo, Cape Town, and Austin.

Founded: 2012

Funding: Not disclosed

Number of staff: 10-15



See the rest of the story at Business Insider

Brexit uncertainty has already caused a 50% drop in foreign tech workers

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brexit eu european union stay

A Brexit brain drain is already threatening the UK tech sector which heavily relies on foreign talent from both the EU and the rest of the world, according to a new report.

Research by career website Hired reveals that the pool of overseas candidates who had accepted initial offers from UK-based companies has dropped by 50 per cent since the UK voted to leave the EU in June last year.

This means foreign tech talents are already seeking employers outside of the UK. This marks a worrying trend for an industry in which some skills are already in such short supply, that British firms are offering non-UK nationals an average of 28 per cent more than local applicants in order to fill job vacancies, according to Hired.

The study also found that British employers are less confident in recruiting from abroad since the Brexit vote.

The data found the percentage of British companies sending offers to candidates outside the country fell from 25 per cent at the beginning of 2016 to just 18 per cent a year later – a decrease of almost 30 per cent.

Hired said that the path to continued success for the tech industry is “suddenly less clear”.

“While things will likely come into sharper focus over the coming months as the UK’s government maps out a path to leave the EU, it’s obvious that the tech industry can’t afford to be complacent if it wants to continue to flourish,” the company said.

“There’s just so much uncertainty for the UK market at the moment,” said Mehul Patel chief executive of Hired. “Neither employers not employees want to take risks,” he added.

Mr Patel said that the survey had also asked UK tech workers what their overall biggest concern was at the moment.

“It was clearly Brexit.”

Other issues cited included happiness at work, personal development and salary.

Those questioned also didn’t appear to expect that concerns would be fading in the short term.

More than three-quarters – 77 per cent of those questioned – said that they expect that uncertainty will prevail a year from now. More than 30 per cent said that they anticipate it being harder to find a job in the next 12 months.

But tech is not the only sector that’s already started to feel a talent squeeze in the face of the UK’s decision to split from the rest of the bloc.

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Buzzy British startup Improbable just got a huge $500 million cash injection

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Rob Whitehead and Herman Narula of Improbable

LONDON — Improbable, a buzzy British startup that builds tech underpinning virtual reality worlds, has landed a $500 million (£389 million) cash injection.

The investment was led by Japanese firm Softbank and it's a huge round of funding for a British startup. The cash is going towards tech development and hiring in its London HQ and San Francisco office, which it opened earlier this year.

What does Improbable actually do? Basically, it builds tech that does the heavy lifting required for huge simulations — whether that's online gaming or scientific research. This frees up the people using the virtual reality software to get on with the business of modelling whatever it is they want to model.

"Today in computer science, people have mastered apps to build things for a single computer,"CEO Herman Narula previously told Business Insider. "And all the power of a single computer, people can use it to do really good things. But there’s this whole other wonderful set of problems that we want to solve — like recreating whole cities, or creating beautiful virtual worlds for us to explore, or being able to recreate economies, or being able to model all the processes in company — things that if we could do, we could do really great things."

Founded in 2012, Improbable's initial focus was on gaming — but has since broadened its view to everything from science to defence. In late 2015, it unveiled SpatialOS, an operating system for simulations, and launched a beta version in February 2017.

Narula says in a statement on Friday announcing the investment: "We believe that the next major phase in computing will be the emergence of large-scale virtual worlds which enrich human experience and change how we understand the real world. At Improbable we have spent the last few years building the foundational infrastructure for this vision."

There's no word yet on exactly what this week's $502 million (£390 million) funding round values Improbable's overall worth at. TechCrunch only reports that the company is worth more than $1 billion (£780 million) and that Softbank's investment is a minority stake in the company — meaning it owns less than 50% of the company.

The investment is an order of magnitude larger than any previous funding Improbable has taken. Its last publicised round was in March 2015, when it brought in $20 million (£16 million), led by Silicon Valley venture capital firm Andreessen Horowitz (also known as a16z). a16z also contributed to this more recent round of funding, Improbable says, along with Horizons Ventures, another previous investor.

By any standard, it's a huge amount of cash for a British firm to raise. According to Bloomberg, it is the fifth-largest VC investment in the UK in the last 10 years.

Tech startups with valuations of $1 billion are more are sometimes referred to as "unicorns" due to their rarity — and Improbable has now been propelled into their ranks, alongside the likes of TransferWise and Funding Circle in the UK.

In a statement, Softbank managing director Deep Nishar was (predictably) effusive. He said: "Improbable is building breakthrough technologies that are becoming vital and valuable platforms for the global gaming industry.

"Beyond gaming, this new form of simulation on a massive scale has the potential to help us make better decisions about the world we live in. Improbable’s technology will help us explore disease, improve cities, understand economies and solve complex problems on a previously unimaginable scale."

Improbable says it has already done a proof-of-concept to recreate an unnamed British city, based on open-source map, traffic, gas and electricity, water and sewage, Internet and mobile connectivity data.

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An app that delivers McDonald's to your home has raised $10 million

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Jinn

On demand delivery startup Jinn has raised $10 million (£7.8 million) in venture funding, bringing total investment in the company up to $20 million (£15.5 million), TechCrunch reports.

Jinn, which operates an app that allows people to get things delivered from restaurants like McDonald's and shops, reportedly received the money from STE Capital, Samaipata Ventures, and other previous investors.

The London-based company intends to use the funding to grow in its existing markets as opposed to expanding to new ones, according to TechCrunch.

Jinn made headlines in January when dozens of its couriers went on strike over changes to their pay.

Leon Herrera, Jinn's cofounder and chief operating officer (COO), was heckled and told he was a "thief" when he confronted the protestors on the street. "You're treating us like slaves," one of the protesters shouted at Herrera.

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Takeaway startup Delivery Hero has just raised €387 million to help it take on Deliveroo

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Delivery Hero CEO Niklas Östberg

BERLIN — Takeaway delivery service Delivery Hero has raised €387 million (£328 million) to help it take on rivals like Deliveroo and UberEats.

The Berlin-headquartered company — whose growth has been fuelled by local startup accelerator Rocket Internet — has now raised over £1.3 billion, making it one of Europe's "unicorn" companies. It employs over 5,000 people.

The latest funding round in the seven-year-old company came from Naspers, a global internet and entertainment group, at a valuation of $3.1 billion (£2.4 billion).

Niklas Östberg, CEO of Delivery Hero, said in a statement: "We are delighted to welcome such a renowned and strong investor with a proven track record in building successful platforms around the world. Naspers' capital and knowhow will support our growth momentum as we continue to focus on creating an amazing takeaway experience."

Bon van Dijk, CEO of Naspers, said food delivery is a large and underpenetrated market that has potential for success across a number of countries.

"Delivery Hero has already achieved significant traction in some markets, but we believe that the vast majority of high-growth markets are at the beginning of the opportunity cycle," said van Dijk in a statement. "Naspers' deep expertise in building leading marketplace businesses in high-growth markets, which includes the leading food delivery business in Latin America, combined with the strength of Delivery Hero’s platform, positions us well to build a leading, global food ordering and delivery platform."

The investment into Delivery Hero comes on the same day that London startup Improbable announced a $502 million (£390 million) investment from Japanese tech giant SoftBank.

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A London-based VC has just raised a $500 million fund to invest in 'deep tech' startups

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Robot earth

Silk Ventures, a venture capital firm backed by the Chinese government and based in London, has raised its first fund worth $500m (£388m).

The firm is eyeing up investments in "deep tech" startups in Europe and the US with potential to expand in China, including areas such as artificial intelligence and robotics, the Internet of Things (IoT), fintech and medtech.

Half of the cash, which will go into startups raising series A rounds and beyond, will come from China's state-owned Assets Supervision and Administration Commission (SASAC) with the rest of the cash raised from other as yet unnamed corporations.

Silk Ventures is run out of Canary Wharf's Level39 fintech space and has offices in Silicon Valley and China and first launched in 2015 as an accelerator. Alumni include challenger bank Revolut, cyber security startup Digital Shadows and soon to IPO adtech startup SuperAwesome.

"We are globally aligned with expert partners in the US, Europe and Asia to work with China at the highest levels to ensure that our portfolio companies are not only well-funded, but have the best chance of success in the Asian market," said founding partner Angelica Anton, a former investment advisor to the Chinese government and at the venture arm of property group Quintessentially, Q Ventures.

"Silk Ventures was built to change the way Chinese capital marries Western technologies, and we pride ourselves on the cultural and operational know-how within our expanding team.”

The firm has also added six new partners to its fold, including Brewer Stone, an advisor on Alibaba's IPO and the ex-head of Asia at Prudential.

The UK is becoming increasingly attractive to Asian firms looking to scout out the latest in technology development. China Equity Group and Hanxin Capital last year launched Cocoon Networks with £500m to invest in European startups and a 70,000 sq ft tech incubator in east London with University College London. Chinese conglomerate Kuang-Chi intends to make more investments in UK tech after taking a £30m stake in a Dorset-based maker of jetpacks. And Japan's Softbank chose the capital to base its $100bn meg-fund.

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London-based VC Notion Capital has announced a new $80 million startup fund

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GoCardless

Notion Capital, a London-based venture capital firm that backs startups across Europe, has announced a new $80 million (£60 million) startup fund that will be used to back later stage companies. Notion has raised 55% of this fund so far, according to TechCrunch

The VC, which focuses on backing enterprise software and cloud companies, also announced on Tuesday the final closing of a $140 million (£107 million) venture fund to back early stage startups. 

Notion also announced that it has promoted ex-Amazon exec Chrys Chrysanthou and ex-Morgan Stanley banker Patrick Norris to partner level.

"These developments leave us exceptionally well positioned for 2017 and beyond, so we feel excited about what the future holds for Notion," said Notion Capital managing partner Stephen Chandler in a statement.

"From the start we set out to build a genuinely differentiated venture capital firm that would be sustainable across multiple generations. Talent is obviously critical to that mission so it is particularly pleasing to recognise the contribution of our two new partners with these internal promotions."

Notion Capital has had a number of successful exits, including Shutl to Ebay, Star to Claranet, Trustev to TransUnion, and Wercker to Oracle. It has also invested in the likes of London fintech startups Currencycloud and GoCardless, as well as travel startups like MOVE Guides, and TripTease.

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An early Uber employee is now launching an 'Uber for storage' to take the stress out of storing your stuff

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Michael Pao Jon Perlow

Uber transformed the taxi industry by making it easy to hail a ride with the touch of a button. 

Now, an early Uber employee wants to apply the same idea of making it more convenient and affordable to a market that is typically neither: self-storage.

On Tuesday, Michael Pao is launching Trove along with his cofounder Jon Perlow, a former high-ranking Facebook engineer.

Trove wants to redefine what "convenience" means when it comes to self-storage, Pao told Business Insider during an interview at its San Francisco headquarters.

Today, the company is officially launching out of stealth with a different way to store items than renting a unit and moving items yourself.

Most people look for a self-storage unit that's located near their work or home so they can easily pick-up and drop things off as needed. Yet, the main point of self-storage is that you end up moving and storing everything yourself — a laborious process that Trove wants to eliminate. It's a problem that the company has been working in stealth for nearly a year after Business Insider broke the news about its $8 million funding raised from Greylock.

"When you’re storing things, you tend to be going through some life transition and you’re stressed," Perlow said. "So the last thing you want to do when you’re stressed is to have to go connect all the dots and rent a storage unit and then find a haul and then beg you friends to help you. We thought we could do a lot better."

Changing what convenient means

Trove wants to challenge that "convenience" means a storage place located close to your house.

"That's one way to think about it, going over to your unit and rolling it up and getting it yourself," Pao said. "A different way to think about convenience is that the items are at your doorstep when you need them. It's a different solution to the same challenge and problem that the customer is asking you to solve."

Instead, the startup wants to save you the headache of moving everything on your own. As part of its service, the company contracts out to professional movers who will wrap up couches, protect breakable china, and make sure lamp shades aren't punctured in the storage process. 

Trove inventory

The items are then photographed and catalogued in Trove's app so you can see just what was stored and request back specific items as they're needed. All of the items are then stored by the moving company, which has its own storage facilities, meaning Trove gets to spare the expense of building new storage units in crowded cities.

"One of the things you notice when you walk around San Francisco is that there are self-storage facilities all over the city," Perlow said. "...It doesn't make sense to me or anyone really why we're storing items that we rarely access on most expensive property on the planet."

As a result, Trove takes advantage of cheaper real estate outside the cities and working with the moving companies that have extra storage space on their properties. Trove's customers are only charged for the space they use, and whenever they need an item back, they can request it straight from the app and have it delivered within a few days. The minimum is $100 per month, which includes the professional packing and pickup. From there, each return of an item costs as much time as it takes the movers to unload, up to $65 an hour per mover.

The competition over storing your stuff 

The storage market is already a $30 billion dollar business with 11 million households renting a storage unit. While Trove is taking a bet that self-storage doesn't need to be fully self-involved, it's not the only company that's trying to bring self-storage into the digital era and take on long-time challengers.

"The on-demand storage space is one area we have been watching and where companies are still showing strength despite slack in the on-demand space overall (with Q1’17 sinking to deal and dollar funding levels previously seen in the same quarter three years previously)," said Marcelo Ballvé, research director at CB Insights

Startups like Clutter and MakeSpace are both trying to solve the same problem by offering professional pick-up and deliveries — and both are well-funded competition ahead of Trove. While the new startup has raised $8 million from Greylock, Clutter has raised over $32 million from Sequoia and MakeSpace has taken in over $56 million, most recently from 8VC.

"When Sequoia invested in Clutter out of both their Venture and Growth funds, we expected competition to follow," said Clutter cofounder Ari Mir. "Our job is not to focus on competition but to take that ringing endorsement and continue to build a stellar team obsessed with delighting customers."

Yet, all of the startups in the "Uber for storage" space face the same challenge: Changing a customer's definition of what's "convenient" for them during a period of high stress and lure them away from the traditional storage unit.

"At the end of the day, storage is a big business. For us, it’s not about trying to serve everybody right away," Pao said. "It’s about serving the customers we believe who have the biggest pain point today. And those customers are the ones that are worried about renting a truck, hiring your friends, boxing everything — just making it dead simple for them."

SEE ALSO: 9 tips and tricks to unlock cool Uber features you never knew about

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3 reasons why it's crucial to ask for help if you're an entrepreneur

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help

Here's a skill set they don't often teach entrepreneurs: asking for help.

Maybe we want to do it all, or at least seem like we're doing it all. Maybe we don't want to impose, or be indebted to someone else. Or maybe our ego just has a hard time thinking someone else can do it better.

Whatever the reason, not asking for help or advice, and believing we can somehow do or know everything, prevents us from doing anything well. Not asking for help leads to distraction from what matters most, which means more time spent on low-priority things than on the things that actually move the needle and move us forward.

I'm so over it.

It didn't happen overnight but, as I've grown into my roles as both an entrepreneur and a parent, I see how crucial it is to ask for help. Here are three reasons why.

1. Asking for help deepens our interdependence.

If I ask for help, I expect to return the gesture at some point. Contributing to that cycle enriches my role and my investment in various networks that I want very much to be part of. In addition, I've found that people want to help and feel useful. I know I do. And they are glad you asked, because it implies a certain amount of trust.

2. Guilt is a total downer.

At a certain point, in the depths no doubt of Overwhelm or Exhaustion, I understood how deeply and variously guilt was holding me back. Feeling guilty about asking for help didn't leave enough time for the higher-profile, big-priority things that needed to get done if I was going to make noticeable progress. Once I made the internal decision to change that, the transition gained momentum quickly.

3. The P Word.

Pride, that is. Want to be good at everything, or at least look as if you are? That's just pride talking. And it gets in the way, big time. Certainly there are a (very) few things that I do want to be exceptionally good at. Writing, for example, and making my kids' favorite snacks. For everything else, I'm glad to ask for help, and let someone else take the credit. There's enough to go around. I promise.

There's no 10-step process for getting better at asking for help. The lightbulb moments that led to my shift in thinking about it happened at unplanned moments, like 1:30 on a Tuesday afternoon when walking back from lunch.

It was useful, however, to have planted the seed in my mind to be aware of occasions when I could ask for help. Small things at first, like seeking advice on commission-based sales from people who are already successful in that area. Soon I was also looking for occasions when I could offer help, which led to the sea-change realization of interdependence (Number One, above), which got the whole thing rolling.

Have you had a lightbulb moment about the importance of asking for help? What was it, and how did it affect your working life?

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The 25 coolest tech companies in Israel

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tel aviv

Israel continues to produce an impressive number of highly successful tech companies for a country with a population of just 9 million people. 

The Middle Eastern country is sometimes referred to as "Startup Nation" thanks to the sheer number of entrepreneurs building businesses there, particularly in cities like Tel Aviv. 

Multinational tech companies like Google, Apple, Facebook, and Microsoft all have research centres in Israel but some of the local companies are arguably more interesting, with many of them specialising in drones, cybersecurity, and autonomous driving technology. 

Take Mobileye, for example. The company's autonomous driving technology was so interesting that Intel paid a whopping $15.3 billion (£11.8 billion) for it in March when it acquired the company. 

The tech companies have been ranked based on interviews with multiple investors on the ground in Israel and what the firms have achieved over the last year.

25. Zebra — medical diagnostics company

Founded in 2014 and backed by the likes of Salesforce billionaire Marc Benioff with $20 million (£16 million), this Tel Aviv-based company says it has taught an algorithm to identify early signs of breast cancer with the help of thousands of previous mammograms.

That constantly improving algorithm — trained using a technique known as machine learning, which is a type of AI that equips computers with the ability to learn without being explicitly programmed — is now better than radiologists using the best computer aided detection (CAD) methods for mammography, the company claims. 

In December, the company launched a service that allows people to upload their medical imaging scans such as CTs and mammograms to Zebra's platform, and receive an automated analysis for key clinical conditions.

 



24. Mobli — social media firm

Mobli is a social media company headed by serial entrepreneur and investor Moshe Hogeg. The startup, which downsized considerably last year, sold a geofilter patent to Snap for $7.7 million (£5.9 million) in March, according to TechCrunch.

Hogeg also has a mobile phone company called Sirin, which has raised $97 million (£77 million) to build a new $16,000 smartphone called Solarin. The phone launched at a party in London last year that was attended by the likes of Leonardo DiCaprio and Tom Hardy but the company laid off a third of its staff in March, suggesting sales have been poor.

Before becoming an entrepreneur, Hogeg, was an officer and company commander in the Israeli Defense Force where he led 150 soldiers in an "elite unit."

He's also the entrepreneur behind the Yo! app. Its sole function was to send the user's friends the word "Yo" as a text and audio notification.



23. OurCrowd — crowdfunding platform

Founded by Jon Medved, OurCrowd is an equity crowdfunding platform that allows accredited investors to invest in pre-vetted startups alongside trusted venture capital investors and angel investors.

The OurCrowd community has invested over $440 million (£339 million) into a range of companies, with $80 million (£62 million) going to startups operating in the healthcare sector.

OurCrowd already has thirteen exits to date, with two IPO's and eleven acquisitions.



See the rest of the story at Business Insider

How Tim Armstrong, a hotshot Boston sales guy, wowed Google's founders, built its multi-billion-dollar ad business from scratch, then became AOL's CEO

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tim armstrong

Tim Armstrong is the CEO of AOL, and he will be the CEO of the combined AOL-Yahoo company under Verizon once that merger is completed.

Before joining AOL, Armstrong was an executive at Google who helped build its advertising business from $700,000 a year to billions every quarter. He was also an expert advertising salesman and entrepreneur, and the first person to sell a $1 million digital-advertising deal, back when all the money was flowing to print and TV companies.

Armstrong visited Business Insider and spoke with Business Insider's US editor in chief, Alyson Shontell, for "Success! How I Did It."

In the interview, Armstrong discussed how he built a high-powered career. During the wide-ranging conversation, he talked about:

  • How he started a newspaper out of college, where actor Casey Affleck worked for him.
  • How he became a great digital-ad salesman and sold the first $1 million ad deal online.
  • What it’s like to be interviewed by Google founders Larry Page and Sergey Brin.
  • How he helped Google pivot from a licensing business to an advertising business, and launch products like AdSense, which would eventually generate billions in revenue.
  • How you know it's time to leave a safe, cushy job (Google) for one that's high-risk (AOL).
  • The advice his dad gave him the night before he started at AOL.
  • How he spent his first 100 days as CEO.
  • How he makes gnarly decisions and comes to peace with them.
  • How he inspires his teams when morale is low.
  • How talks with Verizon CEO Lowell McAdam heated up and led to AOL's $4.4 billion acquisition.
  • How you can be an effective leader who is also well liked and respected.
  • The advice Tim gives to his children, and to anyone who wants to build a high-power career.

Here's the full interview, which you can listen to below.

Or, if you'd rather read it, here's a transcript, which has been edited for clarity and length.

A strawberry farm, volunteering to be fired, and employing Casey Affleck

Nancy Tim Armstrong AOL CEOAlyson Shontell: Tim Armstrong is the CEO of AOL, and he'll be the head of the combined AOL-Yahoo company when the merger closes. Before AOL, Tim built Google's ad products and is basically responsible for the brainchild of AdSense. And he built the ad team from scratch. We're really happy to have you, Tim.

Tim Armstrong: Alyson, good to see you. Thanks for having me on a rainy New York day.

Shontell: I want to go all the way back, to the beginning of your career. It sounds as if you were always entrepreneurial. I remember the story about your making a strawberry farm successful during college?

Armstrong: When I was growing up, I always had the entrepreneurial bug. There were multiple things I did when I was younger, in my middle-school and high-school ages. But one of them was with a friend from college. There was a strawberry farm that the bank owned. I don't know if the farmer had lost it to the bank, but there was a strawberry farm, and we went to the bank and they weren't using the farm, so we said, "Could we take over the farm for the summer and do a pick-your-own strawberries? It'd be a lot less work for us, and probably a lot more profitable."

And so we did a you-pick strawberry farm, from a farm we didn't own, and cut a deal with the bank to do it. We had hundreds of customers drive up and go pick their own strawberries, and it ended up being a very successful venture and a lot of fun.

Shontell: So then you graduate and you have a short stint in finance?

Armstrong: Right when I graduated from college, I actually taught a program called the Explorer Program at Wellesley College. That was for the summer. Then I went to an investment bank in Boston, and I was there for about three or four months, and I realized that banking was not something for me. So I went to my boss and said, "You know, I think you should let me go."

Shontell: You volunteered to be fired?

Armstrong: Yeah, I just said, "I don't think this is the career for me, and I should do something else." And they said, "No, why don't you stay? It seems like you could do a good job here over time." And I said, "I want to go do something else." So I left and ended up starting a newspaper in Boston, out of that experience. And that's really what got me — if you look back to the seminal moment for me — what got me sitting here today — it was really that decision.

Shontell: It's no wonder you're the head of essentially a media company now. So BIB, was the “Beginnings in Boston” newspaper that you started. And the way you got into that, I guess you had been cold-calling executives, just hoping they would talk to you? And you discovered that nobody would talk to you unless you were a reporter?

Armstrong: I was calling people in Boston. I was really trying to just figure out what I wanted to do, and learn about different careers. I again had thought that banking would be something I would be really interested in, but when I realized it wasn't, I thought, "I should go do research and find out, really, what I want to do." And so I would call different executives in Boston, CEOs of companies, and see if they would meet with me, and not many of them would. I called one of a very large financial institution in Boston, and the woman was very nice on the phone, the CEO’s assistant. She said, "You know, the only people who really cold-call here, or who get through to the CEO, are journalists."

Later that night, I was talking to my roommate and I said, "You know what we should do? We have all our friends in their 20s, everyone's finding jobs or figuring out what they want to do — why don't we start a publication to get advice from all of these people, and give it to them? Boston's filled with young people graduating."

So we decided to launch the magazine. It was targeted at exactly my demographic back then, and I didn't know anything about publishing newspapers or magazines, but we basically launched from scratch.

We sold everything we owned — cars, bikes, surfboards, the whole thing. We bought an Apple Quadra 650 computer. And we basically learned how to publish from scratch, and print from scratch, distribute from scratch.

In that journey, I learned probably the most I've ever learned, just about what a business is from start to finish. And it was a wonderful experience. It was really hard. We did an OK job at it, not great. And we ended up buying a second newspaper, which was a better idea. That was in Cambridge and Harvard Square. So that was the launch of my phone calls to newspaper ownership, in a very short time period.

Shontell: It sounds like you never had a problem cold-calling people, which is Sales 101. So it's not really surprising that you ended up having a career in that. But you were telling me a funny story before this podcast, about how actor Casey Affleck used to work with you?

Armstrong: So we bought the second newspaper, The Square Deal, and if you went to Harvard back in those days, you used it. It had coupons in the back; it told you what was happening around town, in Cambridge Square. And we hired people, kids from Harvard, to hand them out to other Harvard students.

I was at a dinner a couple of years ago, when Casey Affleck said to me, "Hey do you remember me? Do I look familiar?"

And I said, "Yeah, of course you're familiar — you strike me as very familiar."

He said, "You don't remember, but I used to work at The Square Deal and hand out the newspapers for you." Obviously he's done really well, and he's not handing out newspapers anymore, for sure. I think he's even won an Academy Award, so that was a fun story, and a good memory back to the old days.

Tim Armstrong AOL CEOShontell: So you soon became interested in the internet. You visited MIT and saw a presentation about it, and you switched gears. What happened there?

Armstrong: Another friend of mine, Peter Dunn, owned a store in Boston called Cool Beans, which was a Grateful Dead store. And he was very networked in the Cambridge and MIT communities. He said, "Hey, there are some people coming. They have this new thing called an "internet browser." We're going to meet down at MIT, and you can see it."

I went down, and literally within one minute of them turning it on and showing what the browser did, I looked at my friend and said, "I'm selling my newspaper as soon as I got back to the office. I'm going to go do this thing. This is 100 times easier, faster, and more scalable than what we're doing in the newspaper business."

And so I literally went back, called my parents on the way home from that meeting, and I said, "I'm selling the newspaper. I'm going to try to move to an internet environment."

We started actually trying to put our newspapers online. This is 1994, I think. And then, long story short, I moved pretty quickly. We sold our share in the newspaper back to another publisher in Boston, and then I went off to start doing internet things, which was a lot of fun.

Shontell: So you rise as this great salesperson, with the first internet magazine, I believe. And the company you end up later working for gets acquired by Disney?

Armstrong: Yes. After the newspaper, the only thing I found right away — because not many people were doing internet things — was IDG, the big tech publisher, was launching the first internet magazine, which was a magazine about the coming internet.

I went to work there. In those travels — it's an incredibly long story — but I went to an event with the founders of NASCAR, the France family. And the Frances got up and gave a presentation about where they thought this internet thing was going. I talked to the NASCAR family, and they basically said, "Look, there's this company. Paul Allen's starting a company on the West Coast called 'Star Wave.'"

Shontell: Microsoft cofounder Paul Allen, right?

Armstrong: Yes. And they were the first real content company on the internet. So when I got back to Boston from that trip, I had a voicemail on my phone from Star Wave. And they said, "Hey, we heard you're in Boston. We hear you're doing internet things, and you're trying to do advertising and content on the internet. We have a company in Seattle. Would you like to come out and visit us?" So I flew out to Seattle. I did a day's worth of interviews and got offered the job at the end of the day. I went back, moved from Boston with a bag of clothes — I didn't own anything else at the time —and moved to Seattle. And I had an awesome experience out of Star Wave.

We launched ESPN.com, NFL.com, ABCnews.com, and worked with a whole crew of people from all over the US who had moved there to really get into internet content. And that was an amazing experience. Then Disney bought us. I ended up moving back to New York, to work for Disney, helping them get their internet things off the ground, including ESPN and ABC.

Shontell: From what I understand, you were pretty young when you went out to Seattle. You were in your mid-20s maybe, and you were working across platforms, which was a really early concept of TV-plus-digital, plus all these things. And you're also working with the legacy-TV sales guys, who are the old guys who've worked their way up to the top. How did they let you in? Why were you such a good salesman?

Armstrong: Well, one is, when I was at Star Wave in Seattle originally, I had done, at the time, the largest deal on the internet ever done. So I did a $1 million deal back in probably 1996 or 1997. And this was when most of the deals were $10,000 deals. I got on Paul Allen's radar screen. I ended up flying down to a Portland Trailblazers game with Paul Allen and some friends from Star Wave. And then when Disney bought the company and I moved to New York, people knew about this deal.

The deal I had done was with Rick Scott, who's now the governor of Florida. He was the CEO of Columbia/HCA, and he did the first really, truly large ad deal at Star Wave and for ESPN. When I got to New York, I sort of had a reputation of somebody who was energetic, creative, and doing deals.

I showed up in New York, and I was really one of only a couple internet people there. It was a little bit more like we were outside-the-box people who didn't fit into the normal way that everything was happening in New York and media. So they kind of took us everywhere. It was sort of like a dog-and-pony show, and we were the dog.

I learned a lot from working at ESPN, which was an amazing company with amazing people. I got to spend a lot of time with people who were super knowledgeable about advertising and super knowledgeable about content. I became, like, their internet buddy.

What it's like to be interviewed by Google cofounders Larry Page and Sergey Brin

Larry Page Sergey Brin

Shontell: That served you well, because then Google came calling. Google at the time was this tiny startup. It was barely generating any revenue. Omid Kordestani, who's now the executive chairman of Twitter, calls you up.

Armstrong: Right.

Shontell: And he's at Google at the time. What does he say and what's that meeting like?

Armstrong: Omid had called, through another woman I worked with at Star Wave. And he said, "Can you meet me in New York City?" I met him at the Carlisle Hotel in New York on a rainy Friday. And we hit it off right away. If you know Omid, he's one of the best humans on the planet, and one of the most engaging.

At that time, Google was into licensing software. That was the main business model at that point. And they were thinking about getting more into advertising, so Omid asked me a whole bunch of questions about what I thought, and I ended up going out to meet and have breakfast with Sergey Brin in Palo Alto.

I had had another job offer at the time from a large gaming company, an unbelievable job. Which would have, at my age, been super enticing. But after meeting Omid and Larry Page and Sergey Brin, and some other people from Google, you could tell there was going to be magic there. And it wasn't exactly clear what it was going to be, but I decided to join Google, and that was a great decision. A lot of fun, and just an unbelievable experience. And again, super-talented people. It was a highlight for me.

Shontell: Do you remember what that first meeting with Larry and Sergey was like? What is it like meeting the Google founders back then, as they're growing it?

Armstrong: I don't think I've ever told this story. But when I had my first discussion with them, they basically said at the beginning of the meeting, after a few questions, "We're not really sure what to ask you. Ask yourself the questions. Like, what questions would you ask yourself, if you were us?"

So I said, "Look, I'm very direct person, very honest. Here's what I would ask, the following questions." And I thought that was interesting. I realized later, after working with them, that that was not an anomaly, that was one of their tactics.

But they were driven. I think to this day, Larry and Sergey are obviously very smart, and very creative. They're very competitive also, in a good way. I'd say they care a lot. At their size now and what they're doing, I'm sure there's a lot of feedback on them, how people feel about them. But they're, at their heart, very good people. Both of them.

Creating AdSense for Google, from scratch

Tim Armstrong AOL CEOShontell: When you get to Google, it's generating about $700,000 a year in ad revenue. And now it's generating about $25 billion a quarter. So you got in and helped them figure out what ad products were going to work. And one was AdSense, right? How did you help develop that? It's now a multibillion-dollar-a-quarter business for them.

Armstrong: First of all, Salar Kamangar used to be the head of YouTube and was really the brainchild behind AdWords, and a few other people we worked with. Really, it all kind of came together in a very mad-scientist way, of how AdWords got off the ground, and the ad business. But there were a whole bunch of us working on it, and it had a good outcome on the AdWords side.

And then one day a guy named John Firm, who worked in our ad-sales group, came and said, "Hey, we have a whole bunch of customers who don't have budgets spent on search. They basically load all their budgets in. There's lot of room for other places they could run it, but we can't spend all their money."

And by the way, one of our publishers, About.com, said, "Is there any way for you guys to help us figure out how to make more money?" And so we literally took a PowerPoint page, mocked up a content page, and put AdWord boxes on it that were laid into the content. We took it into the Google meeting, to the executive-team meeting, and said, "Hey, why don't we syndicate all of our ads onto content properties?"

Which today doesn't sound like brain surgery, but it was a moment in the company's history when there were a whole bunch of people who didn't want to do it. They were like, "We're a search company. Let's stay focused on search. This doesn't make any sense. Display ads don't really work."

There was a big argument, back and forth, but at the end of the day we got a group of engineers. We hired Kurt Abrahamson, who was the president of Jupiter, to come and run it. We spend about a year in my group developing it and growing it, and then we turned it over to Susan Wojcicki, who's running YouTube now. She took it over and ran it.

Then Applied Semantics was a company that was bought by the product and engineering team, so that was another product that had a lot of founders to it, I guess, and a lot of success because a lot of energy got put into it.

One untold story about Google I should have gone back to is, one of the reasons Google is successful in ads is because the search-licensing business went away. Yahoo bought Inktomi, and so one of Google's major revenue lines kind of went away, because search licensing went to a free model from a paid model. That allowed a lot of the engineering talent at Google to go focus on ads. I think without that type of transition, we never would have had the horsepower in terms of the intellectual capital on engineering a product.

Sometimes in business you get lucky, and what looked like a bad situation with the licensing business turned out to be an unbelievably big opportunity. And that's really what led to AdWords. And with the DoubleClick acquisition, there was lots of stuff like that that came out of it. What looked like a tough situation originally turned out to be a boon for the entire company.

Shontell: So this works. You become this god within Google, managing this massive department.

Armstrong: I was not a god within Google. There were a lot of gods within Google. So there was a massively talented team there. Unbelievable talent, yeah.

A call from Jeff Bewkes

Jeff BewkesShontell: Well, that may be true, but still. The head of Time Warner gives you a call, Jeff Bewkes. He notices what you've built and what you've done. This is 2009. What made you intrigued to take a meeting with him, and to talk about the idea of joining AOL?

Armstrong: You know, a few things I would go back to. The reason I ended up going to Google was that it looked like there was a huge opportunity in the information business, and putting information connected with where commerce happens, was a big opportunity. Earlier in the 2000s I had cofounded and funded a company with my college roommate, Luke Beatty, called Associated Content, which was more of a content company that eventually got sold to Yahoo.

But my time at Google, I'd say after I was there for almost 10 years, I have a personal career philosophy, which is, I think you should continue to do something as long as you're learning quantum number of things in general. And I think the quantum learning is probably the most important attribute to people's careers, to continue to grow.

At Google I just wasn't learning anymore, but my interest level over time had started to get really focused in on the content space, and where media was going, and working on Associated Content a little bit. I was on the board for a while. It got me interested in where content was going.

And then when Jeff Bewkes called, it seemed like a unique opportunity. I could go into my investing philosophy, but I'm also somebody who likes to invest. I think a lot of opportunities are opportunities because everyone can't see them. And if you can read something in the newspaper, it's probably not an opportunity anymore. And AOL was the exact opposite. It was something that everyone had given up on, but they had a lot of resources, a lot of users, and they had a lot of talent. So it seemed like an opportunity.

If I was going to do something disruptive, that'll also be a big runway to do something disruptive because people frankly were counting it out. I think that you have a choice to go to a startup to start something, or you have a choice to do something at bigger scale. I wanted to do something at bigger scale.

And it was just an interesting asset. It was probably going to be a windy path, because it was inside of Time Warner. If we wanted to spin it out, we'd have to go through the whole process of spinning it out, and then we'd have to make all these changes to the company, and it was a challenging experience, and that's what I wanted at the time.

How to weigh a big, risky career move and leave your safe, cushy job

tim ariannaShontell: So at the time when you're having this conversation, you're thinking about taking the job. But there was a graveyard of AOL CEOs. There were five, I think, within that decade. How did you measure the risk, and how did you decide to jump? How did you make sure you weren't the sixth CEO in that graveyard?

Armstrong: Yeah, you know, it's interesting. I didn't want to take the job if I didn't think I could do it. And I definitely had a lot of reflection time on that, because a lot of these companies that have these situations have a lot of CEOs, and they're all smart people. They are good at their careers. I was carefully thinking about it, but on the other hand I thought: What if this totally fails and it's the world's biggest failure? Really — who cares? I'll probably learn more doing it.

A lot of people said to me, "Why would you ever leave Google? Why would you leave Google and your reputation at Google to go do something like AOL?" But I thought about it the opposite way, which was, if you wanted to have the most intense learning experience, and apply a lot of the skills I had learned in the 10 or 15 years prior, AOL seemed like a great opportunity to do that. My personality is more entrepreneurial, and it just seemed like an opportunity that, although it had tons of risk, it also had tons of opportunity. And you've got to be willing.

My dad said to me the night before I started at AOL, "This is a burn-the-bridge moment. If you fail at this, you can't walk backward. So you should figure out how to always look forward."

My dad said to me the night before I started at AOL, 'This is a burn-the-bridge moment. If you fail at this, you can't walk backward. So you should figure out how to always look forward.'

And I think that was a great piece of advice, because that's essentially what we had to do, over and over and over again.

Shontell: How do you make a burn-the-bridge decision? How do you know you're making the right choice? Especially as the leader of a huge company?

Armstrong: One thing is, when I took the AOL job, I traveled around and went on a little mini leadership roadshow before I actually started.

I got to announce that I was going to start, and then I had some time before I started and I spent a lot of time with a lot of different leaders, who I respected, who are big leaders across corporate America and some entrepreneurs.

Essentially, I think in a CEO job, you have to be OK with risk and you have to be OK with failure. I have a saying which is, "You have to fail toward a goal."

As long as you're failing, if you know what the goal is, it's OK to fail in that direction. And that's the advice I got from people. On that roadshow, I had a lot of people challenge me. The best mentors I had are also the most challenging people. And on that roadshow, they asked me a lot of the questions I ended up facing further on. I wasn't prepared for all of them but I kind of knew what the role was, and what the job was going to be. And fortunately, or unfortunately, for AOL, a lot of that I learned on the job overall. So it was challenging.

Shontell: And when you come into a new job like that, do you need to bring your own team with you? Because that's something you did. You cleared out the executives, brought in some people from Google. Was that essential?

Armstrong: When I first started I brought a couple people like Maureen Sullivan, who's the president who runs Rent the Runway now. She was the first person who came over from Google with me. And what I told the AOL team was, "Look, this is the team. Everyone's going to have their shot. We have to change what we're doing. Some of the changes, if you want to roll with them and stick with them, great. If this is not what you want to do, raise your hand, because we're going to go in a different direction." And I think over time I did end up bringing a bunch of people in from Google, and other people as well.

I would say looking back on it, overall, you had a very challenged company. Out of the gates, we were trying to spin a company out of a public company and take it public alone, which is a massive challenge. Forget about one that's in a downturn, overall. I think there was a whole group of us who were somewhat experienced, but not fully experienced in doing all the things that we were doing. So we were figuring it out on the fly.

I bet if you went back and talked to a lot of those people, it was probably one of the best — and hardest — but best learning experience. If I went back to it now, at my experience level, I would probably take a step back and take a better account of my own skills of what I was really good at, and what I was not good at. And I probably would have augmented the team slightly. Not that I wouldn't have brought the people in from Google, but I would have had a couple other people around me who had more experience, and I think that was a lesson, and something I'm frankly taking into the Yahoo deal we're working on now.

How to inspire a team when morale is low

Tim Armstrong AOL CEOShontell: You also had a really tough challenge of, this was an uninspired company. It had gone through a couple of rough years, maybe people didn't even remember what a good year felt like. And you had to come in and get people to buy into your vision and get people excited again. So how do you go in and breathe inspiration into a company that feels deflated?

Armstrong: We did a 100-day process, and I traveled around the whole globe. There were about 10,000 AOL employees at the time, I saw about 9,000 of them in person, and I had three processes I was running: feedback from the entire company and team, feedback from the management team, and then a list I was keeping of things that I thought we should be doing.

After the 100 days, we held a meeting at the Time Warner Center and I put up three whiteboards. On one white board I wrote back the results from the entire global team of what they thought we should invest in. I put up a white board of what the management team thought, and I put up a whiteboard of what I thought. I flipped them all around at the same time. Each one had five things on them. All of the white boards were identical, except for one area on the white board that I had flipped around on my personal side.

So the whole company was already in alignment and I think that got people excited. They weren't told what the strategy was. They got input, and everyone was on the same path in believing in it.

A meeting with Verizon's CEO that led to a $4.4 billion deal

Lowell McAdam

Shontell: Down the road, Lowell McAdam, the CEO of Verizon, and you have a conversation. Verizon ends up buying AOL for $4.4 billion. How did that conversation start, and how do you decide, as the head of a huge company, that this was the right move?

Armstrong: There were two things. Lowell is an incredible CEO at Verizon, and somebody who really helped grow it from a wire line to wireless — and Verizon to become one of the most successful companies on the planet in doing so.

When I sat down with Lowell, it was one-on-one. It was at the Allen and Co. conference at what they call the "duck pond," where people kind of have meetings after the conference is over. And essentially I had a blank sheet of paper and Lowell asked me a number of questions. Things like, where the industry is going, what the structure would be, and what I thought was happening. I drew him a diagram of what I thought was happening. We talked for an hour or two about it, and then I didn't see him for months afterward, and then he called.

We had talked about [how] maybe there are operational things to do together between the companies, and then he called and came back in the fall. I met with him, and we had more and more conversations. So over the course of time, there was a very natural progression of where things were going. On the AOL front, what was happening was everything was going mobile and everything was going data-driven. I used to carry around a five-column chart from our board-of-directors meetings that I started every meeting with, that had the strategic priorities for the company.

Mobile, video, and data were the first three things on that chart, and I knew we needed to solve that issue. And Verizon, at the time, wanted to solve their challenge of, how do they grow services? So what naturally grew out of that conversation was a combination of what Verizon needed to solve and what we needed to solve.

It didn't start out as an M&A deal. It started as a big operational deal, then it went to a joint venture, then it went to a full company sale. But that's how it started. And at the same time, there were other companies kicking the tires on AOL, and we were meeting with people, but the reality was Verizon, if you think the future is mobile, then it's going to be about video and data.

If you think the future is mobile, then it's going to be about video and data.

It's hard to argue Verizon wasn't a great outcome for us as a business. I've been there for two years now; it's been a great experience.

Shontell: One thing that's happening in the broader media landscape in digital is this term "duopoly." A lot of media executives keep talking about it — it's the idea that Google and Facebook. the duo, are taking a ginormous share of all digital-ad dollars. There was recent a study from IAB that showed 89% of the digital money was going to those two, and 11% was going to everybody else, like AOL or Business Insider. How do you look at this landscape and what AOL's role can be? Where is everything going, in your opinion?

Armstrong: I think you have got to add Amazon to that list.

Shontell: A "triopoly."

The digital triopoly of Google, Facebook, and Amazon — and how everyone else can survive

Mark Zuckerberg HarvardArmstrong: People are saying duopoly, but they are missing one of the legs of the stool. Amazon's a real competitor in the space. I'm probably a contrarian thinker on this. I like the fact that Google and Facebook are getting more successful, and getting bigger at what they're doing. Frankly for us, we have a different strategy. So the stronger they get at what they're doing, the harder it will be for them to adjust out of that big scale to some of the things that we're thinking about doing.

We're a big publisher; we're one of the largest publishers on the web with our content, and we're one of the larger ad players. So it's challenging, but you have a choice. I'll give you the choice.

You have a choice of being in an industry that's growing at 15, 20, 30% globally. The internet is going to double in the next five years in terms of people who are connecting to it, through mobile. Only 15% of commerce by 2020 is going to be on the internet. There's huge opportunity in front of us.

You have a choice as a leader and as a company. You can go compete in linear spaces or offline spaces that are really challenged, or you can go into a space that's growing and you compete against gold-medal Olympic athletes. It's tough to say Google and Facebook aren't executing at the top of their game. Same thing with Amazon. But that sets an awesome bar for us as a company to compete at that level. And it challenges us creatively to try to get in that game.

From where we sit right now, I'd choose the tailwind industry that's growing, and I would choose to have Olympic-gold-medal competitors, because it's only going to raise our game.

I would choose to have Olympic-gold-medal competitors, because it's only going to raise our game.

With the industry, I have a whole viewpoint on industry consolidation, but where the world's going, we're heading to a place where there's going to be giant scale we've never seen before globally. There's going to be a set of companies that have the abilities to do that. And those companies are going to really, really have the chances to build companies the size that the world hasn't seen before.

Shontell: A final question: You've had to make a lot of hard decisions as a leader of many companies at this point. But you're also personable and a likable guy. How do you strike that balance between gaining respect from your employees and making the hard choices, and being liked and respected at a manager?

The advice Tim gives to his children, and to anyone building a career

Armstrong: There's advice I got when I was growing up — and I give it to my own kids — which is: To thine own self be true. What you see is what you get. If you interact with me, this is who I am, love me or hate me. And I think being authentic is important.

The second thing is, the mentor crew I have. I have a bunch of advice I always give to younger people, but one of them is to build your personal entourage or board of directors.

I have five or eight people outside the company I rely on. I have one person, David Bell, who used to be the CEO of IPG. He's in our office almost every day. I meet with him every Friday. And every Friday he starts by telling me everything I'm doing wrong. For me, it's the most helpful meeting of the week because it always resets me back to, "OK, what am I supposed to be doing as a leader? What's my job? What are those things? If you're yourself, and you're authentic, and you're honest and direct.

The other thing I've learned from David and people like [former Starbucks CEO] Howard Schultz and [American Express CEO] Ken Chenault and other people like that who have mentored me over time is, just be direct with people.

I did an all-company meeting with AOL and Yahoo yesterday. I got asked if there are going to be impacts from doing the deal. I said, "Yes, there are. That's what happens when two companies come together."

I'm not going to beat around the bush. We're going to try to do the least amount we possibly can, but the bottom line is, that's part of what's happening with the deal and I want to be direct about it. So that directness, I think, helps a lot, and being honest with yourself.

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A UK VC has shrugged off Brexit and raised £160 million to invest in tech startups

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Draper Esprit management teamVenture capital firm Draper Esprit has raised a further £160 million to invest in European startups , shrugging off concerns that Brexit has made it harder for UK VCs to raise significant amounts of capital.

The dual-listed investment firm announced on Friday that it has raised £100 million on the London and Dublin stock exchanges. That complements an additional £60 million that it has raised through 2017 via other sources including the Enterprise Investment Scheme (EIS), the Venture Capital Trust (VCT), and secondary co-investment funds.

The fresh capital will be invested into startups across Europe (particularly Western Europe) through the course of 2017, Draper Esprit said.

Notably, all of the new capital was raised without the help of the £2 billion European Investment Fund (EIF), which has recently stopped supporting UK VC firms as a result of Brexit.

Simon Cook, CEO at Draper Esprit, said in a statement: "Much has been written about the uncertain future that British VC fundraising faces in the wake of Brexit. At Draper Esprit we believe our industry can find new investors and that the UK can continue to play a significant role in leading the wider European VC market.

"As a permanent capital listed company, dual-listed in the UK and Ireland, we can access public markets by offering a partnership model with investors who wouldn't otherwise have access to, or the capacity to actively manage, these type of investments; as well as reinvesting our realisations from exits into the next generation of tech businesses each year without the need to raise a new fixed life private fund every 5 years."

A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008.Founded in 2006, Draper Esprit has backed European startups including snack box provider Graze, period tracking app Clue, and AI health app Pushdoctor. 

Draper Esprit plans to use its funds to invest in startups at all stages, especially those focusing on enterprise software, digital hardware, consumer services, and digital health.

The VC firm has backed over 120 companies and invests in approximately one startup a month, Cook told Business Insider in an interview earlier this year, adding that the average Draper Esprit investment is around $10 million (£7.7 million).

"Those headline grabbing multibillion dollar landmark deals, we've done less of," Cook admitted. "We're typically investing when there is 50 to 100 people and the valuation is $50 million to $100 million and then we're selling it for $200 million, $300 million, $400 million. It's less headline grabbing stuff but a lot more cash has gone back to our investors."

In its lifetime, Draper Esprit has invested over $500 million (£388 million), and it invests at the series A stage approximately 50% of the time, Cook said. Big wins include chip designer Movidius, chip manufacturer Cambridge Silicon Radio, and movie rental service LoveFilm. 

Draper Esprit is part of a wider network of venture capital companies operated by the Draper network, that has £2 billion under management. 

Here is Cook's full statement on the new £160 million funds on Investegate:

"Much has been written about the uncertain future that British VC fundraising faces in the wake of Brexit. At Draper Esprit we believe our industry can find new investors and that the UK can continue to play a significant role in leading the wider European VC market.

As a permanent capital listed company, dual-listed in the UK and Ireland, we can access public markets by offering a partnership model with investors who wouldn't otherwise have access to, or the capacity to actively manage, these type of investments; as well as reinvesting our realisations from exits into the next generation of tech businesses each year without the need to raise a new fixed life private fund every 5 years.

As a wider group we have also raised significant co-investment funds through our EIS, VCT and secondary funds, with £60m raised in 2017 to date. We are seeing increasing innovation and entrepreneurship in Europe, especially in enterprise software, digital hardware, consumer services and digital health, and our funds will be used to continue investing in these areas from series A, B and beyond, with 70 per cent. of our capital reserved for scaling-up and increasing our stakes in existing portfolio companies through later rounds.

We have now raised in excess of £160 million of new capital to deploy during 2017 following the £153 million raised during 2016 from our IPO, EIS and VCT funds and the cash realisations available for reinvestment within the Company's portfolio. If we continue to grow our co-investment funds and make further realisations for reinvestment, at this rate we would over the five years of a typical LP fund, have the equivalent of £800 million(approximately US$1 billion) to deploy, making us a strong partner in Europe and filling a much needed gap in the market post Brexit.

We invest in forward-thinking and innovative businesses and firmly believe that the best entrepreneurs in Europe are capable of building world leading technology companies when provided with patient, long term growth capital, access to global networks and support from an experienced investment team.

Furthermore, we believe that all investors large and small should have access to the venture capital asset class. By democratising the venture capital model and making our expertise accessible to a wider, broader market we are breaking new ground in the VC market and this Placing and Subscription is a superb validation of that model. We are grateful for the support that existing shareholders such as Woodford Investment Management, Baillie Gifford and the Ireland Strategic Investment Fund have shown and are delighted to welcome new investors such as Invesco Perpetual and Hargreave Hale as major new shareholders."

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This startup thinks it has a better way to make sure you get a good WiFi connection — and it just got $37 million to prove it

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Fahri DinerMost people these days get their WiFi routers from their broadband provider.

So when it came time to raise more funds, Plume, a startup that's developed an innovative WiFi technology, thought it would be important to team up with some of them.

On Tuesday morning, the Palo Alto company announced that it's raised $37 million in a third round of venture financing. Among the investors are Comcast, which is the largest broadband provider in the United States, and Presidio Ventures, which is a sister company of J:Com, one of Japan's broadband providers. 

Although the startup debuted its technology on a router system it sells directly to consumers, Plume CEO Fahri Diner said the big opportunity in the market is to work with the internet providers.

"We're very much service provider focused," he said.

Both Comcast and Presidio Ventures are new investors in Plume. Another new investor in the company is Samsung Venture Investment. Plume's prior investors, including Liberty Global, Shaw Cable, and Jackson Square Ventures, also joined in the new funding round, which brings the total amount the company has raised to more than $63 million.

Plume has developed a kind of mesh WiFi system that uses multiple access points to help distribute signals throughout a house. The system it offers to consumers resembles that of Eero, with small WiFi access points that plug into outlets spread around the house.pods multi_us

But Plume's system, which it dubs "Adaptive WiFi," relies on a cloud-based network management service. Computers in Plume's data centers dynamically configure the WiFi network in users' homes. They allocate channels and bandwidth to particular devices as needed and hand devices off to different access points as gadgets are moved around the house.

That service can be used not just with its own access points, but with those of other manufacturers, as long as Plume's software has been installed on them.

Last month, Comcast announced it would be using both Plume's pod and its technology in other routers to offer better WiFi coverage for its customers. Comcast is only one of several "tier one" service providers Plume is working with to offer its service, Diner said.

The WiFi routers consumers get from their service providers don't generally have the best reputation for providing good coverage, he noted. Other WiFi companies have tried to solve that by focusing on the retail market. But Plume saw a bigger opportunity in working with the providers.

"We said, 'Let's go help them,'" Diner said.

SEE ALSO: This beautiful device could replace your router entirely

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A startup has a plan to solve the housing crisis with cheap backyard ‘granny flats’

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cover prefab home 1

A startup out of Los Angeles, California, wants to bring small, pre-fabricated living spaces into the backyards of the country's hottest real estate markets.

The homes range in size from 300 to 1,200 square feet — but don't call them tiny homes.

"When you think of tiny homes, a very specific image comes to mind," says Alexis Rivas, the 23-year-old CEO and cofounder of Cover. "A tiny home is just one category of what a Cover unit can be."

Cover, founded in 2014, is a technology company disguised as a residential architecture firm. The company plans, designs, and manufactures backyard studios, in-law units, home offices, and guest rooms — collectively known as accessory dwelling units (ADU) — using machine learning and methods borrowed from the aerospace and automotive industries.

The long-term goal, according to Rivas, is to increase the housing supply in cities where the cost of living has become prohibitive, in the hopes of driving market prices down.

In January, legislation went into effect in California that makes it easier and cheaper for homeowners to build ADUs. The state hopes to see the housing stock climb as a result.

cover prefab home

If a homeowner is interested in putting an ADU on their property, they can fill out a survey of 50 to 100 questions, which covers everything from land type to cabinet finishes. For a one-time fee of $250, an algorithm gathers information on zoning and build codes in the area and returns multiple design options that meet the needs of the owner as well as city requirements.

Once a design has been selected, Cover works on behalf of the buyer to gather the necessary permits, which takes up to 12 weeks. It charges a $20,000 deposit.

In a typical home build, construction crews take measurements and cut many materials on-site. Cover aims to make the fabrication process quicker and more precise by building parts of the house in a factory, where the company uses automated cutting tools and design software. Homes arrive on the property as giant slabs, already fit with electrical wiring, plumbing, and finishes. They can essentially be assembled like IKEA furniture.

cover prefab home 3

This spring, Cover wrapped construction on its first pre-fab home. There are about a dozen more projects in the pipeline, ranging from a $90,000 backyard office to a $300,000 one-bedroom with a full kitchen. Structures start at $250 per square foot.

Rivas says a majority of customers want to build ADUs to shelter aging parents and in-laws, with about 30% of customers interested in renting the studio to make a little side income.

Cover will focus on the Los Angeles market through 2017 and is eyeing an expansion to other expensive California cities like San Jose, San Francisco, and San Diego in the future. Rivas hopes that young people saddled with student debt and retirees will now be able to afford living in single-family home neighborhoods, which may also become more diverse as a result.

"A 400-square-foot backyard accessory dwelling unit is going to rent out for less than a 3,000-square foot home in that neighborhood," Rivas says.

The company raised $1.6 million in financing from top Silicon Valley firms General Catalyst and Khosla Venturesin March. The money will help Cover grow its team, Rivas says.

SEE ALSO: A Silicon Valley startup founder drove 4,000 miles across America in an RV — here's what he learned

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These retirees are making a living in legal weed's booming shadow industry

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marijuana higher standard packaging

She worked in sales and marketing; her friend taught high school English. They retired and settled into their golden years.

"Retirement was nice but certainly it left you lighter in the pocketbook," Barbara Diner, a 30-year veteran of the cable television and telecommunications, says.

Feeling restless and wanting to put a little more green in their pockets, Diner and her longtime pal Deb Baker decided to do something a little out of their comfort zone in their late professional lives. They got jobs in the lucrative legal weed industry.

Their company Higher Standard Packaging supplies containers for storing marijuana in all its forms (from loose plant material to weed-laced gummies) to dispensaries and infused-product manufacturers in Colorado. They have sold nearly seven million units of packaging in the state and have their sights set on California, where recreational sales become legal in 2018.

The multibillion-dollar legal marijuana market has created some interesting shadow industries, including on-demand delivery, "seed-to-sale" software solutions, and packaging. In Colorado, state law requires all marijuana products leave dispensaries in opaque, child-proof containers.

While Diner declined to share revenue numbers, the company has about 50 customers.

marijuana higher standard packaging

The pair had no experience in the marijuana industry before taking on a contract in marijuana packaging in 2014. "I certainly didn't carry a red card," Diner says, referring to the medical marijuana registration program in her homestate.

But the excitement around the industry and the opportunities it presented for women — who face barriers to leadership in more established businesses — appealed to them. They made market-research visits to dispensaries and cultivation sites and studied up on state regulations.

Diner summoned her three decades of experience in sales and marketing and, along with Baker, cold-called more than 100 businesses in the Denver area to find customers.

In the early years of recreational sales, most transactions were handled in cash. It forced dispensary owners to place enormous amounts of trust in their suppliers, who could potentially run off with the cash before providing the products or containers due. Diner says her and Baker's appearances may have helped them earn customers' trust under the circumstances.

"If they were going to give cash to someone, it might as well be women who look like their mothers," Diner says.

SEE ALSO: The 'Mary Kay for marijuana' throws pot-selling parties for seniors

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This startup wants to turn crazy-popular unboxing videos into a new 'QVC for millennials'

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Eric Feng

The former CTO of Hulu wants to build a company that can change how Generation Z shops on mobile, creating what he likes to call a "QVC for Millennials." 

Eric Feng's plan is built around one thing that's super popular with 20-somethings: Unboxing videos. 

"It’s not just people opening up the packs, but user reviews and comparisons, tutorials — the product review category is huge,"Feng said.

On Thursday, Feng unveiled his new company, Packagd. The startup plans to stream live video of the stars of unboxing videos talking about new products. Consumers will be able to watch the videos through Packagd's apps and will be able to buy the products that are mentioned by just tapping on a "add to cart" button as the video plays.  

Over the last year, Feng and his team have been working in stealth to sign agreements with more than 20 YouTube stars and strike partnerships with brands like Best Buy and Microsoft to sponsor the videos.

Packagd's business plan consciously drew inspiration from QVC, the cable channel where hosts showcased new products that viewers could order by calling a number displayed on their screens. Many placed their orders and many more watched just for the entertainment.

The live product demos are a bid to bring back the joy of shopping, something that Feng feels like has been stripped in the internet era. 

"Ecommerce has gotten so efficient that it’s not fun anymore," said Feng, who is Packagd's CEO. "People don’t window shop. People don’t shop with their friends. Amazon is relentless about minimizing the number of pages that you see before purchase."

He continued: "For us, we want to bring discovery. We want you to have fun while you’re shopping."

The plan to beat YouTube at its own game

Feng, who is also a partner at venture capital firm Kleiner Perkins, got the idea for Packagd after learning unboxing videos were exploding as a category on YouTube. The top 5 unboxing channels on YouTube have over 33 million subscribers combined, according to Feng's Kleiner partner Mary Meeker.

YouTube has to cater to all kinds of different video creators and types of content. As popular as the unboxing videos have become, they could do even better if a company focused solely on them, Feng bet.

So Feng and his team built Packagd to work just for so-called unboxers, the group of YouTube stars that make their living un-packaging and selling products. Feng thinks Packagd can help them become as popular among young adults on their mobile devices as QVC hosts have been among the retirees glued to their TVs. And he's banking that they can help sell products much like the hosts have done on QVC and Home Shopping Network.

Packagd Unboxed"We want you to discover not just videos for products you know about, but videos for products you don’t know about. And have those videos driving purchasing decisions,” Feng said.

For its modern and mobile spin on QVC, Packagd is starting with a six hour block of live shows that it will stream through its app every day. 

These aren't intended to be the "Buy! Buy! Buy! The clock is ticking down!" style of infomercials you may see on TV. Instead, Packagd is encouraging its new hosts to take a more informal approach. They'll chat with viewers live while streaming the unboxing videos they've already uploaded to YouTube. Feng hopes the effect will be more like interacting with a friendly expert than hearing a high-pressure sales pitch.

"Unboxers we feel have cracked the code on this content type. They created a content format that’s super interesting, super engaging," Feng said. "We’re not asking them to create new videos. We’re not asking them to adopt it for our platform. We’re saying we want to showcase them in a different way."

The company is starting with a new app called Unboxed that focuses on reviews of tech products, ranging from drones, laptops to smart home devices. Packagd plans to follow Unboxed with an app focused on beauty product reviews that it hopes to launch in two months. After that will come a toy review app. 

During each live show, the host will field questions from Unboxed users who will be able to submit them using a chat feature in the app. Users will be able to buy whichever products the hosts are touting via a purchase button at the bottom of their screens. If they do, they'll earn loyalty points they can apply towards discounts on future purchases made through Unboxed.

Such purchases will benefit the hosts as well; they'll get affiliate commissions. And they won't have to share those with Packagd. Instead, 100% of the affiliate revenue will go the hosts, Feng said. 

Packagd plans to make money by convincing brands to pay to sponsor certain time slots of its live streams. Those partners could either work with a product reviewer to build a show or create their own. Either way, Unboxed service will work the same for users. They'll  be able to ask hosts questions and buy what they see. 

"We want you to feel like you’re in the live QVC audience and talking to the host," Feng said. "What drives a lot of transactions on QVC is affinity with the host."

Beyond live demos

The company will offer users more to watch than just the six hours of live, hosted videos. To accommodate users who may not be interested in the product being touted at a particular moment in the live stream, Unboxed will also offer a library of hand-selected videos for a range of products. 

unboxedBut Packagd's apps will be missing something you normally find on YouTube and on other video sites or apps: a search bar. That's intentional; Feng want to encourage users to browse products and discover things serendipitously through the app rather than accommodate shoppers who already know what they want to buy.

"You don’t turn on QVC when you know you want the DJI Spark," Feng said. 

It's still another app

Despite Feng's conviction that mobile shopping can be transformed, he acknowledges the challenge Packagd faces.

"Look, it’s a crap-shoot," Feng said. "That’s the thing with all these consumer companies, but it’s one where we’ve tried to be logical about it."

While the company's been able to convince product reviewers to host its video stream, it will have to lure in consumers too, and they may be harder to attract. If they're already watching product videos on YouTube or finding products on Instagram, they may not see the need to download a new app to get similar information. 

(Packagd plans to use product giveaways and a physical booth at the electronics show, E3, to convince them to give the app a try.)

Still, Feng is hopeful that if Packagd builds something better for both unboxers and consumers, success will follow. The company has already raised $7.5 million from top Silicon Valley venture capitalists, who are betting it will do for unboxing videos what Twitch did for gaming.

Even though YouTube is the dominant player today, it's investing too widely and not focusing enough on translating its popularity into purchases, Feng said. That's where there's an opening for Packagd, he added. 

"I’m hoping the fact that these videos are so popular means there is demand to consume them. I think the bigger existential question is does that demand to consume those just stay on YouTube?" Feng said. "It may. We may not be able to pull it off. That may be a real competitive risk that we just can’t solve. But we won’t know until we launch and try." 

SEE ALSO: Gen Z really likes watching product reviews on YouTube

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'May was tone deaf to business' — how UK tech is reacting to the election result

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corbyn1

Thursday night's shock election result, which resulted in the Conservative party losing its Parliamentary majority, also came as a surprise to people working in tech.

Last year the tech world supported a vote to remain in the European Union. One poll found that 87% of respondents who work in tech wanted to remain.

So how do people in tech feel about Thursday night's result?

Harry Briggs, a partner at venture capital firm BGF Ventures, said that Prime Minister Theresa May could become a "laughing stock":

"Clearly uncertainty is never good for business confidence - and because Theresa May's ability to negotiate Brexit is fatally compromised (she'd be a laughing stock both in Europe and in parliament), there will likely be another leadership hiatus and temporary power vacuum.

That said, as early stage investors, we are optimists - and we back optimistic entrepreneurs who always looks for the opportunity rather than the downside. For example, a new "safe pair of hands" prime minister such as Hammond might be less anti-immigrant on Brexit - which would be welcomed by startups needing international talent. Thankfully the UK has strong self-preservation instincts and I expect the Conservatives will make a swift and pragmatic change of leadership, and set out a fresh agenda to restore business confidence."

Kayako cofounder Jamie Edwards was hopeful about the election result:

"Any result which enhances the prospect of consensus building, debate and democratic accountability over Brexit is enormously welcome. A hard Brexit which harms access to talent, foreign investment and a strong university base would have been deeply damaging to U.K. tech and reversed more than a decade of building the tech ecosystem."

Technology investor Rob Kniaz from Hoxton Ventures said that the prime minister had been "tone deaf to business":

"The upside of the election is that the DUP will wield a disproportionate amount of power and their policies towards trade and immigration seem sensible. Those are the two things that matter most to tech companies at the moment ... May was tone deaf to business and I'm cautiously optimistic the DUP will be a voice supporting business."

Gerard Grech, CEO of Tech City UK, said the result meant that there was uncertainty:

"This election result has produced a lack of clarity at an important time. But I see it as a crucial period of transition. For Tech, it will be an opportunity to get our message through more strongly than ever in what I hope will be a more business-friendly administration."

James Herring, managing partner of PR agency Taylor Herring, had two points to make:

"1. Opinion polls are worthless
2. That young people clearly don't read newspapers (game over for printed editorial propaganda)"

Laurence Garrett, a partner at Highland Europe, said the following:

"Politics has little impact on the success of the UK tech industry. Technology is borderless in nature and we remain confident that the UK will remain a vibrant location for the innovation economy."

Eze Vidra, former investor at Google Ventures and CIO at healthcare startup Antidote, said certainty and clarity is needed:

"What we need is certainty. We want to get to work establishing the best way forward for the UK/European relationship. Clarity on immigration, market access and capital flows is critical for UK's tech success."

Startup founder Thomas Chappelow of Nimbox said the following:

"The Conservative campaign focused on catchphrases, whilst providing little detail of their plans for 'Brexit,' or for how they intend to lead the county afterwards. It was also tragically short on content relating to our growing technology industry, save for the few proposals to ensure that U.K. tech falls behind our adversaries, by outlawing strong encryption.

The result today, showed that voters do care for detail, and won't bet the future of their country on half-baked ideas that lack substance."

PwC's EMEA fintech lead Steve T Davies said the result would be good for fintech:

TechUK CEO Julian David sent the following statement:

"Decisions that will have to be taken over the next five years will shape the UK for generations to come. The new Parliament must come together to face the significant challenges not only of Brexit, but rapid global digitisation. To thrive the UK needs to be at the forefront of countries that are inventing the future, not just by leading in innovation and the use of new technologies, but by enabling the economy to adapt and people to flourish. This will require some big thinking and some bold policy making. It is vital that the UK remains an open and dynamic economy in which tech businesses of all sizes can be the engine of inclusive growth."

Do you work in tech and want to share your view on the election result? Email the author: jcook@businessinsider.com

Additional reporting by Sam Shead. 

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Here's what investors need to know about Blue Apron's IPO

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Blue-Apron

Blue Apron, the nation's largest meal-kit delivery company, filed to go public last week.

The meal-kit industry has been closely watched by the business community as it has the potential to upend the $800 billion U.S. grocery industry.

Blue Apron's rapid growth has attracted dozens of competitors, including start-ups and initiatives within established companies ranging from Amazon.com to the New York Times.

With all of the attention on the booming industry, it's no surprise that Blue Apron's IPO, the first from a meal-kit provider, is piquing investor interest. Let's take a look at a few of the nuggets inside the company's S-1 prospectus and beyond.

1. Revenue growth has been strong but is quickly decelerating

Blue Apron posted $795.4 million in revenue last year, up 133% from the year before. The company will almost certainly top $1 billion in revenue this year, but in the first quarter top-line growth slowed to 42%. While that is still a strong pace, it seems to indicate that the meal-kit market is maturing quickly, or that competition is making a dent into Blue Apron's growth rate. In 2015, when many Americans were first hearing about meal kits like Blue Apron, revenue jumped 338% to $340.8 million.

The company will have to demonstrate that it can maintain a strong growth rate in order for the stock to be successful, as investors have big expectations for the industry and will be treating Blue Apron as a growth vehicle. If the growth rate continues to slow significantly, the stock will be a dud.

2. It's still not profitable

Like many companies IPO-ing in fast-growing industries, Blue Apron is still operating at a loss. In 2016, it reported a net loss of $54.9 million, or 6.9% of its total revenue. In the first quarter of 2017 alone, its net loss ballooned to $52.2 million, or 21.3% of revenue, as the company spent aggressively on marketing and product, technology, and general and administrative (G&A) expenses.

Management has said that the first quarter will mark the highest level of customer engagement throughout the year due to a seasonal promotional strategy, and I would expect marketing expense as a percentage of revenue to decline as the company matures. It also said the recent increase in product, technology, and G&A costs was due to increased hiring for corporate positions.

Still, it's a concerning sign to see cost growth accelerating while revenue growth slows. Investors would hope to see Blue Apron's net loss narrowing over its first few quarters as a public company rather than expanding.

3. Its competitive advantage is unclear

As the largest meal-kit service in the country, Blue Apron's size alone gives it some advantage over the competition. The company says 92% of its customers come from repeat business, indicating satisfaction with the program, but it will have to continue winning over new customers in order to grow and turn profitable.

Blue Apron says its greatest strength is its "highly collaborative and multidisciplinary team." While that may give it an advantage over new competitors, start-ups, like Uber, are notorious for upheaval in executive ranks as they grow. Talent itself does not represent a sustainable competitive advantage, but Blue Apron's combination of agricultural scientists, world-class chefs, and other staff might.

Among the other strengths the company lists are a "[p]owerful and emotional brand connection,""[s]uperior products at compelling values,""[c]onstant product innovation,""[a]ttractive unit economics," and a "[h]ard-to-replicate value chain." Still, based on the number of entrants, the industry remains wide open.

4. And competition is getting fierce

Plenty of meal-kit service and competing food-delivery companies have already been forced out of business. Among them are Sprig, which had raised $56 million; http://www.fooddive.com/news/sprig-is-the-latest-meal-delivery-service Maple, a New York-based food-delivery start-up, which had raised $22 million; and SpoonRocket.

HelloFresh, Blue Apron's biggest competitor, had a down round in its latest fundraising effort, as its valuation fell from 2.6 billion euros to 2 billion.

Those competitor misfortunes may all be a good sign for Blue Apron, which has continued to grow and build interest for an IPO, but the space has also attracted entrenched supermarket giants like Kroger, Whole Foods Market, and Publix, as well as packaged-food companies like Campbell Soup, Hershey, and Conagra Brands.

Blue Apron was valued at $2 billion in its last funding round and, according to earlier reports, was aiming for a $3 billion valuation in its IPO. Based on its expected revenue of more than $1 billion this year, that seems like a fair price tag.

Some company will emerge victorious from today's meal-kit arena, and Blue Apron is better positioned than any other right now. Even if its financial performance disappoints, the service could still be an appealing acquisition target for Amazon or another company.

Like most emerging markets, the meal-kit space is full of risk and opportunity. We'll learn more about Blue Apron's prospects when the company prices its shares before debuting. Based on all the attention meal kits have received, I'd expect a successful opening day from the industry leader, but it will have to deliver the numbers thereafter to keep up investor confidence.

SEE ALSO: The startup that teaches you how to cook, Blue Apron, has hired bankers for an IPO in 2017

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