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The latest news on Startups from Business Insider

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    Jessica Livingston

    There are thousands of tech startups, but only a lucky few (or, technically 205) ever become valued as billion-dollar businesses.

    So what's the difference between a merely successful company and a billion-dollar one?

    Y Combinator cofounder Jessica Livingston has a ready answer: "An unpromising idea that blossoms into a frightening big one, and driven founders who see that opportunity and run with it."

    Livingston cofounded Y Combinator, a Silicon Valley startup accelerator that churns out batches of 200 companies every six months. She's seen thousands of companies become successful. But she's also seen a lucky few like Airbnb that have become huge businesses.

    On stage at Y Combinator's Female Founders Conference, Livingston offered nine pieces of advice — based on her past experience — for founders to follow if they want a chance to create the next billion-dollar businesses: 

    1. Be lucky: Beyond a good idea, the timing has to be right — and a lot of that is luck, Livingston said. "The most successful founders have the right idea at the right time," she said, although sometimes those ideas grow and evolve before founders realize it was the right one in the moment.
    2. Have the right motives: "The founders of the super successful startup are never in it to get rich or to seem cool. They’re always fanatically interested in what they’re doing," she said. "They think longer term and are much harder for another company to capture with an acquisition offer because they don’t want to quit."
    3. Hit a big need: "Our advice: It’s better to do something you yourself want and then hope there’s a lot of other people like you," Livingston said. The idea behind the company may not seem like a big one initially — Airbnb started out as a service that rented out mattresses on floors — but it has to actually be one to be the foundation for a billion-dollar business. "You need to find something that a lot of people will pay for or something that people will pay a lot for," she said.
    4. Do something basic: A startup's business should be able to be described generically in five words or less — like how Facebook is a network for friends or Uber is a car on-demand. While ideas often start out less general — Facebook wanted to connect Harvard college students — they need to evolve into things that solve basic needs.
    5. Be willing to work on a dubious idea: When Livingston first saw Airbnb's pitch of renting out mattresses on floors, it just seemed like a bad idea, she said. Founders, though, have to be "mavericks" who are willing to ignore doubters and work on their ideas. "You need to be independent. You cannot care what other people think," she said.
    6. Be unafraid of a big idea: "The fear of big ideas prevents most people from starting a site for college students and turn it into the whole world," Livingston said, referring to Facebook. It takes work to turn small businesses into billion-dollar ones, and "a few people are more excited than afraid" to actually do it, she said.
    7. Be driven and resilient: Sometimes it's hard to tell how driven founders are if they've come from a job where they've had someone with authority over them. But it's easy to tell just how much drive they've got after they've launched a startup, Livingston said. "No one has authority over you in a startup. Most people find the authority vacuum uncomfortable, but a few people expand into it," she said.
    8. Consider it your life’s workIn all the really huge startups, at least one of the founders view it as their life's work, Livingston said. Those founders are focused on building for the long-term future and would never willingly sell their businesses short or be tempted by an easy exit, she said.
    9. Be able to evolve into a manager: Designing cool things and managing people are two very different skills and most people don't like doing both. But to build a billion-dollar business, founders need to evolve with their companies. They need to learn how to manage people, and probably even have to like doing it, Livingston said. "It’s a rare person who can be great at both, but you have to be if you want to create a really great startup," she said.

    SEE ALSO: Uber's bad year: The stunning string of blows that upended the world's most valuable startup

    Join the conversation about this story »

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    Dave McClure

    The founding partner of 500 Startups, Dave McClure, is no longer in charge of the startup incubator's day-to-day operations, after being accused of "inappropriate behavior with women," The New York Times reported.

    In its story, the New York Times named one particular woman, Sarah Kunst, who told the paper McClure harassed her after she talked with him about a job at 500 Startups. McClure did not dispute the account, according to the Times.

    “After being made aware of instances of Dave having inappropriate behavior with women in the tech community, we have been making changes internally,” 500 Startups told the Times. “He recognizes he has made mistakes and has been going through counseling to work on addressing changes in his previous unacceptable behavior.”

    Christine Tsai, co-founder of 500 Startups, is now CEO. Tsai wrote in a statement published Friday that she took over the role a few months ago, a detail that the company had not previously announced. 

    "Dave’s role has been limited to fulfilling his obligations to our investors as a General Partner. In addition, he’s been attending counseling to work on changing his perspectives and preventing his previous unacceptable behavior," Tsai wrote.

    The website still listed Tsai as a managing partner and McClure as a general partner as of Friday afternoon.

    McClure is a big name in the San Francisco startup world. His company, which provides funding to young companies and helps them get off the ground, has backed CreditKarma and Twilio, among other successful startups.

    Many of the businesses that work with 500 Startups are early in their development, when the entrepreneurs that created them might be more desperate and eager for funding — and potentially more vulnerable to behavior that exploits an imbalanced power dynamic. 

    The sidelining of McClure is only the latest example of how a growing awareness of gender inequality and sexual harassment in tech is shaking up the industry.  

    Justin Caldbeck, a co-founding partner of Binary Capital, resigned last week following a similar report in The Information. Meanwhile, reports of poor treatment of women at Uber prompted an investigation that led to CEO Travis Kalanick's resignation, the departure of numerous other executives, and the firing of more than 20 employees.

    The Times story also named Chris Sacca, the Shark Tank judge and recently retired venture capitalist. On Thursday, in a preemptive response to the article, he published a post on Medium called "I Have More Work To Do" in which he apologized and said that he had "personally contributed" to making the tech industry "inhospitable for women."

    SEE ALSO: When pressed about sexual harassment at Uber, board member Arianna Huffington said 'it all depends on your definition of systemic'

    Join the conversation about this story »

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    Ismail Jeilani xoogler google london

    LONDON — In 2012, Ismail Jeilani was faced with a choice. The North Londoner had been accepted to King's College London, but university fees had just tripled. He could go — but doing so would mean paying £9,000 a year for his education, and taking out a loan he wasn't comfortable with.

    "It's to do wih my own values, combined with my attitudes towards debt alongside dealing with interest," he told Business Insider. "I didn't think it was fair that I had to choose between what I held closely to myself, and my right to education, and I felt that anybody who's in that position should definitely be able to do both."

    And that's exactly what Jeilani did.

    He went to King's, paying the nine grand a year — but he didn't take out a student loan. Instead, he moonlighted as a personal tutor, teaching Arabic grammar and economics for between 15 and 20 hours a week alongside his studies.

    It left little room for anything else — "I wasn't able to commit to extracurricular activities ... I did Taekwondo for around two months and I couldn't physically carry on because the time wasn't there any more"— but it paid off, and he left university completely debt-free.

    After a stint working for Google, the entrepreneur is now using his experience to build an app with two friends to help others do similar — it's called Scoodle.

    It's built by three old friends

    scoodle profileScoodle is an app that connects tutors to students. Students can search for tutors, book and pay for lessons, and message them, all through the app, while it gives the tutors control over how they manage their students and create group lessons.

    Let's say you want to learn French. You download the app, enter your subject and location, and can then browse tutors signed up on the platform. It displays their qualifications, an introduction, and how much you charge. If you like, you can drop them a message, or book a lesson through the app.

    The company was founded in August 2016, and after a private beta, it launched on May 1, 2017. "We expected students to focus mainly on academic learning," Jieliani said. "However, non-conventional learning is picking up a lot. For example, a lot of students are learning foreign languages and getting tutors to help them get into medicine. This means medical entrance exams and personal statements."

    Jeilani has two cofounders who are old friends. "We've known each other for a long time, probably 10-15 years now. We went to the same supplementary school, on weekends played games with each other back in the PSP days." They're now working together.

    Jeilani declined to provide hard numbers, but said the app is currently growing the number of tutors by 30% week-on-week, and "nearly half of our sign ups return every two weeks."

    To date, Scoodle has been self-funded, but the team is is currently trying to close a seed funding round of between three and five hundred thousand pounds. (Jeilani also declined to name the investors the company is talking to.) It has previously been self-funded, with none of the founders drawing a salary — but they believe the trade-off of equity for capital to help scale is worth it.

    "For us it's a question of timing because when we first spoke about the product and the industry and the idea it was relatively young, but now we're seeing I guess more and more people beginning to work within the industry. So for us it's a question of: What's a bigger priority, is [it] just to be able to say 'hey, we own 100%,' or is it better to maybe own something slightly smaller but more impactful on the society?"

    'My values and faith are a lot of who I am'

    After Ismail Jeilani graduated, he went to work for Google, working as an account strategist in Ireland.

    It's a role that gave him access to a powerful network of ex-Googlers — or "Xooglers"— that he is leveraging as he grows the company. In early June, he attended a pitch day at Google's offices in London, where he and a dozen other startups founded by Xooglers pitched their startups to 80 assembled European investors.

    "The network from the ex-Googlers network is amazing, it's genuinely incredible," he said at the time. "Not just because of the calibre of the people who are here, but also the support network that they provide in the buildup to this."

    He also led the product launch of QardHasan, a platform that helps provide an "interest-free alternative to traditional student loans" for Muslim students in Britain.

    "My values and faith are a lot of who I am," he wrote in a follow-up email. "It teaches me to work with excellence, no matter what I do. It also teaches me that life is short, and that we only have so long to make a meaningful difference in the world. I want to make that difference."

    Join the conversation about this story »

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    Success! How I Did It Banner BI GraphicsVlad Tenev Robinhood founder CEO

    It's hard getting funding for a startup, but it's even harder when the product doesn't exist yet, still requires regulatory approval, and is being launched during a recession.

    But after 75 investor pitches, the founders of a commission-free stock-trading app, Robinhood, found a few willing venture capitalists. Now the easy-to-use app has over 2 million users and is valued at about $1.3 billion.

    "There were a lot of people who didn't believe in it, and we had to bang down a ton of doors. We were really relentless," Vlad Tenev, the cofounder and co-CEO of Robinhood, told Business Insider US Editor-in-Chief Alyson Shontell on the "Success! How I Did It" podcast. "We probably knocked on 75 doors before we actually made it work."

    In the wide-ranging conversation, Tenev and Shontell discussed:

    • His move to the United States from Bulgaria as a young boy, and how his upbringing affected his career.
    • What it was like having about 75 venture-capital doors slammed in his face.
    • How he and his cofounder, Baiju Bhatt, got nearly 1 million people to sign up for Robinhood before the app even existed.
    • How they met Snoop Dogg, one of Robinhood's investors.
    • What it took to build a $1.3 billion company by the age of 30.
    • What millennials are investing in (the average age of Robinhood's users is 30).

    You can listen to the full interview here:

    Subscribe to "Success! How I Did It" on Acast or iTunes. Check out previous episodes with:

    If you'd rather read the interview, here's a transcript of the podcast that has been lightly edited for clarity and length:

    Alyson Shontell: Vlad, thanks so much for joining us today.

    Vlad Tenev: It's a pleasure to be here.

    Shontell: To get started, I want to learn about you and your background, and how you grew into the CEO of a $1.3 billion company before you even hit age 30 — I think maybe you're 30 years old now?

    Tenev: I am 30 now, yeah.

    How emigrating from Bulgaria affected his career

    Shontell: But take me back. You moved here to the States when you were 5 years old from Bulgaria?

    Tenev: Yeah, that's right.

    Shontell: So what was growing up like for you?

    Tenev: Communist Bulgaria is where I grew up, and my father was actually a professor of economics. He tells me the story about how when he was in school, he would sneak into the basement — he had a friend there who was, like, keeping track of access, and she would let him in and let him read all of the banned literature, which was Western economic thought from the US, and that stuff wasn't well accepted at the time.

    My father had an opportunity to come to this country to study — this was in 1991, when I was four. So he went, moved over by himself. My mom moved over six months later, so I was actually living with my grandparents. They would take me to school, they basically raised me for a little bit, and I moved over in 1992, around the summer when I was 5 years old.

    My parents were decidedly risk-averse — they really were pushing me very hard to enter the financial industry, where they both work, but not really to enter it in the way that I did as an entrepreneur. They've been working the same job for over 25 years each, both working at the World Bank, so I didn't really grow up with entrepreneurship in mind. But I came over to Stanford for college, met my cofounder there, and in 2008 I went to grad school, he went to grad school, he joined a trading firm just north of San Francisco.

    His first month on the job and my first month in grad school, Lehman Brothers went under, the market collapsed, and things just completely changed, and it was a very, very interesting time for the industry. At, really, my cofounder Baiju [Bhatt]'s urging and insistence, we started a little trading firm and moved out here to New York City to actually begin it, and that was the beginning of our entrepreneurial journey.

    Starting startups

    Robinhood cofounders Bhatt and Tenev

    Shontell: You had a few kind-of finance-related startups before this, right?

    Tenev: Our previous company, which was called Chronos Research, started in New York. And essentially what we were offering were tools for hedge funds and banks to build automated trading strategies. This was the spiritual precursor to Robinhood.

    If you think about the stock market today, it looks very different than maybe what we were expecting when I was growing up, at least. I watched movies like "Trading Places" where you'd have a bunch of people in the pit waving around paper tickets and the burliest, tallest one would make the trade happen, right? And nowadays, that's not the case. All of the action happens in data centers, a lot of which are in New Jersey, and it's really about who has the fastest systems, the most automated systems, the best software. And those firms have an advantage when it comes to trading. With maybe a team of 10 people, that would have taken 300, 400, 500 people to do at a conventional trading desk at a big bank.

    It became clear to us that the smartphone would be your primary tool for accessing the markets and doing financial transactions in general. When we looked at the space and we compared what we saw with the institutional world, where maybe firms were placing millions of trades per day at effectively no cost, we realized that from a technology standpoint, that's not that different from millions of customers placing trades per day, and that we could offer that at low cost by leveraging that same automation.

    How to get nearly 1 million users signed up before a product launches

    robinhood 2017

    Shontell: And so the app, while it might sound complicated because it's financial services and all that, it's really not — to the point that it is so simple to use it's almost scary. But before I get into that app and what it looks like now, I want to go to you launching a website first before you even had an app, right? And from what I understand, it was more or less an overnight success. From the sounds of it, you basically put up a website and then have all these people suddenly on the wait list when you wake up.

    Tenev: To preface it, before we started Robinhood and launched it, we had very little experience with mobile app development and, really, consumer product development. I mean, our previous company, like I mentioned, was enterprise software, so —

    Shontell: And you were a physics and math major, right? You weren't engineering and —

    Tenev: No, I had no formal engineering background and no prior work experience, really, in consumer companies. And we actually had a couple of experimental apps while waiting for the regulatory approval for Robinhood that we launched and we actually tried to get some traction on, and it was very difficult for us to get customers because ultimately we made a lot of mistakes that first-time developers of mobile products make, like packing a ton of features into apps and not really addressing a really deep customer pain point. So the last thing from our minds when we launched Robinhood, the initial website, was that it would blow up overnight, so we were kind of cavalier in the way we approached it.

    Shontell: What did the website say?

    Tenev: It had a description in very simple language saying, "Commission-free trading, stop paying up to $10 per trade." And then there was a button that let you sign up, and then when you signed up, you put in your email, and you would join this wait list where we would actually show you: There's this many people ahead of you, this many people behind you.

    This has become a relatively common thing since then. I think a lot of that has to do with how well our wait list did, but we were actually inspired by this other product that launched about a year before called Mailbox.

    I remember distinctly it was a Friday night. We had been working on the wait list in preparation for our press launch, which would have been, I think, the following Wednesday or Thursday. Everyone goes home, and I wake up Saturday morning, and I open up Google Analytics, and I see something like 600 concurrents on our site, which nobody knew about at that point. I was just like, "What's going on? This is not normal. Something must be wrong." Right?

    And I'm looking at the analytics — I see a lot of traffic, or the majority of it, coming from Hacker News. And I open up Hacker News, and I see No. 1: "Chinese Land Spaceship on the Moon," No. 2: "Google acquires Boston Dynamics, the Robotics Company," and No. 3 was: "Robinhood: Free Stock Trading." So, first of all, I was like, "Oh man, like No. 3 on Hacker News? This is sort of like every engineer's dream in the Valley, right?"

    Shontell: Hacker News is really big, especially on the West Coast within the tech community. It's kind of how you find cool things that are bubbling up, big stories that are breaking in tech. How did you get on Hacker News? Who put you there?

    Tenev: We have absolutely no idea, and we've tried since then to get to No. 1 on Hacker News, and people at Robinhood I guess don't have a ton of karma, which is your Hacker News cred that helps. But both times we've been to No. 1, it's been a completely random person that we just have never been able to identify.

    My second thought was there's no way we'd get up to No. 1. I mean, the Chinese just landed on the moon and Google made a huge acquisition, so we probably have to settle at No. 3. But 20 minutes later we get up to No. 2. Maybe 15 minutes after that, we're at No. 1 on Hacker News.

    I'm just screenshotting the page; I'm calling my parents saying, "Oh, this is crazy. It might actually be working." And up until that point, we never really had an idea of what success, at least in the consumer space, was like. That was sort of the first moment where we built something that actually worked.

    Maybe about 20 minutes after that wore off, we realized, "Crap. None of the emails are wired up. The website's broken." And everyone just had to go to the office to staple everything together — make sure things were up, emails were getting sent. We ended up de facto doing our press launch on a Saturday, which every single person I've talked to in the PR world has told me was, like, the worst move you can possibly make.

    Shontell: Absolutely.

    Tenev: But we ended up getting 10,000 sign-ups that first day, over 50,000 the first week, and almost 1 million in the first year.

    Shontell: And do you think it was just the idea was exciting? That's been done before. Are there any other platforms that don't charge you a commission other than yours?

    Tenev: Not to my knowledge, and some people have promotions like your first five or 10 trades are free. That's been tried before, but I think what allows us to offer unlimited commission-free trading was a technological step change and the ability to attract a customer base organically in a space where customer acquisition has been entirely paid-advertising-driven.

    Shontell: At the time you put up this website, it goes to the top of Hacker News, and all of this is happening, you still don't have an app, right? There's nothing for people to actually physically download.

    Tenev: No.

    Shontell: It's just "You know this is coming, wait and see," and it builds some intrigue. How many people did you get on this wait list before you actually revealed the app?

    Tenev: We had almost 1 million.

    Shontell: And how many months was that from the time the website went up to the app coming out?

    Tenev: The app fully launched on the App Store in March of 2015, so about two and a half years ago. The time between announcement and public launch was almost a year and a half.

    Finding investors after 75 rejections

    Marc Andreessen

    Shontell: And had you raised money at that point?

    Tenev: We did. When we launched the website and launched the service, we had closed our seed round, so that was about $3 million, and it was led by Index, Google Ventures, Andreessen —

    Shontell: Snoop Dogg.

    Tenev: Snoop Dogg came in at the A, so that was a little bit later.

    Shontell: A few months before Snoop. How do you have no product and still raise $3 million?

    Tenev: Nowadays, it's sort of a relatively common amount. I shouldn't say common, but a lot of companies, especially ones that have capital requirements to get started, actually need to raise the capital. So for Robinhood, we didn't really have much of a choice, because the regulators required showing some amount of capital on our balance sheet before approval to launch the service. They don't want just a broker to come up with no capital and get a bunch of customers and then close up shop overnight. That's a really bad situation.

    So there are capital requirements, which also make it more difficult than launching a typical startup, because there's a little bit of a catch-22 situation. Investors want to be sure that you're going to get that regulatory approval before entrusting you with the capital, but you need that capital to get the regulatory approval.

    The people that invested in the company at that point were making a big bet on the founding team, on Baiju and myself and on this idea that was pretty unproven at the time, of us actually being able to acquire customers organically through word of mouth and actually deliver this product.

    Shontell: So, like, a Marc Andreessen invests in you with no product, no financial approval yet, and no wait list. This is a pretty big gamble. Investors don't usually do this. You must have had one heck of a pitch.

    Tenev: I think it was actually pretty challenging early on. There were a lot of people who just didn't believe in it, and we had to bang down a ton of doors, and we were really relentless. We probably knocked on 75 doors before we actually made it work.

    Shontell: Wow, so 75 venture-capital doors slammed in your face?

    Tenev: Yeah.

    Shontell: Sometimes bets pay off. It sounds like so far so good now that your last round, I think, valued the company at $1.3 billion. Those guys are probably pretty happy.

    Tenev: Yeah, yeah.

    How to get Snoop Dogg to invest in your startup

    snoop dogg

    Shontell: So talk to me about Snoop. How does one pitch Snoop Dogg and get him to invest in their startup?

    Tenev: Well, I think what really attracted a lot of our individual angels to Robinhood was this idea that you're doing something very important, and you're doing it in a new way. And it was a little bit rebellious, but rebellious in a good way in the sense that the financial industry over the past several decades has just not earned the trust of consumers, especially in our demographic. I mean, they've been actively ripping off consumers.

    You look at 2008 where we bailed out the banks, and the middle class, in a lot of ways, got stuck with the bill, and then in the years of the recovery since then, 90% of the returns have accumulated to the top 1%. It feels very, very unfair, and the margins for these services, which used to be brick-and-mortar but are now completely electronic, are way too big. The margins of financial-services companies are astonishingly large relative to what's actually going on, and what that translates into is almost literally they're taking money out of your pocket and putting it in theirs.

    As part of this latest funding announcement, we released some numbers about the business, and the one that I'm most proud of is that we've taken half a billion dollars, over $500 million in saved commissions, and put that money back into customer's pockets. That's money that elsewhere would have just gone into the —

    Shontell: Which is all great, but is still doesn't answer the question of how you pitch Snoop and Snoop got involved.

    Tenev: I think — let me try to remember how we actually met him. I think we met Snoop Dogg through Jared Leto.

    Shontell: OK, so then how did you meet Jared Leto?

    Tenev: Through Aaron Levie.

    Shontell: OK, so all of these people just know all of these people. The Hollywood and tech scenes are coming closer, I think.

    Tenev: Yeah, Aaron Levie is the founder of Box and also an angel investor in Robinhood. He was very helpful to us quite early on because he pushed us really, really hard to get Robinhood.com. We were Robinhood.io at the time, and I don't know the full story behind Box, but I vaguely remember them being Box.net, and maybe by the time they were Box.com that was very, very expensive, so we were lucky to go from Robinhood.io to Robinhood.com when we were still a teeny-weeny company.

    Shontell: So an intro, it sounds like, from an investor — which is why angel investors can be really helpful, if only for their networks. I'm sure for other reasons too, but they can introduce you to maybe future investors and things like that.

    Tenev: Yeah, definitely. And a lot of our angel investors actually really liked the idea of the product. Some of them traded before and give product feedback from time to time as well.

    Shontell: I want to talk about where the product is now. So about 2 million people are using this, and the company was recently valued at $1.3 billion, and you still are doing these commission-free trades. But you now have something called Gold, which is your freemium model. So you're going to basically have a large portion of the app that can be free to use, but then if you want kind of some bells and whistles on top, you pay.

    Tenev: We launched that late last year, in December, and we had done a lot of user research. We have an awesome user research team at Robinhood, where we're constantly talking to customers and understanding their pain points, understanding what products they might enjoy. And we had an idea that Robinhood Gold would be successful at the onset before we launched it, and we were optimistic about it.

    But then when it launched, it basically tripled our expectations. So it was super, super successful. It was growing 17% month over month. We were just generating a lot of revenue from this, and I think that's sort of a large part of what led to the funding round earlier this year and sort of resulted in a step change in kind of the trajectory and traction of the business.

    Buying a stock as quickly as you'd post an Instagram photo

    Robinhood

    Shontell: And one thing I wanted to touch on is just the design is so easy to use and almost gives you pause. I downloaded Robinhood recently, I bought myself some Snap shares when they sunk back down to their IPO price, and the whole thing start to finish for me, from download to buying Snap, took about 20 minutes —

    Tenev: Yeah, and that's never been done before —

    Shontell: Before my husband could even be like, "Alyson, stop, I don't know if I agree with this decision," I already had bought the shares. Is that safe? Is that OK?

    Tenev: I think it's important to separate the transactional elements of that from the actual decision-making of what stock you want to buy. People have really been used to a long process to set up any type of financial account. It used to be, for the vast majority, the bank account, brokerage account. You'd have to go in person, fill out some forms, talk to a person, they'd call you back — it would take maybe two or three weeks to buy your first stock.

    The first generation of online brokerages put up some forms online and a marketing page, but that process behind the scenes was still the same. That's why when you open up a brokerage account that's not Robinhood, you can't buy stock right away — you have to wait one or two weeks, usually. So we were really the first to create that experience of being able to go from nothing to being an owner of a stock instantaneously, because that's what people expect from products.

    You're usually downloading Robinhood precisely because you want to do something. Something gives you the idea, you want to buy a stock — let's download Robinhood to do it. So removing that friction is just categorically a good thing. The brokerages might say, "We slow down the process so that you can make sure you're making a well-informed deliberate decision," but that's just a load of crap. They slow it down because they don't have engineers, they don't have the ability to make an awesome user experience, and it's not a priority.

    How millennials are investing

    People Texting

    Shontell: A lot of your users are first-time people dabbling in the stock market. They've got a few hundred dollars to spend. They skew a little bit younger. So what are some of the habits that you're seeing this younger generation do with their money? Where are they investing it, how are they acting, do you think the recession affected their habits at all?

    Tenev: It's so interesting because there are a lot of habits that we see that have surprised us and that, frankly, we haven't seen before.

    One thing is now that we have several years of activity, we've built a really interesting data set, and we can track people as they spend more time in Robinhood. And the customers that joined Robinhood two years ago, we collect their self-reported liquid net worth, so how much money they have in liquid form in cash. Their Robinhood account balance today is larger than their self-reported liquid net worth two years ago. So we had this idea that Robinhood would function as a savings vehicle, and that seems to be bearing out.

    Another thing that we noticed is that that money, rather than being diverted, as we might have thought, through checking and savings, really looks like it's coming out of spending money. So this is money that would have been spent on coffee or on Amazon or just discretionary stuff, and because Robinhood has the experience that you might get from buying a physical product or something on Amazon, it sort of feels like spending in a way that's very positive and very engaging, but people end up building a portfolio over time.

    And one thing that's super unique is there's a lot more buying than selling activity on the platform, and you have these people that maybe are buying 50 different stocks but one or two shares of each and they're creating these diversified portfolios using small amounts of money. That type of transaction would have cost thousands of dollars in the past — people just wouldn't have done it. So we're actually giving people the ability to do something that they haven't been able to do anytime in the past.

    Shontell: If you're giving advice to someone else who wants to start the next consumer-app rage, what's your advice to them? How do you think that they should get it off the ground? How can they see some success like you've seen?

    Tenev: I think the biggest thing is to make sure that you understand the space super well and that you're actually really, really passionate about it. I think there's a lot of people who come at it from the business angle of: What's a market need? How do my skills align with this market need? How much money can we make from this?

    But the process of actually building something really, really big can take a really long time, and I read somewhere that the vast majority of value is created past Year 10 of a company's existence.

    So if you think about all of the crap that happens between Year 0 and 10, if you're not really, really passionate about something, I think it's very hard to keep going during that time period.

    Shontell: Great. Well, thank you so much for your time.

    Tenev: Thanks, Alyson.

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    Success How I Did It podcast

    Vlad Tenev, Baiju Bhatt, robinhood, sv100 2015Robinhood is a commission-free stock trading app that was recently valued at $1.3 billion. But when the company was first starting, there was very little proof the founders could pull it off.

    Vlad Tenev, cofounder and co-CEO of Robinhood, says his app could not get regulatory approval without having a sizeable amount of funding from venture capitalists. But most venture capitalists didn't want to give him money, because he had no product.

    "So there are capital requirements, which also make it more difficult than launching a typical startup, because there's a little bit of a catch-22 situation,"Tenev explained in an interview for Business Insider's podcast, Success! How I Did It."Investors want to be sure that you're going to get that regulatory approval before entrusting you with the capital, but you need that capital to get the regulatory approval."

    To round up the cash, Tenev and his cofounder did a lot pitching. He estimates 75 venture capitalists turned them down before they were able to raise their first $3 million. 

    Here's the relevant part of the podcast, explaining how they pulled it off:

    Tenev: The people that invested in the company at that point were making a big bet on the founding team, on Baiju and myself and on this idea that was pretty unproven at the time, of us actually being able to acquire customers organically through word of mouth and actually deliver this product.

    Shontell: So, like, a Marc Andreessen invests in you with no product, no financial approval yet, and no wait list. This is a pretty big gamble. Investors don't usually do this. You must have had one heck of a pitch.

    Tenev: I think it was actually pretty challenging early on. There were a lot of people who just didn't believe in it, and we had to bang down a ton of doors, and we were really relentless. We probably knocked on 75 doors before we actually made it work.

    Shontell: Wow, so 75 venture-capital doors slammed in your face?

    Tenev: Yeah...Well, I think what really attracted a lot of our individual angels to Robinhood was this idea that you're doing something very important, and you're doing it in a new way. And it was a little bit rebellious, but rebellious in a good way in the sense that the financial industry over the past several decades has just not earned the trust of consumers, especially in our demographic. I mean, they've been actively ripping off consumers.

    You look at 2008 where we bailed out the banks, and the middle class, in a lot of ways, got stuck with the bill, and then in the years of the recovery since then, 90% of the returns have accumulated to the top 1%. It feels very, very unfair, and the margins for these services, which used to be brick-and-mortar but are now completely electronic, are way too big. The margins of financial-services companies are astonishingly large relative to what's actually going on, and what that translates into is almost literally they're taking money out of your pocket and putting it in theirs.

    As part of this latest funding announcement, we released some numbers about the business, and the one that I'm most proud of is that we've taken half a billion dollars, over $500 million in saved commissions, and put that money back into customer's pockets.

    Check out the episode with Tenev explaining how he built a $1.3 billion company by age 3o, below.

    And subscribe to "Success! How I Did It" on Acast or iTunes. Previous episodes include:

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    NOW WATCH: Hackers and governments can see you through your phone’s camera — here’s how to protect yourself


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    JMP Veste

    Venture capital company Partech Ventures has raised a new €400 million (£354 million) fund to invest in US and European startups.

    The VC firm, which has offices in San Francisco, Paris, and Berlin, raised the money from the European Investment Fund — an EU organisation that has recently stopped funding UK VC firms as a result of Brexit — as well corporates like Nokia, Cisco, Accenture, and L'Oreal.

    Two thirds of the fund will be used to back European startups developing emerging technologies such as virtual reality and drones, The Financial Times reports. The remainder will be invested in US startups.

    "We make 70% of our exits in the US and so [it is important to have a presence there] so we can find exit opportunities," said Partech co-managing director Jean-Marc Patouillaud, according to the FT. "It is very important to select the best deal by benchmarking on a worldwide basis rather than just focusing on a single continent or country."

    Partech has raised a total of seven funds and it has €1.2 billion (£1 billion) under management. The investor has backed the likes of Peanut, an app that aims to connect lonely mums, as well as online furniture website Made.com.

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    JMP Veste

    Partech Ventures, a venture capital company with close to €1 billion (£880 million) at its disposal, decided to shelve its plans for a new London office as a result of Brexit.

    The transatlantic VC firm, which has offices in San Francisco, Paris, and Berlin, was thinking about opening a London office until the UK voted to leave the European Union on June 23, 2016. Business Insider first spotted the news in a report by The Financial Times on Monday.

    "We were considering our next office opening in London but the uncertainty created by the Brexit for the time being led us to go in a wait and see mode," Emmanuel Delaveau, general partner, in charge of business development & investor relations, told Business Insider.

    Delaveau said Partech Ventures is concerned that UK startups operating in regulated industries like fintech might struggle to expand in Europe as a result of Brexit. The firm is also worried that Brexit could make it harder for UK startups to hire talent if visa policies change, Delaveau said.

    Partech Ventures, which has backed the likes of online furniture retailer Made and transportation company Hyperloop One, will reconsider the London office following Brexit discussions, Delaveau said.

    Although Partech Ventures doesn't have a London office at present, it is still making a number of investments in UK tech startups. "We are very active investing in the UK," said Delaveau, adding that Partech Ventures isn't concerned that it will miss out on potentially lucrative deals by not having an office in the country. "We are just about to announce a new deal we a leading in venture this week," he said.

    Partech announced on Monday that it has raised a new €400 million (£354 million) fund to invest in US and European startups.

    The money came from the European Investment Fund — an EU organisation that has recently stopped funding UK VC firms as a result of Brexit — as well corporates like Nokia, Cisco, Accenture, and L'Oreal.

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    • Faraday Future North Las VegasFaraday Future is scrapping plans for a 1-million-square-foot assembly plant in Nevada amid a deepening cash crunch, and it is now looking for an existing facility to build its first car, the FF91.
    • A Chinese court reportedly froze billions of dollars in assets belonging to Faraday's owner, Jia Yueting, who is the chairman of a Beijing electronics company that is mired in its own cash crisis.
    • Faraday is expected to slow down operations at its Los Angeles-based headquarters, but the company says no layoffs are planned in the near term.

    SAN FRANCISCO — Faraday Future, the California startup that set out to dethrone Tesla in the electric-car business with ambitious plans to build a self-driving, 1,000-horsepower entertainment hub on wheels, is officially in trouble.

    The company, at least for now, is abandoning one of its cornerstone projects, a 1-million-square-foot assembly plant in North Las Vegas, it announced on Monday. Business Insider has also learned that the company is significantly pulling back on its operations at its Los Angeles-area headquarters amid a deepening cash crunch.

    "We are in a precarious situation right now," a senior-level Faraday Future employee told Business Insider. "The generous funding we had in the past is no longer here."

    The developments represent a big change in Faraday's public posture. Though reports of cash shortages and internal strife have circulated for months, the company had continued to insist that it was on track to build the Nevada plant — itself a scaled-down version of a planned 3-million-square-foot facility — and that its electric SUV was on track to hit the market by the end of 2018.

    Though it still doesn't have a production-ready car, Faraday has frequently sought to grab public attention with high-profile presentations and bold claims about the capability of its technology.

    Faraday Future FF91Monday's news is an acknowledgment that things aren't going as well as the company had hoped. It also suggests that efforts to raise new funding, to ease dependence on its Chinese billionaire backer, failed — at least for now.

    "We at Faraday Future are significantly shifting our business strategy to position the company as the leader in user-ship personal mobility — a vehicle usage model that reimagines the way users access mobility," Faraday Future said Monday in a statement.

    "As a result of this shift in direction, we are in the process of identifying a manufacturing facility that presents a faster path to start-of-production and aligns with future strategic options.

    "Accordingly, we have decided to put a hold on our factory at the APEX site in North Las Vegas. As the land owner, we remain committed to the buildout of the APEX site for long-term vehicle manufacturing and firmly believe North Las Vegas is an ideal place for us to be."

    Current Faraday employees told Business Insider the company would search for an existing facility in either California or Nevada rather than build its own factory at the North Las Vegas site, which they said would require $80 million to $100 million the company did not have.

    Day-to-day operations at Faraday's Gardena, California, headquarters will continue, but these people said some belt-tightening was required. No layoffs are planned in the near term, but a dearth of financial resources means the development of the company's FF91 electric SUV is expected to slow down as well.

    Jia Yueting

    Who's paying for Faraday?

    Faraday relies heavily on its owner, Jia Yueting, the founder of the Beijing-based tech giant LeEco, which is having cash-flow problems of its own.

    Unpaid loans recently prompted a Chinese court to freeze $182 million in assets tied to Jia, his wife, and several affiliates, according to reports in The New York Times and Xinhua. Courts also imposed a three-year freeze on Jia's roughly $2.3 billion stake in a publicly listed arm of his empire, Leshi Internet Information & Technology.

    Trading in Leshi was suspended in April for a restructuring review — one of several suspensions for the stock in the past 12 months.

    Faraday's recently hired chief financial officer, Stefan Krause, had set out to corral new investors for Faraday in recent weeks to stave off fallout from Jia's cash crisis. Krause told Business Insider in a May interview that he had hoped to round up $1 billion in a series A round of funding. His worldwide blitz took him to the Middle East, London, Germany, China, and back to the US to speak with roughly 35 investors — mostly private individuals — to fund a two-year plan designed to get Faraday's factory off the ground and move the FF91 closer to production.

    Faraday employees with knowledge of the talks told Business Insider the endeavor was unsuccessful because of the uncertainty surrounding Jia and LeEco.

    "The noise around him really makes it difficult to find investors right now," one senior-level employee said of Jia. "There's a lot of interest — the story sells very well — but his situation makes them all stand on the sidelines and they're not really willing to provide the money."

    Faraday Future

    Expanding too quickly, setting off alarms

    Jia, who goes by the nickname YT, has personally backed Faraday since the company was founded in 2014, but the blows the billionaire's financial portfolio has taken in the past year have created problems throughout his sprawling empire.

    LeEco sought to expand rapidly in the US last year, opening new offices in San Jose, California, with plans for a larger campus to be built on some 50 acres the company bought from Yahoo. LeEco also planned to buy the TV-maker Vizio for $2 billion. Separately, Faraday bought 900 acres of land in North Las Vegas for its inaugural factory and made deals with the San Francisco Bay Area city of Vallejo to secure property for a second facility.

    All of those plans were canceled. LeEco sold off the Yahoo property less than a year after the purchase, laid off 70% of its US workforce, and dropped the $2 billion Vizio deal. Construction was halted at Faraday's North Las Vegas site before any foundation was laid, and suppliers began suing Faraday over unpaid bills.

    Faraday Future North Las Vegas

    More than $2 billion in fresh investment from a Chinese real-estate business late last year did little to slow LeEco's bleeding, and several high-profile executives left Faraday in a hurry. A handful of Faraday's suppliers sued the company for millions, claiming they were not paid. And creditors occupied LeEco's Beijing offices for a week in June, demanding payment.

    Jia acknowledged last fall that LeEco expanded too quickly and required more cash than the company anticipated. Jia wrote a public plea for leniency on China's biggest social-media site, Weibo, last week, promising to repay his debts while also saying he would throw all of his energy into his electric-car business.

    "Please give LeEco some time, please give LeEco car some time," Jia wrote. "We will pay back creditors, suppliers and any other debts." Jia told stakeholders that his empire's financial troubles were "more severe than we expected" and said the company "made some mistakes" in allocating its funds.

    He promised to dive headfirst into the car business with Faraday Future, but critics have said the capital-intensive endeavor is what caused his troubles.

    Faraday Future

    Faraday's fight to survive

    Krause said Faraday would search for an existing facility to build its FF91 self-driving cars once they were ready for production. For the Deutsche Bank and BMW veteran, the rationale is straightforward: An operational factory is the key to new investor cash.

    "Some of them would like to see a factory and would like to see us moving a little bit further down the road," Krause told Business Insider in a phone interview last week. "We will secure an existing facility that we can lease or buy at a low cost and then bring in our equipment and be faster to market with the FF91," Krause said, adding that Faraday had already purchased some of the equipment for the factory that was planned for North Las Vegas.

    But the startup still faces a dire outlook in the short term. The company is slowing down development of the FF91, which has been undergoing beta testing for months. Faraday has sought to keep some positive buzz going, participating last month in the Pikes Peak International Hill Climb, where it beat a Tesla Model S P90D in a 12-mile high-altitude race in Colorado Springs, Colorado.

    Still, publicity stunts have done little to deflect the real concern that Faraday's days may be numbered. The company says that, while it no longer has access to generous funding through Jia, it is still able to cover payroll for its roughly 1,000 employees. Faraday executives declined to clarify what the company spent to maintain staffing and routine operations.

    Exhibiting the same kind of dogged determination of its owner, Faraday Future insists it will push forward. Jia has other financial holdings in the US, including some real estate, which could be liquidated for cash. And the acreage Faraday owns in North Las Vegas could also be sold to replenish its reserves.

    It is unclear how long Faraday can hobble into the future with its visions of immersive self-driving, electric transport, but, at least for now, the company remains intent to fight a while longer.

    SEE ALSO: A Chinese court froze $182 million in assets linked to the chairman of cash-strapped LeEco

    DON'T MISS: Faraday Future, once seen as a 'Tesla-killer,' is said to be in shambles as cash runs low and executives flee

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    WeWork Chelsea 5

    WeWork, a company that rents out shared office spaces, has raised $760 million in a new Series G round of funding, according to Forbes.

    At a $20 billion valuation, the co-working giant tops the market caps of Twitter ($12.96 billion), Box ($2.44 billion), and Blue Apron ($1.54 billion) combined.

    The company has not confirmed the investment or its source, but Forbes dug up documents filed publicly with the Delaware Secretary of State on June 30, issuing 13.2 million new shares of preferred stock. WeWork did not immediately respond to request for comment.

    Founded in 2010, WeWork has more than 120,000 members in 156 offices worldwide. Entrepreneurs, freelancers, and remote workers who maintain a base at WeWork receive amenities like free coffee, meeting rooms, privacy booths, and networking events.

    The company has grown its offerings over the last year. WeLive, an offshoot of WeWork evolved the hacker-house concept into all-inclusive living experiences that comes with lots of perks. A new enterprise business puts Microsoft employees in WeWork offices across four major cities.

    WeLive   Lifestyle 1

    In May, WeWork also quietly got into the fitness business. The company plans to open a permanent gym, which is being called WeWork Wellness, at a New York City office location.

    Miguel McKelvey, chief creative officer of WeWork, told Business Insider earlier this year that a network of shared experiences has been "always part of the equation" for the brand.

    He and cofounder Adam Neumann envision an ecosystem of office rentals, residences, gyms, and even barber shops that served the concept of community living.

    "It was always thought of, 'How can we support this person who wants to live more collectively, live lighter — who wants to have less stuff, who wants to pursue their passion, pursue a life of meaning, rather than looking for just material success?'" McKelvey said.

    SEE ALSO: Millennials are paying thousands of dollars a month for maid service and instant friends in modern 'hacker houses'

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    Nicole Eagan

    Darktrace, the UK cybersecurity company backed by Autonomy billionaire Mike Lynch, has raised another $75 million (£58 million) to fuel its growth.

    The tech startup, founded in Cambridge in 2013, has now raised just shy of $180 million (£139 million) and is valued at $825 million (£639 million).

    US investor Insight Venture Partners led the latest funding round, while existing investors Summit Partners, KKR, and TenEleven Ventures also participated.

    A Darktrace spokesperson told Business Insider: "We are using this [funding] to invest in sales and marketing, and also to feed the demand for our AI autonomous response solution Antigena."

    Darktrace's "enterprise immune system" technology has been deployed by 3,000 organisations worldwide and the company claims that its contracts are now worth $200 million (£154 million), an increase of 140% from last year. The company's headcount has doubled to 500 employees over the past 12 months.

    Darktrace Threat Visualiser

    Nicole Eagan, CEO at Darktrace, said in a statement: "Insight Venture Partners has a proven record of partnering with tech-focused firms, and its backing of Darktrace is another strong validation of the fundamental and differentiated technology that the Enterprise Immune System represents.

    "It marks another critical milestone for the company as we experience unprecedented growth in the US market and are rapidly expanding across Latin America and Asia Pacific in particular, as organizations are increasingly turning to our AI approach to enhance their resilience to cyber-attackers."

    Jeff Horing, managing director at Insight Venture Partners, added: "In just four years, Darktrace has established itself as a world leader in AI-powered security. Insight is proud to partner with Darktrace to continue to drive its strong growth and superior product market fit."

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    Silicon Valley

    SAN FRANCISCO - Kristina Bergman made an unusual decision when she founded Integris Software in early 2016: she included an anti-sexual harassment clause firmly in her company's voting agreement with investors.

    The clause calls for an investigation should any board director be accused of sexual harassment. If it is found that there was "reasonable probability" that an incident occurred, the director would be removed.

    Sexual harassment by startup investors is in the spotlight in Silicon Valley after revelations of sexual misconduct led to the resignation of top partners at venture firms 500 Startups and Binary Capital.

    "We wanted to create a culture of inclusion and respect supported by board members who shared those values," said Bergman, whose company's technology helps companies meet compliance mandates, in an email. "That's why we created a mechanism that forces an investor to replace the assigned director on our board should sexual harassment occur."

    Bergman proposed Integris' anti-harassment clause after she witnessed an accusation first-hand. In her last days as a principal at the Seattle venture capital firm Ignition Partners in March 2016, Bergman received an email accusing a partner of publicly groping a 20-year-old staffer at a happy hour event.

    That partner, Frank Artale, resigned as managing director this week at Ignition's request after it "learned of a complaint of misconduct" on July 5, the firm said late Tuesday, citing that allegation and the 2016 incident.

    "While the investigation did not substantiate the allegations, it did indicate that he demonstrated poor judgment, which we addressed with him," Ignition said in a statement.

    Integris raised money from Ignition and three other venture firms following the 2016 accusation. Bergman, a former Microsoft product manager, declined to comment on whether the Artale case influenced her, but called her company's anti-harassment clause "good corporate governance" that she hoped would serve as a model for other organizations.

    Integris' policy is a rarity, but other startups are moving in that direction. Wizeline, a San Francisco firm whose roadmap software is used by other tech companies, in May adopted a policy that calls for an investigation any time someone reports sexual harassment.

    Employees found to have violated the policy will be fired regardless of their position, said Sung Hae Kim, vice president of people operations at Wizeline. "There's no special treatment."

    Among venture capitalist firms, Foundry Group said it would enforce a "zero tolerance policy" on harassment at any company or venture firms in which it has invested. Allegations will result in immediate investigations, firm co-founder Brad Feld wrote in a June blog.

    It remains to be seen how these policies will be enforced, but they are a good start, said Lisa Wang, co-founder of SheWorx, a collective of female entrepreneurs. SheWorx is developing an online database for entrepreneurs to report unethical behavior by investors.

    "These are the types of tangible actions that are actually going to create change because there are real consequences for bad behavior," Wang said. "But it's one thing to have policies. It's another thing to consistently follow through with them."

    SEE ALSO: Silicon Valley's old boy power structure is getting toppled and the repercussions will be huge

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    Bulb founders Amit Gudka and Hayden Wood

    London startup Bulb has a bigger aim than trying to convince people to download an app: It's trying to rethink how energy suppliers work.

    Bulb is a green energy supplier, with all of its electricity and 10% of its gas coming from renewable sources. The company says it now has 70,000 customers.

    Cofounder Hayden Wood told Business Insider that the idea for Bulb came about during his time working as a management consultant for Bain & Company.

    Wood worked within large energy suppliers, but said that he "could not believe what I was seeing when I was working with these companies." He cited opaque business models, poor service, and the high cost of switching to renewable energy as the three main reasons why he wanted to start his own energy supplier.

    Bulb's other founder, Amit Gudka, is a former energy trader at Barclays. Wood and Gudka felt that customers were being overcharged for renewable energy. The wholesale cost of eco-friendly energy is only "marginally more expensive than the wholesale cost of conventional energy coming from gas and coal," Wood said. But customers were having to pay a premium, sometimes up to 25% more, for green energy.

    Bulb is able to offer renewable energy for a lower price than many larger suppliers, Wood said, because it relies on automation and modern technology. Staff spend around half of their time trying to figure out how to increase automation and speed up the business, according to Wood.

    Second Home

    But one side of the business is more retro in its approach. Bulb prefers to train staff up to know lots about the business rather than using call centres or customer service workers who are very specialised.

    The focus on training and smart staff works for now — but can Bulb scale it as the company grows? Wood says the company can.

    "We think that's scalable, Wood said, "we think that it's possible to create teams of individuals who have all of those skills and are able to address customer concerns in one go."

    "So when a member calls us, two thirds of the time that call is resolved in the very first call by the person that they speak with. That only gets more effective as you scale because it will mean that as we get more and more members, we'll be able to service them with a relatively smaller number of people compared to competitors."

    Bulb's approach to disrupting the incumbent energy suppliers feels similar to how challenger banks like Monzo and Revolut are attracting customers from big banks. Monzo CEO Tom Blomfield said in February that he has already turned down an acquisition offer from a big bank. Has Wood had a similar approach from a larger energy supplier?

    "We've been surprised by the level of interest in Bulb and the number of companies that have approached us to partner," Wood said. "So there's lots of smaller energy companies who are interested in partnering with a supplier to deliver a service. And yeah, larger companies who are interested in what we're doing and how we're doing it."

    Bulb plans to reinvest profits into emerging technologies that support eco-friendly energy. But what happens if the company invests in technology that doesn't pan out? Companies such as uBeam have been the target of criticism in the past — how will Bulb avoid investing in something that might not work out for its customers?

    "That is a very justifiable concern. I think that we have to be very, very careful in what we choose to invest time and money in and there has to be a business case for all of those investment decisions," Wood said.

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    Ali Rowghani

    It's not everyday that Ali Rowghani joins a board of directors.

    The Y Combinator Partner and former COO of Twitter only sits on three or four boards at a time. Now he's added a startup named Segment to that list.

    Segment offers a marketing platform that lets companies track and consolidate customer data. Its service is used by businesses like Glossier and Instacart to understand how consumers reach and interact with their services, whether through a marketing email or by going directly to their e-commerce sites.

    Rowghani thinks Segment could one day be as big as Salesforce. As consumer interactions with businesses becomes more and more digitized, companies are struggling to consolidate all of the data they are collecting on their customers. Segment lets companies in industries ranging from retail to media manage multiple applications in one place, but it also helps them create new tools within its platform. 

    CEO Peter Reinhardt, a 27-year-old MIT dropout, launched Segment through the Y Combinator incubator program in 2011. The startup just completed a $64 million C funding round led by the Y Combinator Continuity Fund, which is specifically designed for former Y Combinator incubator companies that are looking to expand. In total, Segment has reached $109 million, with other major investments by GV, Accel and Thrive. 

    When asked what made Segment so special, Rowghani waxed poetic about his relationship with Reinhardt. 

    "He's really one of the most outstanding founders that I have ever known," Rowghani said. "We were already sold on him, and as we learned more and spent more time evaluating the company's plans for the future, we thought this was a unique company with a potential to build a long lasting product in this space." 

    Rowghani said that liking the founding team is rule number one when it comes to investing in a startup. 

    "A great team is better than a great idea," Rowghani said. "A great team will either fix an idea or make it great; a bad team will ruin an idea."

    The second rule for investing in a startup is that it has to have a great product, Rowghani said. He thinks Segment has Salesforce potential because it creates an infrastructure layer on which businesses can grow.

    For now, however, it's Segment that will be doing the growing. Reinhardt said he plans to use the company's new funding to build out his team, particularly in engineering and products. Segment currently has 160 employees, but that number could go up to 400 in 2018, he said. 

    Rowghani, for his part, is up for the challenge. During his five years at Twitter, the company grew from 100 employees to 3000.

    "I hope they don't have to scale as quickly as Twitter did," Rowghani said. "It creates a lot of problems when you grow that quickly."

    SEE ALSO: 4 key tips to get your startup funded

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    computer aided design programmer

    July 13 (Reuters) - Traditionally buttoned-up Wall Street bank Goldman Sachs Group Inc has relaxed the dress code for its computer engineers in a bid to attract tech talent with a more casual environment.

    The fifth-largest U.S. bank by assets told employees in its technology division to "exercise judgment in determining when to adapt to business attire," according to an internal memo from late June seen by Reuters on Thursday.

    It did not specify whether hoodies or sneakers, the ad-hoc uniform of millennial tech workers, constitute acceptable dress.

    The move, one of the first by Goldman's new chief information officer Elisha Wiesel, comes as the bank makes a push to recruit and keep hold of top tech talent in the face of intensifying competition.

    Goldman and other Wall Street banks have been struggling for years to compete for the best employees with Silicon Valley firms and hedge funds, which often have better hours and workplace perks for top software developers and engineers.

    Wiesel replaced Martin Chavez, now the firm's chief financial officer, as Goldman's highest ranking technology executive in January.

    About a quarter of Goldman's 33,000 employees are engineers who have helped transform the firm since the 2007-2009 financial crisis by making trading more efficient and building new businesses such as its consumer lending platform called Marcus.

    SEE ALSO: 2 former Wall Streeters turned startup founders share their best advice for dressing for every kind of office

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    juicero

    Juicero employees found out in a letter on Friday that the company is cutting the price of its cold-press juicing system. Some employees also found out they had been cut, too. 

    In a letter obtained by Fortune, Juicero CEO Jeff Dunn wrote, “the current prices of $399 for the Press and $5 - $7 for produce Packs are not a realistic way for us to fulfill our mission at the scale to which we aspire.” 

    The San Francisco startup's mission is to help people consume more fresh produce everyday, and to get there they will focus on the next generation of the machine, which will run less than $300, according to Fortune. 

    Dunn also said that 25% of employees, mostly on the marketing side, would lose their jobs in a shift in focus to product development. 

    The Juicero machine, for those unfamiliar, can whip up a fresh-squeezed fruit and veggie concoction at the press of a button. It's also WiFi-enabled, and can tell you the nutritional value of your drink. It originally cost $700 when it first launched, plus it received endorsements from Gwyneth Paltrow and Dr.Oz and was hailed as the ultimate Silicon Valley indulgence. 

    Founder Doug Evans envisioned doing for juice what Steve Jobs did for Apple. In a blog post he wrote the machine took over three years and 12 prototypes to create, and that the final product exceeded his "grandest dreams." 

    JuiceroThe letter also announced Evans will be stepping back from daily operations, but remain an active board member.

    The company has faced blowback from consumers after an April Bloomberg article revealed the packets could be easily squeezed by hand. According to the article, investors were a little peeved to learn that the machine was not actually necessary for the same "farm to glass" juice experience. Those investors — which include Campbell Soup, Google Ventures, and Kleiner Perkins — helped Juicero raise $100 million in 2015 after three years in stealth mode. 

    Dunn responded to the Bloomberg story, saying the company already knew the packs could be squeezed into juice and that the value lies in the machine's smart features and consistent pressing technique — not just the juice itself. 

    Juicero packets expire quickly — 8 days, according to the company — and the machine's connected features help them maintain their tight supply chain. The product even has an app that reminds you to drink your juice before it expires. 

    Dunn offered a full refund to unsatisfied customers, but said less than 5% of customers had taken him up on it. 

    Customers will have to decide for themselves if the reduced price is worth it for a glass of juice. To help you decide, read about Business Insider's experience testing the Juicero juicer.

    SEE ALSO: A startup quietly raised a boatload of cash to make a $700 'Keurig for juice' with help from Silicon Valley geniuses like Jony Ive

    Join the conversation about this story »

    NOW WATCH: In the battle for nutrition between smoothies and juice there’s one clear winner


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    betterworks kris duggan

    A former BetterWorks employee is suing the company and its CEO Kris Duggan over allegations of assault, sexual harassment and a hostile work environment.

    The complaint, first reported by Tech Crunch and filed in San Francisco Superior Court earlier this week, is the latest charge of sexual misconduct to come out of Silicon Valley in recent weeks, following the landmine allegations against VC Justin Caldbeck, a co-founding partner of Binary Capital. 

    Beatrice Kim was a customer programs lead at BetterWorks — a Silicon Valley HR software startup — for two years before she resigned in November. According to the lawsuit, she left the company one month after an incident in which Duggan allegedly got drunk during an offsite work retreat, entered Kim's cabin, and touched her legs as she asked him to stop.

    The complaint, supplied to Business Insider by the plaintiff's lawyers, alleges assault and sexual harassment, but does not allege sexual assault.

    In a phone call with Business Insider, Duggan said, "We take things like our culture and our values and the safety and happiness of our employees extremely seriously, so we're looking into this matter. We don't comment on pending litigation but we are taking the issue very seriously and are looking into it."

    'A hostile work environment'

    The problem with BetterWorks went way beyond Duggan's behavior at the retreat, according to the complaint. Several other managers are also named as culprits in creating a hostile work environment, primarily for their response to Kim's complaints.

    "Individuals in the highest levels of the organization encouraged, condoned, and even engaged in conduct that created a hostile work environment. Women who attempted to complain to HR and upper management were deterred from complaining and told to be a 'cool girl' or that 'it’s a female issue' and 'cattiness' or were simply ignored," according to the complaint. 

    The complaint describes an office environment of tacit acceptance of "vulgar and graphic jokes and comments about women, rape, and female body parts, and an organization that plainly favors men and where the workplace has more in common with a boy’s club or fraternity house than a professional work environment."

    Silicon Valley's cultural problem 

    Dave McClureThis is only the latest situation to catch public interest in recent weeks, as the floodgates open up on a culture of sexual harassment among VCs and Silicon Valley startups. Often the victims are lower-level employees or female entrepreneurs who are approached sexually by colleagues, investors and men with higher clout in the industry.

    Caldbeck resigned in June following a report in The Information detailing the accusations of six different women who said he behaved inappropriately. Dave McClure resigned from his role as founding partner at 500 Startups after he was accused of sexual harassment in The New York Times on June 30. A separate allegation of sexual assault followed. 

    As new stories come in, so does the industry reaction. Y Combinator, an influential Silicon Valley start up accelerator, emailed out an online whistle-blowing form to 3,500 entrepreneurs so they could report on sexual harassment by VCs, according to the Washington Post.

    “We don’t call it a blacklist, but that is essentially what is happening,” Kat Manalac, a partner at Y Combinator, told the Post. 

    SEE ALSO: The head of one of San Francisco's most famous startup farms is no longer running his firm after being accused of sexual harassment

    Join the conversation about this story »

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    Brandless

    While much of Silicon Valley has been consumed by the drama at Uber, tech's most valuable startup, a whole new class of companies launched in the first half of 2017 hoping to change the world, become the next unicorn — or just build a successful business. 

    Business Insider spoke to founders and venture capitalists and took a look at funding data to identify some of the startups that had the biggest starts in 2017. Some names on the list are officially launching out of stealth, while others are still in their early stages.

    From a VR arcade company to a recycling startup with mysterious ties to Tesla, here are 17 of the top startups to launch this year: 

    SEE ALSO: Bill Gates made these 15 predictions in 1999 — and it's scary how accurate he was

    Essential, from the creator of Android, is gunning for Apple and Samsung.

    What it is: A consumer gadget company founded by Andy Rubin that's designed a new smartphone to challenge Apple's iPhone and Samsung's Galaxy devices. It calls that gadget, simply, the Essential Phone.

    Rubin is best known as the guy who created Android, sold it to Google, and nurtured it into the most popular smartphone operating system on the planet. He left Google back in 2014, founded a startup incubator, and then helped launch Essential under its umbrella. 

    After working on Essential's phone in stealth for years, Rubin unveiled it in May. The device is just the start of the startup's ambitions. The company also has a smart home hub in the works that's intended to control everything from smart light bulbs to connected toasters.

    Funding: $330 million from Redpoint Ventures and others, according to Bloomberg.

    Website: www.essential.com



    Brandless wants to be the new 'Procter & Gamble for millennials.'

    What it is: A consumer packaged goods company that offers everything from dish soap to olive oil to kitchen knives. The company offers all of its products for a single low price of $3 each through its website. 

    Officially launched in early July, Brandless is making a bet that you don't care as much about the brands you consume as you think. None of its products are from name brands; instead they all carry its "brandless" private label. Rather than having a big logo emblazoned on them with a bunch of marketing hype, the packages Brandless' products come in just say what the products are and list their attributes. 

    Funding: $50 million from investors including Cowboy Ventures, Redpoint Ventures, and Google Ventures.

    Website:brandless.com



    Forward is a new doctor's office that's like an Apple Store meets 'Westworld'.

    What it is: A futuristic medical practice designed by Google and Uber alums that's been described as a doctor's office from "Westworld."

    Launched in January, Forward offers a futuristic take on the popular concierge medical practice model, complete with state-of-the-art diagnostics tools, an artificial-intelligence system that listens and takes notes for physicians, and a pricey $149 monthly membership.

    Funding: Unknown.

    Website: www.goforward.com



    See the rest of the story at Business Insider

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    Success How I Did It podcast

    Mark Cuban

    Convincing investors to pay attention to a startup is not easy, especially if you're a college student and you're trying to attract high-profile investors like Mark Cuban. 

    For Aaron Levie, now the CEO of cloud-based file-storage company Box, an early investment came by trying to get press.

    Cuban had one of the most popular tech blogs – blogmaverick.com – when Box was founded in a dorm room in 2005. After Levie sent the Dallas Mavericks' owner a cold email asking him to write about Box on the blog, Cuban decided to do something even better. 

    "He became interested in investing in the company, and we had never even met, but he did full due diligence, and then our first time meeting him was at a basketball game,"Levie said in an interview for Business Insider's podcast, "Success! How I Did It." 

    Here's part of the pitch email Levie sent to raise Box's angel round of financing, which he shared on Twitter.

    aaron levie angel investment email box The "Shark Tank" star ended up investing a few hundred thousand dollars, according to Levie, which was enough to convince him and his co-founder, Dylan Smith, to drop out of college and focus on the business full-time. 

    Check out the episode with Levie explaining how he took Box public by age 29, below, or keep scrolling for a transcript of how he attracted Mark Cuban with a blind email.

    Here's the relevant part of the podcast, explaining how they did it:

    Shontell: One thing you said in there that's really interesting is that Mark Cuban was an early investor, and he invested blind, right? You two had never met, yet somehow you tracked down his email. What was it like hustling to get Cuban involved? You were kind of the first startup in "Shark Tank," I guess you could say.

    Levie: You know, if you want to credit us with that, that would be awesome. I'm sure there's somebody who came before us, but it was actually really random.

    Back in 2004 and 2005, Mark had one of the most popular blogs on the internet, and it's still his blog today, Blogmaverick.com. We were just pitching him to have him write about Box, through a set of conversations over email. He became interested in investing in the company, and we had never even met, but he did full due diligence, and then our first time meeting him was at a basketball game — you could think about it as our first official board meeting, which was, you know, pretty thrilling. And that investment was a few hundred thousand dollars. We decided to drop out of college and then go and kind of focus on this full-time.

    Shontell: What was the product at that point?

    Levie: It was incredibly basic. It was called Box.net, and it was a really easy way to upload your files to the internet and be able to access them from any device and be able to share them with anyone.

    Soon after we got Mark's investment, we opened up the service to give you a whopping 1 gigabyte of free storage, which was pretty groundbreaking at the time, in 2006. But the idea was: Hey, let's give everybody a 1 gigabyte of free storage, and they will eventually pay us. I think it was something like $5.99 or $4.99 a month to be able to buy more storage space. Obviously, eventually we pivoted the company, but the core was always about making it so individuals could just easily access their files from anywhere.

    SEE ALSO: 'I was having nightmares for a few weeks': Box CEO Aaron Levie reveals how hard it was to build a $2.5 billion business and take it public by age 29

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    Hampton Creek pitch deck

    Hampton Creek's board of directors made a big, and very unusual, change recently: they all left.

    All, that is, except for the CEO of the Silicon Valley startup best known for its egg-less mayo and some of the controversies that have clung to it.

    The company confirmed the board change to Business Insider on Monday. Josh Tetrick, the CEO and now sole board member of Hampton Creek, said in an emailed statement that the board changes would give more freedom to the startup's staff.

    "Ensuring our employees maintain their ability to direct our mission is as critical as the technologies we deploy and the products we launch. We will always protect this principle," he said.

    According to a report in Bloomberg earlier on Monday, the board members left because of conflicts with Tetrick. 

    We will advise Josh

    The company provided a separate statement to Business Insider on behalf of the outgoing directors, which said they would still "advise" Hampton Creek.

    "We continue to fully support Hampton Creek and its CEO Josh in their exciting and important mission to change the food industry for the better of all people. We will advise Josh and the team on strategies across all areas of its business moving forward," they said in a joint statement, provided by a Hampton Creek spokesperson.

    The exodus includes Bon Appétit Management Co. cofounder and CEO Fedele Bauccio, former US Health and Human Services Secretary Kathleen Sebelius, Google DeepMind cofounder Mustafa Suleyman and Khosla Ventures partner Samir Kaul. Bart Swanson, who represented Hong Kong billionaire Li Ka-shing’s Horizons Ventures, also stepped down.

    Founded in 2011, Hampton Creek produces a variety of vegan products, like mixes, dressings, cookies, pasta, and cookie dough. In June, the San Francisco-based company also announced that its scientists are working on meat grown in a lab. The company has raised more than $120 million to date, and in 2016, it closed a funding round that valued the startup at $1.1 billion, giving it unicorn status. 

    But it also hasn't been without controversy. In 2015, former employees told Business Insider that Hampton Creek used shoddy science, stretched the truth when labeling samples, and created an uncomfortable work environment, partly in an effort to meet production deadlines.

    There were also allegations that, leading up to a venture capital funding round in 2014, the startup paid contractors to buy its vegan mayo to appear like there was more interest from shoppers, Bloomberg reported in 2016. Hampton Creek claimed that the buyout program was for quality control purposes. In June 2017, Target also started removing Hampton Creek products from its shelves, citing food safety concerns.

    SEE ALSO: 7 food startups that could change the way you eat

    Join the conversation about this story »

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