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The latest news on Startups from Business Insider

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    bora bora, sharks The Wall Street Journal reports that venture capital firms like FirstMark Capital and Andreessen Horowitz are raising special "impromptu" funds from a few select investors, specifically to invest in late rounds in fast-growing companies with high valuations like Pinterest.

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    NOW WATCH: 14 things you didn't know your iPhone headphones could do


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    OpenStack logo

    Once upon a time, venture capitalists were tripping over themselves to invest in a hot new cloud computing technology called OpenStack

    It began with Piston, which raised $4.5 million in 2011 — considered a "massive" round  at the time.

    Other startups with their fingers in the OpenStack pie, like Mirantis, Nebula, Nicira, and Cloudscaling, received collective investments of more than $200 million. VC firm Storm Ventures says that collective investment in the space had hit $1.8 billion by 2013. 

    Now, the dream may not be dead, but it's certainly on life support.

    Venture capital support for OpenStack startups has all but dried up. In the last week, one of the once-hottest OpenStack startups, Nebula, went bust, and another one, Piston announced that you could now use its core product to install hot software like Hadoop and Mesos in addition to the cooling OpenStack — a huge departure for the startup that was once described as "best suited to deliver" OpenStack by investor Lars Leckie of Hummer Winblad.

    Meanwhile, bigger companies like Red Hat, HP, and Cisco are leveraging their own considerable market might, gobbling up lesser startups or squeezing them out of the market. 

    Worst of all, after seven years of development, there aren't many big companies apart from Walmart willing to step forward and say that they're actually using OpenStack. 

    What happened to the cloud of tomorrow? Where has all the money gone?

    Harder than it looks

    The hard answer is that venture capital firms jumped the gun.

    Originally developed by NASA and Rackspace Hosting, OpenStack was supposed to let anybody, anywhere turn their data centers into a super-efficient cloud similar to the one Amazon Web Services runs. The idea was that customers would do this within their own data centers first, saving lots of money on hardware and other resources. Eventually, as it took off, the biggest companies would begin to rent space in their OpenStack data centers, becoming service providers just like Amazon.

    According to the dream, as the most popular open source project of all time, OpenStack would be guided by the community — from tiny venture-backed startups to companies like Citrix, Dell, and Intel — and given away for free, in an effort to stick it to the likes of Amazon and VMware. 

    But back when investment in OpenStack first started around 2010, the hype was way ahead of the technology, and OpenStack took a lot of work to get up and running with even basic features and low reliability.

    Storm Ventures Managing Director Ryan Floyd"I was horrified at all the hacks it took to get it to work," recalls Storm Ventures Managing Director Ryan Floyd on his first look at OpenStack several years ago. (Floyd led an investment in OpenStack startup Metacloud, which Cisco bought last year.)

    Because installing OpenStack was hard, there was a tremendous opportunity for startups to make it push-button easy. This was the pitch from the recently defunct Nebula, as well as Piston. 

    But cloud computing infrastructure is a critical decision for the customer, and projects to change it could take as long as a year to get approved.

    So the startups needed to move fast to show returns for their investors. Their customers needed to move slowly to make sure they weren't staking their company on unproven technology. That fundamental mismatch is a problem.

    It doesn't help that some of these startups were building on shaky foundations.

    "The OpenStack code was very immature when they started [Nebula]," says Greylock partner and OpenStack skeptic Jerry Chen.

    But it wasn't entirely the fault of the startups. The non-profit organization responsible for guiding the open source OpenStack project bears its share of the blame.

    A political battlefield

    Joshua McKenty co-founded both the OpenStack project at NASA and the OpenStack startup Piston, and served on the board of the OpenStack Foundation, which oversees the software. (He's now the Field CTO for Pivotal, which means he goes out to customer sites and helps them install their own next-generation computing infrastructure.)

    He says that politics have hamstringed OpenStack startups for some time now. He says of the developers working on OpenStack, "They're not the people who are using it, they're the people from the vendors who are selling it." 

    In effect, the Foundation has helped deliver the market into the hands of the big companies. McKenty describes the foundation as "aggressively anti-startup."

    There's a reason why things worked out this way. As the startup OpenStack products, like the ones from Nebula and Piston, failed to set the market on fire, companies looked to install OpenStack themselves. But it wasn't easy.

    Greylock Partners Jerry ChenAnd so companies with big service organizations — like Red Hat, Cisco, and HP — get the call to do the implementation. There was no big, sexy OpenStack product involved. They just did the hard work of making it work for their customers. 

    Red Hat had years of open source chops, since it makes its money from helping customers install and support the similarly free Linux operating system.

    HP and Cisco also have years of experience catering to huge enterprises. HP snapped up Eucalyptus Systems to build out its OpenStack cloud business, and Cisco purchased OpenStack startup Metacloud (which, incidentally, was a Storm Ventures investment that made an 8x return for the firm, Floyd says). 

    Startups simply couldn't compete with these huge services businesses.

    "If you want to take venture money, and want to scale quickly, you can't do services," Floyd says. 

    The OpenStack Foundation knows this, McKenty says, and has relied on those bigger companies to get OpenStack into more customer sites around the world. Sometimes, it's bent over backwards to serve the needs of those big companies.

    McKenty recalls one OpenStack Foundation board meeting last year where Red Hat had the agreed-upon agenda thrown out the day before just so the company could bring in its lawyers to quibble with the board over a minor point in the software — a point that had been addressed and solved in a previous meeting, but not to Red Hat's advantage.

    "The worst thing for OpenStack right now is Red Hat," McKenty says. 

    McKenty left the OpenStack Foundation last September.
    Pivotal Field CTO Joshua McKenty

    It's not all doom and gloom for OpenStack startups. One startup, Mirantis, raised $100 million last October to take on those big companies in the OpenStack services arena. Another Storm Ventures portfolio investment, SwiftStack, builds storage software built on part of the OpenStack code, and raised its own $16 million round also last October. 

    Floyd, for his part, is certain that OpenStack is something the market needs, and that its time will come around again for startups.

    But where there used to be a vibrant, competitive OpenStack field, the conversation is now totally dominated by the big players. And if they were skittish before, the failure of the once-hyped Nebula to find additional funding is giving venture capitalists even more cause to stay far away from the market. 

    "At Greylock, we're looking for winner-take-most markets," Chen says. "The large vendors got what they wanted."  

     

     

    SEE ALSO: They can't all be unicorns: Once-hyped cloud startup Nebula goes out of business

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    ride app

    You may have never heard of Oscar Salazar, but you might recognize him by the design of Ride, his new ride-sharing app for commuters.

    Salazar was Uber's founding CTO and third cofounder alongside Garrett Camp and Travis Kalanick. Salazar and Camp attended business school together; the pair built Uber's first prototype with another school friend, Conrad Whelan. Salazar departed the company amicably soon after it launched.

    Ride, where Salazar is the Chief Technology and Product Officer, is a logistics company like Uber and Lyft. It even uses a similar map design layout and tracks nearby cars like Uber does.

    But the service is much more niche; it's focused solely on commuters and carpooling and it wants to create efficiency there, particularly in places where public transportation is not readily available. It works by matching a company's employees — people who likely have their own cars but want to save money by riding together — with coworkers who share similar commutes.

    Companies sign up to use Ride. Then employees download the app and input their addresses and car types. Users can opt to become drivers, passengers or both. 

    Ride uses an algorithm to pairs users based on where they're going and what time they're leaving for work. Typically, the person who lives the furthest away becomes the driver and uses directions on the app to pick up coworkers.

    Instead of a driver getting commission from the ride like on Uber and Lyft, Ride collects a small fee — $0.12 per mile for each passenger — which is given to the driver to cashlessly reimburse his or her expenses.  

    If a commuter doesn't like the carpool they're placed in, they can decline it and Ride's algorithm will choose another one. Ride is only available on iOS right now. 

    ride CEO CTO

    "We optimize the system and we can always find the best routes for you and also for your colleagues," Salazar told Business Insider. "We want your commute to be as smooth as possible while saving as much as you can."

    Both Uber and Lyft have their own carpooling services: UberPool and Lyft Line. Ride is hoping to become part of a user's daily routine, not a one-off, money-saving solution. As such, it proactively bills users daily unless they select an "I'm Not Riding Today" button to opt out.

    Ride believes it will help companies reach their sustainability goals and improve carbon footprints. Commuting together means fewer cars on the road.

    "We're very excited about what potential this represents,"Ride's CEO Ann Fandozzi says. "The way Oscar and his team are building the technology is really infinitely scalable, to meet the needs of corporations and commuters along the way."The company, which launched at the end of 2014, says it's already grown its customer base to more than 3,000 users.

    TPG Growth, which also invested in Uber, owns the majority of Ride. Ashton Kutcher is a Ride investor too. The company's CEO is Ann Fandozzi, who was previously an executive for companies including Ford and DaimlerChrysler.

    SEE ALSO: 19 Uber interview questions you don't want to be asked

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    MuleSoft founder Ross Mason

    US enterprise software company Informatica announced on Tuesday that it was going private in a $5.3 billion deal, the largest leveraged buyout in 2015.

    Informatica follows a bunch of other go-private deals in the enterprise tech world including Dell, BMC and Informatica's rival Tibco, who went private last year for $4.3 billion.

    With Tibco and Informatica exiting the public markets, there's one company sitting pretty to benefit: a hot startup called MuleSoft.

    All three of these companies offer a service that allows enterprise IT people and software developers to connect different applications together so they can share data and work together.

    That "data integration" market is huge and growing. Enterprises spent over $300 billion a year on it, market researchers say, and it's growing by about 12% annually (CAGR).

    MuleSoft's claim to fame is that it solves the hard problem of integrating cloud applications together, as well as with a company's existing apps. That means, for instance, the customer data kept in in Salesforce can be used by the Workday HR app and the Oracle database kept in the data center.

    MuleSoft was founded in 2006 by Ross Mason, who spent three years building his company while living on the island of Malta and commuting 6,000 miles every other week to San Francisco. He finally gave in and moved the company to San Francisco after he got caught in a scary incident where his plane got caught in the ash after the Iceland volcano Eyjafjallajökull erupted.

    And MuleSoft has been going gangbusters ever since.

    MuleSoft timelineIn 2014, MuleSoft raised $50 million at an $800 million valuation, (about $130 million total over 6 rounds) with backers that include big names in the enterprise world, including Salesforce, SAP Ventures, Cisco, as well as VCs like New Enterprise Associates, Lightspeed Venture Partners, and board member Ann Winblad.

    It employs more than 500 people in 10 offices worldwide, and serves thousands of enterprise customers including global banks, US wireless carriers, and global insurance companies.

    It's clearly marching toward an IPO, which may come sooner rather than later thanks to Informatica and Tibco's go-private deals.

    NEA partner Aaron Jacobson pointed this out in a tweet. (Jacobson did not lead NEA's investment in MuleSoft. That would be Scott Sandell.)

    We've reached out to MuleSoft for comment and will update when we hear back.

    SEE ALSO: How two rushed weddings and an email full of f-bombs led this 28-year-old to his third hit startup

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    NOW WATCH: What the Chinese saying 'The ugly wife is a treasure at home' actually means


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    man staring sad

    I’ve been very open about my struggles with depression over the years. A few weeks ago, I participated in a Q&A with Greg Avery at the Denver Business Journal titled Brad Feld Q&A: Bringing depression out of the shadows in startups. It was part of a more extensive series on Depression, entrepreneurs and startups.

    Since I’m still getting emails about it, I thought I’d republish the Q&A here.

    Q: How common is the issue of depression in the startup world?

    A: Very common, although it is rarely discussed. While the line between stress, deep anxiety, and depression often blurs, most entrepreneurs struggle with broad mental health issues at various points in their lives.

    Q: How hard was it to acknowledge your struggle to yourself? And how hard was it to explain it to your partners and your peers?

    A: Initially it was extremely hard. When I was in my mid-20s, running a successful company and clinically depressed, I was afraid to talk to anyone other than my psychiatrist about it. I was ashamed that I was even seeing a psychiatrist.

    I was afraid people wouldn’t take me seriously, or would stop respecting me, if I talked about how bad I was feeling. The only people I talked openly about it with was my business partner, Dave Jilk, and my girlfriend — now wife — Amy Batchelor. They were amazingly supportive, but even then I was deeply ashamed about my weaknesses.

    Q: When did you start to be so open about it?

    A: After I became depressed for the second time, in my mid-30s — in 2001 just after Sept. 11 through the end of the year. The last three months of 2001 were awful for me after an 18-month stretch from the peak of the Internet bubble — spring 2000 through Sept. 11, 2001. That was a relentless slide downhill on all fronts.

    Sept. 11 was the trigger point for this depression. I was in New York City after a red-eye from San Francisco, landing at 6 a.m. on 9/11. I was asleep in my hotel room in midtown [Manhattan] when the World Trade Center towers collapsed. While I was never in harm’s way, I was terrified, exhausted, and emotionally distressed.

    Once I got back to Boulder, I didn’t travel for the rest of the year. In 2002, when most of my VC and entrepreneurial colleagues were having a terrible year, I acknowledged how much I had struggled in 2001, although I was still relatively discreet about it.

    When I got depressed again at the end of 2012, I was open about it this time as it was happening and throughout the process. I knew at this point how to handle it and that it would pass.

    I also knew many, many entrepreneurs also struggled with depression but, like I had been earlier in life, were afraid to discuss it.

    Q: How much does the issue of mental health differ in startups from the world at large?

    A: In general, I don’t know. But leaders and entrepreneurs are programmed to “never show weakness”, so I expect there’s much more pressure to keep it hidden and suppressed, which if you’ve ever been depressed, can make things much worse.

    Q: Looking back, how much has your work, or work style, been a factor in your depression?

    A: There are many things about my depressions that I still don’t understand. I have been able to identify trigger points for the various depressions, which include physiological exhaustion, boredom, and major life changes [divorce, dropping out of a Ph.D. program].

    Most recently, things started with a 50-mile race I did in April 2012 that I never physiologically recovered from, followed by a near-death bike accident in September 2012, a very intense stretch of work which included writing two books in the midst of everything — “Startup Communities” and “Startup Life” — the death of my dog, and ultimately a kidney stone that required surgery.

    At one level, I was exhausted. I was also bored — my work was fine, but I wasn’t learning very much. I’m hugely intrinsically motivated and have always believed that I’m fueled and motivated by learning. In this case, I was teaching a lot, mostly around “Startup Communities”. But I wasn’t spending any time learning. After coming out of the depression, I realized this was a huge part of things and have subsequently redefined my intrinsic motivation as a combination of learning and teaching. Now that I’m 49, I realize this makes a lot more sense.

    Q: How well does the startup and VC world handle issues of mental health? What would you change about it?

    A: Until a few years ago, we generally sucked at it. The philosophy around leaders and entrepreneurs never showing weakness dominated and we were told never to let ourselves be vulnerable. Fortunately, leaders like [venture capitalist and professional coach] Jerry Colonna have helped many leaders and entrepreneurs understand the power of being vulnerable and we now at least have an open and productive conversation around it.

    Q: Can an executive afford to show any vulnerability and still hope to succeed in leading employees and attracting funding?

    A: Yes absolutely. It’s all about culture, style, and self-awareness. And, it’s much easier to be yourself, allow yourself some vulnerability, intellectual and emotional honesty on your path to being a great leader.

    Q: What would you say to a founder who’s grappling with depression but feeling their success might hinge on not letting it be known?

    A: I mostly try to listen, be empathetic, and introduce the person to other peers who have struggled with the same thing. I talk openly about my experiences, but claim them as mine, rather than suggest that there are generic solutions.

    When ask directly what to do, I offer opinions, but I don’t lead with them, nor do I expect that I will — or that I can — solve the person’s problem. I can simply be a resource for them.

    Q: Have you actually had these conversations?

    A: I’ve had these conversations many, many times.

    Q: What do you suggest to people who need help?

    A: Talk to your mentors, your peers, and your partners. Take the risk of being vulnerable.

    Q: Are there resources you’ve discovered that are particularly geared or well-suited to entrepreneurs?

    A: Jerry Colonna’s Reboot.io is the best organization in the world for this.

    SEE ALSO: 30 screenshots that prove old people are the best part of Facebook

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    munchery

    Tri Tran got the idea for Munchery back in 2010. He was tasked with cooking for his family — himself, his wife and his two sons — and found himself constantly looking for an answer to the question:

    "What's for dinner?"

    "I had a neighbor who was a personal chef," Tran tells Business Insider. "He goes into people's homes, cooks up a storm, 6 or 10 dishes, and put it in their fridge, and the client can go home and enjoy the food over the next few days."

    But a personal chef like Tran's neighbor charges a lot for that kind of service — $700 or $800 per engagement, Tran says. "I was like, gee, that's a lot of food, but there's no way I can afford that kind of service," he says. "So I put on my engineering hat and decided, what does it take to make it work for me?" 

    From there, Munchery was born. For about the same as you'd pay for a Seamless order (roughly $10-15), Munchery serves up a number of fresh-food entrees, sides, desserts, drinks, and kids' meals made by chefs. Munchery does everything in-house, so it's a full-stack operation; instead of outsourcing to third-parties, like restaurants or contracted chefs, the chefs work right inside Munchery's facilities. 

    Munchery, which was founded in 2011, has raised $39.9 million in venture funding, mostly recently raising a $28 million Series B round last April from investors including Menlo Ventures, Tinder cofounder Justin Mateen, and Sherpa Ventures.

    The chefs Munchery has recruited for its New York operation have worked for Daniel Boulud, at Blue Smoke with Danny Meyer, and at Tavern on The Greene. The average Munchery chef has 17 to 20 years of culinary experience.

    "These chefs basically decided that when they cook at these famous restaurants, their own parents cannot afford to go there," Tran says. "So if they want to have a bigger impact, reach more people with their food, it needs to be at a price point that is an everyday use price point. We have huge respect for those restaurants — they are fantastic. But they are not for every day. They're for special occasions."

    munchery foundersEvery time you order a meal on Munchery, the startup gives an equivalent donation to a local charity (in New York, that's City Harvest). The one downside to Munchery, which surprised me when I first tried to place an order, is that if you're looking for lunch, you're going to find that it's not quite on-demand. For now in New York, Munchery is only available for dinner (between about 4 pm and 10 pm). 

    That said, the process works pretty well within its current limitations in New York, where Munchery just launched last month (it's been operating in San Francisco for a while now). You open up Munchery's app and can look at all the offerings for that day (or schedule an order for the next day by looking at the menu).

    Each dish shows the name of the chef who prepared the food, along with a photo and a description of what's inside each dish. You can also look at reviews other customers have left about each meal. "The chefs we recruit for San Francisco and obviously for Seattle, New York — these are chefs who have extensive experience at fine dining facilities," Tran tells us.

    Once you've picked the food you want, you select an hour-long delivery window. I chose between 6:00 and 7:00 PM.

    muncheryMy food arrived promptly at 6:07 pm. I got a text and a phone call from my delivery guy, Mohammed, who said he was in the lobby of Business Insider's office building. He had my meal ready for me in a Munchery-branded bag when I met him.

    Part of what makes Munchery different from most food delivery startups is that your food arrives cold intentionally. When you're ready to heat it up, you can put it in the microwave or the oven. Everything you order comes with heating and serving instructions, and they're pretty hard to mess up.

    As for the food itself, it's really good. I ordered honey-roasted brussels sprouts along with steak. Everything was cooked perfectly — and it cost roughly the same as what I'd otherwise spend if I used Seamless or Grubhub to order dinner.

    The startup's limitations are what makes Munchery interesting and different. You have a limited number of options, a handful of meals each day. And when a certain item is sold out, that's it — you can't order it that day. But if you're tired of the restaurants around your office or your apartment on Seamless, Munchery might be perfect for you.

    muncheryInitially, Tran and his co-founder, Conrad Chu set up Munchery sort of like eBay: the chefs were the sellers, and people would go online and look at the menus and buy the food. But there was a lot of room for error with that model. "The chefs even did delivery, which is horrible, as we found out," Tran says. "They're not good at delivery. They took poor pictures." 

    Today, chefs cook their food in Munchery's kitchen facilities, and the company has its own photography team to make the food pictures look appealing.

    Munchery's chefs are able to hand-make large, scalable batches of food in Munchery's kitchens. "Instead of a typical oven that might make 20 pieces of salmon at once, we have one that can make a couple hundred pieces at once," Tran says. "There's technology we have that allows us to do this very efficiently, but the quality is better than if a company did it one by one, by hand."

    These days, there are a lot of online food services to choose from. There's Blue Apron and Plated, which deliver recipes and ingredients to your door. Instacart is a billion-dollar company that does grocery shopping for you. Seamless and Grubhub send you meals from local restaurants. KitchenSurfing lets you rent an on-demand chef for a night. Then there's Munchery an its closest competitor, Sprig, which have chefs make home-cooked meals for you.  

    It's still unclear if these are "UNI" businesses — startups with business models that make a lot of sense for users, but aren't sustainable enough for investors. 

    Unlike Sprig, which typically offers a couple entrees, desserts and sides, Munchery emphasizes that it caters to families and offers a variety of kids' meals too. Munchery aims to be a service people can use daily to get food for themselves and their families — which, Tran says, sets Munchery apart. "We have tons of respect for those guys, but their issue is different. They serve the individual person who maybe doesn't care as much about variety. For us, that's hard to serve a family with."

    SEE ALSO: Uber's co-founder just launched a new app to make your commute cheaper, easier and better for the environment

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    There is a lot of coverage of the companies that have reached valuations of over a billion dollars. Many of these companies were not always fast growing businesses.

    At Shasta Ventures, we focus on investing at the early stage, so we studied 32 high value consumer companies to see what they looked like around their Series A. Our research included 25 billion dollar companies (as measured by $1 billion+ last round valuations, acquisition prices, or public market caps) and 7 high-flying private companies with billion dollar potential. Nikhil and I looked at startups across a range of sizes and sectors, considering their funding history, user traction, growth, monetization, network effects, regulatory hurdles, market dynamics, and team characteristics.

    We found a number of key traits in common, and most of them may surprise you. Let’s take a look.

    Note: the companies used in this research were not meant to be a comprehensive list. The criteria used to pick this list of companies was A) consumer-oriented applications or services, B) Series A funding rounds after 2007, C) US-based. This list is segmented by companies’ valuation in the ranges stated, as measured by latest private round valuation (estimated), or acquisition price, or public market valuation.

    1. Easy-to-Dismiss Ideas

    Once companies reach the billion dollar club, their basic idea and value proposition seem obvious, but this was not always the case in their early days.

    Our analysis discovered that many billion dollar companies have ideas that were easy to dismiss at first. How many people really ride in black cars? Who really wants to watch live video streaming of people playing video games? Why does anyone care about yet another cloud backup and sync service? Photo messages… that disappear?!?! How many people are interested in renting a couch in someone’s home?

    Airbnb co-founder Brian Chesky has discussed this openly:

    When we came to the Valley, no one even wanted to invest in Airbnb. One of the reasons was they thought the idea was crazy. People thought I’d never stay in a stranger’s home. That’s creepy.

    It turns out that the biggest ideas are not clear when you first see or hear them, either because the idea seems small, regulations are high, or the fundamental assumption seems flawed. However, successful companies often start with executing very well on an initial concept that is the beginning to a much bigger offering.

    2. Competitive Markets

    Conventional wisdom would say that successful start-ups go into wide open spaces with bold new ideas. However, we found the opposite to be true. Most of the billion dollar companies we examined are in highly competitive markets.

    Take messaging for example. There were plenty of ways to communicate before Snapchat or WhatsApp, but these startups still managed to experience breakout success despite the stiff competition. The social and communication sector actually had the highest concentration of billion dollar companies in our survey.

    Another good example is the marketplaces sector, which includes companies like Uber, Airbnb, Eventbrite, and Instacart. There were certainly ways to get cabs, find lodging, organize events, or get groceries delivered before any of these startups came along, and yet these companies delivered a better offering and grew like wildfire.

    The key learning is that consumers are willing to embrace superior products and experiences. It is also clear that large existing markets are ripe for disruption by tech enabled companies that create new ways to serve the customer.

    Tech Unicorns Illustration

    3. Reinventing Existing Consumer Behavior

    We found that billion dollar consumer companies generally reinvent existing behavior with a superior consumer experience, rather than bringing something radical and novel to the market.

    Companies like Nextdoor, Square, Zulily, and others have given consumers new ways to do things they were already doing — connecting with neighbors, paying with credit cards, and buying kids products online. Each company’s success stemmed from a unique insight it had about the customer that spawned a better experience.

    Dropbox was just easier to use than other backup/storage/sync solutions, and far better than the USB drive/self-email status quo. Tumblr built an engaged community around content, which may not seem like a big deal at first, but really differentiated its product. Nest built a thermostat that was connected to the Internet, better designed, and more effective at saving energy. Uber has reimagined the model for a transportation company, presenting an infinitely more convenient and enjoyable way to get around town.

    4. Untested Founders

    Surprisingly, it is most often untested founders, rather than experienced entrepreneurs, who are at the helm of large, fast growing companies.

    Three-out-of-four of the companies in our survey were built and run by people who were doing it for the first time. They did not have a win under their belt or deep experience in their field, but were passionate about their product and had a unique perspective on how to serve their target customer. Having a fresh perspective is important in tackling a category as people with industry experience are often constrained by what is “not possible” and why it “won’t work”.

    5. Zero Monetization 

    Another interesting finding is that many of the billion dollar companies were not monetizing their customers at the time of their Series A round, including Twitter, Pinterest, Houzz, and Nextdoor. At this stage, they were focused on building a user base rather than making money. These startups first focused on nailing their customer proposition and increasing adoption and engagement. Once they had established themselves firmly in the market and reached massive scale, then they started to think about revenue.

    While most companies did not have revenue early on, we found that many that grow to significant scale did have signs of strong product/market fit and/or exhibited strong network effects by their Series A round.

    If this study made anything clear, it is that potentially big ideas are often not obvious at the Series A stage.

    Some startups that seem poised for greatness go on to crash-and-burn, while others that are slow to get off the ground surprise everyone with their triumph. There is no formula, expectations are often wrong, and each success story is unique and unprecedented… but that doesn’t mean there are not patterns worth paying attention to.

    Our analysis did reveal one clear, underlying theme:

    There are large companies to be built by offering new, innovative and superior customer experiences to large markets, regardless of how competitive the sector already is or how successful the founders have been before.

    SEE ALSO: 30 screenshots that prove old people are the best part of Facebook

    Join the conversation about this story »

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    Product Hunt app

    Product Hunt launched a new version of its iPhone app Thursday, and it's worth a download for anyone serious about discovering the next big thing.

    Since its debut a year ago, Product Hunt has quickly evolved into the go-to place for investors and tech enthusiasts to browse the latest products, ranging from viral apps to long-anticipated hardware launches. Like Reddit, people upvote or downvote products in a daily list — a tried-and-true method for surfacing something interesting.

    The friendly community of startup founders, developers, and inventors is also incredibly active, and Product Hunt's new iPhone app makes it easy to stay up to date on the latest hot app or startup while offering an easy way to follow along with community and what they're interested in.

    With its sleek new design and new animations, scrolling through the daily list of products or checking out Product Hunt's curated collections is a silky smooth experience.

    Product Hunt 2.0 app

    While the original version of the app was useful but sparse in features, this latest version remedies that by introducing a host of new features designed to make browsing Product Hunt on your phone as compelling an experience as browsing the website.

    You can now follow your friends and other product makers, and a dedicated Activity section lets you see what they're interested in and upvoting.

    Product Hunt 2.0 app

    There's now also the much-needed ability to search for products, collections, and people, which turns the app into a sort of search engine for products and startup founders. You can also submit, or "hunt," products of your own too. If you find an app you like, Product Hunt now lets you download it within the app.

    Product Hunt 2.0 app

    You can download Product Hunt 2.0 over at the App Store.

    SEE ALSO: I rode the one-wheeled skateboard of the future around New York City — and people kept stopping me to ask where to get one

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    nerdIf you text (650) 419-4194, a smart Stanford kid will help you with anything you need.

    That's the premise behind Nerd. It's an "invisible app," meaning that it works via a text messaging layer without requiring an actual app that you download from the Apple App Store or Google Play.

    All you have to do is text that phone number and someone — the company says it's a Stanford student — will help you out with what you want or need.

    Nerd has three major use cases, according to its website.

    The first is college advice and tutoring. You can text Nerd and ask for someone to review your homework and someone — presumably a bright Stanford kid — will help you out, for a fee.

    Screen Shot 2015 04 09 at 2.56.22 PM

     

     

    Similarly, you can text Nerd and ask for help with hiring or analytics.nerd app

    Nerd, it seems, is targeting a college audience: they offer to specifically help with canvassing campuses for surveys and advertising.nerd app

    We reached out to Nerd for comment on this story and haven't received a response yet.

    However, we did text Nerd to get a sense for how it works. It took about 20 minutes to get our first response from Nerd, and it seemed like whoever we were talking to was a little overwhelmed. We asked whether we were talking to a person or a robot, and they told us they were, indeed, a person. We then asked if they could connect us to Nerd's founders, but we haven't heard back yet.

     nerd app

    Nerd sounds a little like Magic, a Y Combinator startup that promises to deliver you anything you want (as long as what you want isn't illegal). Just after it graduated from Y Combinator's accelerator program, it was reported that Magic was raising $12 million from Sequoia Capital at a $40 million valuation.

    It's unclear who is behind Nerd so it could just be a spoof (the domain registration information was blocked). Still, people are amused by it. Nerd was posted on product discovery site Product Hunt earlier today and it's received nearly 300 upvotes from the community.

    SEE ALSO: Magic just showed its first product to investors on Monday — now it may be worth $40 million

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    NOW WATCH: This Excel trick will save you time and impress your boss


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    Estimize team

    Get ready, FinTech nerds. Estimize, the popular online platform that crowdsources stock analysis from Wall Street experts, is growing.

    Estimize CEO Leigh Drogen announced at the 2015 Benzinga Fintech Awards on Wednesday that the startup had raised $3 million in its Series B round of funding. That's on top of the $2.4 million raised in its Series A round.

    "We really think that there’s this momentum behind crowdsourced finance right now and that it’s at some point going to usurp the traditional ways that you access financial data," said spokesperson Christine Short.

    "We think that the space in general has a lot of potential and we’re just trying to fulfill our role there."

    Leading the round was angel investment firm WorldQuant Ventures, which did not invest in the Series A round but was the company’s first client back in 2012.

    "It means a lot to us that we’re sort of being validated now by our clients that are using the data are now becoming investors," said Short.

    Other investors were Bob Greene of Contour Venture Partners, who had also invested in the Series A round, as well as a handful of new investors, including:

    • Ross Garon, the head of Point72's quant fund, Cubist Systematic
    • Frank Sica of Tailwind Capital and formerly of Soros Fund
    • Brian Finn, President of Credit Suisse First Boston
    • Jarrod Yuster, CEO of Pico Trading
    • Peter Nesvold of Silver Lane Advisors
    • Agilic Partners

    Estimize, which aggregates earnings and revenues from some 6,000 Wall Street pros, has a number of new premium features in the pipeline.

    One feature will allow users to view a select consensus of highly rated, historically accurate contributors. Another will highlight notable estimates from contributors who are normally on point but who fall out of consensus on specific calls. They're also developing a new filter option.

    But before the company can roll out those premium features, they first need to hire more talent. Short said they're currently hiring in the front end, back end, marketing, and sales departments.

    Join the conversation about this story »

    NOW WATCH: 100-year-old math teacher reveals the formula for a long and happy life


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    JP Morgan Chase and Company CEO Jamie Dimon

    "Silicon Valley is coming,"JPMorgan Chase CEO Jamie Dimon warned in his annual letter to shareholders.

    Dimon says startups are coming for Wall Street, innovating and creating efficiency in areas that are important to companies like JPMorgan, particularly in the lending and payments space.

    Lending Club, for example, had the largest US tech IPO of 2014. The payments startup Stripe has a multibillion-dollar valuation and a partnership with Apple Pay. Bitcoin companies and exchanges like 21 and Coinbase are attracting tens of millions of dollars from venture capitalists. And the financial-planning startup LearnVest just got acquired for $250 million in cash.

    "There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking," Dimon wrote. "The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and — these entities believe — effectively by using Big Data to enhance credit underwriting. They are very good at reducing the 'pain points' in that they can make loans in minutes, which might take banks weeks. We are going to work hard to make our services as seamless and competitive as theirs. And we also are completely comfortable with partnering where it makes sense."

    Dimon also spent a section of his note discussing payment competitors, and he notes that payments are "critical" for JPMorgan. 

    "Rest assured, we analyze all of our competitors in excruciating detail — so we can learn what they are doing and develop our own strategies accordingly," Dimon says. 

    SEE ALSO: Jamie Dimon: 'There will be another crisis'

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    NOW WATCH: Sallie Krawcheck's Advice For Wall Street Analysts


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    lane becker get satisfaction

    In 2007, Lane Becker cofounded an online customer-service startup, Get Satisfaction. In 2011, after turning down acquisition interest, the company raised $10 million at a $50 million valuation, bringing its total amount raised to just under $21 million.

    Last week, Get Satisfaction was acquired by a social-media management company, Sprinklr, for an undisclosed amount.

    You'd think the cofounder of a $50 million startup would be celebrating the sale. But Becker isn't.

    In fact, right after Becker signed the acquisition paperwork, he vomited.

    That's because Get Satisfaction, the company Becker says he was pushed out of in 2010, was sold to Sprinklr in a "fire sale." A fire sale in the startup world is when a company is in a desperate state and needs to immediately find a buyer or shut down. Becker says he and Get Satisfaction's early investors didn't make a penny from the Sprinklr deal, though the company's current CEO, CFO, and later-stage investors did just fine.

    Worse, Becker says he wasn't even told an acquisition was in the works. A former employee loyal to Becker leaked him the information, and Becker hired a lawyer to learn what Sprinklr and Get Satisfaction were up to.

    So, how does the founder of a $50 million company find himself powerless and penniless during an acquisition?

    Becker tells Business Insider he and is team made two big mistakes:

    • They lost control of their business to venture capitalists
    • They weren't honest enough with themselves about where their business was in the marketplace before raising a big round of financing at a lofty valuation

    Becker says he and his cofounders started losing control of the company when they raised a $6 million Series A round. But the $10 million round Get Satisfaction raised was what really did them in.

    "We took a $10 million investment very prematurely," Becker told Business Insider during a phone call Monday. "At the time we were entertaining some acquisition offers. In hindsight, they would have been wise acquisition offers to take. The executive team got stars in their eyes about the money and took the investment. When you raise $10 million at a $50 million valuation, that is a serious promise you're making with your business."

    Becker says he didn't tweet about his disappointing acquisition because he was bitter. Instead, he wanted to be honest with the startup community.

    "I understand venture capital is a game and we lost," Becker told Business Insider. "Although I admit I thought it was more a game of chess and it's more a 'Game of Thrones.'"

    I admit I thought it was more a game of chess and it's more a 'Game of Thrones.'

    Becker doesn't fault all his investors for Get Satisfaction's outcome. He says his early-stage investors, including O'Reilly AlphaTech, Kapor, and First Round Capital, were "fantastic" and that "the business would not have existed without them."

    Here's Becker's very honest Twitter rant about what startup acquisitions can really be like for founders. Sprinklr CEO Ragy Thomas did not immediately return a request for comment.

    SEE ALSO: Apple may have bought a keyboard app that tracks your fingers as you type

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    Qobuz CEO Yves Riesel

    France has built a vibrant tech culture in the last few decades, growing from a network of hardware manufacturers in the 1990s to a collection of video game developers, apps and streaming sites today.

    We ranked together some of the most interesting tech startups headquartered in France, including established companies, innovative hardware manufacturers, and small startups making waves in the tech scene.

    17. Yatedo

    It's easy to find information online through Google, but what if you want to find people? Yatedo is a search engine for people that brings together information from all over social media and the web to generate profiles for different people. Those pages include contact information, career history, and social media profiles, all in one place.

    The company brought in $1.6 million (£1.09 million) in seed funding from True Global Ventures in 2012. 

    Founders: Amyne Berrada and Saad Zniber



    16. Pearltrees

    Pearltrees is a French startup that helps its users collect URLs, photos, and files, from around the internet and then sort them into interests.

    The technical term for an organised collection of everything you like is "interest graph." Facebook has a similar functions called Facebook Graph, but Pearltrees is trying to use that technology to connect you with what you like in a smarter way. It can sort your favourite music and films, suggesting new interests.

    Since launching in 2009, Pearltrees has brought in a total of €10.4 million (£7.5 million) in funding, most recently raising €6.6 million (£4.7 million) in 2012 from The Group Accueil and other investors.

    Founders: Nicolas Cynober, Alain Cohen, Francois Rocaboy, Patrice Lamothe



    15. Leetchi

    If you've ever organised a gift for someone in the office, you know how tricky it is to get everyone to pay up. Leetchi solves that problem by allowing users to create a money pot. Friends and coworkers can use Leetchi to contribute to the pot through an app on their smartphones.

    The site was founded in 2009, and has raised a total of $7.9 million (£5.4 million), bringing in $5.5 million (£3.7 million) in 2012 from investors including Idinvest Partners. It used that money to expand into the UK and Germany.

    Founder: Céline Lazorthes



    See the rest of the story at Business Insider

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    spoon university founders

    When Mackenzie Barth was studying communications at Northwestern University, she found herself living in an off-campus apartment for the first time, completely lost, with no idea how to cook for herself.

    "The only thing we could spend our money on was going to eat out with friends at restaurants nearby, but we didn’t really know where to go or had the resources to figure it out, except for talking with our friends," she told Business Insider. 

    Along with her friend Sarah Adler, Barth decided to start her own website — a place where anyone form Northwestern could talk about food. Spoon University— a website to share recipes, health and lifestyle stories, restaurant reviews, BuzzFeed-esque quizzes, and other food-related content — launched in March 2014 and grew to a 100-person student staff at Northwestern's campus.

    Spoon University caters specifically to millennials, offering both localized and more general stories about food, wellness, and lifestyle that are relatable and accessible to young people. The website has a national main page, as well as individual verticals for every participating college campus. Barth says she wants Spoon University to "emphasize the real, authentic, raw fun side of food that you don’t really get with other companies like Food Network."

    Students at other schools saw Spoon University and came to Barth and Adler, telling the cofounders that they wanted a similar publication at their own campuses.

    "We replicated what we built at Northwestern to about five other schools to kind of  test it out," Barth says. "And the requests just kept coming."

    spoon universityA year later, 23-year-old Barth and Adler have moved to New York City, where Spoon University is the only media company going through Techstars NYC's accelerator program. The company will present at Techstars' Demo Day this Friday.

    Spoon University now attracts 2 million unique visitors every month — 10x growth from 200,000 uniques just five months ago. Spoon University has 120 participating college campuses, including schools like Penn, NYU, Dartmouth, and Michigan, with 3,000 students actively contributing stories, photos, and videos to the website. Spoon University's advisors include digital media startup talents like Bryan Goldberg, the CEO and founder of Bustle and Bleacher Report, and Chris Altchek, the CEO of Mic. Its readership is 75% female.

    Barth tells Business Insider that Spoon University's growth has been completely organic: students see Spoon University's stories and videos online, and write in to ask how they can start their own campus chapter. When a student expresses interest on campus, they go through a series of steps to prove that there's enough demand for Spoon University.

    spoon universitySpoon University's staff appoints a leadership group for each campus, which includes an editor in chief, a marketing director and a photo director. Those students are the ones to maintain their team, and they can receive credit as you would for an internship. Spoon University rigorously vets the students who apply for the leadership roles, and writers are also interviewed and vetted to ensure the quality of writing remains consistently good.

    "We empower our editors in chief to really produce better content, to lead their editorial vision for their chapter, because every school is so different," Barth says. "But then we curate the best content on Spoon’s national homepage, and we give people analytics feedback so they know what’s performing well. There’s constant learning going on. For having 3,000 contributors, the content overall is pretty strong, which is great."

    In about a month's time, Spoon University can completely jumpstart a campus chapter. Every campus's leadership team guides its staff to write better stories and to measure results. The students who write for Spoon University are unpaid, like students at most campus newspapers and magazines.

    Unlike campus publications, however, Spoon University has a proprietary backend product, appropriately called "Secret Sauce." It onboards and trains all of Spoon University's contributors, and it serves as a place for writers to track their progress, their analytics, and feedback on all their stories.

    Students who write stories or produce video for Spoon University learn skills they might not be getting in the classroom that can help them out in the real world, especially if they're interested in digital journalism: contributors learn how to optimize headlines, how to promote things on social media, and how to take better photos. 

    "There’s this constant information, skill-building and help and resources you have access to with Spoon University," Barth says.

    spoon universityWriters on Spoon University get national and international exposure. Spoon University has syndication partnerships with big-name media companies like BuzzFeed, the Huffington Post, Elite Daily, Yahoo Food, and USA Today College.

    "With a campus publication you might only have your content seen by people on your campus. but publishing on Spoon University means the reach is so much greater," Barth tells Business Insider. "You can actually feel like your piece of work you’ve put a lot of effort into is being seen by a lot of people."

    To monetize, Barth says Spoon University has worked on experimental campaigns with Whole Foods and other brands, consisting of sponsored content, social advertising and experiential marketing.

    "We're looking for innovative ways to create awesome content and experiences for brands that our audience will love," Barth says.

    Spoon University is looking to grow its 7-person staff this year. The company plans to wrap up its seed round of funding after Techstars' Demo Day, and will continue to focus not only on the written content on Spoon University's website, but its videos too.

    spoon university"We want to help our contributors create video content because it’s really exciting for people to watch food video content online, and give them the tools to become video producers too." she says.

    Barth says she wants millennials to recognize Spoon University as a food-lifestyle brand for them.

    "Despite what a lot of people believe, even college students really care what they’re putting into their bodies, and I think there’s a real generational shift where millennials especially are more aware about food and where your food comes from and how your body reacts to different things," Barth says. "It’s a food movement of sorts."

    SEE ALSO: Food startup Munchery has hired a bunch of gourmet chefs to answer the most popular question in your household

    Join the conversation about this story »

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    notation capital nicholas chirls alex lines

    Do you have an idea for a startup, but no product, traction, or even a working prototype?

    That's OK! You could still get up to $500,000 from a new wave of venture capitalists — "pre-seed investors"— who are happy to fund your future business endeavor. 

    About six months ago, the term "pre-seed investing" became popular in the startup world, particularly in New York City. Two former Betaworks executives, Nicholas Chirls and Alex Lines, are leading the charge with an $8 million pre-seed fund called Notation Capital.

    "Pre-seed" investing is an alternative to raising a traditional friends and family round of financing, or collecting multiple checks from strategic angel investors to get a a startup idea off the ground. These rounds, which are typically $100,000 to $500,000, go to founders in exchange for a piece of their companies (5% to 10%) right at the idea stage, before there's been any proof of concept. 

    Really, pre-seed investing isn't anything new. A few years ago, these rounds were simply known as seed or angel rounds, lead by early stage investors like SV Angel, Lerer Ventures, or Thrive Capital. Startup accelerator programs like TechStars and Y Combinator also use a similar model.

    Now many of those firms have gone on to raise much larger funds, and writing relatively small checks won't yield the returns their funds needed to please their investors (limited partners). In addition, funding rounds have gotten more crowded, often pushing founders to raise millions of dollars before their businesses are ready for the capital.

    Jet.com, for example, is a stealth e-commerce site that raised a $55 million Series A right out of the gate. Clinkle, a payment startup, infamously raised a large ~$25 million seed round more than a year before launching.

    yik yak office yak logo

    Raising too much money too early can blow up in a founder's face. It can cause companies to spend money irresponsibly, before they even know what they should be spending it on, and it can force companies to grow in unnatural ways to earn their lofty valuations.

    Pre-seed firms like Notation Capital offer a less aggressive launchpad for founders who don't want to over-raise or get heavily diluted. Other New York-based investors, including Charlie O'Donnell's Brooklyn Bridge Ventures, David Tisch's BoxGroup, and Shana Fisher's High Line Venture Partners offer similarly modest amounts to founders.

    Chirls says he and Lines have already made four investments. But if there's no traction or product, how can he spot a good startup team?

    Notation Capital looks for people with technical backgrounds who spend all their free time trying to solve a problem. And those people, Chirls says, are "everywhere." 

    "We try to find two or three really smart people hacking on nights and weekends, building something really cool who really want to go do that full time," he says. "But those people don’t necessarily need millions of dollars to do it or want millions of dollars to do it, and they are still at early stages and there’s no growth chart."

    New York may be the perfect place for pre-seed investors like Chirls. The New York startup scene hasn't yet produced tons of wealthy employees who can recycle their riches back into the startup scene like Silicon Valley has. No exit on the east coast has come close to producing 1,000 millionaires like Facebook's IPO did.

    "In the valley there’s so much capital around that it's unusual for someone not to raise millions of dollars out there even with a napkin," says Chirls. "We heard it enough times from founders we know and trust that it’s really awkward in this market to raise $500,000 as a seed round.

    It’s really awkward in this market to raise $500,000 as a seed round.

    "There needs to be more capital and support of this infrastructure at this infancy of a project," he says. "You can call what we're doing old-school seed rounds, or friends and family rounds. But the point is that hopefully we can provide the right amount of capital for a team to get through first 6-12 months."

    READ THIS NEXT: A warning to startups from the head of Silicon Valley's most important startup factory

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    So you're thinking about founding your own startup. Where should you locate it?

    Thanks to a handy new website called Startup Stats, you can now easily compare startup locations by looking at factors such as availability of startup visas, internet coverage and speeds, registrations fees, income tax, and even the average cost of a beer.

    Startup Stats organizes everything in a clean, colorful list by country — there's detailed information on 43 different countries at the moment.

    Startup Stats

     Clicking on a specific country will expand it to show you the full breakdown of stats.

    Here's what it looks like for America. At the top, you'll see the country name, main tech hubs, internet summary, and the relative ease of starting a company there.

    Startup Stats

    Here's the full breakdown of what you need to know about starting a company in Japan, where you'll notice the registration fee is pretty steep, though the average cost of a beer is much cheaper than the U.S. ($1.50 vs. $4).

    Startup Stats

    If you want to zero in on a specific stat such as registration fee, ease of funding, or the availability of a startup visa, Startup Stats lets you sort the list by individual factors too.

    Startup Stats

    Looking to the future, Founded X, the startup collective behind Startup Stats, says it plans to add more information and additional ways to connect with other startup founders in your local area.

    You can browse Startup Stats for yourself by clicking here.

    SEE ALSO: This simple orange grid offers everything you need to know before you start a company

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    NOW WATCH: Peter Thiel's 3 Keys For Building A Successful Startup


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    Dan Price at GeekWire’s Startup Day event.Gravity Payments CEO Dan Price has announced that he plans to raise the base pay of every employee to at least $70,000 per year over the next three years.

    According to the New York Times, Price told his entire staff on Monday of the change. They report that Price began to contemplate the idea after reading an article on happiness: “It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.”

    How is Price going to be able to pay his 120 staffers this respectable wage?

    He told the Times that he will cut his own salary of nearly $1 million to $70,000 per year, and use 75 to 80 percent of the company’s annual estimated $2.2 million in profits from this year to fund the raises. They report that it will affect about 70 employees’ wages, with “30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 year.”

    As we’ve reported, Price has already made some progressive moves to improve the workplace for his employees. In 2013, he instituted a 2 percent payroll increase to offset a new payroll tax. “The payroll tax is regressive and is the tax that most hits everyday people,” Price told GeekWire then, adding that he decided to “put my money where my mouth is.”

    Dan Price accepts the Young Entrepreneur of the Year Award at the GeekWire Awards in 2013. If you don’t know much about Price or Gravity Payments, it’s the startup story dreams are made of. Well, that and a lot of hard work and bootstrapping.

    A native of rural Idaho, Price started Gravity at the age of 19 while he was still attending Seattle Pacific University. Just a little over a decade later, he’s built the company into a “multi-million dollar powerhouse in the credit card processing arena.”

    “When I think about the traditional model of what a company is supposed to be and what a company is supposed to do, and what we are told the goal of a company is, it seems like it fits the unsuccessful people model,” Price said during a talk at a University of Washington Business Competition GeekWire reported on in 2014. “And so when I look at Gravity’s success, it comes from the fact that we are out there serving others. That’s our ethos. That’s who we are…

    “What’s being cool is being happy, and serving others and caring about others and all of these things that go along with true success.”

    Price won a GeekWire Award for Young Entrepreneur of the Year in 2013, and was nationally recognized last year as Entrepreneur Magazine‘s Entrepreneur of the Year.

    This is a major move that sends a big message to other CEOs. According to this piece by the Washington Post, a recent Harvard study found that “Americans believe CEOs make roughly 30 times what the average worker makes in the U.S., when in actuality they are making more than 350 times the average worker.”

    In light of today being Equal Pay Day and the wage gap, this is an amazing move on the part of a CEO. We’ve reached out to Price for comments so be sure to check back for updates.

    SEE ALSO: Escaping the ‘posers': Why these founders left San Francisco to build a startup in Seattle

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    interview

    If there's one thing that techies hate, it's interviewing for a job in tech.

    You'd think it'd be easier, right? After all, every company is soon to be a software company if you believe the Silicon Valley hype, which means that every company will soon need lots and lots more programmers.

    The problem is that it's actually really hard to assess whether or not somebody is a good programmer.

    Everybody thinks they're an expert, and it's often non-technical people like HR that get tapped to do the initial assessment.

    And so two things tend to happen when you interview for a tech job: You either get completely insane "skill" tests on extremely basic knowledge that have little to do with the job at hand, or else they turn to brainteasers, riddles, and other weird stuff designed to gauge your personality as much as your set of skills. 

    Regardless, the result is the same: Really excellent coders find themselves without a job, while recruiters hire people with the wrong skills for the job they're hired to do. 

    That's a problem that HackerRank, a startup founded by ex-Amazon engineer and current CEO Vivek Ravisankar, wants to solve. 

    On Amazon's Kindle team back in 2008, building the software that let people self-publish blogs to the e-reader store, Ravisankar had to conduct a lot of technical interviews. Over time, it became clear that the process was not great. 

    "It's very hard to figure out how good a programmer is from looking at your resume," says Ravisankar, who left Amazon in 2009 to pursue the startup. 

    HackerRank is a tool for automatically making programming tests, based on the skills that the company wants to test for, and then giving them a score based on their own algorithm. 

    "Your 5 can be my 1.2," Ravisankar said.  

    It's a pretty simple idea, but it was profound enough to get HackerRank into the prestigious Y Combinator startup accelerator program. Today, one million developers use it to compete in challenges and gauge their own skills, HackerRank claims, while big companies like Amazon, Riot Games, and Evernote use it in their own recruiting efforts. So far, HackerRank has raised $12.4 million from venture capital firms like Khosla Ventures and Battery Ventures. 

    Now, HackerRank announces integration with the super-popular recruitment software Oracle Taleo, Greenhouse, and Jobvite, such that recruiters can instantly test job seekers and see their scores from right within the program.

    Again, simple, but profound — recruiters can see how good a candidate is straight from the software they're already using to find good future employees. 

    There's an interesting side effect here, too. The traditional technical interview has the bad habit of turning away women and minority groups for the simple reason that they prioritize people who code in a similar way to the interviewer.

    A more objective score given by HackerRank could remove that barrier, ensuring candidates' applications live and die by their own merit.

    "We're bringing in a huge change in recruiting," Ravisankar says.

    Join the conversation about this story »

    NOW WATCH: 7 clichés you should never use in a job interview


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    man and woman at laptops computers couple

    This is, in no particular order, what I'd tell myself about startups if I could go back in time to when I first got involved.

    Which is probably the same as what I've learned. This is most definitely not advice, the "you" here is directed at me. So is "I". Grammar is hard.

    1. You're definitely going to end up building too much and shipping too late. Be obsessive about avoiding this

    2. Someone's always already working on the same idea and that's not a bad thing

    3. Always refuse if someone asks you to sign an NDA before hearing their idea

    4. Like it or not, most networking is focused around drinking. Find a way to deal with that without having a constant hangover

    5. The people who are really getting somewhere aren't the people who are always out for drinks

    6. Linear growth can be worse than no growth

    7. Most people who talk about failing fast, aren't actually practicing this

    8. It's really easy to kid yourself that you're "doing customer development" when actually you're finding ways to make what your customers are saying fit with what you want to build

    9. Everyone has a hidden stash of domains they've never used

    10. It's really easy to become hyper-critical and respond to every idea with "yeah but that won't work because of x". This is lazy, don't do it.

    11. Be especially careful to avoid the above when talking to people who are new to the scene. Call out other people who do it

    12. It's really hard to listen to someone pitching an idea you've seen fail several times already and focus on working out if there's something slightly different and interesting there

    13. Someone being a technically competent developer does not mean they know how to ship things. I'd always rather work with someone who ships over someone who's technically brilliant

    14. The programming language/ framework wars are great fun in the pub, but of limited value in real life

    15. A good developer can pick up any language or platform in a few weeks

    16. I still don't know any real investors

    17. Constantly exaggerating how well you're doing can be very tiring. It makes it harder to publicly celebrate the real victories

    18. It's really hard to build a product if you don't have a big personal investment in the problem it solves

    19. Falling in love with a product (rather than the problem) is really dangerous

    20. You can get away without knowing how a hash table works, but it's really satisfying when you eventually learn it

    21. Same goes for Big O notation

    22. Overnight success isn't a thing. The Social Network is still a great movie

    23. I still don't understand PR

    24. Most technical solutions are trivial compared to how you get the product into peoples hands

    25. Make something people want is probably a less useful heuristic than make something you want

    26. But you wanting it doesn't mean enough people want it for it to be a business

    27. If you don't have first hand experience of an industry, you're probably wrong about how it works, what problems they have and so how they should be solved. Talk to people

    28. "Ads" are where business models go to die

    29. "We'll monetize the data" is the new "Ads"

    30. The people you end up wanting to work with (and help) are the ones who always try and work out how they can help you. Be more like them

    31. But get really good at asking for things. Most people will give you a discount for no reason other than you asked. If you see someone important and influential, introduce yourself

    32. Get good at saying no to things, from people asking you for discounts to interesting projects you really don't have enough time for

    33. Think hard about a pivot which makes good business sense but leads to a product you no longer care about

    34. Writing (blogging, books, journaling) is a really positive experience

    35. Don't pay too much attention to internet comments about something you've written, there's always someone who didn't like one particular sentence (see point about trolls below)

    36. One troll can wipe out a hundred positive interactions, be ruthless in keeping them out of your communities

    37. If you end up pitching to someone over coffee, ask to hear their pitch afterwards

    38. Only say you're going to introduce someone or send them something if you're actually going to do it. People quickly get a reputation for never following through

    39. Show don't tell. "I'm going to build this amazing thing" is a LOT less interesting than "I've built this slightly crappy thing that actually does something". EVERYONE is GOING to build something, most people never do

    40. Building things is awesome, don't get too caught up with the whole "Lean Startup Landing Page" mindset

    41. Lean Startup is awesome, but it's a pamphlet not a book, read the first few chapters and you'll get the idea. Four steps to the epiphany is more technical and probably a better book

    42. Most startup advice is terrible and the good advice is usually obvious. Everyone will give different advice, trust your gut

    43. Except when it comes to what your customers want, then ignore your gut and trust them

    44. No-one has ever used a Bitcoin ATM for practical reasons

    45. Do back of napkin financial forecasts for every potential business model you come up with, just to see if it's in the right ballpark to a couple of orders of magnitude

    46. It's really easy to automatically dismiss everyone who starts a conversation with "I'm looking for a technical co-founder". Doing this means you miss talking to some interesting people. But be upfront that you're not that co-founder so no-one feels like their time is wasted

    47. Trying to raise money and apply to accelerators is a full time job. You're probably either building or fund raising. Not both. If in doubt, choose building

    48. The solution to many, many problems, is not technical. That won't stop people trying solve them with apps

    49. Facebook is the Facebook for X

    50. The idea you laughed at when you saw them pitch at a hackathon may well be the one that's still alive and kicking long after whatever you pitched fails

    51. If there are people who genuinely like failing, I've never met them

    52. That was not "your idea" unless you shipped something, otherwise I invented Facebook, Nest and Oculus Rift

    53. People don't steal ideas. Tell as many people as possible. Never ask someone to sign an NDA before hearing your idea, you'll instantly lose all credibility

    54. Being friends with somebody is not the same as being able to work well with them

    55. Small teams can move VERY fast, be really careful getting extra people involved in any project where agility is important

    56. Multi-tasking isn't a thing, switching costs are huge, do one thing at a time and do it really well. Find a way to block out interruptions

    57. Read every essay Paul Graham has written

    58. Tech news (and news is general) has a very low return on time invested. Prefer books and conversations

    59. Read Founders StoriesFooled By Randomness and The Four Steps to the Ephiphany

    60. The logo doesn't matter at the start, find a simple text based logo you can re-use for different projects

    61. If you possibly can, open source and write up any side project. Every now and then you'll meet somebody really interesting as a result

    62. Regularly working 12 hour days is probably never a good idea. If this is happening a lot, find a way to optimize

    63. Talk to everybody 

    This is a guest post by Ben Dixon who co-founded the online learn to code platform www.makeitwithcode.com.

    SEE ALSO: Why one CEO set a new minumum wage for his employees: $70,000 a year

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    jeff walter Cruttenden acorns foundersAcorns, an eight-month-old app that lets you automatically invest spare change when you make purchases with your credit or debit card, just raised $23 million in a Series C round of funding.

    Yes, you read that right: An app that's only been live for eight months is already on its third round of financing.

    That's because the company was actually founded in 2012 and an Acorns spokesperson says the app has seen "incredible growth" since its mobile debut in 2014.

    The new funding, co-led by Greycroft Partners and e.ventures with participation from Sound Ventures, Garland Capital, and MATH Venture Partners, brings Acorns' total funding to $32 million.

    When Acorns' cofounder Jeff Cruttenden was in college, he realized a lot of his friends — many of whom studied economics or finance — didn't have their own investment accounts.

    "It was really striking,"Cruttenden, whose dad set up a small investment account for him when he was young, says. "These people talked about investing all the time, but they didn't have their own accounts." Cruttenden and his father cofounded Acorns together.

    Cruttenden says there are three main reasons people don't invest: It's difficult to get enough money together to get started; commissions often make it hard to invest even $100 at a time; and most importantly, new investors face too many choices — stock funds, mutual funds, ETFs. It's overwhelming if you're just getting started. 

    "If we could distribute investment accounts like an app and not like traditional investment services, we could tap into a market that's been disenfranchised for a long time," Jeff says.

    Jeff and his dad, Walter, set out to build their own platform to make investing easy and to rein in people who would otherwise be too intimidated or overwhelmed to start investing.

    acorns appAcorns works by letting users invest their change. You link up your credit or debit card to your Acorns app. Every time you use that card to make a purchase, Acorns rounds your purchase up to the next dollar and invests your change into a diversified portfolio of index funds, which are selected by Harry Markowitz, a Nobel prize-winning economist.

    "We're finding that having people invest that way is powerful," Cruttenden says. "If we ask someone to invest $50, for example, that's emotionally difficult to part with. But $1 fifty times or 50 cents a hundred times is much easier. It's helping people get started with investing."

    The app works because it takes little action on the user's part: even if you're a brand-new investor with limited knowledge of investments and economics, Acorns lets you quickly and automatically invest small amounts of money as frequently as you make purchases. Once you open an account, Acorns charges you a dollar a month if your account has a balance of less than $5,000. If you have more than that in your account, you get charged 0.25% per year (The 0.25% is charged monthly and computed daily).

    acorns appAcorns grew from "between 20 and 30 employees" at its launch eight months ago to 80 now. In the past eight months, Acorns says it's grown to more than 650,000 members, opening over 300,000 investment accounts and linking over one million credit and debit cards. Three-quarters of Acorns' investors are under 35.

    Jeff tells Business Insider that the new funding will help Acorns continue to scale and innovate. He says platforms for wearables and the desktop are coming next to complement the mobile Acorns app. The company also plans to expand globally in the next 12 months.

    SEE ALSO: New app Nerd lets you order an on-demand Stanford student, who can help you with anything you need

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