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How 20-Something Serial Entrepreneur Jared Hecht Boosted His Startup's Success By Over 5X

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Jared Hecht

Jared Hecht, a 20-something entrepreneur, sold his first startup, GroupMe, to Skype for about $80 million in 2011.

After working at Skype for several years, he's now working on Fundera, a company that wants to make it dead simple for small businesses to find and secure a non-bank loan.

The company launched in February with five employees and $3.4 million in funding, but Hecht says it feels like they've been chugging away for five years, instead of five months.

The company was also co-founded by Andres Moran and Rohan Deshpande.

In May, the team made a big change and released a completely revamped experience for customers. Until May, small business owners would fill out a basic common-loan application on Fundera, get several lending matches to choose from, and then wait for one of the funding providers to call them. The majority of the experience was taking place off of Fundera's platform. 

"We were effectively outsourcing a lot of our sales and support by doing it that way," Hecht told Business Insider. "We realized that [we] wanted to own the entire experience end-to-end."

Now, prospective loan recipients will complete an upfront application, see their matches, select one or more of them, and then submit all of the exact information that the lender needs to make an offer directly through Fundera. Once Fundera has all of the proper documentation, it submits the application on the business owner's behalf. Users never have to leave the platform, and will get the tons of help from Fundera's team along the way, if they need it. Hecht says that members of Fundera's "customer success team" aim to be educators, giving the small business owners as much information as possible to make good, responsible decisions about which loan product to go with. 

When Fundera first launched, customers who showed intent were only completing the entire process and getting loans 2% of the time, but that percentage has since surged to over 10% thanks to Fundera's platform updates. That's more than a 5X success increase. Since February, Fundera has helped small business owners get 45 loans, with the average loan around $45,000. 85% of small business owners who have gone through the complete application process have received offers from lenders and are fully funded.

The service is entirely free for the small business owner, and lenders will pay between 1 to 3% of the total loan to Fundera as an origination fee. Fundera launched with 20 non-bank lenders, but it now has 24 on-board.

"It's really about helping the internet do to small business lending what it's done to virtually every other industry out there," he says. "We want to increase price transparency, empower the consumer, educate them on all their options, and make it very easy for them to do it themselves." 

SEE ALSO: This Startup Has A Brilliant Customer Service Strategy

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6 PR Tips Every Startup Should Use

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startup office laptops

Today there are more than 30 startups in the United States, Europe and China that are valued at $1 billion or more and that number is expected to increase. With 100 million startups opening up each year and 472 million entrepreneurs worldwide, competition to become the next big thing is brutal.

What does this mean for startups looking to establish their brand, get press coverage and gain recognition? The truth is, in the beginning it is tough. You will find it challenging to cut through all the competitive noise to establish your brand and get the media to pay attention to your company. However, there are strategies you can employ to establish yourself as a startup that cannot be ignored.

Here are six PR tips every startup should use to help gain a competitive advantage.

1. Be ready. 

First and foremost, you need to be prepared. If your product is not the best version of itself, you won’t get any good product reviews, no reporter will cover you and you will most likely experience backlash and negative press. And believe us, there is such thing as bad press. So, make sure you are completely ready before employing any PR strategies.

2. Establish your identity.

Before you can tell the world who you are, make sure you know how to answer that question. To establish your identity, ask yourself: What are our values? What exactly is our company culture? What makes us different from our competitors? Are we doing something that no one else is doing? What makes us uniquely us? It’s important to define those answers and incorporate your identity, values and culture in every aspect of your startup. If you aren’t sure, ask those around you for help. Make a spreadsheet of the answers and rate which responses are the same. If there are too many different answers there is an issue. Fix it before telling your story.

3. Share your story.

Learning to communicate a great story is an integral part of PR. After you’ve established your identity, you need to work on creating a narrative, or your startups story. If you want to stand out in the eyes of the press, investors and your target demographic, you must have a great story to share about who you are and how you got started. It will not only help you connect to your audience, but it will also make it hard for them to forget you. Incorporate this narrative in social media, in your messaging, during interviews and any other opportunity to talk about your startup. And a big key factor, use your company name in each narrative. Many people talk in superlatives instead of facts. Every sentence shared should be a soundbyte for media.

4. Make sure there is CEO visibility.

Your CEO or founder is your mouthpiece that plays an instrumental role in shaping your company’s image, brand and culture. Therefore he or she needs to be accessible and visible to the public. This means they must have a presence on social media, a positive relationship with the press and the ability to share your story flawlessly. Not only will their visibility create credibility and leadership in your industry, but it will also get them in front of the right people to help expand the business.

5.Don’t ignore social media.

Establishing your brand and staying above the fray is all encompassing, time consuming and a lot of hard work. However, don’t forget the importance of creating a social-media strategy that represents your brand, your values and culture. In fact, you need to create an engaging social-media plan from the beginning to grow your presence. A good execution strategy for social media will allow you to establish your identity and credibility in your industry, share your story and position your CEO as a thought leader and pioneer. You need to dedicate time to directly engage with your followers, answer questions, share information and include them in the conversation.

6. Hire if you need help. 

Launching a startup is difficult and implementing strong PR strategies when you are just getting your foot off the ground can be challenging. The good news is you don’t have to do it alone, you can hire a professional. That said, you need to make sure they are a great match for your business and are excited about your plans. A good PR firm will help you establish a strong identity, effectively communicate your story to the right people, create thought leadership opportunities for your CEO and establish an engaging social-media program. They will build your brand, help you stand out, increase your visibility and get you in front of decision makers.

SEE ALSO: 13 Valuable Lessons From Failed Startups

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Startup Livestream Converted A Brooklyn Warehouse Into Its Hip 30,000 Square Foot Global Headquarters

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Livestream Office Brooklyn

Livestream, the streaming service that hopes to bring stream videos to every event over the internet, has been busy.

The company recently announced its official app for Google Glass—the first Google-approved streaming app. Even Google-owned YouTube's streaming services don't have an official Google Glass app yet.

And the streaming service moved its offices at the end of May from its Google-owned property in Manhattan to the artistic neighborhood of Bushwick, Brooklyn, where the company occupies 30,000 square feet on two floors of a refurbished warehouse on Morgan Avenue.

About half of Livestream's employees live in Brooklyn, so the move made sense. Livestream is the first tech company in its neighborhood. 

Livestream has 140 employees total, most of whom work in Livestream's New York offices. But Livestream has offices worldwide, in places like Los Angeles, the U.K., Ukraine, and India.

We stopped by the new Livestream Brooklyn HQ to see how everyone is fitting in.

Livestream's new offices are in the heart of Bushwick, an artistic neighborhood in Brooklyn.



The building itself is on Morgan Avenue, just a few blocks from the L train.



This is ground zero for Livestream Public, a community space where the company plans to live stream workshops that it'll invite community members to attend. CEO Max Haot holds the company's daily "all hands" meeting here at 9 a.m.



See the rest of the story at Business Insider

Meet The Small Startup Making Tech That Powers Facebook, Target, And The Games Of More Than 27 Million League Of Legends Players Per Day

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barry crist chef Chef, a startup based in Seattle that offers "IT automation for speed and awesomeness," has fewer than 200 employees, but is used by some of the biggest companies out there.

Chef changed its name from Opscode in December 2013, five years after launching in 2008, and it offers tools to automate how companies configure, deploy, and scale their servers and applications.

Chef CEO Barry Crist told Business Insider that about 70% of its company's sales come from Fortune 1000 companies. Right now, Chef uses its automation tools to work with GE, Facebook, Target, Yahoo, Cheezburger, and more. Riot Games, which makes League Of Legends, uses Chef to power the games of its more than 27 million players per day.

Crist says that an increasing number of companies are realizing that they need to deliver their goods and services digitally to survive (for example, another big Chef client, Nordstrom, had to build a web experience that matched the one it had in stores). The people using those services expect excellent, speedy experience, and, to scale, companies need to use automation systems that they don't have the expertise to build in-house. So, they come to Chef. 

Chef's namesake tool is open source, and Crist says that many engineers have been a huge part of what the company has built. Companies that don't want to use the open-source version of Chef can pay to use the Enterprise version. The company's tools are designed to work with both physical and virtual serves,  which means that even "hybrid" businesses can take advantage of its tools.

When we asked him about the challenges the company was facing moving forward, Crist said that the biggest hurdle would be continuing to grow and scale. When we spoke, Chef had 150 employees, but was trying to grow that number to 200 as soon as possible.

"We won't starve to death," Crist says. "We need to worry about drowning."

SEE ALSO: This Seattle Startup Has A Brilliant Customer Service Strategy

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Future Food: How Scientists And Startups Are Changing The Way We Eat

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The world's population is growing, while our resources shrink. By 2050, total food demand is expected to increase 70% and food prices could rise by as much as 100%. Meanwhile, the foodie movement is well underway, with chefs and home cooks seeking the freshest and purest local ingredients. Meet the teams of scientists and startups jumping into the food fray, motivated by everything from creating the perfect pepper to saving the world.

GAME CHANGERS: Check out more in this series.

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Airbnb Fined $40,000 In Spain For Short-Term Room Rentals

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brian chesky

MADRID (Reuters) - The region of Catalonia, whose beaches on the northeastern coast of Spain draw millions of tourists every year, has fined home rental website Airbnb for marketing short-term room lets, a first in Europe amid a mounting crackdown on the practice.

Airbnb, a San Francisco start-up valued at $10 billion, was fined 30,000 euros ($40,900) for allowing homeowners to rent out rooms to travelers for under 30 days, which is illegal in the region, a spokesman for the Catalan government said.

Eight companies have so far been fined for similar practices, the spokesman said, adding in total about 55 could end up being penalized after a review of around 2,000 online platforms offering hospitality services.

Airbnb said in a statement it was reviewing the decision and considering its legal options. The fine is its first in Europe.

The firm, which lets homeowners share their homes for a fee by marketing them online, has become a popular alternative to hotels and mirrors consumers' growing reliance on online sharing services in other areas such as transport, including cars.

Users of the hospitality website have booked 10 million rooms in close to 200 countries since 2007. Earlier this year a group led by private equity firm TPG Capital Management agreed to invest $450 million in Airbnb, valuing it at $10 billion.

But Airbnb's facilitation of short-term lets has also brought it growing legal headaches in countries where such practices are banned or strictly regulated. The company agreed in May to turn over its user records to New York state officials investigating illegal short-term renting. [ID:nL1N0O712X]

In Catalonia, home to the seaside city of Barcelona, the regional government tightened rules on hospitality in 2012, though it does allow homeowners to rent out entire houses or flats if they register with a local tourism authority. It says this is to better control the quality of services on offer.

"We need to protect this destination," the spokesman for the Catalan government said, adding it would keep fining Airbnb or seek to have its site blocked in the region if it did not drop marketing these types of rentals.

"Barcelona should stay on the cutting edge of innovation, and we're disappointed to see a ruling ... that will hold the city back," Airbnb said in its statement. "We will continue to provide robust information about the rules in Barcelona, and require all Airbnb hosts to follow those rules."

($1 = 0.7331 Euros)

(Reporting by Sarah White, editing by David Evans)

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Marc Andreessen: Here's How To Destroy A High-Growth Startup And Hurt Silicon Valley In The Process

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Marc Andreessen, founder of venture capital firm Andreessen Horowitz, and inventor of the modern web browser, went on a tweet storm this morning about how to kill your startup, and damage Silicon Valley in the process. 

Here are the tweets:

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5 Excellent Tips Every Startup Should Follow To Lure Investors

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investors

One of the most difficult things about being part of a startup is convincing others your idea is different — and better than — other competing businesses.

Securing healthy rounds of funding from high-profile investors gives you some comfort room to explore ideas and refine your product.

The problem, however, is that it can be hard to convince an investor that your business is worth their money and time.

We spoke with Salim Teja, managing director of information and communications technology at MaRS, a Toronto-based innovation center that helps startups and entrepreneurs succeed. Teja, who also works with MaRS' JOLT startup accelerator, told us exactly what investors look for in an entrepreneur.

Here are a few things to consider before, during, and after your next big investor meeting. 

Make sure you know your market inside and out.

Don't let your passion for your product cloud your judgment. Always consider whether there's a big enough market for what you're trying to build. Even if the idea is creative and smart, it needs to be massively marketable. 

"Very often, we see that disconnect where investors struggle because they might like what the product is," Teja said. "But the market is too small and they can't see it as a high growth opportunity."

Know your company's story, and tell it well. 

Teja emphasized the importance of storytelling when it comes to attracting investors. Not only do you need to be able to describe what problem your product is solving and how it works, but you also need to communicate why your company is the right team to do it. A lot of entrepreneurs struggle with communicating their story clearly, according to Teja.

"Many of our entrepreneurs can't tell that story succinctly or clearly to an investor," he said. "And very often investors have to piece together the story or they walk away confused. You have to be able to tell them a really clear story that gets them excited."

Remember that execution is key. 

Even if your startup's idea is innovative and has a giant market, investors need to be convinced that you're company is the best at its job. Showing investors that you're actually capable of building a business is extremely important, Teja said.

This means having solid milestones to show for the work you've done — such as traffic to your website, a solid user base, etc. It's crucial to decide what your startup's most valuable milestone will be early on in the business development process.

"I think the bar has become quite high in terms of what investors are expecting versus 5 or 10 years ago," he said. "[Back then] it would have been good enough to have a great idea. So prove that you can out-execute everybody else."

Lead the conversation.

When you're meeting with an investor, don't be afraid to take control of the conversation within reason. Investors want to see that you're confident and excited about your business. 

"They'll try to figure out if that person is a doer," Teja said. "First impressions are done in the first 5 or 10 minutes of the conversation. If an entrepreneur is coming to a meeting and they don't look confident, they're not making eye contact, and they're not leading the conversation, those are bad signals."

But don't be confrontational, and listen carefully. 

Investors want to know that you'll be a team player and you'll be willing to work with them on new ideas. Another common problem among some entrepreneurs is being too confrontational rather than listening during meetings. 

SEE ALSO: How to manage your time wisely when you're running a startup

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These 10 Startups Are Creating The Future Of Food

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Soylent Rob RhinehartScientists and entrepreneurs are revolutionizing the way we think about food.

We're seeing new ingredients, like insects, and new means of production, including 3D printers.

Investors are taking notice. In 2013 VCs invested $146 million in the food and beverage industry, according to a report from CB Insights.

We've put together a list of 10 food startups that aren't just creating sustainable, healthier food options — they're shaping the future of food.

SEE ALSO: More Game Changers

SEE ALSO: Tiny Flying Robots Are Being Built To Pollinate Crops Instead Of Real Bees

Modern Meadow grows meat and leather in its lab.

Founders: Andras Forgacs (CEO), Gabor Forgacs (chief scientific officer), Francoise Marga, Karoly Jakab

What it is: Modern Meadow grows leather and food in its lab using biofabrication, which takes small biopsies from animals leaving them unharmed. Modern Meadow's next development, pending FDA approval, will be marketing its 3D printed beef.

Funding: Just received $10 million from Horizons Ventures; prior funding from investors including Sequoia Capital and PayPal cofounder Peter Thiel

Website: http://modernmeadow.com/



Soylent lets you drink complete meals.

Founder: Rob Rhinehart (CEO)

What it is: Soylent is a food product designed to be a complete meal replacement. It's made up of vitamins, minerals, proteins, and carbohydrates essential for human nutrition. Soylent comes in a powder form as well as an oil-based solution, and both are mixed with water to create the meal substitute.

Funding: $2.3 million from Andreessen Horowitz, Initialized Capital, Lerer Ventures, Hydrazine Capital, Y Combinator

Website: http://www.soylent.me/



Solazyme turns algae into food ingredients for your favorite recipes.

Founder: Jonathan Wolfson (CEO)

What it is: Solazyme, a company known for creating renewable biofuels and skincare products from algae, has ventured into new territory: food. Its microalgae-derived food ingredients, which include eggs, butter, and vegetable oil, offer reduced calories, saturated fat and cholesterol than traditional products.

Funding$145.80 million from Harris & Harris Group, Lightspeed Venture Partners, Braemar Energy Ventures, VantagePoint Capital Partners, Roda Group, Bunge, Bluecrest Capital Finance, Morgan Stanley, Chevron Technology Ventures

Website: http://solazyme.com/



See the rest of the story at Business Insider

Bitcoin Startup Funding Is On Track To More Than Double This Year

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Global Bitcoin Startup Funding

Global investment in Bitcoin-related businesses is exploding. The BI Intelligence chart above gives a sense of just how fast money is being pumped into these Bitcoin-based startups.

Here are two comparisons to put these numbers in context:

  • Payments startup funding. $492 million was invested in payments startups during the first quarter of 2014. During the same period, $64 million of that total was invested in Bitcoin startups, according to CoinDesk. That means investment in Bitcoin startups accounted for 13% of investment in payments startups.
  • Early internet. Advocates of the digital currency have often compared its disruptive potential to the internet. And they've made the argument that investment in these companies is akin to early investment in internet companies in the mid-90s. Going by that comparison, Coin Desknotes that the run rate of  investment in Bitcoin businesses has reached the level of early stage investments in U.S. internet startups in 1995, not adjusted for inflation. 

BI Intelligence is a subscription tech research service from Business Insider. For full access to all our charts, analysis and reporting on the latest trends disrupting the payments industry, sign up for a free trial.

SEE ALSO: These Are The Five Main Reasons Bitcoin Is Beginning To Flourish As A Payment Technology

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5 Lessons From Steve Jobs That Every Tech Company Should Take To Heart

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Steve Jobs Commencement HD

Just about every tech leader in Silicon Valley says they admire Steve Jobs, but when it comes to following his lead, where’s the love?

Visit any hacker hangout, tech firm, or investment company in Silicon Valley, and you’re sure to hear people say how much they admire Steve Jobs. They’ll say that he was the most effective CEO, the best innovator, the strongest motivator, the most ruthless negotiator, and the person with the clearest vision in the valley of where tech is going.

Sure, he stepped on people’s toes, and sometimes was unfair to coworkers, but what counts is how successful he was, right?

I first met Steve in a humanities seminar at Reed College. We were discussing the Parthenon frieze, and Steve told me my opinion was full of shit. This seventeen-year-old with the shock of scruffy hair, who looked like he had been sleeping on a couch (which he probably was), told me that if I wanted to understand art, I needed to get out in the world. He was shaming me to reject received ideas and to think for myself, and he seemed willing to kick my ass to get me to do it.

It is this attitude that Jobs turned into a creed and brand at Apple, epitomized by the “To the crazy ones” commercial and the famous 1984 launch ad for the Macintosh. It is easy to admire and pay lip service to Steve Jobs’ rebel image, but why do so few in the valley today follow Steve’s lead, and why are his most important lessons largely ignored by the people who claim to admire him?

Lesson #1 — Creating great products requires patience

Steve was known to chasten product teams with instructions to chuck everything and start over. The cost was high to Apple, but the result was that Apple succeeded when others failed. Microsoft had tablet hardware and software years before Apple, but it took Apple’s iPad to make the category mainstream. Other companies may offer more features in their products, and release them sooner, but user satisfaction studies show that consumers often prefer Apple’s solutions.

In an era when most follow the lean doctrine of releasing a product early, and letting the market dictate product direction, Steve spent time refining the product internally until he felt it was ready to release. That requires time that most companies don’t want, or can’t afford to invest. Steve’s approach took vision—and yes, arrogance— to think he knew better than others, plus the willingness to look beyond the horizon and envision products that customers did not know they needed yet.

Lesson #2 — Think big

What would Steve think of today’s timorous innovators creating the umpteenth find-your-friends app, social sharing site, or cloud storage solution? For every Elon Musk who makes tackling three big, crazy ideas before breakfast seem easy, there are thousands of others who come to the valley to launch any project that an investor will put money into, worthwhile or not. Steve dared to shake things up, and thinking small was not part of his character.

Lesson #3 — Focus on your strengths

Many admire how successfully Steve cut projects and saved Apple when he returned as interim CEO in 1997. Steve learned a few things while he was exiled from Apple, and when he returned he focused the company on what Apple was good at and would attract customers back to the company. That required knowing his own and his company’s strengths and weaknesses, and understanding Apple’s customers. Yet, we still see companies squander energy and resources in too many directions. They should revisit 1997 and learn from Steve’s example.

Lesson #4 — Think different

When it comes to people per square mile trying to profit from others’ success, Silicon Valley rivals the heydays of the California Gold Rush. You can’t throw a USB flash drive in the Valley without hitting someone who wants to advise you, mentor you, teach you to code or pitch, or tighten up your growth hacking skills. Steve would tell you that listening to others is the route to mediocrity. You can’t “think different” when you’re taking your lead from the same people as everyone else.

Lesson #5 — Technology by itself is not enough

This is where we in Silicon Valley most fail Steve. Steve was a college dropout, but he valued learning and culture, and applied what he knew of music, calligraphy, design, and architecture to projects at Apple.

Today, young programmers and entrepreneurs in the valley are encouraged to drop out of college, or not pursue higher education at all, so they can focus all their attention on writing code or learning how to run a company. What value is Shakespeare, Beethoven, or Manet to someone who spends twenty hours a day on a computer? Apple’s products are beautiful to many because they are not only useful, but strive for something transcendent in their design and concept. The products might not always achieve that, but the effort reminds people of their own dreams.

As Steve said at the iPad 2 launch in March of 2011, “It’s in Apple’s DNA that technology alone is not enough. It’s technology, married with liberal arts, married with the humanities, that yields us the result that makes our heart sing.”

If Steve were around today, he’d kick our ass.

Rod Bauer is a principal of the Bauer Group, a consultancy that works with established and startup companies to develop and execute marketing strategies. 

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SEE ALSO: A Bigger Screen Might Not Be The Most Desired iPhone 6 Feature After All

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The 9 Hottest Up-And-Coming Startups In South America

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Fitrip

While it may not be the first place you associate with the bustling startup scene, South America is slowly making moves in the tech world.

Incubators and accelerators like Startup Chile, Startup Peru, Incubar, and iNNpulsa are popping up to feed the growth and foster a friendlier and more supportive environment for startups. But according to TechCrunch, a large portion of these startups end up leaving the continent after graduating from their programs.

There are still many startups brewing across South America, and we decided to round up the best of the up-and-coming batch.

Kunfood wants to make it super easy to order food in a restaurant.

Kunfood is bringing the in-restaurant app to South America, letting diners order and pay when they want to.

The startup is headquartered in Lima and has raised $90,000 from investors like Wayra and Startup Chile. Their app is available for free in Google Play and Apple's App Store.



Fitrip helps you explore cities while staying fit.

Fitrip is an app that provides you with an audio guide while traveling to make sure you stay fit while exploring new places.

The team is based out of Caracas, Venezuela, and is working hard to make sure you don't need to sacrifice a toned body when traveling. SportTechie says it is a very promising startup.



Tripea will help you plan your next vacation on a budget.

The idea behind Tripea is that instead of having to input a destination, you will be able to fill out your budget and other preferences and the site will give you options for where you can go on vacation.

Tripea is headquartered in Lima and is supported by a team of four entrepreneurs and three advisors.

You can see the company's deck here.



See the rest of the story at Business Insider

After A Twitter Meltdown Where He Trashed PayPal, Rakesh 'Rocky' Agrawal Put Seven People Through A Series Of Crazy Tests To Join His Startup

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Redesign Mobile

The “strangest thing that’s ever happened” to Elaine Gaddam wouldn’t have come about if she hadn’t followed Rakesh “Rocky” Agrawal on Twitter.

In early May, Agrawal had a meltdown on Twitter.

Long an outspoken figure in the mobile payments space, Agrawal had taken a job as PayPal's new director of global strategy. He remained in the position only two months before sending in his resignation letter one Friday evening.

He then launched into a Twitter tirade that started with drunken insults to a few of his former co-workers (two of the since-deleted posts said "Duck you Smedley you useless middle manager," and "Christina Smedley is a useless. Piece of shit.") and continued cryptically (and at all hours) for several days, including hints to his whereabouts and promises that whoever found him would be hired for a new company he was launching. 

Rock Agrawal

The eyes of the tech world were transfixed to Agrawal's Twitter feed. Amazement co-mingled with concern as people wondered if they were watching a man become unglued.

After-the-fact, Agrawal claimed to Business Insider his strange behavior and erratic tweets were the result a series of usability experiments he was conducting without telling anyone. 

Amid the stream of expletives and threats, he also made bold assertions about a new company that he was starting and solicited investors.

Agrawal would present his followers with puzzles, asking them to explain some UX problem or guess what his new company would focus on based on a picture of bunch of products laid out on a table.

Finding herself with some free time at her administrative assistant position at the attorney generals office in Vancouver Island, Canada, Gaddam started answering a few of Agrawal's puzzles.

Rakesh

After one of her responses, Agrawal followed her back on Twitter, and sent her a DM asking if she’d be free from June 9 to 13 to come out to San Francisco for a recruiting week of the new company he had been hinting at on Twitter. She didn’t know if he was serious or not, but she said yes. By the end of the month, he had sent her information about her plane ticket.

ReDesign MobileGaddam was one of seven people from across North America invited to attend Agrawal’s recruiting week for his new startup, reDesign Mobile. Three others — lawyer Chuck Marshall, non-profit employee Sara Nordmann, and marketer Victor Marks — had also won their invites from satisfactory answers to Agrawal’s Twitter quizzes. Agrawal had met another — Michael Gilbert — at a puzzle store called Marbles, after Gilbert had impressed him with his customer service skills as he rang up Agrawal’s more than $500 worth of gifts and helped him ship them across the country. He randomly met former-model Sam Jones in Santa Monica when she was there for a friend’s birthday, and the two clicked. He and Mark Rogowsky knew each other from the Q&A site Quora.

Those seven people were about to embark on a five-day whirlwind of tests and activities as they tried to win a position at a company that they knew next-to-nothing about. Gaddam said that Agrawal and the recruits didn't talk about what reDesign Mobile would actually do during that week, and even now Rocky refuses to concretely define his company's plan or business model. 

Agrawal didn’t ask for anyone’s resume or job history before inviting them to San Francisco for an all-expenses paid, week-long interview. If it sounds like an unusual strategy, well, that’s the point. Agrawal revels in the group’s diversity and quirky backstories, enthusiastically explaining how one member lived in a car for three months and never went to college, while another had never worked in tech but had a passion for consumer rights.  

“Silicon Valley writes off all non-22 year-old-white Stanford males, but you can build a great team from around the country if you know how to look,” he told Business Insider in an email.

Agrawal also says he’s fed up with the recruiting processes of the major tech companies in Silicon Valley and that they’re generally only “a test of how good a bullsh*t story you can come up with” in an interview. Agrawal wants to prove that his less conventional methods can unearth "brilliant people" who can build a long-lasting company. (Time will tell.) 

Despite the out-of-the-blueness of the offer and Agrawal’s controversial online footprint, all of the people invited to the recruiting week showed up.

When Gaddam arrived at the airport in San Francisco on Sunday evening, she felt excited, but like the whole experience was surreal. She still had no idea what Agrawal’s mysterious company was all about, but here she was in a new city about to spend a week with complete strangers. When she got to the hotel, she expected that the recruits would bunk up, but found they’d all been put up in huge suites to themselves.  

elaine room

The seven recruits met up for the first time the next morning to make their way to Agrawal’s house together. Several described the vibe that week as in some ways akin to summer camp.

Agrawal had jam-packed the week with activities, but one of the most critical parts was getting to know each other and working together.

Sara Nordmann, who flew in from New York City, told Business Insider that the week felt time-warped due to business, but that “the social element of figuring out the other people and determining if we liked them or got along” was one of the most overwhelming parts.

“You really learn a lot about people when you’re with them eight to ten hours a day, going from activity to activity,” class-action lawyer Chuck Marshall told Business Insider.

Redesign MobileOver the next five days, Agrawal would lead Gaddam, Gilbert, Marks, Nordmann, Jones, Marshall, and Rogowsky through dozens of tests and exercises conducted through a series of activities, including exploring the California Academy of Science, sipping wine in a Sonoma vineyard, comparing transit times for Uber and the BART transportation system, and going to a Giants-Nationals game. The entire time, Agrawal kept an internal log of how well his potential employees were working together and demonstrating critical thinking. Some nights he stayed up until two or three in the morning going over notes or trying to fine-tune the process for the next day.

“The exercises had us thinking about things we probably wouldn’t have recognized otherwise,” says Michael Gilbert, a 20-something from the U.K. who majored in physics and moved to LA to be a musician, before getting a job working for Marbles The Brain Store. Agrawal had the crew take notes on different user experience issues at the science museum, and Gilbert says he noticed things that would normally slip under his radar.

How do these kinds of observational exercises fit into the grand plan of the fledgling startup?

Agrawal is still fairly vague in describing what ReDesign Mobile will actually do. It’s a complex new business model, he says, and but the goal is to build great products, help other companies build great products, or work with other companies that are “doing harm to consumers” to “try to fix that.”

Rakesh AgrawalSamantha Jones, who describes herself as Agrawal’s “right-hand man” and will be running PR for the company, says that reDesign is kind of like a consulting firm, but plans to trade its services for equity in companies it deems as having great potential. Other recruits told Business Insider to expect more details to “roll out soon.”

Another vague subject is the matter of funding. Agrawal tweeted asking for investments and about securing funding way back in May, but he tells Business Insider now that though there are some angel investors that have already committed, there are some that he’s working to get committed.

“We are still finalizing the round,” he later said via email. “I need to circle back with everyone to actually do the paperwork. So far, I've funded everything out of pocket just to get up and running quickly. I'm just now working on funding paperwork for outside investors.”

Agrawal says that he spent approximately $12,000 total for hotel rooms, meals, the vineyard visit, the baseball game, the museum, and — for some of his recruits — the flights, noting that $12,000 is “a bargain” when you consider that a recruiter would charge $30,000 for one hire. Agrawal says he can personally afford such expenditures because he has worked in tech for nearly 20 years and is "a smart investor in the public markets."

As the events of the week played out, the recruits and Rocky really got to know each other. Marshall said the group began to feel like a small family. Then, on Friday, Agrawal held a brief personal meeting with each individual recruit. He walked everyone through a hypothetical Hunger Games of sorts: They had to name the one other person that they’d most want to work with. Then the two other people they’d most want to work with. Then three, and so on, until one person wasn’t picked. He wanted to figure out who each person thought was the weakest link.

Redesign MobileOf the seven people invited, six got on-the-spot offers for either full, part-time, or freelance positions. Gaddam didn’t make the cut, partially, she thinks, because she didn’t speak up as much as some of the other recruits.

“At the end of the day I had a good experience,” she told Business Insider. “But I would have liked to be given an offer.”

Right now, only Samantha Jones and Victor Marks will work full-time. Michael Gilbert plans to work part-time, keeping his gig at Marbles, Sarah Nordmann wants to freelance on reDesign projects while keeping her non-profit job in NYC, Chuck Marshall will focus mainly on the startup but will still occasionally take cases through his firm, and Rogowsky’s role is yet to be decided. That, plus Rocky, is the reDesign team in its entirety. (In May, Agrawal tweeted that his former assistant Amy was an employee and that he'd hired a woman named Sarah who found him at a New York City restaurant, but neither still works with the company.)

The employees and Agrawal all declined to disclose their salaries, but Agrawal says that hiring them was "remarkably cost effective based on people being passionate about the company."

On the surface, Agrawal’s experiment in non-traditional recruiting methods seems to have gone better than his experiment in non-traditional Twitter uses, but it will take more than a few weeks to see whether his nebulous-sounding company with nebulous-sounding funding will be able to last.

"I think that there’s something interesting about finding new ways to hire and build a new team, especially when you do it from scratch," says Gadi Shamia, CEO of Magneto, who was brought in to speak during the recruiting week. "Time will tell if it’s a good system or not. Nobody can judge it right now." 

Although Agrawal has admitted that he wishes that the whole scenario with his PayPal resignation and the many tweets that followed had gone differently, he doesn’t think his reputation has been burned too bad.

“I think that the people who are the smartest people in the valley get that what I’m doing is interesting, and that they should be part of it,” he says. “I think, in general, Silicon Valley is a really conformist culture, and even before all these things happened I was a nonconformist.”

SEE ALSO: These Are The Six Books Bill Gates Thinks You Should Read This Summer

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10 Lessons Entrepreneurs Can Learn From Failing Startups

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startup conference discussion

Entrepreneurs who start businesses often fail, although the statistics cited can vary, according to Bloomberg.

While it’s a given that launching a startup means embarking on a long and winding road, pinning down the exact odds for success is not the most crucial task for a company founder. The most important question to ask is why so many fail. While the overall economy can be a formidable influence, startups frequently make certain common mistakes.

So to help all the future entrepreneurs out there, here are some valuable lessons to learn from various failed startups, including my own

1. Validate the product idea with customers.

Entrepreneurs frequently fail to validate the idea of startup's product with customers. That was my big mistake as I launched my first startup, Just A Five. Nobody wanted what my company had to offer. I ended up wasting hundreds of thousands of dollars on building something that nobody wanted.

Another entrepreneur who fell into that trap is Gary Swartz, who founded Intellibank, a company he described in a LinkedIn column as "sort of like Dropbox done wrong." Swartz was convinced by his investors that his product was good enough to move forward, but he never stopped to check for warning signs from his customers.

"The most important people any company should seek validation from are ... customers," Swartz wrote. "That’s right, your customers matter more than your investors -- and any good investor would agree."

2. Understand the importance of co-founders, partners and team members.

Every great entrepreneur understands that he or she can’t do everything. Certain tasks lie beyond a founder's capabilities. So it's vital to have the right partners and team members involved.

I learned this lesson the hard way when I started my second company, Pixloo.com, and co-founded it with a brilliant aspiring developer. He worked long and hard hours. Everything was golden for 10 months. We launched the product and acquired more than 80,000 customers in less than a month.

Then came the disagreements. We disagreed over the direction of the company and whether we should raise investment funds. He was not willing to budge from his position. I knew we were not taking the the right direction but since he owned half of the company, there was nothing I could do. We ended up selling the company for pennies.

3. Be aggressive.

Most everyone would probably admit a lack of fondness for pushy salespeople. But those who want their business to succeed will have to be extremely aggressive. They'll have to simply pick up the phone and dial customers.

With my first startup, I had two scenarios to choose from: not making money or calling potential clients and refusing to take no for an answer. Without a major push, most new businesses will fail. It's rare for a launch to pan out without aggressive selling of the product.

4. Recognize that fundraising is time-consuming.

While many founders of startups have their attention focused on helping customers solve a problem, money is still needed to make this all happen. Startups can’t operate or grow without revenue. Building a startup entails numerous expenses. And sometimes it's not possible to wait that long. Many business owners run out of money.

Expect the fundraising process to eat up a lot of time. It’s not like what's shown in the movies. Expect to pitch a hundred venture capitalists before receiving real investment. I’ve worked with countless startup founders who have approached more than 50 investors and not received one bite. How many VCs is it humanly possible pitch in a week? It all takes time.

5. Keep your eyes on the financials.

When I started my second company, Pixloo.com, I thought it would be possible to line up a million customers who would fork out $10 a month. I was wrong. I signed up only about 90 customers who were willing to pay me $10 monthly. The other 80,000 clients were nonpaying ones.  

6. Sustain a long-term vision.

Most entrepreneurs realize they need a long-term goal for their startup to succeed. 

Take Meetro, for example, one of the first location-based social networks. The startup did a great job of building an initial fan base in Chicago and then tackled Silicon Valley, according to a guest post by Meetro founder Paul Bragiel on TechCrunch.  Instead of continuing to tend the Windy City community, the founders left that area for San Francisco. "We weren’t there anymore to be the face of the community, organize events," Bragiel wrote. "While the service continued and had a core bunch of people using it, by no means was it as rabid as it was at its peak." 

To succeed, the entrepreneurs probably should have kept in mind a long-term goal (like trying nuture several local communities) and strived to establish one community fully and sustain it before or while initiating a presence in another location.

7. Don't raise much money.

It might sound odd but raising too much money might factor into the sinking of a startup. That’s what Ben Yoskovitz described was problematic for his failed startup Standout Jobs: He raised about $1.8 million too early. “We didn’t have the validation needed to justify raising the money we did," he wrote, noting that members of the founding team couldn’t build an minimal viable product on their own. "That was a mistake.”

The danger for entrepreneurs who successfully raise lots of money on a new product not fully tested is that they can fall into the trap of thinking they have something people are interested in. Instead of validating their assumptions, their startups just get bigger and badder -- and not the cool kind of bad.

8. Build a unique product.

An interesting dynamic is at play the world of entrepreneurship. Founders can’t focus on too small of a niche audience to avoid competition. It’s just not possible to earn money that way. But be wary of copying another startup. 

As Cap Watkin, a designer now at Etsy, explained in a post mortem about Formspring based on his experience there, the staff spent a lot of time and money investing in a share button that was similar to the Facebook share and Twitter's “tweet this” buttons. "We literally spent months on that system. We had to make sure our servers could handle a potentially huge influx of traffic, ... had to design and implement the feature, make sure the implementation was easy for publishers, make deals with publishers."

But the feature was a flop, he said.

“Entrepreneurs: build your product, not someone else’s," Watkin advised. "The most successful products execute on a vision that aligns with their product’s and users’ goal.”

9. Remember to continue to build the business.

A startup could be framed around the greatest product in the world, but if the company doesn’t grow, the business isn't going to last very long. In other words, market the startup and spread the word.

That’s was the problem for photography startup Everpix, according to the Verge: "The founders acknowledge they made mistakes along the way. They spent too much time on the product and not enough time on growth and distribution." 

10. Find the right investors.

It's obvious that an entrepreneur needs to investors to create a successful startup -- unless he or she is independently wealthy. But find the right ones. It's great to work with investors who share the same goals and philosophy and also can provide overall support as well as advice on how the company can become better organized and do marketing.

But what happens if the investors don’t click with the entrepreneur personally, professionally or understand the business? Consider David Levy's experience with his failed startup Tigerbow. "We raised a (comparatively) small amount of money from friends and family. ... Aside from the fact that we got little (non-monetary) value added from these investors, people who are unfamiliar with investing in startups and the risks and challenges of building a company will drive you bananas."

Check out more insights about some of these companies and tons of others in a postmortem roundup compiled by CB Insights.

SEE ALSO: The 9 Hottest Up-And-Coming Startups In South America

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Samsung Is In Talks To Pay ~$200 Million For Smart Home Startup SmartThings

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Alex Hawkinson smartthings CEO

Samsung is in talks to buy SmartThings, a startup that lets you control everyday appliances like lights and garage doors over the internet, according to our sources.

We don't know the price, but Alexia Tsotsis of TechCrunch, who was the first to report the news, says it could be about $200 million.

We've also heard SmartThings has been in acquisition talks with other companies for some time now, but Samsung appears to be the closest to scooping up the startup.

SmartThings is one of the most prominent young companies in the budding "internet of things" space. But big guys like Cisco, Google, and Apple are all experimenting with ways to let people control the stuff in their homes over the internet. In January, Google bought Nest, the maker of smart thermostats and smoke detectors, for $3.2 billion. In June, Nest bought Dropcam, a company that makes Wi-Fi cameras that can monitor your home 24/7, for $555 million.

With so many giants working on the internet of things, it would make sense for a relatively small startup like SmartThings to sell to a big company like Samsung to give it a bigger cushion to step on the gas and start expanding. SmartThings raised $12.5 in November in a round led by Greylock Partners and Highland Capital Partners. The startup first started gaining buzz when it launched a Kickstarter fund that ultimately raised $1.2 million.

Samsung is in need of a new product category, so the SmartThings acquisition makes sense on that end too. Samsung's profits are shrinking as it struggles to sell smartphones in the same volume it used to. The company has dabbled in smartwatches (it has launched five models since last October), but none of them have really resonated with consumers.

In an interview with Business Insider in June, SmartThings CEO Alex Hawkinson hinted that he'd be open to an acquisition, but only if he thought it was the right fit. SmartThings is an open platform that any device or app maker can build into, and Hawkinson sees that as one of the biggest benefits of the company.

"Never say never in business generally, but right now we have a lot of interest in the company, and we believe believe that just generally right now it's best to stay independent because we find that the marketplace wants a truly open platform in this space," Hawkinson said when asked about a potential acquisition in that June interview. "And if we were hypothetically approached about being acquired by one of the candidates you would think of, my concern would be would that close off the avenues of the true innovation that's happening on the platform?"

A spokesperson for Samsung declined to comment. A spokesperson for SmartThings also declined to comment.

SEE ALSO: A review of SmartThings and how it can turn any home into a smart home

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Yahoo's M&A Chief: Why We're Wary Of Startups Backed By Google (YHOO)

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Yahoo Jacqueline Reses

One of CEO Marissa Mayer's  strategies for turning Yahoo around is acquisitions. Yahoo has bought a jaw-dropping 41 companies in two years, Yahoo M&A Jacqueline Reses says, most of them small deals with startups.

But despite Yahoo's love of owning startups, it's not interested in investing in them, Reses says. She has no plans to start a venture arm, she said, even though such venture firms, where corporations incubate the tech and talent that they want, is all the rage these days. (Everyone from Google to SAP has one.)

During a panel session at the Fortune Brainstorm conference in Aspen, Colorado, on Tuesday, Reses explained:

We don’t have venture arm. I worked in private equity for decade, so it wouldn’t be foreign. But Yahoo is in a transformation right now. We need to, as an executive team, focus on that. We need 100% of our attention on our core business. ... Venture investing is a hobby … it would be nice if we had time to have a hobby. But [we don't want to] take up the time of executives to think through if a [startup] investment opportunity is great. We'll focus on acquisitions that are great as opposed to small investments.

That's an interesting perspective for several reasons. Most corporate venture capital firms are legally independent organizations, separately staffed. The company's corporate executives aren't the ones fielding pitch meetings.

Secondly, should CEO Marissa Mayer want to staff up such a thing, she already has an in with the venture world: She's married to one. Husband Zack Brogue is a founding partner of Data Collective, a fund that specializes in "big data" startups.

To be sure, Reses wasn't really knocking the idea of corporate venture firms in general. "Big tech companies that do own venture arms, for them it is the right strategy," she added.

But startups backed by one of them, particularly a direct rival like Google Ventures, make her wary when she's shopping, she said.

"When we look at companies backed at those funds we always ask, 'Why are they selling and why not selling to their own sibling?'" she said, meaning why isn't the company that funded them buying them.

Another issue with corporate-backed startups is the negotiation process. Because Yahoo wants entrepreneurs to feel comfortable selling to it, it has an "open book" policy and shares a lot of info about Yahoo with a potential acquisition, she said. So she's "concerned about information flow" to rivals or others involved with corporate-backed startups.

That said, if she gets satisfactory answers on these things and everyone still wants the deal, she would go ahead and make an offer, she said.

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'Kickstarter For The Homeless' Raises Investment From Some Of The Biggest Tech Investors, Including Marc Benioff

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Marc BenioffHandUp, a crowdsourcing platform for homeless people and their basic needs, just closed a seed funding round of $850,000.

Some of the biggest tech investors have joined the seed round, including Salesforce’s Marc Benioff, SV Angels’ Ron Conway, and Reddit’s Alexis Ohanian.

Poverty is a serious issue in America, with approximately 46 million people living below the poverty line and 3.5 million of them homeless. In San Francisco alone, 7,350 people are homeless, and 54% of them haven’t had a home for one or more years, according to HandUp.

HandUp’s platform aims to solve this problem by connecting technology to individual donors.

The process is quite simple. Once you download HandUp’s iPhone app or visit its website, you can go through member profiles and donate directly to the person you’d like to help. If you can’t find the right person or cause, you can simply donate to the SF Fund, and they will send your donation to members with the strongest needs.

HandUp says most of the members fundraise for dentures and other medical services, housing costs, or phones and computers. For example, a man named Richard from San Francisco’s Tenderloin neighborhood, is raising money for his driver’s license renewal, clothing, household items, and rent.

HandUp’s service also allows donors to know exactly how their donations are being used. The donations must go through nonprofit partners such as Project Homeless Connect, North Beach Citizens, and Compass Family Services, who will ensure transparency by handling how the funding gets distributed.

“I believe that new solutions to poverty are within our reach,” Rose Broome, cofounder and CEO of HandUp, said in a statement.

Today’s investment is the latest philanthropic effort by Salesforce’s Benioff. Best known for his “1-1-1 initiative,” where 1% of a company's equity, 1% of its employees' time, and 1% of its products are donated to charitable causes, Benioff is one of the most vocal supporters of anti-poverty programs. Perhaps, today's’ announcement will convince more tech entrepreneurs to join him in his efforts. 

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Funding Circle Rakes In $65 Million In Venture Capital To Expand US Business

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Small business lending site Funding Circle just landed a major funding round of its own.

The U.K.-based company has raised $65 million in new venture financing, all from existing investors, Funding Circle announced Wednesday. It plans to use the money to expand its U.S. business, which launched last year after a merger with San Francisco-based Endurance Lending Network. The company will invest the capital in both product development and marketing, Funding Circle U.S. managing director Sam Hodges told VentureBeat.

Funding Circle operates a lending platform that enables individual investors and institutions to loan money to small businesses, from franchises to boutiques to manufacturers, looking to enhance or expand their operations. Its loans span from $25,000 to $500,000, with the average loan coming in at around $150,000, said Hodges. Interest rates range from the “high single digits” up to roughly 21 percent, based on credit risk and term (3 to 5 years).

Funding Circle expects its American arm to lend out $100 million by the end of 2014, which will help it reach its $550 million global target. Hodges said Funding Circle U.S. facilitated around $6.6 million in lending across 56 loans last month.

The company differs from peer-to-peer lending sites like Prosper and Lending Club, which primarily fund individuals, not businesses. Its more direct competitive set includes Dealstruck, Fundation, and Raiseworks, but Hodges characterizes Funding Circle as bigger and more mature.

Hodges doesn’t view banks as the competition, he said, but as potential partners — a prescient point several weeks after Lending Club announced its partnership with Spanish bank Santander, which has begun to refer its customers to the online marketplace.

“There remains a very high percentage of small business owners that remain very poorly served by banks,” Hodges told VentureBeat. “Banks don’t view a $25,000 to $500,000 loan as being their sweet spot any more.

“Our loans are being used to generate real economic value within these businesses, which goes to show the type of borrower we’re serving and the closeness of the match to their financing needs.”

Funding Circle investor Index Ventures led Funding Circle’s $65 million round, joined by existing investors Accel Partners, Union Square Ventures, and Ribbit Capital.

SEE ALSO: 'Kickstarter For The Homeless' raises investment from some of the biggest tech investors, including Marc Benioff

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One Man's Dream Of Customizable Wireless Earbuds Just Hit Kickstarter

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What if there could be a pair of headphones that’s completely unique to you — something that fits your ears, but also your style?

OwnPhones, which just launched on Kickstarter, boasts the world’s first 3D-printed wireless earbuds that are “custom fitted to your ears and perfectly designed to match your personality.”

You use a mobile app to upload a video of your ears, and OwnPhones' servers convert those images into the 3D data needed to print your custom earbuds. After that, the actual customization part kicks in, where you get to select from dozens of materials, colors, and styles to create your own unique pair of earbuds.

The company says there are more than 10,000 possible combinations of OwnPhones. And thanks to Bluetooth 4.0 technology, all OwnPhones play your music wirelessly, so you don't need to worry about tangled cords — or any cords, for that matter.

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The company's suggested retail price for OwnPhones is $299, but early Kickstarter backers can get a pair for $149 when they start shipping next March.

Finding The Form-Fitting Solution

ownphones itamar jobani.JPGOwnPhones founder and CEO Itamar Jobani, 34, spent the last 12 years working as a sculptor — first in Brooklyn, now in San Diego, California.

Jobani, a graduate of New York's Pratt Institute, is familiar with all of the major publication tools for scanning and modeling, laser cutting and 3D scanning, but he’s also extremely fascinated with human anatomy.

“My last project was something I collaborated with designers and architects,” Jobani told Business Insider. “We made a 3D-printed dress.”

At the time, Jobani says he and his team scanned a model and fitted her with a unique design that responds to the body. But since he moved to California last September, Jobani has moved onto his next “wearable” project.

With OwnPhones, Jobani is taking a similar design approach to the 3D-printed dress to help people get the customized earbuds of their dreams.

“When I moved out to California, I started running a lot, and I listen to music when I run,” Jobani told us. “I spent a lot of money trying the premium projects out there… They just didn’t cut it.”

Jobani wanted to make a pair of headphones that would never fall out of his ears, or any ears. He also wanted them to be comfortable in any setting — running or sitting still. 

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“I thought I could make something that could fit me physically,” he said. “So I tried scanning my ears with just an iPhone and I got a great result, so I decided I’d pursue it seriously.”

Jobani was determined: He recruited a small team of electrical engineers and industrial designers from the San Diego community, and started getting to work on a prototype for 3D-printed wireless earbuds.

ownphones colorsHe said he tried “pretty much every 3D technology out there,” printing 560 prototypes in about six months’ time. Finally, Jobani settled on a 3D-printing process he was happy with.

“We have a photographic process where you create photos of the same object from different angles,” Jobani said. “It’s widely used for things like 3D maps. So you can go from the far back to the front and cover the entire orbit around the ear, and that gives us enough information.”

Jobani said the key is to making this manufacturing process “mass produceable” was breaking down the ear into several elements, identifying and analyzing its various curves, and then punching the data into a special algorithm. This ever-improving science of making 3D objects from photos, called “photogrammetry,” is the key to OwnPhones’ tailor-made platform.

The customization aspect of OwnPhones, according to Jobani, is what truly excites him about this project. Like the 3D-printed dress, 3D-printed headphones let customers fit their styles to the product, rather than the other way around.

ownphones metals“You can do different shapes, colors, materials, so you can choose exactly what you want,” Jobani said. “We have some very talented designers and some that came to collaborate on this. We built 20 to 30 designs. Each one of those designs could have so many variations with colors and even jewelry pieces made of gold and silver and bronze and copper. But we’re also reaching out to the designer community, asking them to join us to design whatever they want.”

Compared to most manufacturing processes for headphones, which usually involve plastic molds and skilled mold makers for quality control, Jobani says his 3D-printing process allows for greater adaptability, and the price of printing has dropped to the point where it's now competitive with other construction techniques. Jobani says it’s no longer necessary to mass produce a million headphones; thanks to 3D printing, you can build them specific to each customer's order, which ensures it's something they actually want.

“With 3D printing, it doesn’t matter if each part you print is different, it’s still going to take exactly the same time,” Jobani said. “So if you print 40 of the same model or 40 different models with flowers, etc., they will all take the same time.”

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Jobani is impressed with his early results, but he's looking for Kickstarter funding to also improve the company's photogrammetry algorithm, which it calls "mind-bogglingly complex." Jobani says the company has automated about 80% of the ear-scanning process, but is looking to improve the further streamline the operation with more accurate high-resolution scans. Still, Jobani is already thinking big: He believes the rise of premium customizable earbuds could have a cultural impact.

“Musicians wear custom-fit earbuds on tours, but they’re usually trying to hide them. It’s not part of their identity,” Jobani said. “But pop stars like Lady Gaga can wear something that fits her look and offer it to the public so they can identify with her. They can connect people with sports figures. If you want your initials or certain graphic elements, you can do that too. You can create a logo and share it with your friends, or do something for your school, or family, or basketball team, or friends at work. Customers aren’t used to this yet.”

SEE ALSO: The 12 Craziest (And Wrong) Apple Rumors Of All-Time

SEE ALSO: Here's How Apple Can Take Its Iconic Headphones To The Next Level

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Take This Quiz To See If You Can Tell Whether These Startups Are Real Or Fake

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Gawker’s Valleywag blog provides a useful service to snarky startup-watchers by 

highlighting ridiculous companies that claim to fall under the rubric of “tech.”

But reading only Valleywag, you’d be forgiven for thinking that the phenomenon is a modern one: the product of an industry with too much money that has run out of ideas.

Dig a little deeper into the history of bone-headed businesses, however, and you discover that obviously dead-end startups are nothing new, nor are they restricted to those periods analysts call “bubbles”— times in the lifecycle of the industry when it seems as though just about anything can get funded, at occasionally preposterous valuations, provided the founders are sufficiently enthusiastic.

It’s fun to examine the wacky excesses of the start-up world. After all, it can often seem like the tech industry is an elaborate practical joke—albeit one with a lot of money at stake—played on the rest of us by attention-seeking college brats and a few wealthy enablers.

So this week I opened my address book and picked out a few prominent journalists, investors and entrepreneurs. The list included close friends, former business partners and former colleagues—in other words, people I trust to tell the difference between reality and satire. I sent them a list of seven real and eight fictitious startups and asked them to mark each with REAL or FAKE. (They weren’t told how many on the list were real companies and how many I’d made up.)

The results were pretty funny. Since it’s the weekend, you might like to take the test yourself, so I’ve listed all fifteen companies below, and you can find the answers right at the bottom of this page.

THE QUIZ

Before you get started, you’ll want to know how the experts fared. I don’t want to single anyone out; I’ll just give you the average across the panel. On average, they got nine correct answers, out of a possible 15. We’ll return in a moment to whether or not that’s significant and whether the current glut of preposterous startups matters.

1. Layoffspace

A social network for the unemployed that doubled as a job site. It was public, so required users to broadcast their own humiliation to the world to connect with other like-minded unfortunates. Mystifyingly, no one signed up.

2. Agester

According to Mashable, the “Hot or Not for your age” asked users to upload photos of themselves so other people could guess how old they were. The product failed to iterate or scale.

3. Rewined

TechCrunch’s “worst startup of 2010,” Rewined enabled you to swap unfinished bottles of wine you’d opened, but decided you didn’t like, with others in the same situation.

4. Relit

A San Francisco startup for smokers, the Relit app would dispatch a courier to bring you a lighter fluid refill wherever you were in the city, at any time of the day or night. Raised $25,000. 

5. Schweeb

Schweeb is a “human-powered monorail” into which Google has invested $1 million. Travelers get from A to B by pedaling themselves the entire way. No Schweeb monorails have been built yet.

6. Beyoncify

An intelligent selfie filter for women that suggested a list of retouching options and then performed them, before posting the image on Facebook or Twitter with a choice of Beyoncé quotes overlaid on the image. The founders decided one day to roll it out to other celebrities and raised £25,000.

7. Washboard

For a 50 per cent surcharge, this startup promised to mail you quarters for use in laundry machines. Launched and closed down almost immediately in 2014 (it was illegal), Washboard was aimed at students and city-dwellers.

8. Meet Pen

Meet Pen never secured funding but before moving on to other projects the team were designing a pen you could point and click at other Meet Pen owners to exchange contact details at conferences. The product had to be aimed very precisely and usually took 20-30 attempts to work.

9. Cardclone

A personal credit card cloning kit with which card-holders could make multiple copies of their own bank cards, so if they ever left their wallet at home, they could simply print another card off. Failed due to regulatory hurdles in Germany.

10. SitAtMyDesk

A sharing economy startup based in Baltimore that facilitates desk swaps in cubicled offices. Has never taken off, owing to the logistical problems and the amount of confusion and extra work it created for managers, but the company still has money in the bank.

11. Lulu

A social network for women that enables users to “rate their dates” with a variety of cringeworthy hashtags. Variously referred to as “a libel factory” and “bullying at scale,” the app is banned in Brazil.

12. Timbre

Timbre was the “Tumblr for voicemail” that lasted just six months, despite raising $1 million in venture capital to build a comment system in which every comment was a 10-second audio message. No major website installed the tool.

13. Chipps

At the height of the dotcom boom, Chipps launched as a Beenz competitor that raised $205,000 but put only $5,000 worth of transactions through its payment platform, which exchanged real-world currencies for a 56-character passphrase consisting of quotes from 90s teen movies.

14. Dr Death

A smartphone app and social network that encouraged users to take surreptitious photographs of medical professionals and publish them, together with an “incompetence score.” Raised €45,000 before being sued by an insurance company.

15. Knocked App

The number one paid entertainment app in the iPhone store in five countries within 48 hours of launch, Australian startup Knocked allowed users to “impregnate” anyone they met by taking a photo and allowing the software to generate a virtual baby bump.

Before you check your score, let’s ask: does it matter? One school of thought—the view you hear from entrepreneurs, investors and cheerleading bloggers—is that this is capitalism working precisely as intended: a continuous cycle of innovation that requires a degree of failure to function. People who can afford to lose a bit of money fund ideas. The good stuff succeeds. The bad stuff fails, and its founders move on to other projects.

It’s a reasonable argument, but—outside Silicon Valley, in particular—it ignores some important economic realities: namely, that a great deal of this red-in-tooth-and-claw capitalism is funded by taxpayers. Are you comfortable with the state financing such a risky asset class as VC? Because some European venture funds consist entirely or almost entirely of tax dollars.

The amount of money in publicly-funded European venture capital runs into the billions—and that’s before we even get to the grants handed out directly by the European Union with no reasonable expectation of return. The VCs who run them, with no oversight, transparency or accountability to the public, invest in some spectacularly stupid stuff—some of it not a million miles away from the companies listed above. Again, I won’t be cruel and single any out (until a few paragraphs’ time, at least): you need only glance at TechCrunch to see what I mean.

Governments like to focus on consumer technology, which today means apps, because it provides easy wins: the products being created are tangible and easy to understand and the companies have short life-cycles, which enables politicians to boast about job creation and new company registrations. Meanwhile, big technological problems in energy, infrastructure and medicine languish unfunded and unloved.

And it gets worse: immense tax breaks are available for angel investors, who are even less qualified than VCs and whose punts are even more speculative. The qualifying conditions for tax relief, should the investment fail, are absurdly easy to meet, with the effect that the taxpayer is underwriting monstrously idiotic projects, repaying angels as much as 90 per cent of their initial investment when—surprise, surprise—vertical social networks for dogs or cats or flying ant enthusiasts fail to set the world alight.

In other words, you and I are picking up the tab for what can sometimes look like an enormous middle-class dole queue—a way for burnt-out management consultants and deluded graphic designers to party in Shoreditch or Williamsburg or the Mission with someone else’s money. Your money.

So perhaps it does matter that the startup industry produces so many obvious duds and that they are vociferously defended, especially when public money is so often involved somewhere along the chain. 

The jury’s still out on whether taxpayers should play any part at all in high-risk early-stage technology businesses: while it’s true that a lot of successful startups in Europe take public money and have public sector clients in their early years, really big hits, wherever they come from, rarely need to appeal to taxpayer-funded lenders of last resort.

Of course, no company, given today’s state-sector heavy Western economies, exists entirely independently from the government. But if you believe the state has a role to play in early-stage technology, perhaps it’s at a local level, along the lines of San Francisco’s deal with Twitter, which had the effect of persuading the company to move to an undesirable bit of town in the hope that its halo would prompt local regeneration. (It hasn’t happened yet, but who knows.)

What seems obvious is that publicly-funded venture capitalists should be subjected to a great deal more scrutiny than they currently are, their employees should be of a higher standard and their investments subject to public scrutiny—and, where appropriate, even ridicule. After all, it’s we who not only determine whether the latest productivity app or social network stands or falls as customers, but, increasingly commonly, fund or underwrite the project as well.

You can’t blame my band of experts, each of whom is an enthusiastic and lifelong contributor to the startup world, for not being able to tell fiction from fact, such is the silliness of the startups they see every day. But perhaps we could ask founders, who like to say they are taking a lot of personal risk but who are increasingly underwritten by you and me, to be a bit less frivolous and address their talents to real problems.

Call me a cynic, but I’m really not sure the public purse should be pouring cash into bad jokes like Lulu.

Answers to the quiz: 1, REAL; 2, REAL; 3, FAKE; 4, FAKE; 5, REAL; 6, FAKE; 7, REAL; 8, REAL; 9, FAKE; 10, FAKE; 11, REAL; 12, FAKE; 13, FAKE, 14, FAKE, 15; REAL 

With thanks to my panel—Hussein Kanji, partner at Hoxton Ventures; Andy McLoughlin, cofounder of Huddle; Alex Hoye, a prominent angel investor in London; Tom Cheshire, technology correspondent for Sky News; Dave Lee, technology correspondent for the BBC; Colette Ballou, president of Ballou PR; Oli Barrett, founder of the Cosponsorship Agency and Web Mission; Robin Wauters, founder of tech.eu; James Cook, former deputy editor of The Kernel; Jennifer Arcuri, founder of the Innotech Summit; 

***

Milo Yiannopoulos is a columnist and broadcaster. He writes a weekly column on technology, media and politics for Business Insider. His first book, The Sociopaths of Silicon Valley, will be published in 2015.

 

 

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