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The latest news on Startups from Business Insider

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    SimpleGeo tour developers

    Top-notch engineers can make or break a startup.

    But other than equity and salary, there are several other ways to attract talented engineers to your company. 

    In a thread on Quora and bunch of tech industry insiders from hot VC firms and startups real how.

    Here's what they suggest:

    • Give engineers something to work on that actually matters.
    • Hire the best talent because that will attract other smart people. "Genius attracts genius," Lily wrote.
    • Hire a team full of nice people.
    • Treat employees fairly and with respect.
    • Give engineers big problems to solve.
    • Give them a chance to help build a great team.
    • As a company, use and work on the latest technologies.
    • Encourage your engineers to contribute to open source technology.
    • Convey to engineers how much you specifically want and need them.

    SEE ALSO: EX-APPLE ENGINEER: 'Almost Everything That Apple Does That Involves The Internet Is A Mess'

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    A new report from the Kauffman Foundation takes a look at new data from the Census Bureau, which has started to include companies' ages and sizes in its employment data. That lets researchers compare employment and salary trends between young and established companies in a more comprehensive way.  

    They found some fascinating trends.

    • Four out of every ten jobs at young firms are newly created, compared to about 25 to 33 percent at older firms.
    • Young firms have a much higher "churn" rate, meaning that their workers change jobs more frequently. That's actually a sign of labor market and economic health, as people are able to switch to more suitable jobs. The slower churn rate for larger firms is worrisome. 
    • However, workers at young firms earn much less. In 2001, they earned 85 percent of what peers at older firms did. Now they only earn 70 percent as much. 

    You may be better paid at an older, larger firm, but over the course of the recovery, those jobs have been harder to come by. This graph shows the rates of job creation and destruction in older and younger firms. Growth in older firms remains pretty much flat:


    And here's the Kauffman Foundation's graph of pay trends. Salaries at smaller and younger firms have been dropping relative to those at older and larger companies:

    Kauffman 2

    It all adds up to an unfortunate tradeoff. Jobs at younger, smaller firms are easier to come by, and provide more opportunity to advance to more suitable jobs, but they pay significantly less. Until bigger firms start to compete for those workers again, those wages may stay low.  

    Find the full report here

    NOW READ: McKinsey Predicts The War For Talent Will Go Nuts By 2020

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    Mark Zuckerberg

    If you're familiar with Malcolm Gladwell's "Blink", then you're aware of the Warren Harding Effect, which suggests most powerful people are tall, which gives them an advantage in business.

    Gladwell found that most male CEOs were a shade under six feet.

    That means most male bosses about three inches on other men; the average height of men in the US is 5'9".

    Though women executives aren't as well studied, American women are 5'4" on average.

    "Most of us, in ways that we are not entirely aware of, automatically associate leadership ability with imposing physical stature," Gladwell says. "We have a sense, in our minds, of what a leader is supposed to look like, and that stereotype is so powerful that when someone fits it, we simply become blind to other considerations."

    Now, in the tech world, CEOs come in all shapes and sizes. Facebook CEO Mark Zuckerberg, for example, is 5' 9".

    But there are a handful of powerful people in tech who meet or surpass Gladwell's perfect CEO height. They're the kind of people that command your presence the moment they walk in the room, aided by the fact that they tower over everyone else.

    Arianna Huffington, for example, is 5' 10". That's a good half-foot taller than the average. A few tech CEOs are 6' 3" or taller, which is extremely rare. Only about 2% of the U.S. population is that tall.

    After a few personal encounters with surprisingly tall executives, we were curious how Gladwell's tall theory held up in tech. So we took their measure—on Google, Twitter, and Quora.

    Marissa Mayer is model height at 5' 8"

    Source: Google

    Facebook's COO, Sheryl Sandberg, is 5' 8" too

    Source: Google

    Arianna Huffington is 5' 10"

    Source: Huffington Post

    See the rest of the story at Business Insider

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    Google has made an interesting new acquisition that suggests it may be attacking Amazon's shipping business.

    It just bought BufferBox Inc, a Y Combinator startup, for an undisclosed sum. BufferBox is a kiosk that can be placed in local venues around the nation for self-service parcel pick-up. In other words, if BufferBox becomes popular, you could walk into your local CVS and pick up a package you ordered from an online merchant.

    This is a product -- not a talent -- acquisition. BufferBox will continue operating within Google.

    "We're going to keep doing BufferBox," Google engineering director Steve Woods told Financial Post. "We’re not going to go into great detail about our future plans, but we think there’s a real exciting space beyond this amazing start with boxes, and the idea of touching consumers as part of their end-to-end experience is something we’re going to explore together. I don’t think we would say even definitively what it’s going to be, but we’re going to do some great things together.”

    BufferBox had plans to undercut even the cheapest shipping services and deliver packages to its kiosks for $3 or $4. (USPS costs about $5.25 per package. UPS and FedEx cost more.) It also planned to set up 100 kiosks around the Toronto area in 2013.

    So, what does Google want with a shipping company?

    The Economist has one idea.

    "Google is experimenting with a service that would let folk find goods online, order them and have them delivered within a day for a modest fee," The Economist wrote this morning. "This seems similar to Amazon’s hugely successful 'Prime' service, which costs $79 a year to join in America. Rather than try to replicate the e-commerce giant’s extensive network of warehouses, Google is looking for partnerships with shipping companies and retailers instead. But if it is serious about taking on Amazon, it may ultimately have to buy a logistics firm. At $69 billion UPS has a market value less than a third of Google’s; it is valued at less than twice the search giant’s cash pile."

    The Economist implies that Google could jump whole hog into fulfillment and logistics, and that it could becoming the back-end ecommerce delivery system for the world.

    Of course, that is an entirely different business than the business Google is in right now. And it's not clear why Google would want to be in that business, especially with so many other promising opportunities to invest in. 

    So, what do you think Google wants with a startup like BufferBox? Is this really the beginning of a full-on shipping war between Google and Amazon?

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    Mike Abbott, Kleiner Perkins

    Mike Abbott, the brilliant engineering leader who turned Twitter around, has been a venture capitalist at Kleiner Perkins for about a year now. And he's learned a lot.

    He's now determined to change the venture capital culture to be more helpful to and respectful of entrepreneurs—because he's been one himself.

    Abbott is perhaps best known as the guy that killed the Fail Whale at Twitter. If you don't recognize that term—the nickname for the mascot that appeared whenever Twitter had an unexpected outage—that's because Abbott turned Twitter into the much more reliable service it is today.

    He also helped Microsoft build the precursor to its Azure cloud-computing service, and he built Palm's WebOS software—the gem that led HP to pay $1.2 billion for the smartphone maker in 2010.

    But at his heart, he's always been entrepreneur. Before Microsoft or Twitter or Palm he cofounded Composite Software and Passenger. (Both are still around.) He's also a well-known angel investor.

    He never forgot how hard it was to raise money and how the venture-capital world was either ill-equipped to mentor him, or downright disrespectful.

    That's given him a different perspective on his role.

    "I had to learn the hard way, by making a lot of mistakes, I would like to help others avoid those mistakes," Abbott told Business Insider. "There's a little bit of redemption in that."

    While Abbott left both of his companies on good terms, he saw friends "ripped out" of their startups "in a bloody way," he recalls.

    "I don't have a chip on my shoulder like other VCs I've seen, who live vicariously through others because they didn't have the guts to go out and do it themselves," he says.

    That said, he realizes that "I'm not leading a company. At the end of the day, I have to just be able to influence. So far I'm cool with that. A lot of [ex-entrepreneurs turned] venture capitalists can have problems with that."

    He also wants to bring more respect to the money-pitching cycle.

    "Starting a company is incredibly hard," he says. Abbott never leaves a startup hanging, as some venture capitalists do, in a strategy for keeping their options open and avoiding offense.

    "Something I'm trying to do [is that] I want to say no in a respectful way, but in a way the doesn't give people false hope," he says.

    For the companies he funds, he wants to help them with the kinds of management issues they don't have a clue about, like helping them win the war for interns.

    With the shortage of qualified computer-science majors graduating from U.S. schools, companies need to nab them early on. (Take, for example, the story of Flipboard CEO Mike McCue's ardent recruiting of a 19-year-old Brown University student.)

    Startups often forget about looking for interns. By the time they remember, "all the good interns are gone," Abbott says. "And even if you are on the ball, you are not going to have the dollars to go compete with the Twitters, the Facebooks, and the Googles of the world."

    That's where Kleiner's putting its resources together to help all of the companies it's backed recruit interns through formal fellowships. Kleiner began last year with a program for engineers. This year, Abbott and another partner, Megan Quinn, put together an effort to recruit designers.

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    Running behind

    Sure, start-ups are creating jobs, but turns out those jobs are paying much less than their big business counterparts. And the gap is getting bigger.

    It's no secret that start-ups can't hand out the fat pay checks big businesses can. But that pay gap has gotten wider over the last decade-- even as start-ups become serious job-creators.  

    In 2001, workers at start-up companies made 85% of what big business employees earned, but in 2011, start-up workers made only 70% of what their big biz counterparts made, according to a new report from the Kauffman Foundation.

    And while, yes, data shows that start-ups are creating more jobs than in years past, the types of jobs they offer is the primary driver of the pay gap.

    "When job creation as a percentage of hires goes up, that's a good thing from a macro standpoint," Dane Stangler, the Kauffman Foundation’s director of research and policy, told Inc. "But it points back to the underlying issues of the job's quality."

    He added that start-ups in industries like food and retail simply offer lower-paying positions than, say, a tech start-up would.

    The study's findings came from quarterly workforce indicators at the U.S. Census Bureau, which gathers employee and employer information at the state and federal levels, then incorporates it with typical census information, according to Kauffman.

    The study showed that companies under two years of age are more likely to create new jobs. Specifically, 40% of hires at young companies over the past four years were for newly created positions, while only 25% to 33% of hires at older firms were for new jobs.

    Read more:

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    Here’s some stunning, Earth-shattering news: You know all those hundreds of incredibly stupid startups that have been raising seed money in Silicon Valley despite the fact that the people running those startups have no experience doing anything, ever, and have no idea at all how to generate revenue (let alone profit) with their lousy ideas, because, in fact, there is no way to make money with their lousy ideas, because in fact their ideas are lousy?

    Well, nobody wants to give those dopes any more money. So now they're going to go out of business.

    Click here to read more >

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    ray ozzie

    Another bit of news has dribbled out about legendary programmer Ray Ozzie's new gig.

    He's now raised $4 million for it, according to a SEC filing spotted by TechCrunch.

    And the company appears to have a new name: Talko. It was previously known only as Cocomo.

    Ozzie is being superstealthy about this venture. He leaked a teeny bit about it nearly a year ago to Scott Kirsner at and a few tech publications.

    From that, we learned that the company would be doing something involving mobile and the cloud.

    Former Microsoft executives Matt Pope and Ransom Richardson are also cofounders. Both of them worked with Ozzie at Groove Networks, the company Microsoft bought in 2007 largely to bring Ozzie into the Redmond fold. (Ozzie was known, prior to that, as the inventor of Notes, an early collaboration-software tool bought by Lotus, which was then acquired by IBM.)

    At Microsoft, Ozzie succeeded Bill Gates in the role of chief software architect for a while, but left in 2010. Scuttlebutt says he didn't see eye-to-eye with Steve Sinofsky. Sinofsky recently left Microsoft, with his clashes with other executives cited as one cause.

    Since 2010, Ozzie has kept a fairly low profile, perhaps because he was bound by a noncompete clause which expired in 2011, Kirsner reported.  He did invest in at least one other startup, Spindle, a social news app based in Boston.

    Don't miss: 9 Tech Trends That Will Make Someone Billions Of Dollars Next Year

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    Cristina Cordova

    Retaining users on mobile apps is no easy feat. 

    Cristina Cordova, who works in business development for mobile payments startup Stripe, said last month that user retention is "the biggest problem in mobile." She noted how mobile-only apps that initially gained a lot of traction, like Path, Viddy, and Draw Something, eventually fell off.

    Even with analytics tools like Flurry, MixPanel, and Apsalar, Cordova recently argued that it's still hard for developers to fully understand retention. Here's why:

    1. Mobile developers don't know where their downloads come from
    2. Mobile developers don't know when users delete their apps
    3. Mobile developers don't know why users leave

    That's because the App Store and Google Play provide little information about how users discover and interact with certain apps.

    "Unfortunately, much of the data that would allow developers to make more informed decisions to improve retention is locked up by the mobile platforms," Cordova writes. "It’s not that running a sustainable audience or business on mobile is impossible, you’re just starting a few steps behind."

    SEE ALSO: 'The Biggest Problem In Mobile'

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    dan shipper

    A few months ago, early stage VC firm First Round Capital announced a new ploy to find the next Mark Zuckerberg.

    It threw $500,000 into an initiative called The Dorm Room Fund (DRF) and gathered eleven student investors at Drexel and UPenn. The students could make $10 - 20,000 investments in promising classmates with startups.

    First Round's reasoning was that a lot of successful entrepreneurs started businesses in their dorm rooms: Michael Dell, Larry Page and Sergey Brin, and Bill Gates to name a few. Companies such as Warby Parker, Admob and MyYearbook came out of college campuses too.

    Now, the student investors say they think they've found someone with Zuckerberg or Gates potential: 21-year-old Dan Shipper.

    Shipper is DRF's first investment, and he's been granted $20,000 to see his startup, Firefly, through. Firefly allows any website to share a screen with a customer without downloading any software.

    Prior to DRF's offer, Shipper was opposed to taking outside capital. But DRF allows him to build his startup while staying in school, which is all the philosophy major really wants.

    Shipper is a junior at UPenn, and he's been vocal about his desire to graduate. It's not because he hasn't had offers from other startups to drop out. In May, he was publicly recruited by a Y Combinator startup, 42Floors. The founder, Jason Freedman, wrote Shipper an offer letter with "no expiration," pleading with him to join. The post went viral on tech site Hacker News.

    So, what makes Shipper Mark Zuckerberg material?

    His site isn't' blowing up like Facebook's did, but it's pretty clear Shipper will have a bright future. We interviewed the wunderkind back in May.

    Here's what he had to say then:

    BI: What's your background?

    DS: I do a lot of coding. I started learning to code when I was in fifth grade because the only way you can build a viable business as a 10-year-old is to know how to code. Last summer I interned at [New York startup] Artsicle. I'm a philosophy major.

    AS: And did you build a viable business as a 10-year-old?

    DS: I really wanted to make an operating system. I started buying books and reading up and then I realized that it's really, really tough to build an operating system. So I lowered my expectation and I spent a couple years coding different things, not really building any businesses.

    In high school I started developing BlackBerry apps right before the iPhone came out in 2006. No one really knew what an app was so I started doing BlackBerry software development. The first app I made was called FindIt. I kept losing my BlackBerry in my house, and it would be on silent so I couldn't call it. FindIt made it so if I lost my BlackBerry in my house, I could just email it and it would ring even if it was on silent.

    I eventually iterated that into a full-fledged web interface where you could completely control your BlackBerry from the Internet. You could track it, you could make it call you, you could lock it, you could make it display a message and you could back it up completely.

    It was actually tested by the U.S. Army for use on Army BlackBerries. So I had a bunch of other apps like that for BlackBerry and iPhone.

    BI: What have you worked on in college?

    DS: When I first got to college I stopped doing mobile app stuff and started doing web development. And I guess the first successful website I did was with two friends called WhereMyFriendsBe. It took all of your Facebook friends and plotted them on a map.

    That has about 40,000 sign-ups right now. I took freshman year as a way to learn how to take an idea and get it out on the web as quickly as possible. And I did probably 10-15 apps during freshman year. Over last summer I built a website, DomainPolish, and sold it in February.

    BI: How are tech companies catching wind of you?

    DS: Last summer I applied for an internship at a startup. They didn't want me but they introduced me to Artsicle's founders, Scott and Alex, as an intern.

    In terms of Jason Freedman, I tweeted him about six months ago and said, "I want to talk, I'd love to get some advice." We are both frequent readers of Hacker News. It has generated 150,000 uniques for my blog in the past year. I admired Jason because of his writing style and the popularity of his posts so I wanted to get advice about blogging and entrepreneurship in general.

    He called me while I was in class and we ended up talking for a long time. He's been a really great resource for me and he's just a really good guy.

    BI: Have you gotten job offers from other tech companies too?

    DS: Yeah, I have gotten other offers. It's a fun position to be in.

    BI: From any big fish like Facebook?

    DS: No, I haven't gotten any offers from a really, really big company like that, just from well-known startups.

    BI: What keeps you in school? Is there any company that could lure you away?

    DS: I don't think so. I'm not in school as a resume-builder. I'm not in school so I can get a job after I'm done. I'm a philosophy major.

    I'm in school because I enjoy it, and I think it's important and I think I'm learning things that are important in it. I'm taking my time in school to a) learn things but b) take the time to productively prepare myself for when I'm out of school — essentially to set myself up to work for myself when I'm done.

    AS: So you'll work for your own startup when you graduate?

    DS: I'm trying to learn to run a sustainable business because I think in the environment right now, it's very easy to raise money — I guess it's not super easy, but it's relatively easy to raise money. I don't think the environment is going to be that way in two years.

    So my interest is in building businesses the way they've traditionally been built: they make money. You can build that kind of a business in any investment climate, and I think the beauty of software is that it allows you to build businesses where the only cost is your time.

    To me, the only thing I've ever done right is to doggedly pursue the things I'm interested in. That's what I want to continue to be able to do when I get out, so I'm preparing myself.

    Check out the full interview with Dan Shipper, here.

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    hermione way startups silicon valley strap on

    Sibling entrepreneur duo Ben and Hermione Way haven't had much luck landing a $500,000 investment for their health startup Ignite. 

    If you've been following Bravo's "Start-Ups: Silicon Valley," you have probably seen the Ways blow their pitch to Dave McClure of 500 Startups and unsuccessfully convince Jeff Clavier of SoftTech VC to invest.

    But things don't seem to be getting much better for the sibling duo.

    On this week's episode, Hermione celebrated her 27th birthday at her house in San Francisco with friends and two investors, Michael Gale and Amy Swartz, from Gramercy Ventures. 

    Everything seemed to be going well until Hermione opened a gift from her co-stars, which happened to be a strap-on dildo.

    Hermione immediately put it on and started chasing people around The Villa while wearing the sex toy.

    Her brother Ben and Gale appeared to be mortified. 

    "As funny as that was," Ben later said to Hermione, "that just cost us half a million dollars."

    We don't hear directly from the investors in this episode, but based on the preview for next week's episode, it looks like Ben was right.

    "I don't really care about losing the money," Gale said in a meeting with the Ways. "I care about looking stupid." 

    SEE ALSO: Here's Who Bravo Has Been Asking To Audition For Randi Zuckerberg's NYC Startup Show

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    samwer brothers

    Over the last six months, many people have observed that we've entered a quiet period for consumer Internet startups, as the latest social, commerce, and mobile waves play themselves out.

    Venture capital funding has dropped. Excitement has sagged. Fewer red-hot products are taking the world by storm.

    Perhaps most visibly, Union Square Ventures partner Fred Wilson essentially declared the end of this latest consumer Internet cycle in a post called "What Has Changed."

    But if you're still having a hard time believing that the party has ended, here's a new data point for you.

    The US consumer Internet startup is so dead and boring, a smart investor tells us, that Germany's Samwer brothers haven't cloned a single US startup in more than three months.

    The Samwer brothers, you will recall, run an incubation/investment firm called Rocket Internet.

    Every time a US startup shows the slightest bit of promise, Rocket immediately clones it--often right down to the logo and font. And then, a couple of years later, if everything has gone according to plan, Rocket sells the European clone back to the parent company for gazillions of dollars.

    The Samwers built an eBay clone and sold it to eBay, for example. They built a Groupon clone and sold it to Groupon. They've built a Pinterest clone and an AirBnB clone. And so on.

    These clones, by the way, aren't chosen haphazardly.

    According to one source, a team at Rocket Internet systematically reviews every Internet startup that gets funded in the US and then decides whether or not to clone it.

    The firm has presumably reviewed every company funded in the US in the past three months.

    And it hasn't found a single one worth cloning.

    SEE ALSO: The Future Of Digital: No, It's Not "Mobile First"

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    0 0

    closed door, lock, safety lock

    A few weeks ago, we wrote that startups were running out of cash.

    Now, every tech site is talking about the "Series A crunch."

    A "Series A" round refers to the first class of stock issued to outside investors—in other words, the first professional venture capital invested in a company after a so-called "seed" round, which often comes in the form of a loan.

    It has gotten easier and easier to raise that seed money—which means there are now more companies competing for a pool of Series A money that basicallly hasn't changed.

    Fortune's Dan Primack pulled some data to show just how tough the investing climate has become for startups.

    He had CB Insights pull seed-stage and angel investing data for U.S. tech startups—those amount to the same thing in almost all cases—as well as Series A funding data. Primack found that, while there were roughly the same number of seed/angel deals and Series A deals in 2009, the number of seed/angel deals had skyrocketed from 2009 to 2012. Meanwhile, the number of Series A financings have only increased slightly.

    From Fortune:

    Source: CB Insights

    Source: CB Insights

    Because every year's worth of seed deals essentially forms a class of startups that will later "graduate" to raising a Series A round 12 to 18 months later, Primack notes, the real ratio to look at are the seed deals in one year versus the Series A deals in the next.

    In the chart above, if you track the numbers down one column and across one row to the right, you'll see the real ratio at a glance. 

    In 2011, venture capitalists managed to increase the number of Series A deals they were doing to catch up with the explosion in seed. But now they've fallen seriously behind, and the gap is widening.

    "We see the gap continuing to grow," Primack writes. "Series A deals in 2011 represented just 91% of 2010 seed/angel deals, compared to 109% the prior period. That figure dropped to just 65% in 2012, and I would expect the plummet to continue into 2013. After all, the number of seed/angel deals continues to rise and VC fundraising difficulties may mean that Series A commitments have plateaued."

    While the data doesn't provide every answer, it's pretty clear that it's crunch time, and things will only be getting more difficult for startups.

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    Rob Hayes first round capital

    "The Startup Chef" cookbook, which just launched today, shows a more personal side of the people who power the tech community.

    It features recipes from Dennis Crowley of Foursquare, Daniel Ek of Spotify, and 75 other prominent founders, investors, and writers in the tech industry.

    Contributors even wrote a personal backstory to accompany their respective recipes. 

    "[The cookbook] shows a side of the tech community that you don't really get to see that much, especially if you're not in the Valley," the book's co-creator Maya Baratz tells Business Insider.

    Baratz, a product executive at ABC News, and Hunter Walk, a product executive at YouTube, started this project about two months ago to help raise money for charities aiming to end hunger (No Kid Hungry) and to help those affected by Hurricane Sandy (Rockaway Plate Lunch Project).

    "We thought maybe we could get a handful and we were really quite floored with the fact that we got 75 recipes," Baratz said.

    Some of the recipes include "Eggnog Cinnamon Chip Scones" from Randi and Donna Zuckerberg, "Mom Crowley's Sausage Soup", a family recipe for Italian pasta sauce from GroupMe founder Steve Martocci, and chocolate chip cookies from Union Square Venture partner Fred Wilson and his wife, Joanne. 

    Since it's an e-book, Baratz says they will continue to update the book with more recipes. Anyone who is interested in submitting a recipe can fill out the online form.

    startup chef

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    dan porter, omgpop, zynga, march 21 2012, draw something, bi, dng

    It's been a crazy year for the New York tech scene.

    We saw the Draw Something craze take over the world, startups get acquired for hundreds of millions of dollars, and entire offices get shut down in Hurricane Sandy.

    February: OMGPOP created Draw Something, and it sold to Zynga for $180 million two months later

    In early February, New York game shop OMGPOP launched a mobile game, Draw Something.

    The game grew faster than any mobile app ever before. In its first ten days it was downloaded 1.2 million times. After five weeks, it was downloaded 20 million times.

    By week six, Zynga swooped in with an offer to buy the company for about $180 million. By then had been downloaded 35 million times.

    March: Foursquare co-founder Naveen Selvadurai departed suddenly

    On March 5, Foursquare co-founder Naveen Selvadurai departed the startup.

    Gigaom uncovered the news when it started investigating employee stock options that investors were buying up. It turned out a good chunk of the options belonged to Selvadurai.

    May: Facebook had a disaster of an IPO, and the aftermath affected the entire startup ecosystem, even on the east coast.

    On May 18, Facebook went public. It priced its IPO at $38 per share, valuing the company at about $100 billion.

    But the stock didn't pop. Instead, it fell a lot. Today, its stock is trading $11 below the opening price.

    The Facebook Fallout affected the entire tech ecosystem, especially startups, and it spooked a lot of investors.

    Paul Graham warned all of his Y Combinator founders of the fallout in an email:

    The bad performance of the Facebook IPO will hurt the funding market for earlier stage startups. No one knows yet how much. Possibly only a little. Possibly a lot, if it becomes a vicious circle....What I do worry about is (a) it may be harder to raise money at all, regardless of price and (b) that companies that previously raised money at high valuations will now face "down rounds," which can be damaging.

    See the rest of the story at Business Insider

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    snapchat founders

    Snapchat, a new app, is taking over college campuses.

    It lets you snap a photo, send it to a friend, and have it self-destruct within 10 seconds or less.

    So media organizations, including us, have been quick to point out that this makes it ideal for sexting—the act of sending an intimate photo of yourself via a phone.

    But that's just simply not the case, Snapchat cofounder and CEO Evan Spiegel tells Business Insider.

    "I don't think we're surprised by that story just because it's a good story," Spiegel says. "But the reality of the situation is 80 percent of snaps are taken during the day and you can't upload photos from your gallery."

    Spiegel just isn't convinced that people are actually snapping risqué photos of themselves in broad daylight. 

    We're not convinced by this argument: Spiegel seems to conflate the time of day when a photo is taken with the social context. It's perfectly possible to take a revealing photo of yourself "during the day." And the fact that you can't upload stored photos doesn't seem like a barrier to sexting.

    But Spiegel is pushing on.

    "I think with any new product that's difficult to understand there are always lots of questions and criticism," Spiegel says. "I think we have all the right criticism. We’re just going to keep executing on what we believe.”

    So if that app isn't for sexting, then why are people taking more than 30 million snaps a day?

    "I think it’s because it’s really different and it’s really fun," Spiegel says. "It kind of breaks this old model based on performance for our friends in exchange for likes or retweets. It turns that around and it says 'Hey, it's more interesting and fun when you can express yourself and be silly."

    Spiegel doesn't have proof of what people are taking pictures of, but that's because the company doesn't look at or save any of the images.

    "We don't want to own people's photos," Spiegel says, "We want to help them communicate with friends in whatever way makes them happiest." 

    Even though Spiegel says the app isn't for sexting, parents are still worried that it gives their kids a false sense of security. While it's tricky to take a screenshot of a photo sent via Snapchat and the app reports the action, it's still possible to capture a photo and post it outside Snapchat.

    "We've never described ourselves as a secure application," Spiegel says. "It's important to be thoughtful and mindful about the things you say to other people."

    Spiegel says some people are quick to say that the app is aimed toward kids because of the design. But Spiegel says it's really for everyone. 

    "When we're in that kind of childish space, we're more genuine and feel more comfortable with our friends," Spiegel says. 

    And Spiegel seems to be right about that.

    Yale student Chloe Drimal recently wrote about her experience using Snapchat. She absolutely loves it because it's not permanent, like the rest of the technology she uses.

    "By taking out the forever part of a picture of text, more people want to share," Drimal writes on Yale Daily News. "They aren’t afraid to put themselves out there, to send an ugly picture that may turn someone off or a beautiful picture that may seem narcissistic. They know it will eventually disappear."

    Contrast that with Instagram, the photo-sharing app now owned by Facebook. People are keenly aware that others will see their photos—so much so that their self-satisfied self-promotion has become a joke.

    SEE ALSO: Here's How To Use Snapchat, The Awesome New Sexting App

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    Caroline Hu Flexer and Michael Flexer

    With the holiday season upon us, we're pressed to socialize with our coworkers and spend time with family all at once.

    The folks on this list have found an easy solution to that time crunch—all year round. Their cofounders are their spouses.

    It's a daring choice to launch a company with your true love. If things go wrong, your jobs and your marriage are both at stake.

    On the other hand, marrying your cofounder has advantages, too. Running a company is an all-consuming thing. Why not share that with your beloved?

    While it makes sense for the couples, risk-averse investors have sometimes looked askance at these arrangements. But Silicon Valley and Silicon Alley have rich histories of married cofounders including the founders of Cisco Systems, Len Bosack and Sandy Lerner; VMware, founded by Diane Greene and Mendel Rosenblum; Bebo, founded by Michael and Xochi Birch; and Buddy media, founded by Michael and Kass Lazerow.

    Casey Sackett and Jennifer Wong, cofounders of Alt12 Apps

    When Casey Sackett and Jennifer Wong were expecting their first child, Jennifer found no easy way to document the experience. 

    "I had a pregnancy journal to hand-write notes, a couple of reference books for health information, a few photos of my growing baby bump on my phone," she says. She wanted all this stuff on her phone as a few other things, like a contact her mom's support group for advice.

    So in 2009, Casey Sackett and Jennifer Wong launched Alt 12 Apps with BabyBump, a mobile app for expecting mothers. They've since launched two more apps.

    So far, so good for the couple. They raised $1.26 million in venture capital last spring and have had more than 6.5 million downloads of their apps.

    Susan Gregg Koger and Eric Koger, cofounders of Modcloth

    High-school sweethearts Eric and Susan Gregg Koger launched Modcloth thanks to Susan's love of vintage clothing.

    Susan couldn't resist buying cute vintage pieces, even if they didn't fit her. Eventually, she and Eric went off to college and her dorm room grew so full of stuff they decided to sell it online.

    Today Modcloth employs 300 and has raised money from Accel and Norwest.

    Erika Trautman and Cameron McCaddon, cofounders of FlixMaster

    Erika Trautman and Cameron McCaddon fled the high cost of the Bay Area to launch their startup in the relatively affordable locale of Boulder, Colo., where they joined the 2011 class of TechStars, an incubator.

    The company makes a product that allows for easy, Web-based video editing—a tool that typically has required expensive desktop software.

    Since its launch a few months ago, FlixMaster has grown to about 6,000 users and has gained the attention of some big partners, like Sony.


    See the rest of the story at Business Insider

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    michael bloomberg

    Bloomberg and Thomson Reuters can charge banks, hedge funds, and traders thousands of dollars per terminal user per year because both companies break tradeable news faster than anyone else on the planet.

    For this, Bloomberg and Thomson Reuters have massive valuations.

    Bloomberg is worth ~$35 billion, Thomson Reuters, ~$25 billion.

    A startup out of Amersterdam, called Owlin, thinks it can do better than both. 

    In a press release announcing $250,000 in in funding from NoRo Venture Capital, Owlin says its service will break news 10-15 minutes faster than Bloomberg or Reuters.

    The secret sauce:

    Owlin is a new way of detecting events, analyzing the web and ranking news. Nowadays everybody can be an editor, news can pop up on all kinds of online channels. The giants in the news industry can't keep up with the mass of niches by their sheer numbers alone. Owlin brings order to this chaos by looking at millions of blogs and news sites, applying complex algorithms to highlight critical information, important trends or breaking news. By cutting out the middleman and looking in the right places, Owlin can deliver bottom-up news 10 to 15 minutes before Bloomberg or Reuters.

    We're skeptical, to say the very least, but it's always fun to meet a highly ambitious startup taking on global powers.

    According to the press release, Owlin "is a dream come true for its two founders, Richard Kraaijenhagen and Bas van Ooyen."

    "At the age of 20 and living in a little town in the Netherlands, they found that school didn't challenge them sufficiently. So, they dropped out, started their own company and, within a year, got selected from hundreds of start-ups worldwide for Rockstart.Accelerator. They moved to Amsterdam and before they even realized, pitched in front of dozens of people and negotiated with venture capitalists."

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    Joshua Reeves cofounder ZenPayroll

    It's high time an Internet company came along and disrupted the $38 billion payroll industry.

    That's the plan for ZenPayroll, a startup launching today.

    CEO and cofounder Joshua Reeves decided to create ZenPayroll after he experienced his own financial horror story. He discovered—two years too late—that an old 401K had gotten stuck in a slow-growth fund.

    The payroll company "mailed documents to my previous address," Reeves said. " I didn't know my 401K got reinvested for two years."

    ZenPayroll solves such problems. It gives employees a self-service portal so they can manage their money, 401K accounts, and other payroll-related items directly.

    More importantly, it lets employers verify payroll with a few clicks of a mouse or via their smartphones. That's a far cry from the extensive paperwork required today. Constantly changing regulations caused U.S. companies to pay the IRS an additional $5.3 billion in payroll tax penalties in 2011, the startup estimates.

    Reeves says that's in part because payroll is processed by technologies developed decades ago and the business is dominated by two aging players: ADP, founded in 1949, and Paychex, founded in 1971.

    So as Reeves went looking for investors, he had no problem getting people to open their wallets.

    "It resonated," he said. "All of them have used payroll systems" and they had "their own anger" of how complicated they are to use. 

    ZenPayroll raised $6 million from Box CEO Aaron Levie, Yammer CEO David Sacks, Dropbox CEO Drew Houston, YouTube cofounder Jawed Karim, Yelp CEO Jeremy Stoppelman, Badgeville CEO Kris Duggan, SugarCRM CEO Larry Augustin, and Zuora CEO Tien Tzuo

    Other investors include Sherpalo Ventures, Y Combinator,, Google Ventures and Data Collective.

    Don't miss: 9 Tech Trends That Will Make Someone Billions Of Dollars Next Year

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    Ankur Singla

    On Monday, tiny startup Contrail Systems was in stealth mode. On Tuesday it officially launched. Today, Juniper Networks bought it for $176 million.

    Contrail's founders, employees, and investors are sharing $57.5 million in cash and almost 6 million shares of Juniper stock.

    Not bad for two days on the market.

    Juniper has had its eye on the company for a while. The networking-equipment maker kicked in some of the $10 million Contrail raised in July, in a round led by Khosla Ventures.

    Contrail's first product wasn't even scheduled to be released until next year, reports Jim Duffy at Network World.

    But that product is in the super-hot enterprise market known as software-defined networking, or SDN.

    SDN is a new technology that turns enterprise networking on its ear. Instead of buying expensive routers and switches with a lot of fancy features from the likes of Cisco, companies can buy simpler, cheaper hardware—and less of it. This makes networks more flexible and less expensive than they are today.

    VMware set this market on fire when it bought the SDN leader, Nicira, for $1.26 billion in July.

    Since then, startups that do SDN in some form or another have been the darlings of the tech world.  In October, Nicira's biggest competitor, Big Switch, landed $25 million in financing. (Khosla participated in that one, too.)

    Five days ago, Plexxi came out of stealth. It was backed by $48 million in two big rounds, including $20 million this summer.

    In August, SDN startup Plumgrid landed $10.7 million.

    And those are just a few of the SDN startups pouring out of the woodwork.

    Contrail is particularly interesting to Juniper Networks, one of Cisco's biggest competitors, as it gives Juniper a way to grab Cisco's customers. Its product was specifically designed in a way that lets it control Cisco's network equipment as well as Juniper's.

    Its founders previously worked at Google, Cisco, Juniper, and Aruba Networks, and all of them knew Juniper and Cisco's products intimately.

    CEO Ankur Singla was previously the head of engineering at Aruba and worked at Juniper before that. CTO Kireeti Kompella had been a big player at Juniper. Pedro Marques worked at Cisco and Juniper before a stint at Google.

    Don't miss: The 10 Best Enterprise Tech Companies To Work For

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