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The latest news on Startups from Business Insider

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    paul graham

    Tech startup founders often make the mistake of trying to convince an investor with their pitch, Y Combinator founder Paul Graham writes on his blog. Instead, it's better to let the startup speak for itself.

    Graham, a longtime Silicon Valley investor who has backed startups like Dropbox and Airbnb, says the first step is to understand why your startup is worth investing in. Then you just need to explain that to investors. 

    Here's how to at least seem like you'll be a big success and get investors to back your company, according to Graham:

    1. Formidable founders (those who seem like they'll get what they want). This is the most important ingredient of the equation because investors make snap judgments about you when they meet you. Within the first few minutes, Graham says, investors typically decide if you're a winner or a loser. Once they form that opinion, it's hard to change.
    2. Truth. In order to get respect and impress investors, you need to tell the truth. You also sound more confident when you're telling the truth. It's easier to convince an investor to back your company if you yourself are convinced it's worth investing in.
    3. Market: Prove that you're a good bet to investors by showing a "plausible path to owning a big piece of a big market."
    4. Rejection. If you've been fundraising for a while but haven't gotten anyone to invest yet, it can be even hard. Simply be candid about what made investors hesitant about you. 
    5. Different: Convince investors that you're different from everyone else. Show them that you have a new approach to the problem. 

    SEE ALSO: This Is The Meanest Thing Silicon Valley Legend Paul Graham Has Ever Said To A Startup

    Join the conversation about this story »


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    Ashton Kutcher NYSE

    Ashton Kutcher splits his time between investing in startups and acting. He's poured about $100 million into companies like Airbnb, Spotify and Foursquare.

    CNBC's Maria Bartiromo asked Kutcher how he finds the deals, and what he looks for in a startup.

    Kutcher didn't mention being close with fellow tech investors like SV Angel's Ron Conway, who are certainly part of his vetting process. But he did mention what he looks for in companies.

    He says he starts by looking for a problem, then trying to find a startup that's solving it. Occasionally startups will present ideas that solve obvious problems he hasn't thought of before.

    "There are a couple of specific sectors we look at," he says. "The two-sided marketplaces are a big opportunity that was never before available, Airbnb being one of them."

    He also looks for these specific qualities in startups:

    • Consumer-facing software technologies. 
    • The density of the problem they're solving."We're not looking for companies off the bat that we go, 'Oh, that company's going to make an X amount of money and has X market cap,'" says Kutcher. 
    • Extraordinary entrepreneurs."A lot of these companies that we invest in, they are two guys in a garage with a PowerPoint and a dog," he says. "So, you have to sort of see through everything else and go, is this guy or girl going to build something that is going to be enduring?"
    • And by extraordinary, he means passionate people with perseverance."Do they have passion for the problem they're trying to solve? Do they have the kind of will power that's going to take them through the challenges? Because, like Steve Jobs, they're going to face great challenges along the way and they'll face adversity and they'll face people who tell them they can't do it. And when they start, they're going to call -- like Steve Jobs did -- and people won't know [their] name. They're going to go, 'Jobs?' 'Yes, J-O-B-S.' And you have to have a level of perseverance and will to actually drive through that." 
    • Know-how. Kutcher's final requirement: "When you have the moxie to actually put together the pieces and build the solution in a really effective way."

    Here's the full interview with Kutcher, below:

    SEE ALSO: 6 Things You Need To Have If You Want Ashton Kutcher To Invest In You

    Join the conversation about this story »


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    discovery space shuttle rocket launch explodeSome startups that fail initially look like they'll be giant successes. That's because they're able to drum up a ton of traffic or users very quickly, and early adoption can be a sign of a lasting product. It's also easiest to attract investors when a company is in hyper-growth mode.

    Sometimes, those high traffic numbers are fleeting; they're uncontrollable gifts from a big source like Facebook that can be taken away. Other times, startups use tricks to inflate growth and attract investors, but they're usually unsustainable.

    Publishers may buy traffic on Outbrain or StumbleUpon, for example. E-commerce companies may offer discounts that improve gross sales but cause them to operate at a loss. Others master Facebook's platform temporarily and get a flood of referrals.

    When investors see big growth numbers, in their haste to get into the deal, they may forget to ask an important question:

    What is causing the rocket ship growth, one source or many?

    If the answer is one source, will there still be a business if it's suddenly taken away?

    In 2012, a few startups grew incredibly quickly on the heels of Facebook's platform then raised tons of money. Those startups include Viddy, Socialcam and BranchOut (Fab and Path did also, but those businesses are still alive and working themselves out). Socialcam sold for $60 million at its peak.  Viddy, a Socialcam competitor, went on to raise at a $350 million valuation. Branchout, a professional networking tool for Facebook, raised $25 million and had so much traffic that journalists were urging LinkedIn to buy it.

    In each case, the rocket ship growth disappeared shortly after the fundraises.

    Viddy's President, who is currently returning millions of dollars to investors because the idea didn't pan out, recently said: "Viddy raised a substantial amount of capital last year, during different market conditions."

    AllThingsD's Mike Isaac explains those market conditions well. What Viddy's president really meant to say was it had one source of traffic, Facebook, and it disappeared. 

    "The market conditions Aguhob speaks of, I’d estimate, involve Facebook’s proclivity to giveth and taketh away. Viddy, along with other social video startups like Socialcam, rose to prominence last summer on the back of Facebook, when the social giant was delivering massive amounts of traffic to social video apps. Alas, after wide reports of Socialcam spamming users and general distaste for its viral reach, Facebook turned off the traffic funnel to social video apps, leaving companies like Viddy and Socialcam in the lurch.

    "So essentially, Viddy raised tons of money when traffic was rich and scaling, hiring and expanding resources rapidly made sense. Now, in its post-Facebook-aided future, Viddy is downsizing — both in bank balance and in team size."

    Branchout faced a similar situation. It climbed from 400,000 monthly active users in December 2011 to 8 million four months later, raised a ton of money, then lost two-thirds of those users by June 2012. Marini told Business Insider then that his team stopped making user acquisition on Facebook its priority, which is why the number nosedived. 

    In other words, once BranchOut stopped getting Facebook referrals, it found it had no business. Yesterday, TechCrunch wrote that BranchOut had failed and was pivoting.

    The smartest investors see past hockey stick charts and examine why companies are growing quickly. They ask for access to Google Analytics, care about engagement, and don't get distracted by big, artificial numbers. Those who don't may think they're buying into something great, only to find themselves out of a lot of cash. And startups who rely on one source may find themselves suddenly out of business.

    Join the conversation about this story »


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    Drew Houston

    A prominent Silicon Valley investor is upset about Dropbox.

    Here's what's bugging him.

    In 2011, Dropbox raised $250 million.

    Everyone reported that Dropbox raised this amount at a $4 billion valuation.

    But according this investor, Dropbox actually raised that $250 million at a much lower valuation.

    He says that actually, Dropbox sold some "preferred" at a $4 billion valuation and some "common" stock at a valuation closer to $1 billion.

    So, according to this investor, it is inaccurate to say Dropbox is worth $4 billion. 

    This investor does not know any this information first hand. He's not a Dropbox investor, and he only heard about some of these valuation figures by chatting with people who are.

    Still, I believe him.

    The reason I believe him is that pretty much all startups sell preferred stock to investors at a higher valuation than their common stock. 

    Preferred stock is more expensive because it comes with special rights and privileges. The main one is that, in the event of a sale, preferred stockholders get their money first. 

    Meanwhile, those of us in the press love big, sexy numbers, so we typically report the valuation of the preferred stock.

    Add it all up and the answer is: yes, Dropbox is probably not worth as much as you thought.

    Then again, the same could be said for all the other "billion dollar" late stage startups out there: Airbnb, Uber, and Box. 

    There is nothing dubious about this state of affairs – so long as companies like Dropbox are honest with their employees about how much their stock, which is common stock, is actually worth.

    We've seen no evidence that Dropbox or any other startups are being dishonest.

    Which is good.

    Because if startups were being dishonest with employees or potential employees, they'd be setting themselves up for all kinds of nasty fraud lawsuits by employees and maybe even an investigating from the IRS.

    Join the conversation about this story »


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    sa 100 2012 party steve greenwood brewster

    Brewster, a contacts manager that launched a little over a year ago, has lost all 12 of its original employees since then, according to a source familiar with the company.

    There are a mix of reasons for why all the employees have left, but this source says it's mostly due to concern over the app's poor user engagement and acquisition and frustration over founder Steve Greenwood's management style and vision for the company.

    It's unclear how many active users Brewster has.

    In an interview, Greenwood wouldn't comment on the employee departures or the number of users Brewster has, but did say he was happy with the team of eight people he has in place now. He also added that Brewster was gearing up for an update this fall with new features and the company's investors were happy with the product's direction.

    Brewster launched in July 2012 to a lot of hype. In fact, so many people tried to download the app on day one that the service crashed. The app pulls in contact information from your phone and social networks like Facebook, LinkedIn, or Twitter and merges them all together. The idea is to have a dynamic contacts list that automatically updates whenever someone changes jobs, moves, or gets a new phone number. The startup raised an undisclosed amount last year from Union Square Ventures and other investors. 

    Before starting Brewster, Greenwood worked at a startup called Drop.io, an online file sharing service that Facebook bought in 2010.

    Join the conversation about this story »


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    dandelion

    Todd Masonis and Cameron Ring didn't set out to start a chocolate company.

    When the pair met at Stanford University in 1997, they created Plaxo, a social contact service that ended up selling to Comcast in 2008.

    At the time, Facebook and Google were also rumored to be bidding for Plaxo. But Comcast ultimately won with an offer estimated between $150 and $170 million.

    Shortly after the company sold, Ring and Masonis decided to try to reinvent chocolate.

    They wanted to create a place where people could see and learn about how chocolate is made, Ring tells Business Insider.

    So they started Dandelion Chocolates in San Francisco late last year.

    There are a few different facets to the Dandelion Chocolates business. There's the factory where it produces its own chocolates, as well as a cafe where it serves up candy bars, hot chocolate, and pastries.

    Some days, Dandelion even hosts classes to teach people the basics about chocolate. It's appropriately called "Chocolate 101." 

    Earlier this year, it had about 50 wholesale retailers on board. Today, that number has more than doubled to 120 retailers. There's even a waiting list of about 100 wholesalers that want to carry the chocolate, but there's just not enough to go around right now. 

    On the cafe side of the business, things are going well, Ring says. There are months when Dandelion brings in more money than they spend. But they're still looking to further scale the direct-to-consumer side of the business.

    Masonis and Ring set up the store using an iPad and cloud-based point-of-sale system from ShopKeep. Ring even created a custom back-end solution to sync up every aspect of the business.

    "It’s hard to come from a technology company and not apply tech in every way that you can," Ring says. "Once you’ve done tech, it kind of always affects how you see the world."

    Dandelion Chocolates prides itself on its high-quality chocolates. All of their chocolates are 70% ground cacao beans and 30% sugar. That's it.

    Dandelion will typically make three types of bars at any given time. Even though they use the same ingredients in every bar, they have completely different flavors, Ring says. Some cacao beans are sweeter, more nutty, acidic, and so on. Depending on what beans they have at any given time, Dandelion can achieve a variety of flavor profiles. 

    Down the road, Ring says he's looking to open up a parklet, which would be a little permanent pedestrian area installed in a parking space outside the shop. The company is also looking for another retail opportunity, Ring says.

    Dandelion Chocolates is mostly self-funded, but also raised a small friends and family round. 

    SEE ALSO: The Story Of A Boy Whose Tempter Tantrum Led To A Venture-Backed Food Startup

    Join the conversation about this story »


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    Kelsey ConophyOn a mission to create a new way to match employees and employers, it was fitting that Kelsey Conophy used an unusual method for recruiting her co-founder.

    The 2012 Parsons School of Design Graduate was looking for someone with both technical chops and a psychology background to complement her own design and business background.

    She spent some four months searching in the usual ways: networking, going to Meetups, and reaching out on various professional sites, all to no avail.

    After that, Conophy took the more unusual step of posting that she was looking for a potential co-founder with that particular experience on a profile on OkCupid, the popular dating site. Shortly after, she heard from Julian Diaz, who had studied both subjects at Penn and had similar frustrations with the recruiting world.

    "Within a week of posting, I did have a few responses, some kind of sketchy. Luckily Julian Diaz responded ... we met up for dinner and hit it off," Conophy told us.

    Together they created workZeit, a HR tech startup that uses data to analyze company culture. The company offers a "cultural fingerprint analysis" that companies can run on applicants and their own workers through in order to create better matches, based on preferences and practices related to how the company measures performance, how they motivate people, the pace of work, and the social culture.

    "Most people think companies know what their culture is, but a lot them don't. We've found that a lot of companies have a really hard time discussing what [their culture is] and finding out what they actually have," Conophy said. 

    About a year and a half into the Brooklyn startup's existence, clients include New York area companies like Annalect and Compstak. 

    workZeit Is part of a growing group of companies attempting to bring more data to the HR process, which has been about unscientific interviews and gut feelings for too long.

    Join the conversation about this story »


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    How do all the companies on the Internet fit together? Where is the center? What is on the outside and moving in?

    Menlo Park, Ca. startup EverString has put the whole thing on a map, using artificial intelligence technology to perform semantic analysis on 900 million news sentences and counting.

    The company was started last September by ex-NASA engineer Patrick Martinchek and former investment banker Vincent Yang, who are both students at the Stanford Graduate School of Business. Their team includes a neural network brain scientist, NASA scientists, mathematicians, growth equity investors, event trading experts, and a professional gambler, many of them also MBA students at Stanford.

    Other than its technology galaxy product, EverString also has a smart news reader productIf you're interested in enterprise companies and big data, you can search through news articles that mention big data events and conferences, or you could search only for the companies that had recent product launches or just raised funding.

    EverString's services are marketed to venture capitalists, financial traders, and other business professionals. The firm is already providing custom solutions for a handful of customers, though it's not disclosing how much it charges.

    EverString is currently part of Microsoft Ventures Accelerator program in Beijing. Part of the team is in China and others are in Mountain View, Calif. It has received an undisclosed amount of funding from Sequoia Capital, IDG Ventures and Farallon Capital. 

    Martinchek showed us some of the maps. Here's the Technology Galaxy:

    everstring galaxy

    Each dot represents a company, with larger dots representing more influential companies.

    Each color represents a different industry, with different shades showing variation in that industry. Martinchek confirmed that pink represents cloud-based companies; orange is search-related; magenta shows enterprise; green relates to social networking.

    The companies near the edge of the galaxy are typically newer. The larger, more established industries cluster toward the center of the galaxy. The lines show connections between companies and industries.

    We'd show the maps in more detail if we could, but that's proprietary information for EverString.

    Below is the same map more clearly grouped by industry. Google is the largest not, indicating its dominant influence. EverString customers, however, are more interested in the smaller circles and clusters on the edge, showing companies and industries that are just emerging.  The online education industry, for instance, is growing in influence, with hot companies like Coursera, Udemy, and Udacity.

    everstring graph


    Let's zoom in on the "Social network" category. Unsurprisingly, Facebook and Twitter reign supreme here. Even though MySpace's heyday is long gone, it's actually still relevant and influential in the industry. 

    everstring relationship map social


    The travel and rental industry appears toward the edge of the galaxy, meaning that it's not nearly as influential as something like social networking. Still, we see some familiar companies like HomeAway and Airbnb with a significant influence in the growing industry. 

    EverString_Galaxy Travel_Rental_Services

     

    So now that you've seen what the Internet galaxy looks like now, here's a view of what the Internet looked like back in 1984. Not much going on then.

    EverString


    In 1998 & 1999, Google was founded and a few more tech companies entered the mix.

    Everstring internet map

    As new industries and companies emerge, the technology galaxy will continue to grow and reveal new, untapped markets. 

    In the near future, EverString will allow its customers to overlay the galaxy with real-time information from Twitter. That real-time Twitter functionality will allow customers to understand which companies are generating conversation at any given moment. 

    SEE ALSO: Now, You Can Predict The Future Just Like Nate Silver

    Join the conversation about this story »


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    dating

    Humans have been having sex without the help of technology for ages.

    But there are still plenty of startups aiming to harness the power of technology to make it even easier to have sex.

    As of February 2013, four companies controlled 77% of the $1.22 billion online dating market. They were IAC (owners of Match.com and OkCupid), eHarmony, Zoosk, and Spark Networks. 

    In addition to those, there are a handful of other startups trying to make it easier to find love. 

    Tinder is one of the hottest apps out there for dating.

    Even though Tinder doesn't peg itself as a dating app, it has generated over 75 million hook-ups and at least 50 engagements

    Tinder shows you pictures of people nearby with similar interests. You simply swipe right if you like what you see, or swipe left if you don't. Tinder will notify you if there's a mutual match. If there is, you can start chatting right away. 

    iOS: Free

    Android: Free



    Let's Date helps you find people with similar interests nearby.

    Unlike Tinder, Let's Date features full-fledged profiles.

    Everyone on Let's Date has a dater card, which features basic information like age, sex, and interest. It also has more interesting information, like your "kink factor," and willingness to have sex on a first date.

    Once you're in the app, you swipe through dating cards and if you like what you see, you can click "Let's Date." If that person hits "Let's Date" on your profile, the two of you will be able to chat and plan your first date.

    iOS: Free



    OkCupid's CrazyBlindDate sets you up on blind dates.

    OkCupid's Crazy Blind Date completely masks who you're going on a date with. 

    To use it, all you have to do is sign up, create a basic profile, select places you'd like to meet, set which nights you're free, and upload a photo. CBD will find a match for you, but only show a scrambled version of that person's photo.

    Before the date, you'll be able to chat and learn more about each other. 

    iOS: Free

    Android: Free



    See the rest of the story at Business Insider

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    Bryan Goldberg

    Earlier today, BleacherReport co-founder Bryan Goldberg raised $6.5 million to launch a new site geared toward women called Bustle. 

    Goldberg wrote a post announcing the new round on tech publication PandoDaily. But based on the looks of the comments, some people are clearly skeptical:

    "A quick look editorially, and it looks like you're not doing any more than what Refinery29, Cut Blog, fashionista, Racked, Stylecaster, Fashionologie, BuzzFeed fashion, Jezebel, HuffingtonPost fashion, or any of the other hundreds of low-value fashion sites that already does what you're trying. Many of them can add writers just as quickly as you can." - excerpt from vFunct's comment

    "Bustle sounds pretty interesting, and it's wonderful that you're hiring so many women. But I remain somewhat perplexed and frankly disturbed that VCs are more than willing to support these huge funding rounds to (obviously talented & experienced) MEN to create for a female audience while female entrepreneurs themselves receive less than 10% of all VC funding. Are there women on the founding team? Or are they all just employees? I didn't see a mention of that, specifically." - Cynthia Schames

    "While I salute you as an entrepreneur able to build a real and healthy business in my industry, news-media, I have to say you don't make a very convincing case that you are a good CEO to run a feminist brand. First, you managed to name your company after a fashion that's ancient and was an obstruction to women who sought to move freely (the bustle). That name also feels derivative of the actually feminist magazine Bust. Secondly, you write: "My job, as CEO, is to hire the right people. My job is to know a lot of engineers, editors, venture capitalists, and salespeople — and to bring them together. Knowing the difference between mascara, concealer, and eye-liner is not my job." Knowing your targeted audience, and that these women (including myself) care about far more than cosmetics might be a good thing for you to include in your job description." - LoraKolodyny

    Some commenters are clearly dumbfounded. Others are trying to better understand Bustle's main competitors.

    From an advertising standpoint, Goldberg says that he sees Vogue, Hearst, and other large women's publishers as competition. He argues that while there are a lot of great women's sites out there, they can be very niche. Some that come to mind are Feministing, Autostraddle, Jezebel, and SheWired.

    But despite concern from commenters, Goldberg maintains that Bustle writers aren't just going to write about cosmetics. He also argues that even though there could be better people to serve as the face of the company, not all of those faces would likely be able to achieve the same success with Bustle as he foresees. 

    SEE ALSO: Bleacher Report Co-Founder Bryan Goldberg Raises $6.5 Million To Launch A Site For Women, Bustle

    Join the conversation about this story »


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    Mad Hatter Tea Party

    As cofounder of a local-social network startup called Circle, Evan Reas is no stranger to finding novel solutions to unusual problems.

    When you find yourself positively stumped by a creative obstacle, there are the conventional methods of attack – dream something up by yourself, or maybe hire a professional to take care of the problem from beginning to end.

    And then there are the more unique, off-the-beaten-path approaches.

    Like taking magic mushrooms.

    "It completely changes how you think," Reas told us. "About your problems, about yourself, everything. It forced me to ask, 'Is what I'm doing important?'"

    With 4.5 million people using Circle so far, it would certainly seem so. This iOS and Android app aims to be your local network, showing you who and what is nearby. It can sort your friends by their various Facebook networks (high school, college, workplace) and lets you send them messages.

    Reas isn't alone in his endorsement of the psychedelic experience. The list of public figures affected by mushrooms and similar drugs runs long and varied, featuring a set of names that includes literary heavyweight Aldous Huxley, musical icon Jerry Garcia, and even Francis Crick, who discovered the double helix structure of DNA.

    We're not endorsing this approach, of course. Magic mushrooms are illegal in most states.

    Circle and its 10 employees have made the app available for free on iOS and on Android.

    Join the conversation about this story »


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    salad blue apron

    When you come home from a long day of work, the idea of making a meal from scratch is dreadful. It takes time to find a recipe, go shopping, prep the ingredients, then start cooking. 

    A VC-turned entrepreneur who felt this pain, Matt Salzberg, decided to turn it into a business. His startup, Blue Apron, sends weekly ingredients to its subscribers in either 2, 4, or 6-person portions. It now ships ingredients for more than 100,000 meals per month and its growing popularity helped Blue Apron raise a fresh $5 million Series B round of financing.

    Investors include Salzberg's former firm, Bessemer Venture Partners, First Round Capital, and some of Blue Apron's previous investors.

    Each week, Blue Apron posts six meals on its site, three of which are vegetarian. The meals are created in a test kitchen by one of the startup's founders who is also a chef,  Matthew Wadiak. Users can decide which (if any) meal to order and how many portions to buy. This week's choices include spice-rubbed pork medallions with peach salsa and chopped Napa cabbage salad.

    Each portion costs $9.99 and takes 30-45 minutes to cook. There is no shipping cost, which is kind of Blue Apron, because it certainly costs a lot to guarantee that fresh, unbruised food will arrive at a user's door. Ingredients are sent pre-measured, so users won't spend time separating a bag of peas and worrying about wasted food. It doesn't come chopped though, so you'll still have to bear that burden.

    Blue Apron's meals are all healthy but Salzberg cautions that they're not a dieting solution. Each portion is between 500 and 700 calories.

    Blue Apron is raising money to continue scaling the company. It already ships meals to more than half the country, but it's going to reach more destinations soon. It's able to offer low costs by negotiating wholesale prices, something people can't do at local grocery stores. It also knows how many people will be ordering a meal about six days in advance, so it knows how many ingredients to order. When they do over-purchase ingredients, Blue Apron donates them to a local New York charity, Food City Harvest, which gives leftovers to families in need.

    Salzberg says everyone from new moms to empty nesters are trying Blue Apron. It's even saved a few relationships. He says couples have also sent him photos of engagement rings next to meals they've made via Blue Apron.

    While Blue Apron strives to make life easier, it also strives to help cooking novices improve their skills in the kitchen. The name was selected to reflect that; in France, apprentice chefs wear blue aprons. The startup currently has 40 employees. This is Salzberg's first venture.

    Join the conversation about this story »


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

    Dan Porter was the CEO of OMGPOP (the company that made Draw Something) when it sold to Zynga for nearly $200 million in early 2012.

    Last spring, he left Zynga and the New York City office full of former OMGPOP employees closed.

    Now, Business Insider has learned he's working on a mobile entertainment startup and he's in talks to partner with star talent agent, Ari Emanuel.

    The source we spoke with is "100% sure" of Porter's entrepreneurial plans, although Porter declined to comment on the matter.

    The source says no deal between Emanuel and Porter has been finalized, but Emanuel and other movie industry executives would be the likely founders of Porter's project, not traditional venture capitalists. The startup is being held up, says the source, due to pending employment contracts that are expected to go through around September.

    Porter and Emanuel apparently met at a party and the pair hit it off. The opportunity will allow Porter to "hobnob with A-listers and build stuff with a pretty able team," says the source.

    Porter has poached some of the youngest, most talented engineers from OMGPOP for his startup, including Ferose Babu and Will Chen.

    Babu, Chen, and Emanuel have not responded to requests for comment.

    The mobile entertainment company will run a lot like Betaworks, a company that creates other companies, says this person. 

    "People in the company will dream up and build prototypes of stuff, then they'll launch it," Business Insider was told. "The process will be to create something really fast, put it out there, and if it has any legs, the employees that were working on that particular product are going to spin it off into its own company."

    All of this ties into recent news about OMGPOP employees wanting to re-acquire their former domain, omgpop.com from Zynga. Omgpop.com generates roughly 2 million monthly uniques and could generate a few million dollars in advertising revenue if properly maintained. As the reports go, OMGPOP executives asked for it back and were willing to pay for it, but Zynga gave them the runaround.

    While Porter hasn't been named as one of the people who wanted to buy it back from Zynga, Business Insider has reviewed written online conversations where Porter seemed to be the brains behind the operation. 

    The source says Porter wanted to own the domain to send traffic to his new startup. 

    "Dan wanted to use the highly engaged audience of 2 million from OMGPOP to get the kids to download the new apps he's creating to create an immediate feeling of a hit," this person says.

    Porter disputes the allegation. 

    "The goal was to keep it alive," Porter says. "If we had gotten it back, it wouldn't redirect to anyone's new business. If Zynga called and said I could have it for free I'd say no. I'm not interested in running it."

    As for his next venture, Porter merely states:

    "I'm excited about returning to my entrepreneurial roots and doing stuff in the future."

    Join the conversation about this story »


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    Earlier this week, a startup founder in San Francisco wrote a rant in a blog post outlining all the reasons he hates living there. He moved from New York to northern California to participate in a top-notch accelerator program, Y Combinator.

    The founder, Peter Shih, now claims his post was meant to be "humorous satire." Some San Francisco residents don't see it that way. Now, someone is putting up posters telling him to move back to New York and urging others to boycott his payments company, Celery.

    Here's a picture of the poster which was tweeted to Business Insider, below.

    To see the post that made residents so angry, read this.

    Join the conversation about this story »


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    jerry yangIf you're going to try to do something really new for the world, lots of well-meaning people are going to criticize you as nuts or stupid.

    That was the point of a quote from Amazon CEO Jeff Bezos we published last week.

    The trouble for people in the technology business is that sometimes, these well-meaning critics are the people with all the power and money – venture capitalists and big-time CEOs.

    This was the point driven home by Twitter thread started by Groupme head of business Steve Cheney late Sunday night.

    He tweeted:

    Hunter Walk, a former Google executive who also spent time at  at virtual reality company Second Life, replied:

    Second Life hasn't lived up to its hype, but broadband Internet sure has. Any VCs who bet it would not are probably not in the business anymore.

    Then Ariel Seidman, formerly of Yahoo tweeted:

    The Yahoo CEO in 2008 was Jerry Yang. Yang is  a visionary in his own right, but boy did he blow this one. Five years later, Yahoo is still way behind in mobile.

    Here's that Bezos quote:

    "Invention requires a long-term willingness to be misunderstood. You do something that you genuinely believe in, that you have conviction about, but for a long period of time well-meaning people may criticize that effort, and when you receive criticism from well-meaning people it pays to say -- first of all, search yourself -- are they right? And if they are you need to adapt what you're doing. If they're not right, if you really have conviction that they're not right then you need to have that long term willingness to be misunderstood." 

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    Kleiner Perkins day in the life

    What's it like to intern at a big-name startup in Silicon Valley?

    The Kleiner Perkins Caufield & Byers Fellows Program hires design and engineering students from across the nation and places them in its portfolio companies. KPCB companies include Flipboard, Chegg, Groupon and Nest.

    The firm says thousands of applicants apply to the program. One of this year's fellows, Amrit Mazumder, is a graphic design student at the Rhode Island School of Design.

    He scored a position at Flipboard and shared some of what his summer has been like with Business Insider.

    Amrit found this great house in Palo Alto for his summer internship.



    Not only is it in a quiet neighborhood, it's also only a ten minute walk from Flipboard's office.



    A quick coffee in the morning lets the interns get some bonding time in before work ramps up.



    See the rest of the story at Business Insider

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    ixiplay

    You work really hard all day, so when you're finally back at home, all you want to do is kick back with your iPad and play with some apps.

    A little Candy Crush and scotch to ease the pain, am I right?

    But no.

    First some 8-year-old wants you to talk to them.

    Then some 3-year-old is trying to give you a hug.

    Ugh.

    Fortunately, for you, modern parent, there's a new Silicon Valley startup called WittyWorX.

    WittyWorX makes a green robot owl called "IXI-Play" that is programmed with a "rich set of sensors and expression capabilities to support the playful interaction" with your children.

    "With its lifelike body movement and posture, animated eyes and sounds, IXI-Play is very well suited to express its emotions during game play. Children recognize and enjoy this interaction, making IXI-Play feel like a real buddy for playful interaction."

    Translation: make sure there's water in your ice cube trays and your iPad Mini is charged, because you've finally got some quality time ahead of you in your evenings, modern mom or dad.

    WittyWorX showed off IXI-Play yesterday, at a very important conference for startups in Silicon Valley called YCombinator Demo Day. All the top venture capitalists attend the event to see what kind of life-improving innovations are coming next. IXI-Play was a favorite.

    Here are some of IXI-Play's expressions. Note the one in the second row from the top, second column to the left. This robot will handle the tough love for you.

    IXI-Play expressions

    Here's a video demonstration of IXI-Play.  When the dad sits in the easy chair at 41 seconds in, remember to imagine that's you.

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    Inc. magazine has a good article about how stressful it is to start a company.

    It starts with a story of Bradley Smith, a founder who sold his watch, cashed out his 401k, borrowed $60,000 from the bank, and borrowed another $10,000 from his dad at 5% interest to start a company – and then found out his wife was pregnant.

    Smith had trouble sleeping for a few months.

    There's a great quote in the story about what it's like being an entrepreneur from Toby Thomas, CEO of EnSite Solutions.

    Thomas says being an entrepreneur is like being a man ride a lion.

    "People look at him and think, This guy's really got it together! He's brave!" says Thomas.

    "And the man riding the lion is thinking, How the hell did I get on a lion, and how do I keep from getting eaten?"

    lion mouth

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    travis kalanick uber

    Uber is a car service that sends a driver to a user on demand when he or she pings a mobile app. Investors think the business is worth a lot of money — $3.4 billion to be exact.

    That's up from a $330 million valuation in November 2011.

    If you've ever tried Uber or live in a city where taxis are unreliable, you know Travis Kalanick's team is onto something big. People are willing to pay up to avoid being late or stranded.

    But how can Uber be worth multiple billions? And how will Uber impact more than our punctuality in the future?

    Right now, Uber only lets you hail cars from your phone. It started as a luxury black-car service in 2009, but now it offers cheaper options, like Sedans (Uber X) and taxis. There are no reservations. The app only accepts real-time requests.

    In Kalanick's mind, Uber can offer much more than rides. The CEO hinted at the company's potential in an interview with Fortune's Jessi Hempel, where he called Uber the "cross between lifestyle and logistics."

    Kalanick wants Uber to be an "instant gratification" service that gives people what the need, when they need it, whether that's a ride or some other delivery

    For example, if you want to send a package to a friend across town, you could hail an Uber driver who could pick up the package and deliver it minutes later.

    Kalanick's team has already experimented with on-demand ice cream trucks, which deliver treats to residents who hail it on their phones. They've also experimented with on-demand roses on Valentine's day, helicopter rides to the Hamptons, and on-demand barbecue in Texas. Each has been spun as a marketing promotion, but it's also a way for Uber to test new types of deliveries and work out the kinks.

    "What we're doing right now is we're in the experimentation phase where you sort of find some interesting ways to do promotions like Uber ice cream," Kalanick explained to Hempel. "It's very straightforward for us to basically give [drivers] a phone with an app on it and say, 'Look, when the thing is blinking, hit the screen and go to where the map tells you to go. And you don't have to pick them up and take them anywhere, just give them ice cream.'"

    So while Uber only currently offers rides full-time on its app, it's in the process of figuring out logistics around the world to ultimately power other real-time requests. Think package deliveries, furniture, food, and more.

    Kalanick's close friend and Uber investor Shervin Pishevar explained Uber's grand vision to Inc:

    "Uber is building a digital mesh — a grid that goes over the cities. Once you have that grid running, in everyone's pockets, there is a lot of potential for what you can build as a platform. Uber is in the empire-building phase."

    That doesn't mean you'll be able to order everything in real-time on a service like Uber.

    "There are things that are not designed for Uber," Kalanick told Hempel. He used the example of hailing a plumbing service on Uber. Plumbers are needed so infrequently, there's no need for them to show up in real time via Kalanick's service. 

    "If somebody goes ...'Travis, when are you going to do a concierge service? Or hotel [bookings]?' I'm like, 'We're not going to do hotels because we're not delivering a hotel building to you.' We know what we are," he says.

    Uber is not guaranteed to win and dominate the world of logistics. There are other real-time networks, like Seamless or PostMates, that could inhibit Uber's expansion plans. Multiple cities have given Uber legal trouble in an effort to protect cab companies.  Competitors like Hailo, SideCar, and Lyft have popped up and gained traction.

    With a reported $125 million in annual revenue, Uber's $3.4 billion valuation is a stretch. But when you start to see Uber's potential beyond cars, the number becomes easier to grasp.

    An investor who hasn't put money into Uber doesn't think the valuation is crazy, but he does thinks it's one Uber will have to grow into.

    "You don't have many even market comparables," the investor explained. "There aren't a lot of alternative transportation companies that you could take and apply the same multiple to Uber." He noted a 10X multiple on revenue, or a $1-1.25 billion valuation, might better suit Uber's current size. "There are so many other categories Uber can go after though; I think that's how investors justified the $3.4 billion valuation."

    Investors are thrilled with Uber's growth. Revenue is up 18% month over month and Uber is profitable in all of its earliest markets. The startup has grown from 75 employees last year to more than 300 today. It now runs in more than 35 cities worldwide, up from 12 one year ago. Uber is also a category leader.

    Google's involvement in Uber could also add a lot of value to Kalanick's company. Google Maps and location-based search paired with Uber's ability to deliver would be a powerful combination.

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    maya uberIf you've taken a ride with Uber, the popular on-demand car service, you probably remember that at the end of your ride, you were prompted to rate your driver.

    A rating of one star implies poor service (maybe your Uber driver was uber late, or got pulled over on the way to your destination), and a perfect five star score meant the ride left you very satisfied with the service.

    Because Uber drivers go through an arduous process to become licensed, the ratings help maintain the company's credibility, and drivers have an incentive to keep their scores high: their jobs.

    But while you're rating your driver, your driver may also be rating you.

    According to a frequent rider in Washington DC, a friendly Uber driver who taxied her from the bar to her apartment one Saturday night, told her that he was happy to pick her up because her "score was so high — five stars!" 

    The driver told her that at the same time she had requested as driver, another request had come in. That passenger's score, he said, wasn't as high as hers. In fact, it was on the lower side, three stars.

    According to the driver, scores are given to passengers the same way they're given to drivers, except as a passenger, you don't know your score. 

    A spokesperson for Uber confirmed drivers rate passengers too. 

    To be clear, this isn’t a new practice, and it has been mentioned in various smaller blogs and forums before. But as Uber grows and reaches a massive $3.4 billion valuation, it’s worth noting how the system works. Rating passengers is a way that the drivers can make sure they aren't going to be wasting their time or jeopardizing their own rating. 

    According to the DC-based driver, your score can go down for directing the driver to the wrong place, being too drunk, or treating the driver poorly. 

    It doesn't come as a shock, of course, that this type of behavior would end up coming back to haunt you later as you're searching for a way to get home. But this startup's covert practice serves as a reminder that Uber is not a right, it's a privilege.

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