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The latest news on Startups from Business Insider

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    Skip scooters

    • In June, President Trump announced that the US planned to levy a 25% tariff on $50 billion worth of Chinese-imported products.
    • There's two rounds of tariffs taking place, the first of which goes into effect on Friday.
    • The second round of tariffs doesn't have an implementation date yet, but it could impose a 25% tax on products associated with e-cigarette company Juul and e-bike startup Bird as early as next week.

    Electric scooters, e-cigarettes, and e-bikes might be getting more expensive in the near future.

    In June, President Trump announced that the US planned to levy a 25% tariff on $50 billion worth of Chinese-imported products.

    The first round of tariffs, which affects nearly 1,000 products including smart-home devices, electric motors, and navigation devices, comes into effect on Friday.

    There's a second round of tariffs in the works, as well — and it might have a punishing effect on some of the hottest startups in venture capital. Currently, there's no implementation date on the second round of tariffs, but the Financial Times speculates that it could go into effect as early as next week. 

    If the 25% tax is imposed against these products, then prices on products produced by millennial-beloved startups like e-cigarette company Juul, e-scooter company Bird, and electric bike company Jump might skyrocket in the near future.

    Join the conversation about this story »

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    chamath palihapitiya 3

    • Investors are fleeing Social Capital, the young venture firm founded by early Facebook executive Chamath Palihapitiya, to start a fund of their own.
    • Ted Maidenberg, a founding partner of Social Capital, is leaving the firm to join former colleagues Arjun Sethi and Jonathan Hsu at the new fund.

    Social Capital, one of Silicon Valley's most buzzworthy tech investing firms to emerge in recent years, is unraveling amid a wave of departures — and many of the departing team members are regrouping to launch a fund of their own.

    Ted Maidenberg, a founding partner of Social Capital, is joining a new firm being launched by Arjun Sethi, who left Social Capital in June, Business Insider has learned.

    The move represents another blow to Social Capital, which was founded by early Facebook executive Chamath Palihapitiya, whose tech pedigree and iconoclastic pronouncements about investing made Social Capital one of the most closely-watched VC firms in the industry.

    But after a tumultuous first half of 2018, in which Palihapitiya has made a series of abrupt and jarring changes in strategy, top investment partners are jumping ship. And for some, the landing spot looks very familiar.

    "It's like Social Capital, but without Chamath," one source told Business Insider about the new firm being launched by Sethi.

    Maidenberg is the second Social Capital partner to defect from Palihapitiya's firm for Sethi's offshoot in the past week. Axios reported on Tuesday that Jonathan Hsu, a partner and head of data science, is also leaving to launch the new fund with Sethi.

    There may be more shoes to drop

    We don't know much about Sethi's new fund. It was rumored to focus on cryptocurrency investments, but another source familiar with the matter tells Business Insider that's incorrect.

    The firm will have Sethi, Hsu, and Maidenberg as founding partners.

    Maidenberg was a founding partner at Social Capital, but he left in the fall of 2017. Although he is still listed a "board partner" at Social Capital, he did not invest in the last fund — a sign that he was phasing out his involvement, Bloomberg reported.

    Maidenberg and Social Capital did not immediately return requests for comment.

    His exit brings the number of departures at Social Capital to five partners in less than a month. Multiple sources told Business Insider there may be more to come.

    Mamoon Hamid, another founding partner of the firm, left suddenly in August 2017 to join Kleiner Perkins Caufield & Byers after the rival VC firm poached him away.

    In June, Social Capital lost partners Tony Bates, a longtime tech executive who was most recently president of GoPro, and Marc Mezvinsky, a former hedge fund manager who happens to be Chelsea Clinton's husband. The pair were hired in 2017 to lead a growth-stage fund that's since been cancelled.

    Palihapitiya is tough to work with, but what VC isn't?

    Business Insider spoke with several people — a mix of entrepreneurs, investors from other firms, and tech industry insiders — who pointed to Palihapitiya as one of the factors driving the exodus.

    They described Palihapitiya, 41, as a dynamic but erratic investor who is notoriously difficult to work with. Others however, said he's tough, but what successful VC isn't?

    Multiple sources said some partners may be defecting from the firm because they don't agree with the direction that Palihapitiya is taking at Social Capital.

    In 2017, Social Capital began building an automated system that uses an algorithm to invest in startups. Companies apply through a glorified Google Form and let the AI decide whether or not they're worth backing. The firm has said it plans to use the system — called CaaS (capital as a service) — to make 1,000 investments in 2018.

    Sources familiar with the matter said some partners are leaving because of the pivot to data-driven investing. Others said Sethi left Social Capital on good terms, and he even plans to team up with Social Capital for one of the fund's first investments.

    One person in Silicon Valley said the most successful VCs evaluate a company based on its people, not just its metrics. This person worried for Social Capital's future.

    "As soon as you move to algorithms and you're just purely data-driven, you're going to lose the sensibility of a company," this person said. "I don't care if you're the founder of a tech startup or a VC. Being disconnected from the touch is damaging."

    SEE ALSO: These 2 brothers each launched $1 billion companies in their 20s — now, Justin Kan says that their success came from how they did chores as kids

    Join the conversation about this story »

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    luxe valet startup

    • SpotHero, an app that lets drivers find, reserve, and pay for parking spots on their phones, almost didn't make it through the brief era where on-demand parking services were all the rage.
    • Hundreds of millions of venture dollars were flowing into SpotHero's competitors, which tried to provide valet service at the push of a button on your smartphone.
    • But SpotHero survived the funding wars and is now thriving, while his competitors — including Luxe and Carbon — have shut down or pivoted their business.
    • Lawrence said that ultimately, SpotHero had the better business model than the competition: "Whenever you sell a product for less than it costs you, that's a problem."


    By the time Mark Lawrence started raising big money for his startup SpotHero — which lets drivers find, reserve, and pay for parking spots on their phones — plenty of investors told him he had "already lost."

    Those were the days of the on-demand valet empire.

    In 2015, anyone with a car in San Francisco could summon a valet with just a few swipes of an app. People wearing pink blazers or blue running jackets— the signature looks for startups Carbon and Luxe, respectively — zipped around the city on Razor scooters to take your keys, park your car, and return it on demand for a small fee.

    Hundreds of millions of venture capital dollars flowed into these valet businesses that hoped to mimic the success of Uber and provide a service at your fingertips.

    Even then, Lawrence held onto the belief that letting drivers book a parking spot on an app was the right path to building a billion-dollar on-demand parking company.

    That decision ended up saving his company. The four most high-profilevalet services have since shut down or pivoted, leaving SpotHero with the opportunity to take their business. The tale offers a helpful — and somewhat obvious — reminder for any entrepreneur.

    "I know why they failed," Lawrence said. "Whenever you sell a product for less than it costs you, that's a problem."

    On-demand valet was an incredibly costly business model. Companies like Luxe, Carbon, Zirx, and Valet Anywhere would dispatch a valet at a moment's notice to park a car in the middle of a city. The margins were thin. They made about $2 to $5 per parking job after paying the valet's wages and a monthly fee for the parking spot.

    As demand for these services grew, the companies had to buy more parking spots. The parking lot and garage owners often denied giving the companies any meaningful discounts at scale. And so, as demand went up, so did their operating costs.

    Lawrence said "every bone in my body" told him the business model was doomed.

    Mark Lawrence SpotHero

    Still, their early success made it difficult for Lawrence to raise money for SpotHero. He had already left his job as a financial analyst at Bank of America shortly after the worst of the financial crisis to pursue the SpotHero idea. Yet, some of top firms in the Valley, including Bessemer, Lightspeed, and GV, Google's venture arm, already made their bets in the on-demand parking space, which meant they couldn't put money into competitors like SpotHero.

    By 2015, "half of the growth-stage funds in Silicon Valley invested in on-demand valet. And so, imagine, I've only raised $4 million, I'm supposed to go to market, and the pool of people I'm supposed to raise from has shrunk by 50%," Lawrence said.

    Investors told him to consider expanding into valet services, which was climbing in popularity in 2015. On visits from Chicago to San Francisco, he saw the rival startups' ads and their valets, who served as walking billboards in their colorful outerwear.

    "I had major doubt," Lawrence said of his company's early chances of survival.

    SpotHero briefly considering a pivot to on-demand valet. The company launched a pilot program in Chicago, its home base, and New York City. At the end of the trial, SpotHero had blown through tons of cash to pay valets, and validated Lawrence's suspicion.

    He presented their results of the experiment at a board meeting. 

    "After five slides, they were like, 'We're not doing this,'" Lawrence said.

    His perseverance paid off. SpotHero spent three years building the Chicago market and fine-tuning the operation, before expanding to 49 other cities. It links drivers with over 5,000 parking lots, garages, and valets across the US and Canada. SpotHero takes a commission on every reservation made, without having to pay for labor.

    According to the company, SpotHero will generate hundreds of millions of dollars in revenue this year, up 52% over 2017. It's raised $57 million in funding to date.

    Ultimately, Lawrence said SpotHero thrived while his competitors failed, because his business model made sense. Plus, he believes it provides a better customer experience.

    He said in most cases, it's faster to walk to your car, sitting in a SpotHero lot or garage, than it is to wait for a valet to get your car, drive through city traffic, and meet you.

    "You know what's more on-demand than on-demand valet?" Lawrence said. "SpotHero."

    SEE ALSO: Top Silicon Valley investors explain why an electric scooter startup raising $400 million in 4 months is 'genius' and worth every penny

    Join the conversation about this story »

    NOW WATCH: An electric car from a startup company could outperform the Tesla Roadster

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    The Insider Picks team writes about stuff we think you'll like. Business Insider has affiliate partnerships, so we get a share of the revenue from your purchase.


    • FoundersCard is an exclusive membership for startup founders, CEOs, entrepreneurs, and just about anyone with that "innovator" mindset.
    • In addition to getting access to private networking events, FoundersCard members get VIP perks, discounts, and extras from retailers and services ranging from airlines and hotels, clothing brands, and gyms to office services.
    • Until July 31, FoundersCard is offering a discounted rate exclusively for Business Insider readers, and a waived initiation fee. To get the discount, you'll have to apply through this page.

    If you're an entrepreneur, an innovator, a startup creator — in other words, a founder — there's a unique and exclusive program that you might be interested in joining. Beyond personal benefits, it can provide direct, tangible benefits to the business or project that you're trying to grow.

    FoundersCard is a private membership club for — well, founders — designed to provide members with various elite statuses, VIP treatment, and top benefits. In addition, FoundersCard fosters an ambitious, social community of similarly driven people from different industries, helping to facilitate networking opportunities, connections, and more.

    Despite its name, the FoundersCard isn't a credit card and doesn't involve transactions, which means that anyone can apply, regardless of what country they're from.

    FoundersCard was founded in 2009 by Eric Kuhn, a new Austin-based venture for a veteran entrepreneur of the 1990s and early-2000s. While the card initially grew its network and offerings slowly — and had a few early bumps in the road — it's made leaps and bounds over the past few years as an organization. Since running into a few issues in its early years, it has bolstered its membership, and made connections with a lot of travel, lifestyle, and business services companies.

    If FoundersCard sounds like something that could be useful to you, read on to learn more about how it works — and to take advantage of a discounted rate of $395 per year (compared to the normal $595) with a waived initiation fee (usually $95). This rate is a special exclusive for Business Insider readers who apply through this page.

    FoundersCard Rolex

    How it works

    To join FoundersCard, you have to complete an application — because the organization is designed to be exclusive and especially curated to be useful and enjoyable for members, everyone isn't always accepted. The process is fairly subjective, 

    You can apply for a preview membership to get a better sense of which benefits are currently active. From there (or right away, if you don't care about the preview), you can fill out the complete application. You have to enter your personal details, including your company name and your title — FoundersCard is open to people other than strictly company founders — as well as your contact and billing information. If you're approved, your payment method will be charged the first year's annual dues — $395, with FoundersCard's exclusive offer for Business Insider readers, or $595 without — and a one-time $95 initiation fee — waived for Business Insider readers. 

    Benefits of FoundersCard membership

    FoundersCard offers a wide range of benefits that can be loosely broken into three categories: savings and discounts, VIP treatment and perks, and exclusive events.

    FoundersCard hosts an ongoing series of networking events in cities with high concentrations of members — thanks to business travel, though, there are often different people and new faces at these mixers, even if you go to two in a row in the same city. Usually with 100–200 members, the networking events offer attendees an opportunity to mingle, make connections, and share experience with members from a wide spectrum of industries.

    Other benefits tend to change as promotions become active, things become available, or FoundersCard negotiates a new partnership or improvement to an existing one, so it's difficult to share a comprehensive picture of what membership entails. There are also a ton of different benefits — this is a deliberate move to appeal to the widest possible cross-section of member, so that there are appealing things to many different people.

    The following are examples of some perks available at the time of publication. FoundersCard provided Business Insider with a temporary active account in order to access the full benefits portal.

    JetBlue Mint

    Airline discounts and elite/VIP perks, including:

    • Cathay Pacific offers 5-25% off flights, as well as a complimentary upgrade to Silver elite status. That status includes priority check-in, complimentary advance seat reservations, access to business class lounges while traveling on the airline in any class, and an extra baggage allowance. The status is valid for a year, after which you'll need to re-qualify through normal methods.
    • British Airways offers FoundersCard members up to 10% off most round-trip fares between the US or Canada and the UK.
    • Alaska Airlines offers 5% off fares within the Continental US, Hawaii, and Canada.
    • JetBlue features preferred flat fares for Mint (business class) transcontinental flights, plus up to 5% off coach and business class tickets. Mint fares are as low as $800.
    • American Airlines offers a changing list of benefits, including extra frequent flyer miles, elite qualifying points, or the opportunity to receive complimentary Platinum status for three months, with the chance to keep it by flying a certain required amount within three months.
    • Qantas, the Australian flag carrier, offers a whopping 10–25% off flights from the US to Australia or New Zealand.
    • Emirates offers 5–10% off US originating fares. The airline serves more than 125 destinations around the world, and offers particularly useful routing for those traveling from the US to the Middle East, Asia, and Africa.
    • Singapore Airlines discounts US originating flights up to 5%.
    • JetSmarter, a service that helps members find available seats on private and chartered flights as an alternative to flying commercial — but for a much cheaper price tag than flying private normally carries — offers FoundersCard members a free three-month trial.

    Rental car and chauffeur service discounts and elite statuses, including:

    • Complimentary Preferred Plus membership at Avis, and up to 25% off rentals.
    • Platinum membership at 15% off rentals at Sixt Rent a Car.
    • 20% off all Silvercar reservations — the founder of Silvercar is a FoundersCard member.
    • Credits and discounts with major car services including GroundLink, EmpireCLS, Carey, and Getaround.

    Exclusive FoundersCard rates, elite statuses, and perks at various hotels brands, including:

    • Starwood
    • Marriott
    • Kimpton
    • Hilton
    • Park Hyatt
    • The Standard
    • Mandarin Oriental
    • Omni Hotels & Resorts, and more.

    Lifestyle and retail discounts, including:

    • Discounts when you buy or lease a new Audi.
    • 20% off at John Varvatos.
    • Up to $10,000 off when you buy or lease a new BMW.
    • A complimentary $100 credit at Trunk Club— the founder and CEO of the company is a FoundersCard member.
    • Complimentary Diamond Total Rewards status at Caesars resorts and casinos, plus 20% off most rooms.
    • 20% off at 1-800-Flowers.
    • 15% off headphones, speakers, and more from Bang & Olufsen.
    • Discounts at other retailers including Adidas, Reebok, Indochino, Rent The Runway, Cole Haan, Tommy John, Todd Snyder, and Jonathan Adler, and more.
    • Discounts or credits at gyms, fitness studios, and wellness centers, including Equinox, Crunch, SoulCycle, Bliss Spa, Peloton, CorePower Yoga, and more.

    Business discounts, including:

    • 15% off voice and data plans with AT&T Wireless.
    • Up to 47% off UPS.
    • Up to 50% off Dell computers.
    • 20% off business card and stationary orders from MOO — the company's CEO is a FoundersCard member.
    • A free year of service from the virtual office service.
    • A flat 20% discount off products and services from LegalZoom.
    • Loyalty pricing at Apple.
    • 40% off Lenovo computers.
    • 25% off classes at General Assembly — one of the co-founders is a FoundersCard member.

    This is far from a conclusive list. FoundersCard has hundreds of benefits, discounts, and offers available, and can offer enough value to outweigh the annual fee even if you're a sole proprietor just getting your idea off the ground, or even an individual who can take advantage of the retail and gym discounts.

    If your small business has grown a bit, though, you can get tremendous value from discounts on shipping, IT services and gear, travel, and more.

    Between that, and the opportunity to network with like-minded and similarly focused entrepreneurs, FoundersCard presents a unique and potentially valuable opportunity — whether it's worth the $395 annual fee (with the Business Insider discount) depends on you. 

    Click here to learn more about FoundersCard's offer exclusively for Business Insider readers.

    SEE ALSO: The best credit card rewards, bonuses, and perks

    DON'T MISS: Chase launched a new Marriott Rewards card — and it's offering a huge and limited-time 100,000-point sign-up bonus

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    fanduel founders

    • Paddy Power Betfair is acquiring fantasy sports company FanDuel.
    • FanDuel was valued at $1 billion just three years ago. Now, the company is being sold for less than half that amount.
    • According to documents that detail the deal's specifics, FanDuel's original founders might not make any money from the sale.

    Selling a company is usually cause for celebration, but for the founders of fantasy sports company FanDuel, the moment is likely to be bittersweet. 

    The nine-year-old company, which was once one of Britain's most closely watched startups, was said to be valued at over $1 billion just three years ago. Now, it's valued at less than half that amount by the company that's buying it, Dublin-based bookmaker Paddy Power Betfair. 

    According to documentsfirst reported by Legal Sports Report that detail the specifics of the deal, FanDuel is now valued by its investors at around $465 million. 

    FanDuel's current valuation is about $50 million more than the total amount of funding it's received since 2009: A whopping $416 million from investors including private equity firms Shamrock Capital and Kohlberg Kravis Roberts.

    Now, those investors are cutting FanDuel's founders a raw deal: As majority shareholders, they're exercising their "drag along rights," which allow them sell the company, even if the minority shareholders don't want to.

    In this case, the minority shareholders are FanDuel's original founders, Nigel and Lesley Eccles, Tom Griffiths, Rob Jones, and Chris Stafford. None of the original co-founders still work at FanDuel, and it doesn't look like their original efforts will be rewarded — according to the deal documents, they're not going to make any money at all off of the company's sale. Of course, it's not clear what the financial terms were surrounding their departures from the company, and they could have negotiated a pay package

    Because the amount FanDuel is being sold for is hardly more than the amount its investors originally gave, its co-founders are losing out. The deal stipulates that "no part" of the payable offer will go to the "company's ordinary shares," along with no options to purchase the company's ordinary shares. In this case, those shares belong to the startup's minority shareholders, which include its founders. 

    FanDuel's founders' loss is a classic case of the dangers of a sky-high valuation, in which the founders' original shares are so diluted that their original involvement reaps little compensation when it comes time to sell the company. 

    The biggest winners of FanDuel's sell? The company's current executives, who are set up to make at least a few million dollars a piece.

    Join the conversation about this story »

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    The Insider Picks team writes about stuff we think you'll like. Business Insider has affiliate partnerships, so we get a share of the revenue from your purchase.


    • There are plenty of beds in boxes to choose from these days, all of which promise to have a unique feature to ensure a better night's sleep.
    • While I'm not always a fan of foam mattresses, I was certainly impressed by the Leesa mattress, which was not only comfortable, but cooling as well.
    • As a side sleeper, it’s sometimes tough to find mattresses that don’t leave me feeling achy, but the Leesa is certainly doing the trick.
    • At $995 for a queen, it’s a very good option for folks who may otherwise be skeptical of foam mattresses, or things that come out of boxes.
    • Right now through July 12, you can get $160 off a Leesa Mattress when you apply the exclusive code "JULYINSIDER" at checkout. 

    You’re not just seeing things — in fact, there are an alarming number of mattress stores throughout the United States. In fact, so common a sight is one of these bedding purveyors that there have been severalarticles written about why there seem to be more Mattress Firms than Starbucks in some towns (honestly, looking at you, New York City). And now, there are also a plethora of online mattress stores too — sure, Casper may have been first out of the gate, but it seems as though you can’t go online anymore without receiving an ad for a new bed in a box from a new company.

    But if you’re looking to cut through the noise a bit and find a mattress that is actually better than what you might find in a lot of the aforementioned brick-and-mortar stores, and indeed more comfortable than some online options, too, then look no further than Leesa.

    Its flagship Leesa mattress promises to redesign your sleep experience, and I have to say that I was pleasantly surprised by just how positive my experience really was on the mattress.

    The Leesa mattress promises to provide you with "the comfort, support, and universal feel everybody needs to sleep better." The company leverages what it calls a "unique combination of performance foam layers" in order to "deliver cooling bounce, contouring pressure relief, and core support for amazing sleep." And frankly, Leesa lived up to its promises.

    First things first — before I received my Leesa mattress, I looked up a few existing reviews on Amazon, where the mattress boasts a very respectable 4.1 out of 5 stars from over 900 reviewers. But of course, I wanted to see what folks said the problems were first. I read things about the mattress sleeping too hot, about visible sags, and about problems with the Leesa lying flat.

    Luckily, I did not find any of these issues to plague me during my own testing of the Leesa mattress, but I'll address each existing concern to the best of my ability.

    First off — the mattress too hot complaint. While I am not necessarily a hot sleeper, I certainly prefer the room to be cooler so that I can snuggle into several layers of blankets, and then move to various parts of the bed as I begin to overheat. When I slept on the Leesa, I found that I did not, in fact, have to move to other parts of the bed at all throughout the night. While the area in which I slept obviously became warmer than other parts of the mattress, I did not experience any sort of overheating, which was quite the surprise. This is likely due to Leesa’s 2-inch Avena foam top layer, which purports to provide airflow for a cooler night’s sleep.


    As for the visible sagging issue, this was certainly not the case in my experience. As soon as I unwrapped the mattress, it expanded prettily, and inflated to a very respectable thickness (which was consistent across the entirety of the mattress). And speaking of pretty, one of my favorite things about the Leesa mattress is that it is, indeed, a very attractive piece of furniture. Its grey and white cover almost looks like something you could just sleep on without a fitted sheet, but of course, that wouldn’t be the most sanitary option. That said, whenever you’re doing laundry, this isn’t a mattress that you’d be ashamed of your friends and family seeing naked. The built-in mattress cover is also extremely soft to the touch — in fact, it’s made of the same material as the Leesa Blanket, which I also own, and cannot say enough wonderful things about (but that's a story for another day).

    Finally, in my experience, there was no problem with the Leesa lying flat. I unpacked it as the company suggested I do, placing the rolled up mattress on my bed frame, and then unrolling it as it expanded. It worked like a charm, and now sits atop my bed as I would expect it to.

    When I first began sleeping on the Leesa, one of the key points I kept in mind was whether or not I would feel any stiffness or pain in my side upon waking. As a dedicated side sleeper, I sometimes feel that my mattresses are a bit too firm, and leave my favored side a bit uncomfortable throughout the night and the next day. Luckily, because the Leesa is a foam mattress and quite supple, I did not have this issue.

    Indeed, I felt supported throughout my repose, and woke up without any cricks or aches, which was major. I also found that the Leesa was quite comfortable regardless of what other positions I tried out — the two-inch memory foam layer does seem to mold to the body quite well and relieve pressure whether you’re a back, stomach, or side sleeper. And for extra strength and durability, Leesa also boasts a six-inch base foam layer, for a total thickness of 10-inches. Not bad for a mattress that comes compressed out of a FedEx truck.

    You can check out the full cutaway in the below image.


    When it comes to cost, the Leesa is quite competitive. Currently, Leesa is running an exclusive promotion for Business Insider readers that involves $160 off a mattress with the code "JULYINSIDER." Shipping is free, and mattresses are built to order, which is another added plus.

    Of course, if you receive your Leesa and decide that this particular foam mattress is not for you, don’t fret. There is a 100-day return policy, so if you sleep on it and dislike it, you can always send it back from whence it came. But if you’re anything like me, that probably won't be the case.

    Buy the Leesa Memory Foam Mattress from Leesa for $525 (Twin), $695 (Twin XL), $855 (Full), $995 (Queen), $1,195 (King/California King)

    SEE ALSO: I spent a few weeks sleeping on sheets from Parachute, a popular online bedding company — and they're 100% worth their high price tag

    DON'T MISS: This $115 pillow is the only one I've slept on that's literally cool to the touch — and that stays cool all night

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    Sam Yagan

    • SparkNotes, the book-summary site, is one example of a startup that was so popular in its early days that it couldn't keep up with customer demand.
    • Other examples include GOAT, the world's largest resale marketplace for high-end sneakers, and VIPKid, a Chinese education startup. 
    • At least one entrepreneur says this is the sign that a company has achieved product-market fit.

    Of the many reasons startups fail, being too popular isn't the first that comes to mind.

    And yet that's exactly what (almost) happened to a series of now-successful companies.

    Take book-summary sites SparkNotes, for example. Sam Yagan was a Harvard undergrad when he cofounded the company along with his roommate; the site went live the spring of their senior year.

    As Yagan told Business Insider's Richard Feloni on an episode of the podcast "Success! How I Did It," the immediate response was that "people were pissed." Specifically, because the site didn't have the book they needed yet.

    "That's the best kind of hate mail to get, is we need more product," Yagan said. That summer, they hired some editors to put up more SparkNotes, "and the rest is history."

    Eddy Lu had a similar experience when he cofounded GOAT, which is now the world's largest resale marketplace for high-end sneakers.

    On Black Friday 2015, GOAT blew up and couldn't keep up with customer demand; thousands of orders were left unfilled.

    As Lu told Feloni on another episode of the podcast, "We responded to every single customer-service message. I think there were about 4,500 that day. But at that point it was better to be hated than unknown."

    Untenable customer demand can be a sign of product-market fit

    Unprecedented customer demand nearly put VIPKid out of business. As Business Insider's Harrison Jacobs reported, the Chinese education startup connects native English-speaking teachers with young Chinese students for virtual English lessons.

    While the company was in its pilot stage in 2014, a friend of cofounder Cindy Mi tried out the service and posted about it on Weibo (China's version of Twitter).

    Within a day, Jacobs reported, the company was receiving calls and messages from people who wanted to try the service for themselves. People started to get angry because the company wasn't able to respond to all their requests.

    Mi's team ultimately resolved the problem by putting out a statement that read: "Give us a couple of months and, when we're ready, we'll come back to you."

    Mi told Jacobs that the message conveyed to customers that the company was professional instead of sleazy and wasn't simply trying to get money out of them before the product was ready.

    This is a phenomenon that Y Combinator CEO Michael Seibel has seen before — and he thinks it's a good thing. In an "Ask me Anything" interview, Seibel said, "My definition of product-market fit is: You are drowning in demand — your product is being used by so many customers that you cannot handle all the new people knocking at your door!"

    Seibel acknowledged that not every successful company achieved this milestone. And yet he said, "I don't understand how you can have product-market fit and not a lot of people wanting your product. The two go hand-in-hand."

    SEE ALSO: The 32-year-old CEO of The Muse who quit a job at McKinsey to start her own company shows there are 2 ways to launch a business — and one gives you a much better chance of success

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    Ariel Tseitlin, Scale Venture Partners Headshot

    • This week, Silicon Valley venture firm Scale Venture Partners closed its sixth fund at $400 million.
    • The firm is focused on what Scale VP partner Ariel Tseitlin describes as 'early in revenue investing,' and focuses on helping companies grow their revenue early on.
    • Tseitlin said that to effectively bring in revenue, companies should focus on sales and customer conversion rates.

    The investment focus at Silicon Valley venture firm Scale VP is what one partner at the firm, Ariel Tseitlin, describes as "mixed stage" investing.

    "I cringe when people call the type of investing we do 'late stage investing,'" he said. "We call it 'mid-stage,' or 'early in revenue.'" 

    A company that's early on in the process of generating revenue doesn't necessarily imply that it's a late stage company, either. Tseitlin says it's ideal that a startup begins making money early on, and this can happen as soon as the first few rounds of investing, as early as a series A. 

    On its sixth raise, Scale VP has closed a $400 million fund to focus on enterprise tech and turn a number of 'early in revenue' companies into profitable ventures. 

    Tseitlin says that Scale VP's form of investing puts his firm at a unique advantage: "Because we invest in enterprise software, and, most typically, A, B, and C phase companies, we see what successful companies do right," he said.

    Much of SVP's funding model relies on data captured from earlier investments and tried and true benchmarks, said Tseitlin. When it comes to making money, Tseitlin said that it's important to scrutinize the efficiency of each and every function of the business. To successfully turn a profit, there's one particular area of focus to laser in on: Sales.

    "There are so many areas to inspect in a new business," said Tseitlin. "How efficient is your ability to generate a new lead? What are your conversion rates?"

    Tseitlin offered up the example of Scale VP portfolio company DocuSign, which went public earlier this year, as a company that was laser-focused on operating efficiently from its very beginnings.

    "They were focused on growing their business the right way, very early on," said Tseitlin. "They were phenomenal at it."

    Tseitlin says the key to DocuSign's success lies in the company's ability to effectively manage the money invested in it, and the components to this are simple: "It's all about sales efficiency," said Tseitlin. "For every dollar you spend, how many dollars does that bring in in new revenue?"

    To bring in revenue, Tseitlin suggests that a business should focus on its customer acquisition costs, and the ability to maintain those same customers at every stage of the company. "This is a very important metric of a company's health," said Tseitlin.

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    Travis VanderZanden

    • The amount of money flowing into venture-backed companies jumped to $57.5 billion in the first half of this year — up 50% from the same period a year earlier, according to a new report from PitchBook and the National Venture Capital Association.
    • The lion's share of the dollars flowed into software companies and those based on the West Coast.
    • Much of the boom is coming from nontraditional venture investors, such as private equity firms.

    For entrepreneurs looking to raise money for their tech startups, this year has been the best of times.

    Venture capital-backed firms raised a whopping $57.5 billion in the six months ended June 30, according to a new report from Pitchbook and the National Venture Capital Association. To put that in perspective, that's more than was invested in such firms in any full year between 2008 and 2013, and it's 50% more than was invested in the first half of last year. 

    "For an industry that has been characterized by capital availability over recent years, the first half of 2018 has only exacerbated feelings of excess," Pitchbook and the NVCA said in the report. The report continued: "To say capital availability is high would be putting the true state of the US VC industry lightly."

    But if you wanted to get some of that cool venture cash, your best bet was to be in the software business – and to be located on the West Coast. Software startups raked in $23.7 billion in venture investments in the first half of this year. That's about 41% of the total, and about even with the same period last year. They also accounted for about 42% of all venture deals in the first six months of this year.

    Some 62% of all the venture capital money invested — and 40% of the deals — in the most recent period went to West Coast based startups. In the same period last year, startups based in San Francisco, Seattle and other West Coast locations accounted for 55% of the money invested and 41% of the deals.

    Overall, the number of venture investments ticked up only slightly, from 3,917 in the first half of 2017 to 3,997 this year. But the size of those deals swelled. For example, the median seed-stage investment jumped from $1.6 million in the first half of last year to $2.1 million this year. Meanwhile, the median amount invested in Series B round jumped to $29.3 million from $24.3 million for all of last year.

    Interestingly, much of the money flowing into venture-backed startups isn't coming from traditional venture capital firms. In fact, about 63% of the total dollars invested in the first quarter came from private equity and other nontraditional sources.

    And it looks like the good times will continue to roll. Venture capitalists raised $20.2 billion in the first half of the year, up from $19.1 billion in the same period last year, putting the industry on track to top $30 billion in funds raised for the fifth year in a row.

    "We don’t believe that current trends will subside in the near term," PitchBook and the NVCA said in the report.

    The new funds flowing in are "adding dry powder to a market already awash with capital," they continued.

    SEE ALSO: Venture-capital investing hit $28 billion in the first quarter — but fewer companies are getting funded

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    NOW WATCH: 80% of startup money goes to 3 states — here's what one visionary is doing to help spread the wealth

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    The Insider Picks team writes about stuff we think you'll like. Business Insider has affiliate partnerships so we get a share of the revenue from your purchase.

    Stone Runner

    • Sneaker startup Allbirds became famous for their cloud-like, super comfortable Merino wool sneakers.
    • The direct-to-consumer brand has a deep commitment to sustainability, and as such, has released a new line of sneakers made from Eucalyptus pulp — called the Tree collection. 
    • The collection features two styles, the Runners and the Skippers, and we tried them to see if they're just as comfortable as the originals
    • Spoiler alert: They're amazing. 

    Chances are you've heard about Allbirds, the internet-famous $95 sneaker made from a soft, almost cashmere-like Merino wool. 

    Currently, Allbirds makes two styles of shoes — the wool "Runners", and the wool slip-on "Loungers." We've tested both of them before, and our team universally feels that they're pretty much the most comfortable shoes out there (read our review on the wool Loungers here and the Runners here). In fact, a recent Insider Picks survey showed that Allbirds was one of our readers' favorite products that they have purchased as a result of an article we wrote. 

    There are a lot of reasons people like these shoes beyond just how comfortable they are. They're also relatively affordable at $95 a pair — a low price they're able to maintain as a direct-to-consumer retailer — and they're easy to clean with a simple spin in washing machine. But for some, the biggest draw is the fact that the company maintains a deep, unshakable commitment to sustainability.

    Its this commitment that led the brand to develop and introduce a new and even more sustainable set of shoes made from trees — or more specifically, from a textile engineered using Eucalyptus pulp.  


    According to Allbirds, this new material uses 5% of the water and one-third of the amount of land when compared to traditional footwear materials. The brand also committed to using the "most rigorous sustainable forestry standard, Forest Stewardship Council (FSC) certification, to protect trees, wildlife, and people."

    Naturally, considering that Merino wool prices have been steadily climbing, we wondered if the production of these shoes was intended to offset the increased cost of producing their wool line. After all, Allbirds is beloved in part because their shoes have maintained a steady and reasonable price since the very start. But the brand assured us that the idea for new, sustainable textiles had been in the works since before they even launched their original Runners in 2016. 

    We spoke with the founders of Allbirds, Tim Brown and Joey Zwillinger, who told Business Insider that they've always envisioned Allbirds as a sustainable material innovation company. "For us, it was about creating a brand that challenges the status quo and redefines what it means to make something 'better.'"

    Allbirds_2057_Shot_2_RoseTreeSkipper_W_0289 (1)

    The new line, aptly named the "Tree collection," includes two styles — the Runners, which we already know and love, and a pair they call the "Skippers," which are basically a thinner-soled boat sneaker. This new textile has more breathability, which Allbirds says was a response to costumer concern:

    We are always listening to our customers, and heard from them that there are moments when they needed a different type of experience than Wool. We developed Tree to address these situations and create a more comfortable warm-weather experience.

    The new material creates a cooling effect by wicking moisture away, making them perfect for summer, and the price has stayed consistent at $95 a pair. The makeup of the insoles has stayed consistent, so you can still expect the same comfort level of their classic pairs. The new women's styles come in navy, stone, and rose, and the men's styles come in navy, stone, rose, and cloud (a very light blue).

    As long-time fans of the brand, Allbirds gave our team the chance to test out the Tree Runners and Tree Skippers in advance of the launch. Keep reading to find a breakdown of each of our experiences with the new styles (spoiler alert, they're still really, really great). 

    Read our reviews below:

    Navy Runner

    Mara Leighton, Insider Picks reporter:

    "Allbirds is one of my favorite companies to shop from because they have always exceeded expectations on comfort, quality, and style. In other words, they’ve earned my trust as a valuable buy. I don’t feel bad dropping money on a new pair of shoes from them because I know I will wear them until they borderline disintegrate — and I will be glad every time I put them on. It sounds like an exaggeration, but they’re really that comfortable.

    I tried the Tree Runner in navy, which is actually a nice dark green-blue in person (less bright than a true teal), and — again — Allbirds has exceeded my expectations. They’re crazy comfortable, the silhouette is flattering and close-fitting, and I love the smooth but texturized upper. The stylistic contrast of the thick laces is a really nice touch, and the semi-muted color means they go with basically anything.

    The sole feels familiar (it’s the same structured, wool-lined insole found in my loungers) and supportive, but the upper is even more breathable than my other pairs.

    While I wouldn’t buy Allbirds if they weren’t consistently making the most comfortable shoes I own, I also love that they’re using sustainable materials (and encouraging innovation). They feel ridiculously good on, and any conscious consumer can feel great about buying them."

    Rose Skipper

    Connie Chen, Insider Picks reporter:

    "I wear my wool Runners regularly and am always more than happy to talk about how wonderful and comfortable they are to anyone who’s curious, so I was excited to learn about this new launch from one of my favorite brands. Itching for the feel of summer, I opted for the Stone Skippers, which are a modern twist on the classic boat shoe.

    Again, Allbirds’ use of a surprising material has proven to be successful. I never would have guessed that the textile was made from eucalyptus pulp, but it provides an interesting, eye-catching texture that’s more unique than that of a traditional boat shoe. Eucalyptus is known for its cooling properties, so I appreciate that the Skippers offer the ideal casual summer look while also keeping my feet cool in warm weather. The neutral, sandy color of the Stone ones reminded me of the beach and can really match with any color you wear on top.

    Like Mara said, slipping my foot in felt soft and familiar since the shoe has the same wool-lined insole and heel cup of Allbirds’ other offerings. I’m also almost certain that these Skippers are more comfortable than the Runners, which is an impressive feat."


    David Slotnick, Insider Picks senior reporter:

    "I tested out the Tree Skipper in Kauri Stone, and think I’ve found the perfect summer shoe. They feel like a combination of a boat shoe and a sneaker — I’ve never found the former very comfortable, but sneakers can be warm or restrictive during summer. The Tree Skipper is lightweight and breathable, and, to my delight, feels like a nice, properly-supportive shoe that would be equally fitting for walking around a city during vacation, or wearing on the way to the beach or on a boat. I can tie the laces to keep them on as I walk — even if I walk quickly or run — although I can kick them off without untying them if I want to."

    Shop all styles from the Allbirds Tree collection here.

    Shop women's styles here.

    Shop men's styles here.


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    Heath tech leaders under 40 thumb 4x3

    The healthcare industry has no shortage of big ideas.

    Whether by eliminating the hassle of visiting a brick-and-mortar pharmacy or by changing the way we store and access personal data, young leaders are working to make healthcare a better experience for everyone.

    Drawing from nominations that came in from top healthcare executives, entrepreneurs, and investors, Business Insider has come up with 30 leaders under the age of 40 who are shaping the future of medicine.

    Here's our list of top young leaders engaged in groundbreaking work in healthcare technology, listed alphabetically.

    SEE ALSO: Meet the 30 biotech leaders under 40 who are searching for breakthrough treatments and shaping the future of medicine

    Tanvi Abbhi, 30, and Dr. Nora Zetsche, 29, are making it easier for doctors and nurses to coordinate care for their patients.

    Abbhi and Zetsche first met back in middle school, where they became friends. Their lives and career paths took different turns in the following years as Zetsche served as a radiology resident, while Abbhi worked with entrepreneurs around the world. Zetsche's work in healthcare left her frustrated by how poor she thought the experience was for both doctors and patients. "I felt strongly there are better ways to manage that experience on both sides," she said.

    So in 2016, the two came back together to start Veta Health, a New York-based startup that aims to make healthcare more connected both inside and outside the hospital, ideally making the experience better for doctors and patients. The startup develops software intended to make it easier for doctors and nurses to coordinate patient care, and it also communicates with patients to ensure they're hitting their treatment goals.

    "The healthcare transformation we see ourselves in is moving from episode-based to extending care delivery to beyond care settings of hospitals," Zetsche said.

    Through Veta Health's platform, patients can connect with doctors and nurses to make sure they're on the right treatment track. That way, those caretakers can keep tabs on a patient's progress even when they aren't in the office for an appointment.

    Piraye Beim, 39, is bringing precision medicine to women's health.

    While getting her Ph.D., Beim was closely tracking a revolution in cancer treatment. Researchers were starting to investigate genetic mutations and their role in driving cancer's growth. Drugs began emerging to target those mutations. But something was missing.

    "I didn't see that same playbook coming to reproduction and women's health," she said.

    So in 2009 she set up Celmatix, a company meant to do exactly that. Almost a decade later, Beim still serves as CEO for the New York-based company, which makes a genetic test that screens for risk factors associated with female fertility. Celmatix also makes software that collects clinical data for reproductive medical centers and now has 90,000 patients on it. The company has raised $60 million in funding.

    Dr. Robin Berzin, 37, is building a doctor's office that could be the future of medicine.

    Berzin's interest in wellness dates back to her days training as a doctor at Columbia University and the Mount Sinai Health System in New York. After starting a company that provided a secure messaging platform for hospitals, Berzin began to think about how else the market for primary care, the basic level of healthcare you experience when you get an annual physical, could be disrupted.

    "It seemed obvious to me to build a new system for primary care that not only re-operationalized medical care but also that incorporated tracking, and mental health," Berzin said. That’s why she started Parsley Health, a medical practice that has raised $10 million in funding.

    Founded in 2016, Parsley Health has centers in New York, Los Angeles, and San Francisco and is the only medical practice located in WeWork spaces. Parsley is focused on functional medicine, a type of practice that tries to take a more comprehensive, holistic approach at treating the underlying cause of a particular disease. For a monthly fee of $150 you get not just primary-care visits but nutrition plans and supplement regimens along with more in-depth genetics and microbiome testing.

    See the rest of the story at Business Insider

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    Openpath Alex Kazerani and James Segil

    • Openpath, a startup that lets employees enter offices with their phone, raised $20 million in a series B funding round led by Emergence Capital, the company told Business Insider.
    • The Los Angeles-based company was started by the founders of Edgecast, which was acquired by Verizon in 2013 and is now used as Verizon's primary content delivery network.
    • Openpath works by letting employees enter the office with their phones, hands free. After tapping on a reader, Openpath's cloud-based software recognizes the phone and automatically opens the door.

    Getting into the office when you have to sift through a handful of badges or forgot your keycard at home is inconvenient.

    Openpath, which just raised $20 million in a series B funding round led by Emergence Capital, wants to fix that.

    Existing investors Upfront Capital, Sorenson Ventures, Bonfire Ventures, Pritzker Group Venture Capital, and Fika Ventures also participated in the round. The company last raised a seed round in May before the product launched, netting $7 million from investors.

    Openpath works by letting employees enter the office with their phones, hands free. By tapping on a reader, Openpath's cloud-based software recognizes the phone and automatically opens the door. Employees can also press a button inside an app, use an Apple Watch, or scan a traditional keycard to gain access too.


    And while "digital keys" aren't anything new, many of the ones on the market are riddled with glitches or only work 90% of the time, founders James Segil and Alex Kazerani told Business Insider. Openpath works with Bluetooth, WiFi, or cellular data, which the company says makes it more reliable than other systems that do the same thing. After a person taps on the reader, their phone sends three signals via Bluetooth, WiFi, or cellular data, and whichever one is the fastest is the one that ultimately opens up the door.

    "People tell us that this is such a time saver, from an employee perspective where it only takes a second to get into the office, and from an administrator perspective so they don't have to chase everyone down worrying about keycards and badges," Segil said.

    In addition to offices, Openpath is also marketing itself to landlords.

    'Like a dog collar'

    James Segil and Alex Kazerani personally felt how difficult it is to get into your office with a dozen badges and keycards to sort through. The pair founded Edgecast, which was acquired by Verizon in 2013 for more than $350 million and is now used as the cellular giant's primary content delivery network.

    After the acquisition, Segil and Kazerani were working at Verizon and found that the number of keycards they had to keep track of quadrupled. 

    "We saw other people with this problem too," Kazerani said. "We saw people carrying them around their neck like a dog collar and we hated and resented that so much."

    Realizing this was a problem and that similar digital key solutions were often glitchy, they decided to start Openpath in 2016.

    From a security standpoint, Segil and Kazerani say that a phone is safer than a keycard, which can be easily copied, stolen, or given to anyone else. Users can also toggle security settings to require employees to authenticate themselves with additional measures, like a fingerprint or a code.

    Openpath's software comes with handy additional features, such as letting an administrator remotely unlock doors or letting them import employee lists and permissions from other apps.

    While the company would not disclose how many customers use Openpath since it launched a month ago, Segil said the company has seen double the sales they originally put in their business plan, which in part enticed investors to back the company.

    SEE ALSO: WeWork bans meat at company events and won't let employees expense meals that include meat because it's bad for the environment

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    sc moatti mighty capital vc

    • Venture capitalist SC Moatti is all done giving startups piles of cash.
    • Her firm Mighty Capital raised a modest $13 million for its debut fund.
    • Moatti says she has something more valuable than money to give. Her organization Products That Count has access to one of the world's largest networks of product managers, who serve a critical role at any growth-stage company.
    • Mighty Capital portfolio companies can instantly tap into the Products That Count community when they want to hire product managers, sell to product managers, or get advice from insiders on building their companies at scale.


    More and more venture firms, from Palo Alto to Tokyo, are pouring billions of dollars into mammoth, global growth funds — called "mega-funds"— that have so far invested in startups building the future of work, cars, computing, even dog-walking.

    In fact, Silicon Valley has never been so flush with cash.

    The first half of 2018 saw nearly $58 billion invested into venture-backed startups in the US, which is more than VCs deployed for the full year over six of the past 10 years, according to the National Venture Capital Association. An estimated 300 new funds will close in 2018, which only adds to the growing opportunities for founders to raise.

    It would seem less than noteworthy that a former Facebook executive and venture capitalist, SC Moatti, has just raised a modest $13 million for her debut fund. But Moatti is running a different playbook than most VCs.

    Moatti's Mighty Capital, based in San Francisco, focuses almost exclusively on product-driven companies and writes checks for between $500,000 and $1 million on average. The sums are small compared to the massive checks that fat funds like SoftBank's $100 billion Vision Fund or Sequoia Capital's rumored behemoth fund can write.

    According to Moatti, she has no interest in giving startups piles of cash. Anyone can do that, she says, and Moatti believes she has something more valuable than money to offer.

    To be more specific: Mighty Capital gives access to one of the world's largest networks of product managers.

    Moatti sold her last company to Facebook, and eventually went on to launch Mighty Capital simultaneously with Products That Count, an organization that puts on monthly networking events and produces a blog, a podcast, newsletters, and more geared for the 200,000 product managers, executives, and founders who constitute the club.

    The two groups work as a team. Mighty Capital invests in product-driven startups in and out of the network, and its portfolio companies can instantly tap into the Products That Count community when they want to hire product managers, sell to product managers, or get advice from insiders on building their companies at scale.

    "Most venture capital firms offer money and a network. Well, if you've been in the Bay Area for long enough, we all have a little bit of money and a network," Moatti said.

    "The fact that we give access to basically hundreds of thousands of potential hires, or hundreds of thousands of potential customers, that's really differentiated," she said.

    Mighty Capital tries to deliver more value for the dollar

    Mighty Capital makes mostly growth-stage investments, because Moatti said that's when the firm can add the most value for companies. The job of a product manager is to match a customer's problem with a solution in the form of a product. This is known as product-market fit, and it's an essential goal of growth-stage companies.

    Entrepreneurs have different ways of interacting with Products That Count.

    In the early days of a company, entrepreneurs might go to the group's events, read the official blog, or tune into the podcast. As the company scales, they might ask to sponsor a Products That Count event in order to "give their brands some visibility," Moatti said.

    "Then once they got even bigger — say, Series B or Series C — then they say, 'Now I'm on the hook to have a national sales team, to recruit in multiple locations, to reach the very last customers,'" Moatti said. "'That's when I want Mighty Capital to invest, because I'm going to get a strategic access to Products That Count.'"

    Moatti has introduced members of the organization to future investors, hires, and customers. Portfolio companies have her high-profile connections at their fingertips, while other Products That Count members rely more on local networking events.


    A new way of doing VC

    Before launching a fund, Moatti invested her and her partners' money into such tech juggernauts as Airbnb and cloud-computing company DigitalOcean. She says Mighty Capital has a track record of returning more than six times the money invested.

    Investors clammored to get into Moatti's first raise for the fund, she says. It was 30% oversubscribed, and the fund raised $13 million in only seven months — well short of the typical two years she's heard from bankers that it usually takes to raise a fund, said Moatti.

    There's so much venture capital being raised in Silicon Valley, the most promising companies and their teams have their pick of investors. It's no longer enough for a VC to be rich in order to convince a startup to sell you equity.

    "I come from technology where you can pretty much tell, like, 'My product is unique because it has this specific feature — import, export, whatever — that makes it easy.' Money is money. It's nothing specific. It's really hard to say, You should take my money because it's more green that somebody else's,'" Moatti told Business Insider.

    Some venture firms specialize in order to attract a certain type of company. Investors might choose to focus on a venture stage, a geography, or an industry.

    "That's not how you stand out," Moatti said. "You stand out by the value you bring, not by saying, 'I do this and not that.' You stand out by saying, 'You should take my money because it really has a different color, because we give you access to Products That Count.'"

    See also:

    Join the conversation about this story »

    NOW WATCH: 80% of startup money goes to 3 states — here's what one visionary is doing to help spread the wealth

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    The Insider Picks team writes about stuff we think you'll like. Business Insider has affiliate partnerships, so we get a share of the revenue from your purchase.


    • Filippo Loreti is Kickstarter's most funded watch brand ever, and one of the platform's 20 most successful initiatives to date across all categories.
    • Every watch Filippo Loreti makes is purchased online and shipped directly to the customer, a direct sales model that cuts out middlemen and greatly reduces overall costs.
    • What strikes me most about the trio of Filippo Loreti watches in my collection is the fact that, although ostensibly similar, each piece has a look and feel all of its own.
    • Nearly all under $300, these watches are more than worth their price.

    To quote vaunted 19th Century French novelist Victor Hugo, "There is nothing as powerful as an idea whose time has come." And though today I'm writing primarily about the upstart luxury wristwatch brand Filippo Loreti, it's not in reference to that watchmaker that I invoke this famed quote. (Wristwatches have been commonplace for more than a century, after all, and are hardly a novel concept.)

    In this case, the "idea" in question is the use of online crowdfunding to help launch and scale a product or service. And even more specifically, I'm referring to Kickstarter, the luminary of the slate of new public-benefit corporations that help raise capital for ventures that would likely never have lifted off via traditional business growth models.

    For if anyone has ever made good use of Kickstarter, it's Lithuanian-born brothers Danielius and Matas Jakutis, who were in their mid-20s when they launched their first Kickstarter campaign back in 2015.

    Their funding goal for their fledgling watch brand Filippo Loreti was $20,000. Within a single month, they raised almost a million dollars. Then, the next year, as the second line of Filippo Loreti watches was unveiled, the company commenced another round of online fundraising. This time, they raided more than five million dollars, again in less than a month. These wildly successful crowdfunding sessions would mark Filippo Loreti as Kickstarter's most funded watch brand ever, and as one of the platform's 20 most successful initiatives to date across all categories.

    Jakutis Brothers

    For the consumer, what this crowdfunding success would ultimately mean is the ability to buy watches for which other brands might charge $1,000 or more between $225 and $315 in most cases. Even their priciest watches currently sells for $609, a bargain in the luxury timepiece category. With quick cash in the coffers, Filippo Loreti could devote less time (and expense, ironically) to raising funds or to establishing partnerships and marketing materials, and could instead get down to the production of chronometers.

    Unlike other luxury watch brands, the pieces the company makes won't be seen in jewelry store display cases or in the pages of catalog. Every watch Filippo Loreti makes is purchased online and shipped directly to the customer, a direct sales model that cuts out middlemen and greatly reduces overall costs. In fact, according to Filippo Loreti's own website, the markup costs associated with wholesalers, retailers, advertising, and other expenses associated with traditional luxury watch sales result in a customer paying as much as a 4,000% increase in sale price over production costs. With that figure in mind, you can appreciate how a wristwatch can sell for just a few hundred dollars yet can still be called a luxury item.

    PA VM BlackG 1.1

    I own and wear three Filippo Loreti watches, so you can consider me something of a lightweight collector, but I'll posit that I'm quite familiar with the brand. What strikes me most about the trio of Filippo Loreti watches in my collection is the fact that, although ostensibly similar, each piece has a look and feel all of its own.

    My Filippo Loreti watches include the Venice Moonphase Silver, the Venice Moonphase Rose Gold Blue, and the Venice Moonphase Black Gold. Each has a case measuring 40 mm across and nine mm thick, each features a single dial on the right side of the body, and each has a band made of fine Italian leather. On each face you will find three small subdials that track the date, day of the week, and month, and a richly illustrated moonphase set behind a half-moon-shaped cutout. There is an hour hand and a minute hand, though no second hand. The bands are fastened with a simple metal buckle.


    As noted, for all their similarity, these three watches look strikingly different and work with different outfits for different occasions. I could wear the Moonphase Silver with faded jeans and a T-shirt, while the Moonphase Blue Gold would look just fine sneaking out beneath a French cuff shot forth from a tuxedo jacket. The Black Gold watch would look at home accentuating a business suit or resting on the bar at an upscale, well, bar.

    While I have not had any of my Filippo Loreti watches long enough to see how they last over the years (and neither has anyone else; this brand is brand new in the scheme of things), I can tell you this:

    So far, at well under $300, these watches are more than worth their price.

    View the entire Filippo Loreti catalog on their website here.

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    Russian-born Masha Drokova, 28, poses in this handout photo provided January 22, 2018.   Courtesy of Day One Ventures/Handout via REUTERS

    • Masha Drokova, founder of San Francisco-based venture firm Day One Ventures, believes that investing in companies is a holistic, personal endeavor.
    • She's played the part of matchmaker to several of her portfolio companies' founders.
    • Falling in love is good for business, says Drokova.

    "Everyone is more productive when they fall in love," says Masha Drokova. 

    Drokova is the founder of Day One Ventures, a San Francisco-based firm focused on early-stage investments. The 28-year-old runs her firm differently than that of the average Silicon Valley venture capitalist: She considers investing in companies to be a deeply holistic undertaking, often forming close, personal relationships with her portfolio companies' founders. 

    "If I don't have a human connection with someone, I won't do business with them," says Drokova. "For me, it's never just about the money. I'm going to know most of my founders for the next five or 10 years. If you don't have a personal connection with a person, it's likely that your business relationship will fall apart."

    Often, Drokova's close-knit business relationships evolve beyond a purely professional context. "I'm friends with the founders of my portfolio companies," she says. "I enjoy spending time with them and learning about them."

    Sometimes, business guidance and personal advice blur together. Drokova says she sees an entrepreneur's personal well-being as a primary foundation for creating a strong business. When advising fledgling startup founders, Drokova considers their mental and physical health in addition to their business execution. 

    "It's often very simple things that help," says Drokova. "Meditating, eating healthy food, taking care of their physical health."

    For some stressed-out founders, Drokova recommends mediation classes, podcasts, and self-developmental courses like Vipassana and sexual energy retreats. 

    But for others, the anecdote for the stresses of startup life is slightly more transformative. The best thing Day One's founders can do for their business?

    Fall in love. 

    "My founders are much more grounded when they're in relationships," says Drokova. "They take on this new energy. They're more focused."

    To aid her founders along in the pursuit of romance, Drokova has played the part of matchmaker to a number of her portfolio company entrepreneurs.

    "It's not necessarily matchmaking," says Drokova. "I just introduce them to my friends."

    Once they fall in love, Drokova says she notices an immediate difference in the way they run their business. 

    "They're more well-rounded," shes says. "Their partner slows them down and keeps them focused. In order to do a great, breakthrough thing, you need to be inspired."

    Drokova speaks from experience. "All my best work was achieved when I was in love," she says. "Love is unexpected and exciting. It gets you engaged in life."

    For startup founders working long hours, often siloed away from day-to-day life, Drokova says that romance has a tendency to reinvigorate their work, inspire their decision making process, and engage them in their professional pursuits.

    There is one thing, however, that's even better for business than new romance.

    "When they have a new kid being born," says Drokova. "That's when you really notice a difference."

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    Kylie Jenner

    • Kylie Jenner's cosmetic company, Kylie Cosmetics, has sold more than $630 million worth of makeup, but Andreessen Horowitz partner Li Jin suggests that Jenner's company is flawed.
    • According to Jin, Jenner relies too much on her own celebrity appeal to tout her brand.
    • An enduring business is tied to an idea or a larger purpose, not an individual, suggests Jin. 

    At 20 years old, Kylie Jenner is poised to become the world's youngest billionaire. Her hugely successful cosmetic company, Kylie Cosmetics, has crossed the $630 million sales mark since it was created in 2015, and is now worth close to $800 million.

    Forbes, which lauded Jenner as "The $900 Million Cosmetics Queen" in early July, described the 20-year-old's company as a business model so efficient that it runs, essentially, on "air."

    The key to Kylie Cosmetics' recent success? Jenner's expertly executed social media strategy: With hundreds of millions of online followers at her fingertips, Jenner can advertise and sell her products all without ever expending a dime of her own.

    But for Li Jin, an investment partner at Silicon Valley venture firm Andreessen Horowitz, Jenner's social media smarts might not be enough to leverage her brand into an enduring business.

    On Twitter, Jin suggested that there's a cautionary tale at the heart of Jenner's unprecedented success, and that the 20-year-old's cosmetic empire might be fated for obscurity unless she expands its focus.

    Kylie Cosmetics

    According to Jin, Kylie Cosmetics' primary flaw is that it's too focused on Kylie Jenner. 

    "The major job that her products help consumers do now is to feel like they’re accessing a piece of Kylie," Jin writes.

    If Jenner hopes to maintain her business in the long-run, Jin suggests that it shouldn't rely as much on Jenner's celebrity persona: "To become an enduring, standalone business, it's necessary for all influencer brands to go beyond being tied to a single person, and create a 'purpose brand.'"

    Jin points to Harvard Business professor Clayton Christensen's example of a "purpose brand" as being a company that "become[s] so tightly associated with the job they perform that they become inextricably linked to it."

    For instance, enduring brands like Coca-Cola, Starbucks, and Kleenex have all iterated their mission so well that consumers will pay a premium for their products over their more negligible counterparts. These brands aren't linked to an individual, they're connected to something much bigger: An idea, an emotion, or a mission.

    "Some of the strongest purpose brands even become verbs, inextricably linked with a specific job," Jin continued. "It’s tough for brands to stick around without being tied to a specific job, and consumers’ jobs don’t often change."

    Could Kylie Jenner's company suffer the same fate as Martha Stewart's Omnimedia?

    Martha Stewart

    If Jenner doesn't shift Kylie Cosmetics' focus beyond her own celebrity influencer appeal, Jin suggests that it could suffer the same fate as Martha Stewart's media company, Living Omnimedia, which dwindled drastically in value following its initial public offering in 1997. 

    "In the '90s, Stewart leveraged her prominence from books and TV to create a business with publishing, broadcasting, and merchandising segments, all centered around her persona as a homemaking goddess," writes Jin. "Its valuation hit $1.8B after IPO, but 16 years later, [it] was de-listed and worth a small fraction of that."

    While some might believe that social media provides powerful, enduring fuel for any celebrity or influencer-backed startup, Jin says that it's just the opposite: In the digital age, celebrity-focused brands dissolve faster than ever before.

    "In today's digital world, with compressed hype cycles and without the benefit of multi-year retail or broadcasting contracts, celeb-underpinned brands can fade even faster,"  she writes. "Social media has made it easier than ever to attract an audience and build widespread influence...the barriers [to start] a new brand are lower than ever."

    Is social media really all you need to run an $800 million business if you're an influential celebrity?

    Forbes' story suggests that Jenner is almost entirely reliant on her social media following to turn a profit: "Basically, all Jenner does to make all that money is leverage her social media following,"Forbes reports."Almost hourly, she takes to Instagram and Snapchat, pouting for selfies with captions about which Kylie Cosmetics shades she's wearing, takes videos of forthcoming products and announces new launches."

    Is social media really all you need to run a billion dollar business if you're an influential celebrity?

    Jin doesn't think so. After all, she writes, celebrity-backed brands like Blake Lively's Preserve and Mary Kate and Ashley Olsens' StyleMint have all petered out within the last few years. Successful celebrity-backed companies like Jessica Alba's Honest Company and Gwyneth Paltrow's Goop shifted the focus away from their starlet founders early on, says Jin.  

    "Their famous names imparted a signal of credibility, but to scale and endure, they aligned themselves with broader movements and communities," she writes. 

    To create a long-lasting company, Jin recommends that Kylie Jenner transfer the focus of Kylie Cosmetics to a distinct, mission-oriented purpose: "She can align her brand with a broader shift in women’s attitudes: Today, that could be makeup as self-expression and a celebration of individuality and diversity."


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    Elon Musk

    • Starting a business isn't as exhilarating as it can seem, experts say.
    • The rise of "entrepreneurship porn" is luring many ambitious young Americans into launching their own companies, when they might be better off joining a more established organization.
    • If they do decide to found a company, these entrepreneurs should at least be adequately prepared, instead of simply diving in headfirst. Entrepreneurship isn't just about risk-taking and passion.

    Tomas Chamorro-Premuzic has been teaching MBA students for more than 15 years.

    When he first started teaching, all his students wanted to work for corporate giants like Goldman Sachs, IBM, and Unilever.

    A decade later, Google, Facebook, Apple and Amazon were the big draws.

    "Now," he told me when we spoke by phone in July, "the vast majority tell me, 'You know, I'm going to be a startup guy. I'm launching something. I'm going to create the next big X, Y, Z."

    "Who are we to crush their spirits?" Chamorro-Premuzic said. "But I think we have a responsibility to inform people that the probability of attaining that is really, really, really low, and that to actually attain it, they're going have to sacrifice so many things."

    Today, Chamorro-Premuzic is a psychology professor at Columbia University and the chief talent scientist at Manpower. In one of the opening chapters to his 2017 book, "The Talent Delusion," he explains why many ambitious young Americans today would be better off working for an established company than trying to build their own business.

    And yet many of these young Americans are hypnotized by stories of entrepreneurs who, against the odds, made it big. Even if they're not prepared — personally or professionally — to launch a business, they forge ahead anyway.

    "People feel like, 'Oh, I have an idea. I don't like the idea of having a boss. I'm going to be the next Elon Musk,'" Chamorro-Premuzic said. "It's not that easy."

    Telling people you're an entrepreneur is 'sexy'

    The rate of new-company failure in the US is unclear. In 2017, USA Today highlighted data from the Bureau of Labor Statistics, showing that about 20% of new businesses survive longer than one year. In fact, according to BLS data, that number hasn't budged since 1995.

    But "entrepreneurship" is notoriously hard to define. Do mom-and-pop businesses count? Or is it just high-potential ventures? "Failure" is even harder to define: What if a startup pivots or downsizes?

    Mark ZuckerbergStill, Chamorro-Premuzic's observations about entrepreneurial overeagerness are echoed by academics and business people alike.

    Morra Aarons-Mele, the founder of Women Online and The Mission List, appears to have coined the term "entrepreneurship porn" in a 2014 Harvard Business Review article, to describe "an airbrushed reality in which all work is always meaningful and running your own business is a way to achieve better work/life harmony."

    In the article, she makes the point that entrepreneurship is hardly as liberating as it can seem: "Starting a company doesn't mean being freed from the grind; it means that the buck stops with you, always, even if it's Sunday morning or Friday night."

    When Aarons-Mele launched her companies, "I just wanted to make a living," she told me, and she knew that "I just never wanted to go an office again for 10 hours a day." But a couple years in, something changed.

    "I drank the Kool Aid," Aarons-Mele said, "of being not just an entrepreneur, but a woman entrepreneur. It was sexy." She started going to conferences and speaking at events for founders.

    "It was only after I realized that I did not want to scale, that really becoming this sort of entrepreneur with a capital 'E' would make me have to live a lifestyle that I didn't want, that I became a happy small business owner instead."

    Aarons-Mele knows firsthand that the word "entrepreneur" can sound infinitely more appealing than "small-business owner." She suspects that can play a big role in people's desire to scale their company, and quickly. That is to say, entrepreneurship can be as much about the founder's ego as anything else.

    "It's a very American thing to be an entrepreneur," Aarons-Mele said. "'Small business' implies small. It's a lot of what ambitious people might even want to escape versus create."

    Too many aspiring founders think entrepreneurship is about 'diving in'

    Then there's the problematic notion that starting a business is all about taking risks.

    "There's something a little bit inherent in a lot of founders' psyches of, 'You've just got to dive in,' that it's the type of thing that you can't go and learn about before you do it," said Noam Wasserman. The common misconception is that "you have to fail, learn from that, pick yourself back up."

    Wasserman is the founding director of the Founder Central Initiative at the University of Southern California's Marshall School of Business. When we spoke by phone in June, he told me that this myth "heads off at the pass any of that inclination to go and learn before you go and dive in."

    Wasserman's observations recall those of Wharton professor Adam Grant. In his 2016 book, "Originals," Grant wrote that, contrary to popular belief, the most successful entrepreneurs don't quit their day job to start a company. One University of Wisconsin study found that entrepreneurs who kept their day jobs were 33% less likely to fail than those who don't.

    Recent research also reveals just how important it is to wait until you have enough experience before building a company.

    An MIT study found the average age of a successful startup founder is 45. The study authors found that work experience explains much of the age advantage. They write in the Harvard Business Review,"Relative to founders with no relevant experience, those with at least three years of prior work experience in the same narrow industry as their startup were 85% more likely to launch a highly successful startup."

    Indeed, Chamorro-Premuzic said that technical expertise in the area where you're founding a company is one of the most "underrated" attributes of a successful entrepreneur.

    'It's your baby, your everything'

    I asked a few entrepreneurs to tell me about their experiences, about how entrepreneurship porn had (or hadn't) influenced their decision to launch a company.

    away jen rubioSophie Kahn took a relatively cautious approach: As she told Business Insider's Libby Kane, she kept her job at Marc Jacobs while developing the plans for AUrate New York, the jewelry company she cofounded with Bouchra Ezzahraoui and that's raised $2.6 million. Entrepreneurship, she learned, was both harder and easier than she'd anticipated.

    "Harder, because it's truly all-consuming and you never ever have a day off. It's your baby, your everything, and always with you," she wrote in an email.

    And "easier, because it doesn't feel like work in the sense that it's your passion and you want to work on it, and of course since you're free to make your own choices and set your own schedule."

    Jen Rubio left her job at Warby Parker a few years before cofounding direct-to-consumer luggage company Away, which has raised a total of $81 million. But Rubio says she and her cofounder, Steph Korey, another Warby Parker alum, learned a lot from their experience there: "Being on the ground floor of an early-stage startup with that mentality allowed us both to build something entirely new every day," Rubio wrote in an email.

    Rubio's best advice for anyone considering starting a business is "to be really specific about why you're doing it and what problems you'll be able to solve in a meaningful way for your customers; don't start a business just because you think you have have a great idea."

    'Passion can become your peril'

    Another persistent myth about entrepreneurship is that, once you've got the product and financing in place, the people stuff will come naturally. Many entrepreneurs, Wasserman said, are completely oblivious to the importance of the people side — i.e. who you hire and how you manage your company.

    For example, some entrepreneurs figure that they're already best friends with their cofounder, so everything should be fine. "Unfortunately, those happen to be the least stable of founding teams," Wasserman said.

    But perhaps the most destructive misconception around entrepreneurship is the importance of passion.

    At the start of every semester, Wasserman asks his students: How important is passion for the "entrepreneurial magic?"

    "We get a resounding, 'Passion is critical. Passion is going to be the main ingredient that is going to enable me to go and succeed as a founder,'" Wasserman said. Then he presents them with a case study "that drives home to them that passion can become your peril."

    Specifically, Wasserman said, passion can mislead you into thinking you're readier to start a company than you are, or make you believe that your idea is more valuable than it is. "You have to really go and grab the founders by the lapels and have them think deeper about these people issues," Wasserman said, "where the person that they're dealing with is themselves."

    SEE ALSO: The 32-year-old CEO of The Muse who quit a job at McKinsey to start her own company shows there are 2 ways to launch a business — and one gives you a much better chance of success

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    NOW WATCH: Learning to celebrate failure at a young age led to this billionaire's success

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    Whole Foods Prime

    • Tech companies are in constant negotiations to acquire startups that could help them in the future.
    • Google has made the most acquisitions, with an average of nearly a dozen a year.
    • Microsoft, Cisco and IBM make fewer acquisitions, but the companies they buy tend to have higher valuations.


    To stay successful in tech, companies must find a way to walk alongside the cutting edge of innovation.

    Companies do this partially by devoting a large portion of their resources towards research and development (R&D) – but to hedge their bets, these companies also are in constant negotiations to gobble up new startups that could be strategic to their futures.

    In this giant game of Pac-Man, most of the acquisitions are small and sequential, just like the dots that make up the arcade game’s classic maze. That said, sometimes these tech giants get lucky, such as in Facebook’s acquisition of Instagram, and buyouts turn into power-ups that can change the dynamics of the game entirely.


    Today’s interactive infographic comes to us from IG and it allows you to compare the tech acquisitions made by dominant companies such as Facebook, Apple, IBM, or Cisco.

    Acquisitions can be sorted by industry filters (i.e. e-commerce, security, etc.) and different acquiring companies can be switched in. There are also different tabs that show total M&A expenditures by company, M&A activity by CEO, and frequency of acquisitions measured in quantity per year.


    Before we go into specific acquisitions, let’s look at the big picture using images pulled from the interactive version of the graphic.

    Here is a comparison of the number of acquisitions made since 1991, for each major company on the list:

    Screen Shot 2018 07 25 at 1.54.49 PM

    Google has made the most acquisitions, averaging about 10 to 11 per year. That adds up to a total of 214 since the company was founded.

    Screen Shot 2018 07 25 at 1.56.23 PM

    Interestingly, while Google has had the most acquisitions, it only ranks in 6th out of this group in terms of dollars spent. Giants like Microsoft, Cisco, and IBM may make fewer acquisitions, but the companies they do buy tend to be more established with higher valuations.

    As an example of this: Microsoft bought LinkedIn in 2016 for $26.2 billion. That’s more than Amazon has spent on all of its acquisitions (including Whole Foods) combined.


    Finally, here’s a comparison of the big five – Amazon, Apple, Microsoft, Facebook, and Google (Alphabet) – which are also the five largest companies by market capitalization in the United States.

    Screen Shot 2018 07 25 at 1.57.08 PM

    On the interactive version, it’s possible to highlight each acquisition to get the deal value and company name.

    But, even on the static version above, it’s noticeable that each of the Big Five has made at least one real sizable acquisition. Those are the circles that stand out the most on the timeline:

    • 2011: Google buys Motorola for $12.5 billion
    • 2014: Facebook buys WhatsApp for $19 billion, and Apple buys Beats for $3 billion
    • 2016: Microsoft buys LinkedIn for $26.2 billion
    • 2017: Amazon buys Whole Foods for $13.7 billion

    The gobbling activity for these Big Five has continued into 2018, as well.

    In fact, just in June 2018, Microsoft announced the acquisition of code repository GitHub for $7.5 billion. The deal is expected to close by the end of the year.

    SEE ALSO: Amazon is perfectly positioned to disrupt the world of investing — and its blueprint for success may already exist

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    500 Startups CEO Christine Tsai

    • Christine Tsai has worked with hundreds of entrepreneurs since cofounding 500 Startups eight years ago, giving her some unique insights into what factors lead to success.
    • She said successful founders tend to have two traits: they listen to feedback and they move quickly.
    • To succeed, prospective entrepreneurs also have to be open-eyed about the difficulty of the task ahead of them, she said.

    Christine Tsai has a lot of experience working with startups, and that's given her some pretty good insights on what makes entrepreneurs successful.

    Tsai is the cofounder of 500 Startups, the famed Silicon Valley venture firm and startup accelerator. Since last August, she's also been its CEO, following the departure of Dave McClure, her fellow cofounder who left amid accusations of sexual harassment— accusations that she's declined to discuss in much detail.

    Launched in 2010, 500 Startups has helped incubate hundreds of companies and has invested in more than 2,000 total, including Twilio, which went public in 2016. Over that time, Tsai has gotten a close-up look at lots of startup founders and seen what works and what doesn't and what it's like to be an entrepreneur.

    Successful founders tend to have two key traits, she said in an interview this week with Business Insider. They're coachable, and they move fast.

    Listening is one of the keys to success

    Christine Tsai, right, with the team from online clothing stylist BombfellTsai said people have this image of the successful entrepreneur being someone like former Apple CEO Steve Jobs — the "don't listen to anybody, I'm always right type of founder." But those types of founders usually aren't successful, she said.

    "I feel like those people who are like that, they succeeded despite being that way, not because they were that way," she said.

    That doesn't mean successful entrepreneurs need to be ultra-congenial or acquiesce to every suggestion made to them, Tsai said. But they do need to be open to suggestions.

    "They do listen," she said. "They do take the feedback from customers, from employees, from investors."

    Moving fast is also crucial

    Successful startup founders also move quickly, whether it's launching new products or putting new strategies in place — or learning from mistakes, Tsai said.

    500 startups meets frequently with the founders of companies in its portfolio to check in with them about how their companies are doing and how things like fundraising are going, she noted. "It's always a bad sign if they say they're going to do something, and then a week later, two weeks later, they still haven't done it," she said.

    Successful entrepreneurs have to be careful not to be rash or reckless, she said. But they also have to avoid stalling and overthinking things.

    "It's a very fine balance, of course," Tsai said.

    But founders that succeed have a very acute understanding that they've got to move as quickly as possible.

    "You have a very limited runway either in terms time [or] cash," she said.

    It's important to be clear eyed about the task ahead

    twilio ipoTsai also offered some advice for prospective entrepreneurs: Understand what you're getting into.

    TV shows and news reports tend to romanticize the life of startup founders, particularly the super-successful ones. But founding and running a startup is usually anything but glamorous, she said.

    Most startups fail. Many entrepreneurs are trading a stable, high-paying job for an uncertain, lonely, and stressful existence.

    And the payoff — if there is any — usually only comes after years and years of hard work.

    "It's really sucky … it's really hard," she said. "I definitely do warn [entrepreneurs] about that."

    SEE ALSO: A new study shows that tech CEOs are optimistic about the future, even if they still don't understand millennials

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    trump eating

    • While companies race to turn animal cells into restaurant-grade burgers that eschew the environmental and ethical baggage of traditional meat, a battle is brewing over who gets to police them.
    • On one side is the the Food and Drug Administration (FDA), which has the bulk of participation from most of the leading Silicon Valley startups in the space.
    • On the other is the US Department of Agriculture (USDA), which is represented by the majority of traditional American meat producers, such as the National Cattlemen's Beef Association.
    • Now, the old guard of meat makers is going directly to President Trump to ask that the USDA — and not the FDA — is the one to oversee cultured meat.

    The fight among startups to create the first slaughter-free meat needs a referee — badly.

    While companies around the world race to turn animal cells into restaurant-grade products that eschew the environmental and ethical baggage of traditional meat, a battle is brewing over who gets to police them.

    On one side is the the Food and Drug Administration (FDA), which has the bulk of participation from most of the leading Silicon Valley startups in the space. On the other is the US Department of Agriculture (USDA), which is represented by the majority of traditional American meat producers, such as the National Cattlemen's Beef Association.

    Of the two agencies who could regulate the brave new world of cultured meat, the FDA appeared — at least at first — to be leading the charge. Earlier this month, it hosted the first cultured meat meeting to start the discussion on the subject. A handful of leading startups and scientific groups in the space attended.

    Notably, the USDA was not invited, despite asking to be included in a letter sent to the White House budget office the day before the meeting.

    burger warNow, the old guard of meat makers is going directly to President Trump to ask that the USDA — and not the FDA — is appointed to be the agency that oversees cultured meat.

    In a letter sent to Trump on Thursday, groups including the American Farm Bureau Federation, National Cattlemen's Beef Association, National Chicken Council, and National Turkey Federation wrote that the USDA is "uniquely equipped" to ensure that cultured meat products are labeled, tested, and marketed "in a manner that provides a level playing field in the marketplace."

    After calling out the FDA meeting as a "power grab," they said cultured meat producers should be subject to the same regulatory rules as they are — rules that currently come from the USDA.

    "If cell-cultured protein companies want the privilege of marketing their products as meat ... they should be happy to follow the same rules as everyone else," the letter read.

    But cultured meat startups and nonprofit groups who support their work say the FDA should be the ones in charge, citing the fact that traditional meat regulators wouldn't have a great deal of expertise in overseeing their products.

    "My favorite question," Matt Ball, a senior media relations specialist with the Good Food Institute, a nonprofit that promotes the development of cultured meat, told Business Insider, "What would a USDA inspector do? Stand there and stare at a clean meat cultivator?"

    SEE ALSO: The startup behind the Bill Gates-backed veggie burger that ‘bleeds’ is part of a transition to animal-free meat — here are the other frontrunners

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    NOW WATCH: What happens when you hold in your pee for too long

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