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Why Consumer-Facing E-Commerce Is BROKEN

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Sindhya ValloppillilI finally found panties on True&Co., an ecommerce lingerie company.

It took them nearly one year to start selling panties. They allegedly sold them when I mentioned them in an article titled VCs Think My Boobs Need An Algorithm in January, but the panties were impossible to find.  Nobody could find them. Now you can find them after about 6 minutes of multiple choice questioning and some scrolling around online.  But you still won’t get a “true” fit from their algorithm.  

Another startup that I discussed in that article is Dollar Shave Club (DSC) which is now raising yet another round of funding even though they raised a total of $10.8M in venture funding last June.  Earlier this month, DSC finally launched their 2nd product - Dr. Carver’s Easy Shave Butter. Who on earth is Dr. Carver and what does he have to with DSC, you ask?? Is Dr. Carver a new brand? Well, I bet your guess is as good as Dollar Shave Club’s. I’m. Not. Joking.  

Consumer marketing is an art AND a science. It’s something that the founders of many consumer-facing ecommerce companies and their investors don’t understand. The Science Lab in LA, which launched DSC, and the DSC management team and their investors clearly don’t comprehend it. That’s why consumer-facing ecommerce is broken.

To date, all that DSC has done is create one funny video that went viral. DSC’s second video was a complete failure so they pulled it from YouTube. Interestingly, Grumpy Cat is a damn funny video that went even more viral, and it has more brand potential than DSC. Grumpy Cat could be branded similar to Angry Birds with games, lunchboxes, candy, etc. Naming a brand Dollar Shave Club is problematic since DSC’s intent was to build a global lifestyle brand. The name limits them to “dollar” and budget pricing and also to the shave category. Will they call their shower gel “Dollar Shave Club Shower Gel”? That doesn’t exactly make sense.  On that note, Dr. Carver’s Easy Shave Butter, its newest product, doesn’t make sense. The management team doesn’t understand branding, positioning and pricing. The cost of the Easy Shave Butter product is $8 while the average shave cream or shave gel from leading brands like Edge or Gillette is $4 or less (even $2) – everywhere, even at the corner CVS or Duane Reade in Manhattan and on Amazon.com.  If DSC’s goal is to disrupt the industry by offering cheaper products, they are certainly NOT doing that with Dr. Carver’s Shave Butter.

What I don’t understand is what exactly is DSC doing with $10.8M? What took them so long to launch the shave butter product? It is stock packaging (which means it’s off-the-shelf without distinct custom design). It’s also a stock formula that they sourced from lab in Dallas, Texas. Just like the non-proprietary blades that they source from Dorco, a Korean company, DSC’s Dr. Carver’s Shave Butter is not a proprietary formula.  The packaging is a knockoff of Kielh’s with its apothecary-esque branding which is a very inconsistent departure from DSC’s budget branding. Product lead time for their stock packaging and stock formulas is NOT 1 year. They also don’t need $10.8M in funding to sell non-proprietary products with stock packaging. Here are the facts: For a product with stock formula and packaging, it should cost: less than $25K for a small production run of 7,000 units with a lead time of 2 months. The cost of goods per unit should be no more than $3.57. With a COG of $3.57 and retail price of $8, their markup is 55%. That should yield about $56,000 in sales. Keep in mind that this inventory is seasonless, trendless and sizeless too. It’s a very lucrative business for those who truly understand it.

The fact that DSC waited one year to launch a shave butter/cream demonstrates that they: 1) don’t spend their cash wisely, and 2) they don’t understand consumer psychology. When products are used in tandem, marketers should pair these products together and so that the consumer can buy them together. When most people buy a cup of coffee at a coffee shop, they will go somewhere where they can also get milk and sugar. The only exception to this pairing rule is when a product has superior performance and distinction. That’s not the case with DSC’s razors.

The biggest question I have is: why on earth is DSC raising yet another round of funding? Word on the street is that they are now hoping to close a Series B of $45M in June. I’m still unclear on what they did with $10.8M which they raised at a hilariously healthy $30M pre-money valuation – they’re hemorrhaging their investors’ money! In addition to STILL offering free razors for a month to new customers, they are now also doing radio ads and TV commercials during the NBA Playoffs! The going rate for a 30-second spot during the NBA Playoffs is $500,000. At this rate, I predict that DSC is going to follow in the footsteps of hyper-inflated, struggling companies like Groupon and BeachMint. It makes no sense to keep pouring money into a brand that isn’t really a brand, doesn’t have special products and doesn’t understand its industry. Without great branding and experience, you’re just another product.

Harry’s, a new grooming brand that launched online last month with upwards of $4M in VC funding, isn’t much better than DSC.  Marketing and branding aren’t their forte either. The funniest comment I saw on their Facebook page was: “Is this razor only for white people who all look the same?”

harry's facebook

They are definitely too niche if people are saying things like that. Their logo is quite possibly the ugliest logo that I’ve ever seen. You cannot just reapply the same formula that worked at Warby Parker and move it to Harry’s and expect success. You cannot just shift one executive/founder from a successful company to another company and category and expect success. We already learned this lesson with Ron Johnson and J.C. Penney. The minute more compelling grooming brands launch DSC and Harry’s will be in serious trouble.

Here’s another shocking startup story: A NY-based luxury goods and fashion curation startup which closed $2M in venture funding in October 2012 and was slated to launch in November/December 2012 delayed its launch by one whole year. The only reason for the delay is poor planning. Unlike many other startups, this startup isn’t stuck due to lack of funds. The founder of this startup, who does not have a background or understanding of fashion, luxury goods, buying, or ecommerce, did not understand the buying cycles for purchasing products from third party brands. Her prior work history included being a Co-Founder at a food-focused picture sharing app and doing digital partnerships for a leading media company.  In my opinion, this founder should have never gotten funding. There is no excuse for a one-year delay when this startup has cash and resources. More importantly, this founder failed to establish an iota of traction since her company was pre-launch and even pre-business plan and branding. She clearly lacked domain expertise or even a basic understanding of the luxury goods and fashion industry. She should have established all of that before getting funding. Her investors from leading VC firms failed to do proper diligence and gave her $2M in VC funding at a $5M pre-money valuation.  

Clearly, many VCs don’t really understand which founders to fund, and they don’t really understand consumer-facing ecommerce. Entrepreneurs shouldn’t look to these VCs for validation especially if these VCs are funding founders without plans. Some common threads with these flawed startups include having founders who do not understand:

  1. basic business, understanding of retail, how to scale a company, pair and group products to drive more sales

  2. branding and marketing

  3. consumer psychology, purchasing habits

It seems that a lot of founders and VCs think that marketing and branding aren’t that important and can be outsourced. That’s clearly apparent in all the aforementioned startups. Without a great brand experience, you’re just another product. Marketing and branding are conceived in the heart and mind first, then applied to product and finally applied online. Marketing is an art, a science and also a spectator sport - online it’s become a shit show that’s providing me a lot of laughs.

About the author: Sindhya Valloppillil is the Founder & CEO of Helix Men. Most recently, Sindhya was the Brand & Product Development Manager at ZIRH Skincare. 

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Startup CEO: We Had The Perfect Product Launch Planned, And Then It All Went Splat

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egg splat crack smash broken

Last April, entrepreneur Vibhu Norby had a massive product launch planned his iPhone-only social network for groups, Everyme.  

Norby and his team had already gone through Silicon Valley's top accelerator Y Combinator, had raised a $1.5 million seed round, had collected 25,000 email addresses from people wanting to be notified of the launch, and had prepared coverage of the launch on tech blogs like TechCrunch and AllThingsD. 

So Norby never could have imagined what would happen next, he writes on his blog

Just hours into the launch, Norby and his team realized that things were not going according to plan. People were signing up for the product, but not at the rate Norby imagined. Throughout the week, each day saw fewer and fewer sign-ups.

"To top it off, all of our team members had access to the stats dashboards," Norby writes. "You could see the psychological effects of dropping numbers impacting productivity and morale significantly. It felt like we had bet it all on red and the ball stopped on black."

The lesson learned is that if you launch and plan to grow massively right out of the gate, you will be disappointed and your team's morale will be at an all-time low. In fact, Norby says, it might be better not to launch at all because it suggests you're making a bet on your product, and not focusing on a long-term strategy.

Here's why focusing on a big launch is the wrong strategy, in Norby's words:

  • “Launching” screws with your metrics – and you need clean metrics to evaluate and iterate on your business. If you see 6000 sign-ups on day one and 2000 on day two, you can be mislead about the strength of your vision. It clouds your ability to single out the passionate users and understand their usage patterns.
  • You’re probably not going to find product/market fit right out of the gate. So whatever press or marketing you have planned will fall on uninterested eyes. Again, this will mislead you. You’ll spend less money and waste less time by locating your interested market first and then pursuing marketing channels to reach them when ready. It sounds obvious, but it isn’t. When you have a consumer app, at first, everyone seems like part of your target audience even though they aren’t. Likewise with enterprise, not all businesses are candidates for your software.
  • As mentioned earlier, the bigger your launch, the quicker you will enter the famous “trough of sorrow.” No human can easily withstand the emotional rollercoaster of startup metrics. Such baggage can lose you co-founders, employees, and your capital. And you will lose faith in yourself in the process.
  • You’ll be penalized when raising your next round. Neither the bell-curve nor the downward slope is an attractive graph to show investors. You can demonstrate growth by finding one passionate user, and then ten, and then 100 instead of taking in 6000 sign-ups to find 111 passionate ones. Some savvy investors will ignore your charts and focus on you – fine – but you have to be a champion. You can’t afford to think negative thoughts about your business when talking to an investor.

SEE ALSO: Meet The CEO Who Lived In A Taco Bell Parking Lot And Now Runs A Cool New Startup

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Top Silicon Valley VC: I'm Investing In Bitcoin Startups

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chris dixon eric eldon techcrunch disrupt ny 2013

Chris Dixon, like many other Silicon Valley investors, is really excited about Bitcoin. He says he's invested a significant amount of money into it.

Bitcoin is a digital currency that was first introduced in 2008 and allows instant transfers to anyone, anywhere.

Dixon spoke about why he and the rest of Silicon Valley are excited about Bitcoin, and what types of Bitcoin startups he's looking to invest in.

The Andreessen Horowitz partner says some of the smartest entrepreneurs in California are thinking about starting Bitcoin companies. They're working on PayPal-like models, exchanges that will help people trade the currency, and banking models to help people store bitcoins.

Dixon says Bitcoin is exciting partially because it offers relief to "pent-up frustration" surrounding the financial-tech industry.

"I think for a lot of people in tech, finance has been this very frustrating area," says Dixon. "We see what happens on Wall Street, it's very corrupt, and it's so highly regulated that, when you do try to start a company, you run into all these regulations. [Bitcoin is] this release for the pent-up frustration. Finally something is happening in finance tech....[We spent] years in the desert there.

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Bang With Friends Is Raising ~ $1 Million To Help People Find Hook Up Buddies

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girls kissing boy frat party collegeBang with Friends (BWF) is a Facebook app that does exactly what you're thinking it does. It helps people on Facebook find friends to hook up with rather than date.

So it may come as a shock that BWF is raising a ~ $1 million seed round, and investors are actually giving the founders money.

According to multiple people familiar with the deal, BWF already has some money in the bank. We're told Tim Draper and Great Oaks Venture Capital are investors.

Investors we spoke with who knew of the round explained it as "curious" and "kinda stupid." But BWF had great initial traction for such a ... casual ... product.

When Business Insider interviewed one of the founders four weeks ago, it had 820,000 users without spending any money on marketing and it had matched 200,000 couples. A match is when two users agree to meet in person via BWF. The founders say 70% of their users are between the ages of 18 and 34.

Great Oaks did not respond to a request for comment and BWF declined to comment on its fundraiser.

For more on BWF check out: The Anonymous Co-Founder Of 'Bang With Friends' Explains How He's Helped 200,000 Couples Connect >

Here's what BWF looks like. Note the forward slash in the domain.

BWF

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A Few Things To Keep In Mind Before Launching A Hardware Startup

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makerbot replicator 2

For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham says, there are many reasons for this:

Hardware does well on crowdfunding sites. The spread of tablets makes it possible to build new things controlled by and even incorporating them. Electric motors have improved. Wireless connectivity of various types can now be taken for granted. It’s getting more straightforward to get things manufactured. Arduinos, 3D printing, laser cutters, and more accessible CNC milling are making hardware easier to prototype. Retailers are less of a bottleneck as customers increasingly buy online.

Another important factor is what Chris Andersoncalls“the peace dividend of the smartphone war”:

All the components in a smartphone — the sensors, the GPS, the camera, the ARM core processors, the wireless, the memory, the battery — all that stuff, which is being driven by the incredible economies of scale and innovation machines at Apple, Google, and others, is available for a few dollars. They were essentially “unobtainium” 10 years ago. This is stuff that used to be military industrial technology; you can buy it at RadioShack now.

It also doesn’t hurt that the most valuable company in the world (Apple) and some of the most exciting startups (e.g., Nest, Jawbone, Leap Motion) make hardware.

If you are thinking of doing a hardware startup, here are a few things to keep in mind:

- Manufacturing. Many hardware startups stumble when they try to go from prototype to large-scale manufacturing. There is no AWS-equivalent for hardware. To get manufacturing right, entrepreneurs often end up living in China for months and even years. The difficulty of manufacturing is one reason that hardware entrepreneurs tend to have more work experience than software entrepreneurs.

- Defensibility. Hardware companies generally have economies of scale but hardware products generally don’t have network effects. This means that as soon as you prove the market, you’ll face competition from lower cost manufacturers. The best startups complement hardware with software and services that have network or platform effects. Think of hardware as bringing the revenue and software/services as bringing the margin.

- Planning. The build-test-iterate model that is popular in software startups doesn’t translate well to hardware startups. Proper planning is essential because mistakes can be unrecoverable. For example, you might create a design that fails environmental tests but only discover this years later when you are about to go to market. (See all those symbols on the back of your phone? Those are regulatory certifications).

- B2C vs B2B. Consumer hardware tends to get more attention, but B2B hardware has a number of advantages. You’ll have fewer startup competitors, because entrepreneurs who have both hardware and business domain expertise are rare. You’ll also have fewer incumbent competitors, because B2B hardware usually requires local sales and service teams, making it harder for foreign competitors to copy you. Finally, manufacturing can be done locally because higher price points mean you can be less sensitive to labor costs.

Read more posts on cdixon.org »

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Zynga Spends $1 Million To Launch A New Tech Accelerator (ZNGA)

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mark pincus woah zynga

Zynga has agreed to invest $1 million from its philanthropy fund, Zynga.org, to create a new accelerator for education tech in San Francisco, Zynga announced today.

The accelerator is being run with the NewSchools non-profit venture fund, which has had many big-name backers including The Bill & Melinda Gates Foundation and the Walton Foundation.

Zynga.org and NewSchools have already selected a handful of emerging ed tech companies to join the accelerator's first class, which kicks off this summer.

The companies accepted so far are Kidaptive, LocoMotiveLabs and Motion Math. They have all launched learning games and apps already.

Edmodo, a social learning platform for education with 19 million users, has signed on as a charter partner, too.

SEE ALSO: Both Eric Schmidt And Steve Ballmer Love This Guy's Startup That Makes Windows Less Frustrating

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This TechCrunch Disrupt Winner Could Be The Future Of Search

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enigma at techcrunch disrupt 2013

After three days of startup demos at TechCrunch Disrupt NY, data startup Enigma won both the Startup Battlefield and the Disrupt Cup, taking home $50,000 and beating out six other finalists. 

Enigma aims to make sorting through public data a breeze. It pulls info from over 100,000 data sources and finds connections between them. Think SEC filings, state and federal records, lists of frozen assets, and even CrunchBase. 

If you search "Google," for example, Enigma brings up a list of databases including granted patents, H-1B Visa applications, and SEC filings. If you click H-1B visa applications, you can see every application Google filed and drill it down to see only software engineers. From there, you can quickly see that the U.S. Department of Labor certified 471 of Google's applications for software engineers.  

Sure, the data is already out there, but it's not easily accessible. The founders also maintain that it's hard to see the connections between those sources of public data. 

Enigma seems a lot like Recorded Future, the data startup with $20 million of funding from investors like Google Ventures and the venture arm of the CIA, In-Q-Tel. Both companies are aiming to make it easier to sift through and find correlations between publicly available data. 

"At a very macro level, Enigma is working the same business problem: gaining insight for business decisions from public, open source information," RecordedFuture VP of Product Matt Kodama tells Business Insider. "Enigma and Recorded Future are working to harness different kinds of public information to that end, and that's a really critical distinction that will flow all the way through our respective products."

Already, Enigma has raised $1.45 million in seed funding, and has partnered with Harvard Business School, research firm Gerson Lehrman Group, S&P Capital IQ, and the New York Times.

Past TechCrunch Disrupt NY winners include Soluto, Getaround, and UberConference. All three of those startups have fared pretty well, but none are runaway successes, at least not yet. 

  • Soluto, the winner of Disrupt's inaugural event in New York in 2010, has raised $18 million in funding to continue offering support tools to small businesses for managing and fixing their PCs. Just last month, it introduced a new service to support small businesses with up to 10 PCs.
  • Getaround, a peer-to-peer car rental startup, has raised $19 million to date from investors including Yahoo CEO Marissa Mayer, Collaborative Fund, Menlo Ventures, and CrunchFund. It's still a relatively young company but is definitely a rising star in the "sharing economy."
  • UberConference, the winner of TechCrunch Disrupt 2012, has done pretty well. Earlier this year, it partnered with billion-dollar startup Evernote to share notes in conference calls.

Still, TechCrunch Disrupt, formerly known as TechCrunch 40 and TechCrunch 50, has produced some successful startups over the years:

  • Redbeacon won the top prize at TechCrunch 50 in 2009, went on to raise $7.4 million, and then sold to Home Depot for an undisclosed amount.
  • GroupMe, a group messaging app that came to fruition during a hackathon at Disrupt NY 2010, got snapped up by Skype for north of $43 million. 

SEE ALSO: Fred Wilson: If People Laugh At An Investment I Made, I Know I Struck Gold

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These Startups May Have Blown It By Turning Down $100 Million

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single platform alyson shontell

It's common sense: If someone offers you $100 million, you accept and become fabulously rich.

In Silicon Valley, common sense is replaced by an irrational desire to create an extraordinary company like Google or FacebookFor 99.99% of entrepreneurs, that mentality is profoundly stupid and the pursuit of a billion-dollar company has cost many founders life-changing fortunes.

Here are four examples of companies that turned down $100 million offers, and it may have been a mistake.

VIDDY: Last year, a video app called Viddy walked away from a $100 million offer, then lost all of its traction. Viddy has since laid off half its staff and its CEO has been fired. 

Viddy's competitor, SocialCam, however, was smarter. It raised significantly less money than Viddy at a far lower valuation (Viddy raised $36 million at a ~ $300 million valuation). It was acquired for $60 million just months after its launch.  

The mistake Viddy made was trying to become a $1 billion company like Instagram. It's admirable but ultimately it ended in failure.

FOURSQUARE: Foursquare also had the option to sell for more than $100 million and passed. 

In 2010, one year after its launch, both Yahoo and Facebook offered to buy Foursquare for $100-120 million. At the time, Foursquare had only raised $5 million and had a handful of employees. The money would have changed the founders' lives, and it would have been a home run for investors.

But Crowley had already sold one company to Google, Dodgeball, and he regretted it. Google promptly shut down the location app, and Crowley didn't want to see his dream shut down again. He turned down the offers and has gone on to raise $71.4 million. Foursquare is currently fending off "haters" and trying to prove its business model.

QWIKI: Google offered to buyTechCrunch Disrupt winner Qwiki for more than $100 million, but CEO Doug Imbruce turned it down. Now it's on its third pivot.

PATH:Path also turned down a $100 million offer from Google three months after launch. Now it's getting heat for spamming users to maintain growth. Morin is worth millions from his time at Facebook, but his employees aren't.

Why founders turn down big money

Part of the reason founders turn down jaw-dropping sums is their desire to build world-changing companies. Sometimes they feel the acquirer isn't a good fit, or they aren't ready to give up control.

"Of course it's a tough decision because you're trying to figure out what's the best thing to do for your company," Foursquare's Dennis Crowley said of acquisition offers. "Your company is your baby at that point…You have to make a call and weigh the pros and cons."

Another part of the equation is the investors who have a lot of money at stake. 

Benchmark investor Bill Gurley told the audience at TechCrunch Disrupt that an "anti-IPO," pro-acquisition mentality plagues the tech industry and "prohibits companies from hitting the long ball." He used Indeed as an example. Indeed is a Connecticut-based company that was acquired for an estimated $1 billion after only raising $5 million, a win by almost any other standard.

"[Indeed] had a great business model, a huge consumer brand…and they sold it,” he scoffed.

Gurley isn't the only investor urging founders to take their startups further. Last year, New York startup Single Platform faced similar pressure to avoid an acquisition. It had raised $4.45 million and was in the difficult, local-business space. Like many early stage startups, it battled near-death experiences and struggled to generate significant revenue. An investor told us then that its founder, Wiley Cerilli, was mulling over a $50 million buyout. The investor turned up his nose at the idea of a sale. 

"You'd NEVER hear a Silicon Valley startup talk about selling for $50 million," this person said.

The odds are against startups

Most startups fail. The odds of a venture-backed startup failing are 75%.

Yet founders, against the laws of probability, cling to the anecdotes in which founders hold out for epic, jackpot offers. Sometimes it's smart to hang on.

GROUPON:Groupon was offered $6 billion by Google, turned it down and went public. But its founder Andrew Mason is now gone, and the company might wish it had taken that exit.

PINTEREST: Pinterest hasn't succeeded yet, but it's growth hasn't slowed and its on its way to be an image-based shopping engine. While no billion-dollar acquisition offers have been made public (Google was rumored to be interested for a few hundred million dollars), investors think Pinterest is worth multiple billions.

FACEBOOK: Mark Zuckerberg was offered $1 billion by Yahoo in 2006 and turned it down. He's now worth ~ $13.3 billion and 1,000 of his employees are millionaires.

The smartest founders know how to ride the wave

The decision to sell a company is harder than it sounds. There's fear that investors and the tech community will think a founder is taking an easy way out.

But the smartest entrepreneurs don't let that get to them. They know when it's time to sell.

SINGLEPLATFORM: A few months after the $50 million acquisition discussion, another company offered to buy SinglePlatform for $100 million in cash, stock and employee incentives. Cerilli was in the middle of a fundraise, and he spoke with his investors about what to do. This time, he received support. An investor told him, "Wiley, I'm excited to work with you, but you should take the offer. I'll work with you on your next company."

OMGPOP: Another entrepreneur who knew when to walk away is Dan Porter. Porter was the CEO of OMGPOP which was acquired by Zynga for ~ $200 million. Porter decided to sell his company after confiding in 10 friends and asking for their opinions. He assumed all of them would think he was "giving up" if he sold his company. To his surprise, all of them told him to sell.

Neither Porter nor Cerilli will forget the day they told employees about their acquisitions. Cerilli called up his co-worker, Kenny Herman, after the Constant Contact sale and told him he was now a millionaire. Herman, then 27, had just landed in the airport from his honeymoon.

Porter sat down with each OMGPOP employee and told them how much they had individually made. A bottle of champagne was chopped open, and an entire day of work was dedicated to paying off employee debts, such as student loans and mortgages. Porter's decision also made OMGPOP's founder, Charles Foreman, a millionaire. Before the sale Foreman had left to found a new company; he only had a few thousand dollars in his bank account.

When you're an entrepreneur with a lot of initial traction, it's easy to forget the odds are stacked against you.

While it's hard to sell a company and wonder what you could have built if you hadn't, it's painful to know you and your employees could have been rich, and you blew it.


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These Are The 10 Most Anticipated Startups In Chicago

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Trump Chicago, rooftop bar

TechStars has become one of the most prominent startup accelerators in the world, with locations in Boston, Boulder, New York, London, and Seattle.

Late last month, TechStars announced the 10 startups that beat out nearly 1,000 applicants to join its inaugural program in Chicago. TechStars Chicago was formerly known as Excelerate Labs, but the two recently formed a partnership and decided to use the TechStars branding. 

TechStars is a three-month accelerator program that gives entrepreneurs access to mentors, and invests $118,000 in each company: $18,000 in seed funding and an optional $100,000 convertible note.

Startups that go through TechStars seem to be bound for success. TechStars has funded companies like SendGrid, Condition One, Kinvey, and Timehop, to name a few.

Out of the 175 startups that have gone through TechStars, 90% of them are still up-and-running or have been acquired.

CaptureProof aims to improve a patient's relationship with their doctor.

CaptureProof lets patients securely share their photos and videos with their physicians. The app captures, shares, and compares patient photos and videos to physicians can keep track of how their patients are doing. Physicians can also analyze their patient's health information and trends from anywhere using the company's mobile apps.

Its founder, Meghan Conroy, has a background in pharmaceutical sales and photography.  



HIPOM helps parents manage their children's Internet usage.

With Home Internet Peace Of Mind, parents can easily manage how much time their children spend online.

HIPOM's control panel allows parents to turn on/off Internet access on devices throughout the house at any time. 

"When I read the application for HIPOM I could immediately relate to the pain point that it addresses because I have children of internet age myself," Troy Henikoff, managing director of TechStars Chicago, said. "I gave the service a try and sure enough it really works." He went on to say, "HIPOM's innovative approach to dealing with the growing problem of tech addiction among children is something that will likely resonate with any parent who has ever had the thought that maybe their kids are spending too much time on line."



Nexercise helps you lose weight and stay in shape.

Nexercise is an iOS and Android app for tracking weight loss and getting in shape. The app encourages you to work out through competitions, alerts, and actual rewards.

So far, Nexercise has facilitated 3 million workouts, with its users clocking 100 million minutes of physical activity.



See the rest of the story at Business Insider

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29-Year-Old Mike Brown Just Raised $33 Million To Start A VC Firm In New York

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mike brown bowery ventures aol

Mike Brown spent the past year traveling all over the country. He made quick trips to rural towns and spent weeks in cities spanning coast to coast.

But none of it was for fun. That's just what it takes when you're 29, and you want to launch your first venture capital firm.

Brown met with dozens of high wealth individuals – potential limited partners –  and pitched his idea for Bowery Capital. It'd be an early stage firm based in New York, and it'd go after startups working on enterprise solutions. Nearly all of the people Brown pitched were strangers, some without an in-depth knowledge of the tech industry.

The tiring year paid off. Brown, who formerly invested Richard Branson's money at Virgin Group and is a partner at AOL Ventures, raised $33 million for Bowery Capital. Each LP invested about $1 million. Brown will be off on his own as a sole partner with two employees who worked with him at AOL Ventures, Nic Poulos and Keegan Forte.

Through AOL Ventures, Brown invested in startups such as behaviorally-targeted content company, Sailthru, advertising CAPTCHA startup, Solve Media, and content syndication platform, NewsCred. Brown is also personally invested in a few startups, including former TechCrunch Disrupt winner, Qwiki. Brown's personal investments will be tucked into Bowery Ventures' portfolio. 

Brown will be investing in about 25 startups, spending between $250,000 and $3 million on each. He'll be investing in their seed and Series A rounds. Seed investments are often the first money put into a startup; Series A rounds provide enough capital for startups to begin scaling.

Brown isn't the first twenty-something to start a VC fund. Joshua Kushner, 27, raised money for his own New York startup fund, Thrive Capital. He has since invested in companies like Instagram and GroupMe.

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What Every Entrepreneur Can Learn From Y Combinator Without Actually Going

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Back in 2010, my startup FlightCaster had hit some serious obstacles and we needed to pivot.  We had set a deadline for ourselves for some metrics and we failed to meet them.  It was a bruising time.  We had to let half the team go.  I had to tell my investors what had gone wrong.  They asked that we consider just giving back the remainder of their money.  It sucked.

We had set this deadline early enough that we still had some money in the bank and still had plenty of enthusiasm.  What seemed insurmountable was starting over with a new idea.  To get us through this tough time, we played a little trick on ourselves.  We pretended that we had just gotten into Y Combinator again.  We had about the same amount of money left as YC+Start Fund.  Our runway was similar.  Why not just pretend we were in the program.  When you’re in YC, going from zero product to a launched product in 10 weeks is the name of the game.  When you’re not in YC, building something that fast feels overwhelming.

For the next 10 weeks, we tried to mimic each step.  We wrote up our various ideas as if they were YC applications.  I re-read a bunch of Paul Graham essays and got myself back in the mindset.  Once we landed on an idea (it was an enterprise travel product), we gave ourselves 4 weeks to get to Prototype day, just like YC.  We demoed weekly–to each other, other entrepreneurs, and our investors.  It wasn’t as good as Tuesday night dinners, but it worked–our productivity shot up as we wanted to make significant progress each week.  After that, the pressure was on to launch something.  We held off working on a business deck stuff until our Demo Day approached.

I was amazed how simply adding some YC-like structure to those several months made everything we were doing feel better.  Before that, we had been pretty lost.   But once we pretended to be in YC, we were motivated because we had a schedule to hit.

Effectively, our Demo Day turned out to be presentations of the new product to large travel agencies.  And they were interested.  Which then brought new term sheets from our investors.  Which also brought interest from a larger company, who wanted to have acquisition talks.  Eventually, we took the acquisition.

*** 

I’m hearing from fellow entrepreneurs right now that didn’t get into Y Combinator.  The very  best of them have already moved forward and are working on their startup at full speed.  Love that.  YC is helpful but certainly not required.

While there are definitely a lot of advantages to being in the YC program, the fact is you don’t need them to succeed.  You can get a huge chunk of the value of YC without actually being in the program.  That what this post is about.    Go out and grab it.

What you can get from YC without being in YC

Advice from Paul Graham and the YC partners

Fortunately, Paul Graham writes down most of advice right in his essays.  There is no set of  YC secrets that he hides from the rest of the startup world.  In fact, much of what he says in person simply reinforces the advice that he has already doled out through his essays.  Having watched him for several years now, I also find that if he starts to give out new advice within a YC batch, you will soon find that idea better articulated in an essay a couple of months later.  The same goes for many of the other YC partners who give their advice out for free in their blogs.

Advice from speakers

Every Tuesday night in YC, famous founders give advice to the group. Fortunately, a substantially similar experience is available to you every year.  YC runs startup school each year in October.  Many of the speakers that come to YC on Tuesday night dinners also present at startup school.  And if you miss it, their videos are posted up in the startup school archives.  When I did my first startup (which we did not do YC for) I sat down and watched two years worth of startup school videos as part of my preparation. 

A set launch date

One of the most overlooked values YC provides is the date of demo day itself.  When you get into YC, the date at which you will have to show your product and traction to investors has already been set.  When you have a demo day approaching and you desperately want to show 4 or 5 weeks of traction, the pressure is really on to launch quickly.  And launching quickly is one of the single best pieces of advice you can get out of YC.  So, if you’re not in YC, simply continue to accept the date of demo day and force yourself to launch before then.

Feedback from other founders

One of the most intimidating parts of being in YC is that we demo our progress to each other every Tuesday night.  There is nothing formal about it; you’re just around a lot of people who are working non-stop and everyone is interested in what each other’s building.  And when you demo that often you inherently want to show progress so that you’re not showing the same thing two weeks in a row.  Just like taking a class in college provides some social motivation and structure, YC provides a really nice social cadence.  Find a community of startups in your city, and start demo’ing each week.  Make weekly feedback a heartbeat that powers your startup.

The cash

I don’t want to be dismissive of the $15,000 you get from YC.  For three of my startups, I was dead broke (and significantly negative) during the building phase of the company.  But I can still look back and honestly say that $15,000 was not a make or break number.  There are other ways to make it work.  Now of course, YC also gets you start fund now, and it is certainly nice to have $80,000.  However, it’s rarely a number that fundamentally makes the difference.

The mantras

YC has a bunch of mantras.  For the most part, they are simply concise versions of advice that has npw been given hundreds of times.  Ignore them at your own peril.

“Make Something People Want”

“Write Code, Talk to Users”

“Be a cockroach, impossible to kill”

“Do stuff that doesn’t scale”

“Launch early”

Demo Day

No doubt, demo day is an incredible opportunity for a startup.  The amazing thing though is just how far each of the startups have gotten in such a short time.  Most of the startups have traction graphs that go steeply up and to the right.  If you make the same progress in your own startup, you won’t need a demo day to raise money.  With extra networking and AngeList effort, you’ll do just fine raising money.  No traction?  Well then, demo day wouldn’t have helped you anyways.

The Network

The network of YC alumni is quite awesome.  Everyone’s willing to help each other out.  It’s the second most helpful community I’ve ever been a part of.  The first?  Hacker News.  Ask for feedback and you’ll get it.  Ask for help and you’ll get it.  Give back to the Hacker News community whenever you can.  Treat it as your community, full of people conspiring to help you with your startups.  The comments can often be overly critical.  Don’t let that distract you from the immense value this community overall still provides you.  Use it. 

Go to it everyone!    And if we here at 42Floors can help you in any way at all—please let us know.

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This Tiny Startup Is Trying To Reinvent How We Learn And Read Music

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blake west

How we learn and read music hasn't changed in hundreds of years. 

Until now. 

Hummingbird co-founder and music teacher Blake West was inspired to create an entirely new music notation when he saw a lot of his students struggling with how to read music, West tells Business Insider

"I felt like they weren't doing as well as they should be," West says. "As a teacher, I felt like I was spending too much time trying to teach people how to read music." 

Generally speaking, it could take someone anywhere from three to nine months in order to gain some level of confidence reading traditional sheet music, West says. But with Hummingbird, that time is measured in minutes. 

"We see it as something that can be beneficial for anyone," West says. "Beginners get the most value out of it now. It's designed to speed of the process of learning music."

hummingbird notation With Hummingbird notation, aspiring musicians don't need to count lines. And every note has its own symbol. 

The idea isn't to change the meaning of music, West says, but rather make learning music more accessible to people.

When developing Hummingbird notation, West and his co-founder Mike Sail tried just about everything. They experimented with colors, shapes, lines, squiggles, and other symbols. 

Sail says that they weren't satisfied with any aspect of the notation until students were able to guess what the notation meant without needing any explanation. 

Down the road, Hummingbird will release a tablet app that replicates the experience of having a teacher right in front of you. In terms of monetization, Hummingbird plans to open up a sheet music store, and license the music to other content creators and publishers. 

Since launching last month, Hummingbird has seen 80,000 unique visitors download 25,000 pieces of sheet music.

But Hummingbird is already receiving some backlash from traditional musicians. West says some highly-trained musicians have called the idea terrible.

Though, West says he can understand where the critics are coming from. 

"When I started teaching, I underestimated the difficulty of learning traditional notation," West says. "Once you know it well, it's very easy to forget that it was hard to learn in the first place."

As much backlash Hummingbird has received from professional musicians, Sail says they're still receiving tons of emails and comments from people who believe in the platform.

One man, who has always had trouble learning music because of his dyslexia, told Sail how Hummingbird is much easier for him.

"It's been polarizing in both directions," Sail says.

The ultimate goal for Hummingbird is to provide a legitimate alternative to reading traditional sheet music.

"We want it to be the type of thing where no one feels the need to switch to traditional," West says. "We're not saying professionals need to switch over or trying to convert people already great at learning music." 

SEE ALSO: Meet The CEO Who Lived In A Taco Bell Parking Lot And Now Runs A Cool New Startup

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If You Can Solve These Math Problems, You Are As Smart As The World's Smartest Teenagers

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Phoebe Cai 15, USA

Earlier, we told you about the 10 smartest kids in the world.

They are ranked by a site called Brilliant.org, which asks users progressively harder math and science problems.

Think you might be as smart as one of these tweens or teens?

Prove it by solving some of the math problems they've solved.

Here's a problem 15-year-old Phoebe Cai solved about dominos



Dylan Toh,12, solved this ridiculously hard geometry problem



Tadewos Abiye Getachew, 17, nailed this tricky algebra question



See the rest of the story at Business Insider

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The Geniuses At Harvard Business School Just Came Up With These 14 Startup Ideas

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graduation, harvard, caps and gownStudents from Harvard Business School recently launched their startups as part of Harvard's "startup bootcamp" program for first-year students. 

The Field Immersion Experiences for Leadership Development 3 program is a 10-week crash course in building a company from scratch with a limited budget, and on a tight deadline. 

Click here to jump straight to the startups >

Steven Sinofsky, the former president of Microsoft's Windows Division, worked with a section of about 90 students this year, led by Professor Jan Hammond. Each startup team had roughly six students. 

Here's a breakdown of the program, courtesy of Sinofsky:

  • Two weeks to develop a product concept.
  • Funding simulation (“stock market”) which gives some teams the opportunity to raise more capital and others will need to make do with less, and thus pivot their ideas.
  • About 8 weeks to fully develop the idea, go to market strategy, prototype or actual product, and basically to show that the product can be made.
  • Launch day – this is where we are today! On this day your product or service is ready to be used by people. The stock market is opened for trading and based on the launch readiness and pitches, the value of companies goes up or down and some companies do not make it past this stage.
  • About 3 weeks to actually sell the product or service and ready for …
  • IPO day!

Even though it's merely an academic exercise, the products are real and intended for people outside of Harvard to use. 

View The Rental helps apartment and house seekers find the perfect place to live.

View The Rental offers objective information about apartments and houses for rent in Boston or Cambridge. It provides remote video chat via Skype for people who are unable to see the apartment in person. 

View The Rental will scout out the apartment or house for you, and stream a live video walkthrough. Or, you can receive a report via email. 



RescueMe is a basic medical kit.

RescueMe is an all-in-one travel pack for medication. Each pack includes a First Aid kit, cold, headache, and flu medicine, ear plugs to block out unwanted noise, and a refillable carrying case.



MyFriendBert makes it easier to find dates.

MyFriendBert sends expert-planned, customized date itineraries to your email. Its experts have "scoured the earth" to find hidden gems for the perfect date. With MyFriendBert, you can book a date within a matter of seconds. 

When you sign up, all you have to do is enter your email address, select what kind of dates you want to receive. So either classy, trendy, active, or laid back. The next step is to select how much you're willing to pay. 



See the rest of the story at Business Insider

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People In The Valley Are Passing Around This Smart Take On VC Deal Flow

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mark suster interview 2Venture capitalists need proprietary sources of deal flow.

Otherwise, they might end up paying more than they have to, while also taking a huge risk. 

VC Mark Suster wrote a blog post suggesting one good source of deals, and two bad ones best ignored.

The good source: Suster says blogging is the best source of deal flow imaginable.

"The sheer number of relationships I’ve built through being public, transparent and being willing to engage in comments and through social media has enabled me to get to know entrepreneurs even before they launch their next company," Suster writes on his blog.

A bad source: Investment bankers. Investment bankers are designed to help companies get access to investors, but they also make bad companies look good, Suster writes.

Another bad source: "Demo days," where startups pitch their products in front of an audience of investors, press, and fellow entrepreneurs. 

"Getting excited about a company at a conference and investing is a sucker's bet," Suster writes. "Entrepreneurs raising at prices not normally supported by progress face risks downstream when they have to raise more capital. And that fund raising is part of the job of being an entrepreneur – not something that gets in the way of your doing your job."

Suster prefers to get to know companies over time and loves the startups that don't lend themselves to demo days. 

"I like to watch how they respond to set-backs and adversity," Suster writes. "I like to see how they improve their products when there are obvious holes. I like to debate with them how they will land customers and how they deal with the press." 

Suster also likes to see how they attract teammates, and hear the reasons why their co-founders quit a well-paying job to join a startup. 

"I'll take messy and hard work any day," Suster writes.

SEE ALSO: VC Fred Wilson: These Are The Worst Things You Could Do In A Pitch

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The Difference Between A Startup Failing And Succeeding Could Be Your Mental State

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jason freedman 42floors

Jason Freedman has started multiple companies and gone through Paul Graham's world-renowned startup accelerator program, Y Combinator.

Y Combinator offers startups a lot of benefits: an amazing network of alumni, famous founders who share advice, weekly dinners and peer presentations, a $15,000 investment, and access to tons of investors at Demo Day.

When one of Freedman's companies was failing, he and his team tried a mental trick: they pretended they were back in Y Combinator and gave themselves the same kind of schedule. When their work ethic changed, the business changed too. 

Freedman and his colleagues re-read essays by Graham to get mentally prepared. They presented weekly progress reports to each other, batted around ideas and pressured themselves to launch something great, quickly. They recited popular YC mantras including "Make Something People Want" and "Be a cockroach, impossible to kill." Lastly, they set a Demo Day for themselves. Their Demo Day involved mastering a pitch and presenting to potential big-name customers rather than investors.  

When the "Demo Day" hit, Freedman wowed the travel agencies he was trying to win as clients. The newfound interest from the agencies led to newfound interest from investors. Eventually, interested acquirers came along and one of them bought Freedman's company.

"While there are definitely a lot of advantages to being in the YC program, the fact is you don’t need them to succeed," Freedman writes of the experience. "You can get a huge chunk of the value of YC without actually being in the program."

You won't get access to YC's network or cash, but Freedman suggests using Hacker News for advice instead, a site where smart founders frequent. You can also watch a lot of famous founders share advice with the YC community online; many of the keynotes are posted in YC's startup school archives. As for the money, $15,000 isn't life changing. It probably won't make or break your startup.

"I was amazed how simply adding some YC-like structure to those several months made everything we were doing feel better," Freedman writes. "Before that, we had been pretty lost.  But once we pretended to be in YC, we were motivated because we had a schedule to hit." 

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Ori Allon Has Hired 63 Ex-Googlers, Twitter Employees, And Harvard MBAs To Solve New York's Biggest Headache

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ori allon urban compassOne week after Google met Ori Allon in a tiny, server-crammed office in Sydney, the young developer had a first-class ticket to Mountain View.

Allon, then 26, had created and patented a search algorithm that was used by his peers at UNSW instead of Google. On Orion, users could pull up search results related to the typed keywords as well as exact matches. 

Yahoo and Microsoft caught wind of the Google meeting and asked to meet Allon too. Negotiations to buy Orion started at a few million and ended in a bidding war won by Google. Orion is now an integral part of Google searches.

Allon, who has triple citizenship in Israel, Australia and the United States, rose through the ranks at Google and managed multiple teams overseas. But he missed coding, so he left Google to start a new venture, Julpan. Julpan was another search algorithm, but this one accommodated real-time search results.

Again, large tech companies caught wind of Allon's startup and started a bidding war. Ultimately, Twitter won Julpan. Until Bluefin Labs' $100 million exit in February, Julpan was Twitter's most expensive acquisition. 

While Allon was financially successful from his two exits, he didn't feel fulfilled as an entrepreneur. Twice, Allon built companies that didn't generate revenue and sold them. So his latest venture, Urban Compass, is a much different challenge.

This time, Allon wants to make money right away and build a long-standing company. He's trying to solve a big headache for New Yorkers: housing.

urban compass

Urban Compass launched today before a room full of press with Mayor Bloomberg at Allon's side. It's positioned to be the ultimate apartment-finding tool for Manhattan. On it, users can search listings by price, number of bedrooms, and location. They can also schedule times to view available apartments, and read neighborhood reviews.

Urban Compass charges a broker fee that's much lower than the typical one month's worth of rent. Eventually, Urban Compass wants to accept all monthly rent charges from tenants for landlords on its platform.

Allon and his co-founder were able to raise a monstrous $8 million seed round and hire 63 people before today's launch announcement. Employees include ex-Googlers, Twitter and Microsoft employees, and Harvard MBAs.

Allon's investors are strategic real-estate moguls. The Kushner family is involved through Thrive Capital, which also gives Allon access to the Trumps through Jared Kushner (Ivanka Trump is his wife). The Tisch family, which has names plastered on at least a dozen NYC buildings, is also working with Urban Compass. Goldman Sachs, which never dips its hands in early stage startups, is an investor.

From his investors' and personal connections alone, Allon expects he can get 20-30% of New York's real-estate market to use Urban Compass. There are more than 6,000 listings currently on the site. Once Allon's team perfects the New York experience, Urban Compass will expand to other cities.

An apartment-finding tool for a single city sounds like a tired idea. But Allon's grand plan is smart. 

Ultimately, Allon wants to build a social local platform, like Foursquare or Nextdoor. But instead of ramping up users, Allon wants to ramp up revenue first.

Urban Compass hopes to onboard the major real estate companies in the area, which in turn will onboard all of their tenants. Then the platform will have real-time details of who's moving in, who's moving out, and what types of local venues will enhance a resident's experience. Once Urban Compass accepts rent payments, users will begin visiting monthly, which ensures user retention and site engagement.

Despite his two exits, serial entrepreneurs like Allon are never sure bets for investors. Sean Parker raised $33.5 million for Airtime and it never took off. Bill Nguyen raised $40 million for Color and it tanked. You don't have to look beyond Foursquare or LivingSocial to know how difficult it is to sustain a location-based business. 

But 63 employees and a slew of investors are banking on Allon figuring out his third startup. And with Allon's new mindset, the results could be greater than before.

"I could do another startup, build something very specific, and sell it to a larger company," Allon told The Verge. "But I’ve done that already, you know. It's not about the money. I’m ready for a different challenge. I want to build something really, really big."

urban compass

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An Ex-Googler, Ex-Yahoo Really Good At Putting Himself In Money-Making Situations Just Joined The Board Of TapAd

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AdMeld CEO Michael Barrett

The biggest sector in New York tech remains ad tech.

One of the biggest names in New York ad tech is Michael Barrett

He made his name running ad sales at MySpace (back when that was still a big deal). 

Then he sold a company, Admeld, to Google for bank.

Then his buddy, interim Yahoo CEO Ross Levinsohn, poached him from Google to run ad sales at Yahoo.

Then Levinsohn left Yahoo, and Yahoo's new CEO, Marissa Mayer, gave Barrett a big exit package.

For those keeping score, that's: Cha-ching. Cha-ching. Cha-ching.

The old cha-ching times three.

So everyone's been wondering: What's next for Barrett?

We just found out.

A couple sources close to the situation say he's joining the board of a company called TapAd.

TapAd allows brands to buy ads targeting the same person across multiple platforms (Home PCs, smartphones, smart TVs, etc.)

We hear it's valuation is close to $140 million, and that people at the company believe 2013 revenues will be around $40 million.

An official announcement is coming tomorrow.

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The 20 Hottest Startups From Israel

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Tel Aviv startup BillGuard

Israel calls itself the "startup nation." Israelis say that technology is the country's No. 1 export.

By some counts, Israel is home to 4,800 startups today. It's also home to least two dozen accelerator/incubator programs in the Tel Aviv area, alone, including some run by Microsoft and Google.

There are more incubators in other cities, too, including a program in Jerusalem run by Jerusalem Venture Partners on a campus so big it has its own restaurant and nightclub. 

All of this is to say that as a startup hub, Israel is second only to Silicon Valley.

So it's not easy to name the nation's hottest, most exciting startups because everywhere you turn there are young companies doing really cool things.

Business Insider recently spent a week exploring Israel's super hot startup community, meeting with founders, employees and venture capitalists. 

(Disclosure: Microsoft and Jerusalem Venture Partners paid some of the travel expenses for this trip.)

We asked everyone to name the nation's coolest, hottest startups.

Waze: crowdsourced traffic reports

Waze is far and away the hottest, most talked about startup in Israel these days.

It's an internationally popular maps-and-navigation app for 30 million drivers worldwide. Drivers report their traffic problems, which is a great way to get real time traffic info.

At one point, Apple was rumored to be buying Waze. That didn't happen but the company is doing so well that co-founder Uri Levine has become an angel investor in other Israeli startups, like Pixtr, the app that makes people look gorgeous in photos.

Waze has offices in Palo Alto, Calif. and New York.



Wix: beautiful websites

Wix is a five-year-old company backed by VC firms like Benchmark and Bessemer.

It provides free and low-cost websites and lets people with no tech background create beautiful sites. Wix hosts over 30 million sites.

In Israel, Wix is known for its gorgeous offices in an up-and-coming area in near the Mediterranean sea called Tel Aviv Port. (Here are some pictures of the office.)

Wix has offices in San Francisco and New York.



BillGuard: a new way to protect you from fraud

BillGuard protects consumers against a kind of fraud-like activity it calls "grey charges." That's where companies sneak regular charges on your credit card.

Once you sign up, you do nothing more. BillGuard monitors the world for fishy transactions and gets the refund for you, for up to three cards for free. It charges $80/year to protect up to 10 cards.

BillGuard has raised $13 million so far from big-named VCs including Bessemer, Khosla, Founders Fund (Peter Thiel's and Sean Parker's fund) and Innovation Endeavors (Google chairman Eric Schmidt).

BillGuard also has an office in New York.



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Once-Hot App Viddy Returns $18 Million To Investors And Prepares A Final Attempt To Turn Around

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shakira-waka-waka-vevo-2

Last summer, social video app Viddy was in a much different place. It was in a battle to be the "Instagram of Video" alongside competitor SocialCam, and its number of users surged higher every day.

Viddy used that momentum to raise a $30 million Series B round from investors such as Khosla Ventures, NEA and Goldman Sachs. Even Shakira invested.

But the traffic was temporary. Viddy grew quickly on Facebook's platform, but Facebook cut off the traffic hose when news broke that people were getting spammed by social video apps. Viddy's executive team has all but left, including its CEO and its head of business development. In February, one-third of the staff was laid off.

Now, Viddy is giving itself one last go. It's returning $18 million to investors and keeping the remaining millions to try a few more product launches.

"Viddy raised a substantial amount of capital last year, during different market conditions,” Viddy's president, JJ Aguhob, told AllThingsD. “A year later, Viddy is a leaner, product-focused organization that is steadily growing its audience and will soon be releasing new products. Our late-stage investors have been very supportive, but it just makes good business sense to return capital we do not need and have a clean balance sheet in the process.”

Having to return all that cash isn't the most painful part of Viddy's story either. Last year, Viddy reportedly turned down a $100 million buyout offer from Twitter when the app was on the upswing. 

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