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A VC who made $200 million when Skype was acquired explains why Israel has become the 'Startup Nation'

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Mark Tluszcz portait_April16

For a country with a population of just 8 million people, Israel certainly packs a punch when it comes to creating world-class technology companies — several of which have been acquired by Apple, Google, Facebook, and other US tech giants for hundreds of millions.

Mark Tluszcz, a man that claims to be the first investor in Skype, told Business Insider in London why Israel is now referred to as the "Startup Nation."

"You have an entrepreneur culture that’s extremely present in Israel," said Tluszcz, who is CEO of Mangrove Capital Partners, a venture capital firm that has raised $650 million (£459 million) to invest in early-stage technology companies.

Tluszcz also thinks the compulsory national service that Israeli citizens go through is another contributing factor. The normal length of compulsory service in the Israeli Defence Force (IDF) is three years for men and around half that for women. "They all go through the military where they learn a lot of skills," said Tluszcz. "When they're there, they interact with a lot of great technology people. So there's a force in function to get tech people together."

Tluszcz also said the most intelligent people in Israel tend to go to one of three top-tier universities so the smartest entrepreneurs all get to know each other as they study.

The investor, whose VC firm made $200 million (£140 million) from a $2 million (£1.4 million) early investment into Skype, claimed there is a "very vibrant financing community" for startups in Israel, who can now access Silicon Valley investors more easily thanks to a new direct flight between Tel Aviv, the main tech hub in Israel, and San Francisco, in California.

Tluszcz has backed a number of Israeli companies, including web development platform Wix, which became Israel's largest tech IPO when it listed on New York's Nasdaq market at $650 million (£465 million) in 2013.

Google, Apple, and Facebook have all set up engineering operations in Israel in a bid to hire technically talented Israelis that aren't interested in running their own startup.

The US tech giants have also acquired a number of Israeli startups. Navigation service Waze, for example, was acquired by Google for $996 million (£693 million) in 2013, while Facebook bought Face.com, an Israeli company with face recognition technology, for $100 million (£69 million) in 2012.

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Meet the 24-year-old investor who just raised $6 million to start his own fund

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The House Fund Jeremy Fiance

Like most new college grads, Jeremy Fiance has a strong love for his alma mater.

But his approach to giving back is different: Fiance raised a $6 million venture capital fund to only invest in startups associated with University of California, Berkeley. 

The launch of his new fund also comes with an important distinction. At only 24 years old, Fiance says he is the youngest sole managing partner of a venture fund ever. (Business Insider couldn't find any examples of anyone younger either.)

When he started approaching LPs, the people who fund venture capitalists, after graduation, many people thought his intro email was just a way to get a job interview at their firms. But Fiance was serious about investing in the entrepreneurial ecosystem he had helped build at Berkeley, even if he is only 24. 

"This was the biggest, highest impact," Fiance says. "It was a must-pursue now for me."

The investor wunderkind

It all began when his grandfather gave him a copy of Ben Graham's "The Intelligent Investor" when he was in middle school.

"No middle schooler should ever read that because it's dense and boring," Fiance now says. 

He started trading stocks in middle school, but had decided by the time he started at UC Berkeley that he was more interested in creating a company than just investing in them.

Fiance designed his own major with the idea of taking a mix of business, design, and engineering classes to start a company. Soon after, he won a pitch competition for an idea called LectConnect, where students taking the same course across universities, like Astronomy 101, could share class notes and study materials.

Yet, when he looked around Berkeley to figure out the playbook for turning an idea into business, he couldn't find any entrepreneurship groups to help him launch it. 

"I decided to create that community," Fiance says. He started a local chapter of an entrepreneurship group and also helped create a nonprofit accelerator on campus that let people get course credit in exchange for developing their ideas. 

UC Berkeley students

By junior year, he and a friend launched Dropsense, a mobile alert system for diabetics, and had a clinical trial all lined up to go. They got to the part where they would need to raise capital and didn't now where to go. 

"We had to decide if we were going to drop out to do the clinical trial," Fiance said. "That was a tough moment for me at the time."

In a Pitchbook survey of the schools with the most billion-dollar companies, Berkeley beat out legends like MIT and Michigan and placed third behind Harvard and Stanford. Yet, compared to Stanford and Harvard, there wasn't a student-focused fund or obvious launch pad, like Stanford's well-known StartX

"Where do you go for that first $0 to $250K?" Fiance says. "That capital is just hard to come by. There weren't just a lot of angels around the campus."

If you build it, the money will come

Fiance saw there was an opportunity. When Dorm Room Fund, a student-focused fund from First Round Capital, launched at Berkeley, a 21-year-old Fiance became managing partner and spent two years sourcing deals for them. 

The incubator he had built on campus helped Lily Robotics with the first $2,000 it needed to build a prototype. Through Dorm Room Fund, Fiance added an additional $20,000. Now the startup is valued at more than $87 million, according to PitchBook

For his senior thesis, he studied the startups coming out of Cal and realized all of the connections the campus had. Tesla cofounder Marc Tarpenning had graduated from the university, as had Apple cofounder Steve Wozniak. Companies like TubeMogul, Oculus, TrueCar, Caviar, Tanium, Data Bricks, Shazam, and Cloudera all had ties to the campus, whether it was launched as students or founded by alumni. 

steve wozniak

After he graduated in December 2014, he wrapped up working for another early stage firm in March and decided to go after starting his own fund himself. 

"I sent a lot of cold emails," Fiance says, although he can't even begin to estimate how many. 

As a kid just out of college, Fiance acknowledges he had to find new ways to get people to take him seriously. He built some software to hack the system, identifying the strength of connections and making sure he didn't ask someone to intro him twice. It took more than 500 meetings with alumni to get backers, advisors, and mentors for his fund.

"I had to get creative to get the meetings," Fiance says. "They weren't expecting much."

It wasn't until he pointed out Berkeley's startup connections and the lack of a dedicated fund that they realized he had a point and a business opportunity. Investors are now counting on Fiance to find the next Tesla, Apple, and Cloudera to come from Berkeley.

On Monday, Fiance is officially launching the House Fund, having raised $6 million from only backers with ties to Cal including early Uber investor Shervin Pishevar and Redpoint Ventures founder Jeff Brody. 

Running the show

Fiance's House Fund to start will only invest in software or software-enabled startups, like Lily Robotics. Hoping to catch the ideas early, Fiance's fund will focus on pre-seed and seed investments, and all companies must have one Cal founder, whether they are a student, faculty, or alumni. The pre-seed investments will focus on the first $50,000 startups need to get off the ground, and then Fiance will up it to $100,000-$250,000 for seed rounds. 

A big part of the carry, or the money the fund returns, will be reinvested back into the Cal community. 

"I think this is the perfect place to start," he says.

As for his dreams of starting a company, Fiance realizes now after a year of fundraising that he wants the House Fund to harken back to the old days of venture capital when the emphasis was less on the capital. Instead, he wants to be about building companies, and he envisions his fund will be the connective glue to get the Cal community involved with the talent that has already naturally sprung from its campus.

While he is likely the youngest sole manager to ever raise a fund, Fiance isn't daunted by his youth or his lack of years spent building connections. Those 500 meetings turned into a fund and a network for the next generation of entrepreneurs.

"I've activated an army of allies," Fiance says. 

SEE ALSO: This startup is the new secret weapon investors are using to outsmart each other

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I worked at a tech startup for a year. I didn't get rich, but I loved it anyway

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chris kemp nasa photo

Earlier in April, journalist and comedy writer Dan Lyons released "Disrupted: My Misadventure in the Start-Up Bubble"— his long-awaited memoir of a year spent working for marketing startup HubSpot.

The short version is that Lyons found his year-ish working at a Silicon Valley startup to be a weird, cult-like experience where he never got as rich as he hoped. In an excerpt of the book that ran on Fortune, Lyons called it "startup hell."

I can't speak to Lyons' specific experience at HubSpot. Some startups are probably like this.

But, I, too, worked at a startup, Nebula, for just over a year, and it wasn't like he describes at all.

I definitely didn't get rich from Nebula. With San Francisco rents and the cost of commuting on the region's crumbling infrastructure, I was treading water, financially speaking.

Nebula itself went bust just over a year ago, with most of the talent jumping over to Oracle

But I wouldn't trade the experience for anything. I learned a ton from some of the smartest people I've ever met, got a tremendous amount of insight into the workings of business and startup life, and made valuable connections.

That doesn't sound like "startup hell" to me.

Cloud evangelist

Nebula's flagship product, the Nebula One cloud controller, was designed to make it easy for anybody to build a cloud computing environment, similar to the one Amazon Web Services uses. Just plug it into your server rack, turn it on, and boom, cloud.

That was the sales pitch, anyway. The reality was more complicated.

When I first joined Nebula in the fall of 2012, I was coming off a stint as a freelance reporter for an obscure tech blog. I had been around enough startups to know that I would probably not get rich from Nebula. But they offered me stock options as part of my compensation package, and I figured, hey, best case, I can pay off my student loans. 

Really, though, the thing that attracted me to Nebula was its pedigree. 

nebula one cloud controller

Cofounder and CEO Chris C. Kemp had most recently served as a CTO at NASA, and brought tons of talent from the space agency to start the company. And it had raised at least $35 million in funding, with legendary Silicon Valley investors like Sun Microsystems cofounders Scott McNealy and Andy Bechtolsheim.

Better yet, Kemp himself recruited me to the company — I interviewed him at a party, and he liked the ensuing story. If you ever want an ego boost, have a former NASA executive personally ask you to join his company. It works wonders.

Unlike Lyons' experience at HubSpot, Nebula was pretty sedate. It was lots of really smart people working long hours to solve tough problems. 

The best part

The best part of the job was getting to hang out with and learn from all of those really smart people. As part of my cloud evangelism or whatever, it was my job to sit down and help them distill their thoughts down to a conference talk, or a blog post, or a contributed chapter of a book.

At the time, Nebula didn't have any kind of marketing organization, so it would be up to me to define my duties and role. I came up with the title "Cloud Evangelist" — yeah, I know — but really, I was what a larger company would call a "content marketer."

I wrote our blog, helped proofread and jazz up company presentations and speeches, and kept tabs on the competition. Truthfully, I didn't always have too much to do — when I joined, the Nebula One was still six months away from launching, which made me an evangelist with nothing to evangelize.

Still, I like to think I absorbed much wisdom by working with my colleagues. But if getting recruited by Kemp was an ego boost, then hanging out with those engineers brought me crashing down to earth. Still, like they say, "if you're the smartest person in the room, you're in the wrong room." 

san francisco bay bridge

There were plenty of concessions to that elusive notion of "startup culture." The kitchen was always well-stocked with snacks, soda, and a truly heroic amount of top-shelf alcohol. Indeed, every Friday at 4pm was a designated in-office happy hour, which was code for "you can drink at your desk."

The dress code could be summed up as "don't be naked, especially if you're meeting a customer." One prospective hire showed up for his interview in flip-flops and shorts and I'm almost 100 percent certain that wasn't what sunk his application. 

And we once had what a friend and former coworker referred to as our "obligatory ridiculous startup bonding experience," where the company chartered a trio of sailboats for a five-hour lunch excursion in the San Francisco Bay. 

But it was still definitely an office. Same occasional pizza lunches, same weird office politics, same struggle for conference room space, same highs, same lows as most other places I've worked before and since.

The worst part

By late 2013, the writing was largely on the wall for Nebula. Despite the hype, the Nebula One controller wasn't selling in any vast quantities, and it was causing some anguish within the company. It turned out to require more hands-on installation just to get started than anyone had planned. And at a starting price of $100,000, it wasn't flying off the shelves.

Not too long before I left, Kemp would take a new title of Chief Strategy Officer, with veteran tech executive Gordon Stitt taking over as CEO. 

By this point I was increasingly eager to get back to my reporting career. Christmas Eve 2013 was officially my last day.

Ultimately, I chose not to exercise my stock options when I departed. I heard later that most departing employees didn't, either. A year and change after that, Nebula went bust. If I had bought those shares, they would have been worthless today. 

The reasons why Nebula failed are not easily summed up — the Stanford School of Business literally wrote a case study on it, and I can tell you firsthand that it's only scratching the surface. The short, brutal version is that we didn't come up with something people actually needed.

All of that said, it was an excellent learning experience, even if nobody got rich. And most of my former coworkers landed on their feet at Oracle, Netflix, or elsewhere. Kemp himself is working on a new startup, I hear.

So while some startups definitely do sound like hell, like Lyons experienced, it's certainly not all weird cult initiations and horrors. Sometimes, it's a calculated risk/reward balance between playing it safe or trying something new and cool.

Oh, and I was wrong before about the best part. The actual best part was that Patrick Stewart narrated the Nebula One launch video and I got to help write his lines:

RELATED: Before joining a startup, read this book and be warned

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

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There have been job losses at music social network Crowdmix — and it hasn't even launched yet

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headphones

Music social network Crowdmix has laid off around 8% of its staff, and it's still yet to actually launch its product.

London-based Crowdmix is building an Instagram-style social network that's all about music. Fans will be able sign up to see new music and posts from musicians. Users can also connect streaming sites so that they can play music through the app. It's due to launch in May.

However, a source told us that Crowdmix recently cut a number of jobs in its marketing department. Crowdmix confirmed the layoffs, although it declined to provide an exact number of staff affected by what it called a "reorganisation." 

Crowdmix cofounder Gareth Ingham recently said that the company has over 160 staff in total, which suggests that around 12 staff members were affected by the cuts.

The company has also cut ties with a Los Angeles-based marketing agency which it was using in preparation for its launch, although Crowdmix says it has since started working with another agency. The company also recently hired a new CMO to lead the marketing team.

Crowdmix provided the following statement to Business Insider about the job cuts:

As a business that operates in a rapidly evolving marketplace we are constantly looking at ways to best respond to changing operational and market demands. As a result of this ongoing evaluation, we can confirm that we have gone through a re-organisation of our marketing department, which impacts less than 8% of our overall workforce. Since Crowdmix’s inception there has not been a single month where headcount hasn’t moved in both directions. We fully expect this pattern to continue for the foreseeable future which is in line with a fast growing early stage business.

We have invested in senior, more experienced talent which allows us to be more streamlined and effective in getting us to where we need to be, including Ted Mico as CMO who joined us this month from Mirriad. We have another three experienced exec leaders joining which we will be announcing in due course. We are excited about launching our app this summer.

It also provided this context for the ending of the relationship with the Los Angeles marketing agency:

We are significantly increasing our investment in our marketing, but focusing on highly skilled execs and consumer activation. As already mentioned we have hired a new CMO and Head of Communications in the last month with further announcements to come. With regards to ending a relationship with an LA based marketing agency we never comment on past, present or future commercial relationships unless mutually agreed. We continue too work with third parties to support us ahead of launch.

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Why Uber won

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The start of 2016 marked the end of the steroid era of startups  —  the time between 2010 and 2015 when money was cheap and more plentiful, and used as a performance enhancing drug for company acceleration.

No question, venture money has always been used to accelerate company building. But this was different. Cash was able to singlehandedly drive scale and growth. The zero interest rate environment created a generation of investors desperate for returns, and everyone  —  from angel investors to LPs  —  had money to put to work. The overhang of cash pushed the market pendulum to swing from fear to greed, and with it came unprecedented round sizes, valuations, and total capital raised.

This level of venture money hadn’t been seen since the 1999 tech bubble.

rothmanuber

Entrepreneurs look for an arb to build their business upon  —  a new ad platform like Facebook or Twitter, a platform shift like desktop to mobile, or some unique way to acquire users. For the past several years, money itself was that arb, especially for marketplaces, to rapidly scale their business.
 
There are three ways for marketplaces to buy scale: they can buy growth, speed and/or liquidity. For some (not all), it was a smart strategic move. And for Uber, money enabled them to win.

Buying Growth (CAC > LTV)

Both founders and investors value traction. Everyone wants to see strong customer acquisition, transaction volume, and geographic expansion. Growth can be a positive signal of a business’ long term potential, which is why growth is a priority for every startup.
 
Unfortunately, growth has become a proxy for success  —  even if it’s “bad” growth. And yes, there is “bad” growth. If the cost of customer acquisition (CAC) is greater than the lifetime value (LTV), a startup can grow itself to death. Over the past few years, I have seen startups utilize cash to buy growth with the goal of optimizing the biggest top line possible, while neglecting core elements of their business like user experience and customer retention. A founder’s job isn’t growth at all costs — growth is the byproduct of an amazing user experience.

If the cost of customer acquisition (CAC) is greater than the lifetime value (LTV), a startup can grow itself to death.

When investors talk about growth, we’re talking about sustainable growth. There are no shortcuts for long term sustainable business — companies should be built from the user experience out, not the top line in.

Buying Speed (CAC < LTV)

For marketplaces, speed provides a strong competitive advantage  —  it’s not about being first to market, but rather first to liquidity (see my recent Harvard Business Review article, Network Effects Aren’t Enough).

Airbnb wasn’t first to market. VRBO was. Uber wasn’t first to market with UberX. Lyft and Sidecar were. In both of these cases, speed mattered  —  Uber and Airbnb executed at a much faster pace by buying users and hiring engineers. 
 
Many people confuse speed and growth, but the clear difference between the two is sustainability. If the CAC is less than the LTV of those customers, the growth is sustainable. Companies that buy speed are reaching their sustainable end state sooner while still focusing on key factors such as user experience, quality and customer retention. It’s about the pace. However, simply buying growth takes the company in an unsustainable direction and completely off course. Growth from this perspective is about vanity  —  or worse, incompetence.

Buying Liquidity (Network Value > Aggregate CAC)

I’ve often repeated the central goal of marketplaces. It’s something of a mantra for me: liquidity isn’t the most important thing… it’s the only thing.Building a marketplace is similar to building two separate companies simultaneously with each being codependent on the other.

The reality is that’s really hard to achieve. The cold start problem of getting supply and demand to the same place at the same time for the same product or service is hard. Brutally hard. If you don’t have enough buyers, the sellers won’t come. If you don’t have enough sellers, the buyers won’t come. This is what kills most marketplaces  —  they don’t just die of natural causes. 
 
As a result, marketplaces should be fixated on reaching initial liquidity quickly. There are many ways to achieve that and during this steroid era, money was a viable way to hack liquidity. Companies could just buy the supply. Heck. They could also buy the demand too. And if you buy enough supply and demand, the marketplace may be able to manhandle liquidity to a point that it could sustain itself without the artificial subsidy. The math is whether the network asset value at liquidity is worth more than the collective spend on the users. Not whether CAC is less than LTV. 
 
Does network value exceed aggregate user cost? This is a strategic question as much as it is a financial one.

Uber case study

Uber is the canonical example of using money as a performance enhancing drug during the steroid era. Let’s start with the record breaking facts. Uber raised $9 billion in equity and another $1.6 billion in debt over 15 rounds in a 6 year period. That is unprecedented for a private company. 

Travis Kalanick Uber CEO
 
So what did Uber do with all its money?

The strategy wasn’t buying growth, speed or liquidity. Uber’s strategy was to buy all-of-the-above. At small dollars using money is a financial decision. At Uber’s big dollars using money is a strategic decision. The company’s use of money as performance enhancing drug was beautifully aggressive. It was offensive and defensive at the same time. 
 
If we rewind the clock to 2012, Lyft launched a peer-to-peer ridesharing service and Uber was a black car marketplace. Lyft and Sidecar’s P2P taxis were a bigger idea in a bigger space. And like most marketplaces, it was a winner-take-all opportunity, or at least a winner-take-most. At the time, all three companies were only in SF and everyone was racing towards liquidity, with sights to have a right of first refusal on every other city in the country thereafter. Lyft had a big head start, but Uber was trailing right behind. 
 
Uber began to aggressively put its war chest to work to achieve liquidity as fast as possible. This meant enabling ~5 minute pickups for riders and ~$25 hourly earnings for drivers.

First, it guaranteed drivers hourly rates and spent money to acquire drivers. With drivers on the road, Uber focused on filling their cars through paid channels and incentivizing referrals. In a nutshell, the company subsidized fares and gave away free rides until there was enough demand and drivers could earn enough on their own. City by city, Uber implemented this playbook  —  buying drivers, buying passengers, subsidizing rides  —  to shave minutes off the pickup SLA and increase driver earnings, propelling Uber to liquidity.

uber flywheel

A rational competitor would have bought speed alone  —  buy as many users as you can as long as CAC is less than LTV. It’s the prudent (but wrong) thing to do in this case. The problem is that this strategy only works if the other competitors do the same. And Uber didn’t just buy users, they bought a network. It cost an order of magnitude more, but is worth infinitely more in a winner-take-all or winner-take-most space. It’s the difference between finance thinking and system thinking.
 
Uber used money as a weapon not as a tool. 
 
And it worked.

Conclusion

The period of cheap capital and billion dollar checks has ended. In this capital constrained market, buying scale is no longer going to be a credible lever for the next generation of startups. 
 
Everyone talks about product/market fit, but we need to expand the discussion. The trifecta is the right founder/startup fit, product/market fit, and…startup/scale-up fit. Companies can no longer look to money as a performance enhancing drug for scale-up. Even Uber couldn’t be built the same way today. 
 
In this next era, growth will give way to profitability. Leveraging capital will give way to leveraging people and product. Focus will move from the balance sheet to the income statement. The center of gravity will shift from financial to strategic. Yes, the post-steroid era will be harder but companies will be more sustainable and built upon a stronger foundation as founders will use creativity instead of money to solve problems.

Simon Rothman is a partner with Greylock Partners. He and Greylock are not investors in the companies mentioned in this piece. 

SEE ALSO: Uber has hit a road bump in its quest to conquer food delivery

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The CEO of $11 billion Pinterest reveals his thoughts on going public, crazy private markets, and advice for founders who don't want to fail

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ben silbermann pinterest ceo founder

Ben Silbermann is the CEO of one of the most valuable private companies in Silicon Valley: Pinterest. But his photo-collection startup wasn't always a rocket ship.

In March 2010, four months after launching the company, Pinterest had just a few thousand users. Compare that to Instagram, which had about 1 million users after that same amount of time.

"So March 2010 we launched Pinterest and we were at 3,000 accounts"Silbermann told a crowd of entrepreneurs about Pinterest's slow start in 2012. "And that wouldn't be so bad if we hadn't started building Pinterest actually in November 2009. And that alone wouldn't have been so bad if I hadn't left my job to start a company in May 2008."

Since then, Pinterest has grown tremendously to more than 100 million monthly active pinners. A round of financing in March 2015 gave the company an $11 billion valuation. Silbermann's team is now focused on monetization, likely preparing to go public.

The road to generating real revenue has been bumpy, with some turnover on Pinterest's executive team and once hot advertiser interest that has seemed to turn lukewarm.

But the company reportedly generated more than $100 million in 2015, as much as five times the increase from the year before, and IPO rumors have begun to swirl.

In early April, we swung by Pinterest's headquarters in San Francisco and asked Silbermann about the company's growth and future plans, and for general startup advice.

The following Q&A has been lightly edited for clarity and length.

Pinterest CEO Ben Silbermann

Alyson Shontell: It took awhile for people to first learn about Pinterest. Then it was all the media could talk about. Now the media hype cycle has cooled down again. What's the roller coaster ride been like?

Ben Silbermann:Some things have been really consistent over time. Years ago we thought of the company's mission very similar to how we think of it today. We thought of Pinterest as trying to build the world's catalog of ideas, and we do that because we want to help people discover ideas for themselves, for their everyday lives.

As the company's gotten bigger, it's changed in three big ways.

One is that we've had to invest a lot more into personalization in search. Over the past few years we've built a really extraordinary engineering team. Their whole job is to show everybody the right pin for them at the right time.

The second big area of investment has been the transition to phones. When we started, Pinterest only had a website. Today, around 80% of usage is on the phone, which I wouldn't have been able to imagine five years ago because Pinterest was synonymous with a big screen and lots of pictures.

The third big thing, which is the focus for this year, is scaling internationally. I think quite soon the majority of our users will be outside the US.

Building for a global audience sounds straightforward: "Go global." But for Pinterest, because it's about discovering ideas, for each of those markets we need to figure out how we get the right content, if its localized in the right way, and if we're explaining the service well. If you've never used Pinterest before, you might think it's a social network versus a place to get ideas for yourself.

Pinterest employees

Shontell: Why doesn't Pinterest want to be viewed as a social network?

Silbermann: Our job is to help you discover ideas for yourself. Those ideas come from other people, but the objective is not to get a lot of followers or to impress others.

There are a lot of really valuable services that are always pushing you to communicate with other people. But there are relatively few services that are about helping you be the person you want to be and fulfilling your ambitions.

Shontell: When Pinterest launched, its grid layout was innovative. But since then, has Pinterest's product changed much, and does it need to in order to further growth? For a comparison, when you look at Snapchat, it's launched three very different core products to grow like it has: Snaps, Stories, and Discover.

Silbermann:We're always experimenting with features. The core of Pinterest itself is quite a technical achievement. It's an internet-scale search engine with a recommendation engine, and there's a full live field.

So if you think of the technical challenges facing Google and the technical challenges facing Facebook in recommending you content, those exist in the core of Pinterest.

But when I think of what's changed, there are actually a lot of features. But they may not have felt like big revolutionary things because people were surprised to realize, "Oh, that wasn't always there?"

You couldn't always send pins through messaging interfaces, for example. And you couldn't always collaborate on boards or keep boards secret. There weren't always recommended pins beneath the pins. There's a discover tab where you can see the best curated content.

So I think the volume of changes is actually pretty high. The changes are subtle, but they're meaningful features.

pinterest phone product

Shontell: Pinterest seemed slow to focus on monetization. Did that ultimately hurt Pinterest's ability to monetize and, looking back, would you have prioritized revenue sooner?

Silbermann:No, I think that we chose the strategy we chose for two reasons.

One, we wanted to be able to focus on scaling the core product and refining that experience. Two, we were growing at a time when there was a lot of available capital. If that wasn't an option, we obviously would have pulled forward.

Today, the company is being operated without the need to take additional capital — we've become self-sufficient. So I wouldn't have done it again, but if I was asked by an entrepreneur, "What should I do?" I would say, "You should figure what's right for your internal strategy and calibrate it against what's going on in the market." Because you would do different things if our formative growth period, for example, was 2009 and 2010. You would do it totally differently. So that's what we've done.

So far things are going really, really well. Monetization was up 5x from 2014 to 2015. I think it will be a really meaningful year this year. We don't want to do rough projections when we're private, but [the business side is] going really well, and the thing I'm excited about is that, on the pinner or user's side, we're seeing really, really good numbers in terms of people finding the ads to be valuable.

We're also seeing really good ad-renewal rates. That's really important because, at a small scale, you can churn through the world's advertisers. But advertisers are really savvy and they renew where they see value, and our job is to make sure that they can see that value clearly. High renewal rates to me means there's a good exchange of value. That doesn't mean that there isn't work to do, this is still an early product, but I'm excited about it all pointing in a good direction.

Shontell: A few months ago, Pinterest shifted its focus to onboarding retailers and consumer-product goods as advertisers. Why did you decide to go more narrow and focus on those clients?

Evan Sharp

Silbermann: Those were areas where we were confident we could deliver value for pinners and for advertisers. It was also a focus question. We're entering an online ad market that really, really big companies have matured over for years. That means it's incumbent on us to build out the measurement systems and the accountability systems that people now think of as standard.

By focusing on a couple of verticals, we can go deeper rather than using something that's half built for everyone. Our intent is to start with two verticals as pillar points, and as we build them out the systems will mature and expand.

Shontell: You know I have to ask this: When's the Pinterest IPO?

Silbermann: We don't have anything to share. Totally truthfully, if you asked people at Pinterest, I hope what they would say is that they're really focused on the two top company goals.

One goal is to make the product experience great outside of the US, and the second is to continue building a sustainable revenue model that will let the company keep investing and building out a catalog of ideas.

Shontell: The private markets have seemed a little crazy, with lots of sky-high valuations for startups. What are your thoughts on it?

Silbermann:This is going to sound so cliché, but markets are a pendulum. That used to be just an academic thing I would say when we started the company back in 2008 and 2009. I'd never seen the full swing of the pendulum, I'd just read about it.

But that seems to be the story from the moment Pinterest started, which would be way on one side of things, and it was super hard to get anyone to fund you, then for a period it was relatively easy. And then it will pull back.

Across that pendulum, everybody will act rationally. When the pendulum is [on] one side, investors will use that as a lever on value and on control, and when it's on the other side they'll see scarcity in the market. That's why it's self-correcting.

Shontell: Has your goal as an entrepreneur always been to go public someday? Mark Cuban recently told CNBC that founders used to want to go public, but that's not been the case recently.

Silbermann:That's never been a goal in and of itself. It all comes down to where companies can find the capital they need to forward invest in the business.

But as I said, I think people will act rationally at whatever point they can. "Public" has never been the goal — instead, it's "How can we build a company that can forward invest," and a lot of those resources should come from revenue. Then of course, as every public company will tell you, a lot of those resources will come from forward anticipation of value in the company, which is baked into the market cap.

Shontell: A mutual contact of ours told me something about you. They said that even if Pinterest hadn't worked out, you'd still be a billionaire because you're sitting on a pile of amazing startup ideas that could all become billion-dollar companies. Are you sitting on a pile of billion-dollar ideas?

Silbermann: The big lesson I learned — because I blew up a bunch of companies [before Pinterest], and by that I mean they never got off the ground, they just failed — is ideas are about as good as the execution behind them.

A great learning experience for me is how many great people are required to execute ideas really well and how thin the line is between seeing great execution looking back and poor execution.

Shontell: What are the areas most ripe for disruption?

Silbermann:I think biology is experiencing a real moment right now between really fast advances in methodology and in computing, and on synthesis. It's going to have a moment very much like computing in the '80s.

Also, we're pretty early in seeing the impact of many people eventually having a network-connected computer that they can afford, and is always with them.

I always look at those big global stats about how many people have yet to use their first internet-enabled device, which will probably be a phone. That's still billions of people. I think there's a lot that's going to happen there that's very interesting.

Shontell: What advice do you have for founders who are running startups that don't immediately take off? When should they decide to give up or keep going?

Silbermann:My general advice is keep going, because usually the inertia of your own insecurities and people around you is something that should be pushed back against. I was listening to an NPR story this morning with Shankar Vedantam about grit.

Grit's this kind of heralded virtue now, but he asked at the end of the story, "What's the difference between grit and stubbornness?" And the answer can only be told looking back.

If things work out well you say, "Oh, that was grit." If it turns out that you just toiled and completely failed it's, "Oh, that was just wrong-headed stubbornness."

If you ask any investor or entrepreneur, they know if anyone could forward-plot certainty they'd be incredibly wealthy and successful. But it's really hard.

My general advice is to keep going even though there are a lot of things that are telling you not to. The reason there's no simple answer is because it's kind of told in retrospect.

He told this story on the radio show of Isaac Newton. Coming up with calculus — that was grit. But the decades he spent trying to turn lead into gold — that was stubbornness. But it was the same guy.

I thought that was a really telling thing. So when entrepreneurs ask me, that's usually what I tell them. You should bias toward keeping going unless you're not personally in the position emotionally or financially where you can do that.

SEE ALSO: Aaron Levie runs a $1.5 billion company at age 31, thanks in part to a Jerry Maguire-like memo he wrote when he was 22

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A 28-year-old wants to back Europe's first $100 billion tech firm with his new VC fund

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Backed VC

Meet Andre de Haes; a 28-year-old with what must have one of the most impressive CVs on the planet.

Oxford, MIT, Stanford, Harvard, Goldman, J.P. Morgan, The Boston Consulting Group, McKinsey & Company, Andreessen Horowitz, and Index Ventures can all be found littered across de Haes' CV. The newest company on de Haes' CV, however, is not a household name.

"Backed VC" is a €30 million (£23.6 million) startup fund that de Haes launched on Thursday with school friend and fellow Oxford graduate Alex Brunicki.

The fund, which has been quietly run out of London's Clerkenwell neighbourhood over the last six months, is making investments of between €500,000 (£394,000) and €1 million (£788,000) on average, although there is scope to invest from as little as €200,000 (£157,000) right up to €2 million (£1.6 million). Around one investment is being made each month through the Backed VC fund.

Backed VC is investing in early-stage companies in the same way that Saul and Robin Klein's LocalGlobe fund does. But while LocalGlobe is primarily going after London startups, Backed VC is trying to spread its investments fairly evenly across Europe.

"Europe needs on a pan-European level seed fund that can provide a more scalable offering," de Haes told Business Insider ahead of the announcement, adding that he wants Backed VC to do for Europe what Andreessen did for the US.

The fund is only interested in companies that have global ambitions, according to de Haes. "We don’t want to back regional winners and definitely not national winners," he said.

De Haes and Brunicki believe that their relative youth will set them apart from other venture capital funds. They claim that unlike some other VCs, they're "culturally connected" to the entrepreneurs in their "clan" and "ingrained in the networks through which they build their teams."

Interestingly, the duo claim they will share Backed VC's profits with anyone who refers them to a company that they end up investing in (and profiting from).

Europe's first $100 billion business

It's no secret that the UK and Europe are yet to produce a tech company worth $100 billion (£70 billion). The US, on the other hand, has several in the likes of Apple, Google, Facebook, and Amazon. De Haes thinks it won't be too long before this changes.

"Within the next five years, I think there will be a business founded in Europe that will become a $100 billion business," said de Haes. "In the next decade we’ll have a $100 billion business built out of Europe."

De Haes said startups are starting to grow rapidly across Europe because there’s a management layer of talent coming out of businesses that have already been built. "There is seed-level expertise available now," he said, pointing to TransferWise, Criteo, and Supercell.

Backed VC has been operating quietly over the last six months, investing in 10 companies across four cities: London, Paris, Stockholm, and Helsinki. Those companies include music video streaming service Boiler Room, 3D printing startup Unmade, and AI music composing startup Jukedeck.

De Haes, who travelled to five countries in seven days last week (mostly "in economy with Ryanair or EasyJet") said he and Brunicki are only investing in founders that they can picture leading huge public companies.

"We're also only investing in industries that are fundamentally better in Europe than Silicon Valley," added De Haes, going on to say Backed VC is particularly interested in AI and predictive analytics companies.

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Silicon Valley startups are terrified by a new idea: profits

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shark

Everyone in the Valley is reading a post by venture investor Bill Gurley that spells out in detail how the tech bubble is bursting.

In it, he's explained why the startup world is freaking out about a strange new idea they've never had to consider before: profits.

Gurley writes:

In Silicon Valley boardrooms, where "growth at all costs" had been the mantra for many years, people began to imagine a world where the cost of capital could rise dramatically, and profits could come back in vogue. Anxiety slowly crept into everyone’s world.

Gurley has been the rare VC who's been warning about the tech bubble for a couple of years.

No one was listening in 2015 when the money was flowing so freely that the number of startups valued at $1 billion or more mushroomed to over 160.

Other VCs publicly pooh-poohed his warnings.

VC Scott Nolan, a partner at Founders Fund — best known as Peter Thiel's venture firmsaid a year ago that he wouldn't even invest in a company that wasn't burning through cash because it meant those companies "don’t have enough ideas about what valuable things to do with more money."

But the VC investing game goes something like this. Invest in a company. Tell the founder to grow to $100 million as fast as possible, operating at a loss to grab market share — $100 million in revenue used to be the magic number for an IPO or for a hefty acquisition by a bigger company, whereby the investor is profitably cashed out and able to invest again.

The sharks are here

But unicorns have a unique problem. They can't exit like that.

katy perry dancing sharksOften an IPO won't value them as highly as their last private round so investors risk losing money on an IPO.

In fact, there hasn't been a single tech startup that's gone public yet in 2016.

And an acquisition isn't possible because bigger companies aren't going to buy them at their high valuation prices.

And, as Gurley points out, there's a limit to how much venture investors are willing (and able) to keep these cash-guzzling startups afloat.

The VCs, who can't cash out, are out there trying to raise more money for their funds, he says.

Unicorns risk running out of money with no place to turn.

And that's when "the sharks arrive with dirty term sheets," meaning investors with terms that range from dangerous to unscrupulous.

Once a CEO accepts a "shark's" term sheet, he's poisoned the company, Gurley warns. No other investors will want to invest in the company and get tangled up.

"Any investor asked to follow a dirty offering will look at the complexity of the previous offering and likely opt out," Gurley says.

The obvious solution terrifies startups

There's a solution, of course, Gurley points out: profits.

Or As the CEO of unicorn startup Gusto so eloquently said, "You can't keep spending $5 to make $1."

A dinghy full of refugees and migrants is towed by a Turkish Coast Guard fast rigid-hulled inflatable boat (not seen) on the Turkish territorial waters of the North Aegean Sea, following a failed attempt of crossing to the Greek island of Chios, off the shores of Izmir, Turkey, February 28,  2016. Picture taken February 28, 2016. REUTERS/Umit Bektas Gurley quotes Gavin Baker, a high-profile portfolio manager at Fidelity who tells startup CEOs: “Generate $1 of free cash flow, and then you can invest everything else in growth and stay at $1 in free cash flow for years.

Baker adds: "I get that you want to grow and I want you to grow, but let’s internally finance that growth."

Both Gurley and Baker say that profits are really the "only way to control your own destiny."

Still, startups are terrified of the thought. It takes very little management skill to hire like mad to flood the zone with sales and marketing efforts, losing money.

They've been taught to believe that this is the best way to run a young company, an "aggressive 'spend-to-win' mentality," as Gurley describes it.

Creating a desirable product that can be sold at a price that will sustain a company, that's something else.

In the meantime, there's a new term for what's happening: the unicorpse. Or as Salesforce CEO Marc Benioff, a prolific angel investor who has also been warning about the dangers of unicorns, once put it: "there's going to be a lot of dead unicorns."

SEE ALSO: You'd have lost nearly 20% of your money if you bought these 21 hot tech IPOs of 2014 and 2015

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NOW WATCH: This startup uses cremated human remains to grow trees


The top 9 cities for business in Britain

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Oxford

The top nine UK cities for business have been announced by IT company Sungard Availability Services.

It examined a range of metrics — including start-up survival rates, average internet download speeds, office rents and graduate populations — and combined them together to come up with an overall ranking.

London didn't make the top three thanks to its expensive rates, while university cities of Oxford and Cambridge did well.

English cities make up eight of the top nine, while a Scottish city took the remaining spot.

Check out the list below:

9. Leeds

Start-up survival rate: 60.2%

Employment rate: 73.1%

Office price per sq. foot: £110.5

Leeds has a huge student population thanks to its four universities, ensuring a steady stream of talented, ambitious workers. The relatively cheap office rent also makes it great for start-ups.



8. Northampton

Start-up survival rate: 61%

Employment rate: 78.6%

Office price per sq. foot: £145.2

Northampton has the highest employment rate of any city in the country, which probably explains why it's also fourth highest on the list for start-up survival rates. The lack of a significant tech hub has resulted in some cyber breaches in the area though.



7. York

Start-up survival rate: 68.1%

Employment rate: 74.4%

Office price per sq. foot: £90

York ranks top in the list for start-up survivals, due to its strong infrastructure and high university graduate numbers. It also has an exceptionally low crime rate, which is always good for business, though its low average broadband speed of 19Mbps and population density means it's not higher up the list. 



See the rest of the story at Business Insider

There have been job losses at music social network Crowdmix — and it hasn't even launched yet

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headphones

Music social network Crowdmix has laid off around 8% of its staff, and it's still yet to actually launch its product.

London-based Crowdmix is building an Instagram-style social network that's all about music. Fans will be able sign up to see new music and posts from musicians. Users can also connect streaming sites so that they can play music through the app. It's due to launch in May.

However, a source told us that Crowdmix recently cut a number of jobs in its marketing department. Crowdmix confirmed the layoffs, although it declined to provide an exact number of staff affected by what it called a "reorganisation." 

Crowdmix cofounder Gareth Ingham recently said that the company has over 160 staff in total, which suggests that around 12 staff members were affected by the cuts.

The company has also cut ties with a Los Angeles-based marketing agency which it was using in preparation for its launch, although Crowdmix says it has since started working with another agency. The company also recently hired a new CMO to lead the marketing team.

Crowdmix provided the following statement to Business Insider about the job cuts:

As a business that operates in a rapidly evolving marketplace we are constantly looking at ways to best respond to changing operational and market demands. As a result of this ongoing evaluation, we can confirm that we have gone through a re-organisation of our marketing department, which impacts less than 8% of our overall workforce. Since Crowdmix’s inception there has not been a single month where headcount hasn’t moved in both directions. We fully expect this pattern to continue for the foreseeable future which is in line with a fast growing early stage business.

We have invested in senior, more experienced talent which allows us to be more streamlined and effective in getting us to where we need to be, including Ted Mico as CMO who joined us this month from Mirriad. We have another three experienced exec leaders joining which we will be announcing in due course. We are excited about launching our app this summer.

It also provided this context for the ending of the relationship with the Los Angeles marketing agency:

We are significantly increasing our investment in our marketing, but focusing on highly skilled execs and consumer activation. As already mentioned we have hired a new CMO and Head of Communications in the last month with further announcements to come. With regards to ending a relationship with an LA based marketing agency we never comment on past, present or future commercial relationships unless mutually agreed. We continue too work with third parties to support us ahead of launch.

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A startup that just raised $25 million is like a college newspaper on steroids — and it’s racking up 30 million uniques a month

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evan burnsThere is a graveyard full of startups that have said they want to “democratize” the media business, Odyssey CEO Evan Burns says.

The winning model seems so tantalizingly within reach: Build a big platform that allows a lot of fresh voices to contribute. No more gatekeepers, anyone who wants to write can.

But startups, like temporarily shut-down Slant News, have found that building that idea into a business that can scale, or make any money, isn't always easy.

Even so, Odyssey seems to have hit upon one formula for distributed growth in media, and the startup has come out of nowhere to top 30 million monthly uniques using a business model that sits somewhere between a conglomerate of college newspapers and a social network.

Odyssey recently raised $25 million in a round led by Michael Lazerow, who sold his startup Buddy Media to Salesforce for $800 million, and Columbus Nova’s Jason Epstein. Both will be joining Odyssey’s board. Odyssey's total funding sits at $32 million.

Lazerow tells Business Insider he hasn’t been this enthusiastic about a startup since Jonah Peretti pitched him BuzzFeed (which he invested in).

So what exactly is Odyssey?

Odyssey is a bit like a college paper on steroids. The startup has a stable of over 10,000 writers, aged 18-28, who produce around one piece a week. Odyssey then relies on the social networks of the individual writers to push out the content to the masses.

Each writer has to apply, and the main criteria for acceptance, Burns explains, is having a unique perspective — and being able to turn in an article once a week. These writers are not paid.

Sound familiar? This mass collection of unpaid contributors is the model that initially made Turner-owned sports site Bleacher Report a success. The Huffington Post used a similar contributor model to boost its pageviews, as does Forbes (Business Insider has some outside contributors as well).

The concept sounds like a blogging platform at first, but what separates Odyssey is human editors. Each Odyssey article goes through three layers of editing:

  • First, a “community editor” looks at it, who is basically just a power user within a particular geography. This isn’t a paid position.
  • Second, the article is copyedited by an outsourced (but paid) person.
  • Third, the article goes to one of Odyssey’s 70 full-time, paid editors.

Odyssey

The question remains as to how much time the 70 full-timers can actually devote to each piece. If Odyssey is producing ~10,000 articles per week, that means each editor is checking out over 140 per week. That is not an easy feat under any circumstances.

But beyond editing, Burns says the writers see an increased engagement for posts over self-published ones (2 to 4.5 times), and often reputational boost they get from their friends (who see they are being published by a branded outlet).

This business model seems built for college, where bright young writers are willing to swap their work for being edited and professionally branded (Odyssey's initial incarnation was narrowly focused on Greek life). And indeed Lazerow says the majority of the writers are in college, though Burns stresses that they are expanding in other segments of the population as well.

Lazerow actually created a similar business when he was in college at Northwestern called University Wire. University Wire is a network of college papers that's now owned by CBS.

The content Odyssey produces spans all sorts of topics, from politics to fashion to sports, and is about 20-25% focused on purely local issues, according to Burns. The local contributor model has been tried before without much luck. AOL poured a lot of time and money into Patch, a local news site with articles published by an army of contributors, but it struggled (though it has rebounded of late). Odyssey has no overarching editorial mandate. It's up to the writer.

Odyssey launched out of beta in 2014, but recently has begun to pick up steam, climbing from 20 million monthly uniques in November to 30 million in February. This type of performance doesn’t seem so crazy when you realize how much content 10,000 writers are pumping out (Odyssey published 400 articles on the terrorist attacks in Brussels alone). At the current numbers, each writer is only individually accountable for around 3,000 uniques per month.

A tech company

Burns stresses that Odyssey isn’t a media company, it’s a tech company. That may be a way to woo investors, but it also makes the business proposition for writers easier to understand. If you look at Odyssey like an advanced blogging platform with added features (like human editing and advice on structure), it makes more sense that 10,000 writers have chosen to jump on it.

Burns says that legally the startup is also set up as a social network, which could help insulate it in the event of any libel or copyright claims against its writers.

But even with the emphasis on being a tech company, it's still hard to shake that nagging feeling that writers should get paid for their work if advertising is being sold against it, especially if it ends up going viral (perhaps I'm biased). Burns says part of what this $25 million investment is for is to build out the monetization of Odyssey, both for the company itself and for writers. He wants to build a YouTube-like model of paying writers, starting with the platform’s stars.

And how will Odyssey make money? Besides advertising, Burns says that the huge amount of data the company is amassing is valuable, particularly insights about how content spreads on the internet. Odyssey is also readying the launch of video on its platform (like many media companies), a move Burns thinks will increase the startup’s ability to make money from ads, and amp up its reach.

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Classpass users are freaking out over new price hikes that make it more expensive than Equinox

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Classpass Payal Kadakia 2713

In New York, fitness lovers embraced Classpass' offer of unlimited workout classes at popular studios and gyms for $99 a month.

Now the company's changing its prices, and people are freaking out.

In an email sent to subscribers on Wednesday, the company said that it's "introducing new plans"— meaning that current unlimited members, who are paying $125 a month, will soon have to pay $190 a month to get the same amount of service.

Those who sign up today will get 10 classes a month for $135 (or $125 for existing customers), and will have to pay $200 for the unlimited package.

Classpass may have announced this change earlier this month, but the startup is just starting to notify subscribers and some people are not happy:

Here's the email Classpass sent out with the changes:

We started ClassPass with one mission: to make the world a more active place.

As our community of members has grown, it’s become clear that our business must evolve to meet their needs. Studio drop-in rates in the New York City metro area are as high as $35, and in order to build a membership that’s best for our customers and for our business, we can no longer sustain a one-size-fits-all Unlimited membership at our current rates.

As a result, we are making the following changes to ClassPass membership in the New York City metro area:

  • We are increasing rates for our Unlimited membership to $190/mo.+tax for current Unlimited members ($200/mo.+tax for new members).
  • Recognizing that this is a significant price change, we are also introducing a new membership plan – Core – which gives you 10 classes per month for $125/mo.+tax.

What do these changes mean for you?

Your current plan and rate are valid through the end of your May cycle. To transition to the Core membership (10 classes for $125/mo.+tax), there’s nothing you need to do. We’ll automatically enroll you beginning with your June cycle.

To continue with your Unlimited membership at the new rate of $190/mo.+tax, select this option in your Account by Monday, May 30 to begin with your June cycle. You can still change your plan or cancel your membership at any time.

Thank you for your continued support in helping make the world a more active place,

The ClassPass Team

SEE ALSO: How the founder of ClassPass — a startup that motivates thousands of people to work out regularly — stays in shape

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The entrepreneur who hired chefs through Tinder has sold her cookery startup for £50,000

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Ariella Young portrait

Ariella Young, the founder of food startup Mychefit, has sold her company for nearly £50,000 after struggling to raise the additional investment she needed to grow the business.

Mychefit, a platform that allows people to hire a chef online and have them come and cook a meal at their home, was acquired by an undisclosed catering company in the UK.

"I have sold it for just under £50,000," said Young, who used Tinder to hire chefs on the platform.

"It was profitable but I could not raise VC money," she told Business Insider by email. "I was afraid that it was going to be a small, profitable, family style business. I have met with more than 10 food and tech VC firms in London but they all saw Mychefit as a lifestyle business that cannot scale in a big way. Maybe they were right or maybe I was too early in the market."

Ariella MyChefIt.JPGAngel investors backed Young's business with £50,000 so it's unlikely that the exit will provide significant returns for any of Mychefit's stakeholders.

Venture capitalists are being more cautious about where they invest their money in 2016, according to Mark Tluszcz, cofounder and CEO of Mangrove Capital Partners, and one of the first investors in Skype.

Young said that she also feared Mychefit would struggle to compete with Uber Eats and Amazon Fresh when they arrive in the UK.

"It has been an incredible learning process for us and we got to meet over 300 brilliant chefs," added Young.

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An angel investor who's helped start over 100 companies reveals the No. 1 thing he looks for in entrepreneurs

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david rose

If you watch "Shark Tank," you know there are plenty of traits and behaviors that can turn off potential investors.

Cockiness, sheepishness, inexperience, idealism — just to name a few.

It's considerably harder to figure out which characteristics attract investors and make them believe in the entrepreneur's business idea.

Even David Rose, a serial entrepreneur and an angel investor who's either founded or funded over 100 companies, says it's hard to pinpoint one specific quality that draws him in. But over the course of his career, Rose has learned to look for one key predictor of success: What have they already started?

Rose is the founder and CEO of Gust, which runs a platform and community for entrepreneurs and early-stage investors. He's also the author of two books, most recently "The Startup Checklist."

The majority of the entrepreneurs Rose meets with are in their 20s and 30s — which he says means they've had plenty of time to come up with an idea and run with it. He told Business Insider:

If you managed to get through a quarter of a century without ever yourself having started something, that's a real telltale sign to me. It doesn't matter what the hell you started, whether it was a charitable drive or a sports club at school or whatever. Show me, tell me, help me understand what you have actually started. Because what entrepreneurs do is they have an idea and then they execute. They get off their rear end and they go do something.

Rose said he's more inclined to invest in an entrepreneur who's taken initiative than someone who's spent years acquiring knowledge without applying it.

Library, Reading, Girl, Books"There are a lot of 'wantrepreneurs' out there who are very well-meaning and love the thought of startup companies," he said.

"They know the industry cold; they've read all the books; they know all the stuff; but they've never actually done something. And that is like the killer thing. I would much rather take somebody who has not done all that reading … but instead just went and did something."

Research suggests that serial entrepreneurs are more likely than less seasoned entrepreneurs to succeed in their business ventures — regardless of whether they failed or succeeded in the past.

As Rose said, "having experience being a serial entrepreneur is only either neutral or good. It's not a bad thing, even if you failed."

The takeaway? If you've got entrepreneurial aspirations, don't spend all your time reading and thinking about starting something. Instead, go out and try it — the experience will likely give you a leg up when you're sitting across the table from a potential investor.

SEE ALSO: 4 research-backed signs you're meant to be an entrepreneur

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NOW WATCH: 'Shark Tank' star Robert Herjavec on the challenges standing in the way of entrepreneurs

A startup that claims to be the 'Uber for sales' has been using fake profiles and endorsements

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  • Clozer, a startup that allows businesses to outsource sales to specialist negotiators, has been found by Business Insider to use fake endorsements, inaccurate LinkedIn profiles, and aggressive emailing tactics.
  • The site features its sales professionals, but their photos are sometimes actually stock images or pictures of people not associated with Clozer.
  • Business Insider was able to create a fake Clozer sales profile with no checks or verification.
  • CEO Ami Bloomer's LinkedIn profile included a false claim about investing in technology company TransferWise.
  • Bloomer says she fired her team in Vienna and has 20 virtual assistants to help her run the company.

How it works

The concept for Clozer is pretty simple: It'sthe "Uber for sales." When a company has a big sales deal coming up you log onto the website and select a specialist (known as a "clozer") who can sell your goods or services for you. You pay them a fee, and Clozer takes a cut that's between 5% and 20%. 

Clozer came to our attention because it has targeted small businesses in the UK and tech startups in particular. The company wants to become the go-to, on-demand sales force for small companies. Business Insider spoke to one customer of the site who said he had paid $499 for a subscription in order to list opportunities on Clozer, and the company has actively solicited for new business, contacting 150,000 potential clients.

The company has promoted its services in the media. In January, blogger Edmund Ingham called it"another sharing economy win," in a post on Forbes. A few months later, Clozer CEO Ami Bloomer was invited onto "BBC Business Live" on BBC World News to talk about her site live on air. Presenters called it"a fantastic idea so long as your salespeople are good at actually selling things" and "really interesting."

Clozer CEO Ami Bloomer

The CEO's LinkedIn profile falsely claimed that she invested in TransferWise

Clozer CEO Ami Bloomer claims to be a veteran technology executive who has experience investing in major tech companies. Business Insider saw a copy of Bloomer's old LinkedIn profile which says she has invested in London startups TransferWise and Crowdcube, both of which are worth hundreds of millions of pounds.

Clozer CEO Ami Bloomer LinkedIn profile

But TransferWise denies that Bloomer is an investor. Bloomer told Business Insider that the error came about after she handed her LinkedIn profile over to the 20 virtual assistants that she uses to help her run her company and they became confused about the payments method she uses. She insists, however, that she has invested in Crowdcube. That company declined to comment on whether she is an investor, citing data protection laws. Both claims have since been deleted from Bloomer's LinkedIn profile.

Bloomer's LinkedIn profile also listed a Mensa IQ score of 156. That score would place her in the very top section of the UK in terms of intelligence, and is almost the maximum score achievable on Mensa's tests in the UK. Business Insider asked Bloomer about it but she did not respond. The score was deleted from LinkedIn after we got in touch.

Separately, Bloomer's cofounder Mattia Varriale says on LinkedIn that he attended "Magna Carta College Oxford." There is no such college with that name in the world-famous Oxford University, however Varriale denies ever claiming to have gone to Oxford University. Additionally, Varriale told Business Insider that he no longer works at Clozer.

Clozer founder LinkedIn

The homepage of the site includes fake users

The Clozer homepage includes professional headshots of Clozer users along with some extraordinary claims. "Maureen" from London claims to have sold over £200 million of software. "David" from Melbourne says that he has sold $400 million (£283 million) of medical devices.

But none of the photographs currently displayed on Clozer's home page are genuine images of users. Their headshots are stock images or photographs sourced from other websites. One woman who had her photograph used by Clozer, Fox 5 DC TV news anchor Annie Yu, angrily tweeted at Clozer to demand it remove her image from the homepage.

Annie Yu tweet to Clozer

Bloomer says that the images were uploaded by an intern who has since been fired, along with her team in Vienna. "The team made many mistakes," she said, blaming their "incompetence" for the errors on the site.

The photograph of Yu was recently replaced with another photo of someone who isn't a real Clozer user, despite Bloomer's insistence that the intern who made the original error has been fired. Clozer's homepage has also been updated to include a tiny line of text which reads "We do not show images of Clozers on our homepage. You can search to see photos of Clozers with their biographies/ clozers."

Clozer homepage

Misleading endorsements

Clozer's website includes a page of endorsements by people who claim to have used the site and found it useful. But Andrew Jenkins, whose employment is listed as "Cambridge," is actually just a stock image with the description "Business man with hand to face" that's available to download for free on fabulousfaces.com. There's no indication that Jenkins exists or has ever endorsed the company.

Clozer

Daniel Barford of volunteer site Give What You're Good Atclaims that Clozer has helped him improve his company's cash flow. However, the company he works at was founded by Ami Bloomer, the CEO of Clozer, and she's still listed on the company's contact page. There's no indication on Clozer's endorsements page of the link between the two companies. Barford did not respond to a request for comment.

Bloomer told Business Insider that the endorsements page was added to her site "without permission." Shortly after we contacted her, it was modified to remove several endorsements, including Andrew Jenkins from Cambridge and Daniel Barford of Give What You're Good At.

A LinkedIn post published by Bloomer claims that "there is now [sic] way to find that page without getting a direct link," and she accuses her former employees of sending Business Insider a link to the endorsements page in what she calls "a bit of darkness" and "bad blood." However, we actually found it by simply Googling her company.

Clozer doesn't verify every profile shown on the site

Bloomer told Business Insider that her company has a system to test and verify "Clozers." But Business Insider was able to create a fake profile that was featured at the top of the website and has remained on the site for weeks.

We used a photograph of music producer and Snapchat star DJ Khaled to create a LinkedIn profile for a "Michael Richards" who works as a sales consultant at HSBC.

Clozer

We signed up to Clozer and indicated that we had experience in technology sales. Straight away the profile was listed at the top of searches for Clozers in London. It has remained highly visible for weeks.

A simple Google Image Search for the photograph used on Clozer shows that our profile is really DJ Khaled. But it doesn't appear that Clozer has carried out even the most basic verification to ensure that customers are viewing genuine users.

DJ Khaled Google Image Search

The site does verify Clozers, but only further on in the signup process, Bloomer explained in a statement to Business Insider. 

"The verification is a test and Linkedin signup, along with checks of three references. No one will be matched to a deal until that is complete," she said.

However, weeks after signing up with the fake profile, we received an email from Clozer telling us that we had been matched with a deal. It was a contract to do deals for an online marketplace similar to Clozer. But the company's cofounder told Business Insider that he was surprised to learn he had a listing on Clozer, as he had only experimented with the site and ignored requests for money.

"They've created a post using our name," he said.

Business Insider also spoke to other businesses that had listings on Clozer. One business owner who wished to remain anonymous told us that he'd been introduced to a salesperson in San Francisco through the site. Another business said that the site didn't work properly — something we heard from several Clozer users.

Clozer's business strategy involves sending 150,000 messages on LinkedIn

Business Insider spoke to multiple technology investors who were asked to invest in Clozer but declined to do so. (It is common for investors to decline to invest in a company in its early days — most investors pass on most chances to invest. The fact that they decline the chance is not on its own an indicator that something is wrong.) A copy of Clozer's pitch deck to investors that was sent to Business Insider shows that part of its business strategy is to send 150,000 messages to potential customers in order to attract users to the site.

Clozer pitch deck

Sending cold emails or other social media messages is a normal tactic for new companies. Bulk emailing is a standard marketing practice and almost all companies do it. There is no evidence that there was anything unusual about Clozer's email marketing tactics, other than the sheer size of the campaign. Bloomer says her marketing tactics are in line with the technology industry generally and that "lots of companies" operate in the same way. She added that the emails and Facebook comments were "not aggressive" in their volume.

Here is an example of what that campaign looked like: Rob Close is an operations manager at Bedford log cabin company Dunster House, who says on the Clozer endorsements page that he pays "$499 a year" for Clozer. Twitter user Martin Power posted a screenshot of a LinkedIn message he received from Close, promoting Clozer:

Rob Close LinkedIn message

Close told Business Insider that he was unaware of the level of emails being sent through his LinkedIn account. He declined to say whether the emails were sent automatically or by him personally. It's not clear how many messages were sent in total, beyond the 150,000 that Bloomer claims in her pitch deck. But Close said he is now going to change his passwords. Bloomer didn't respond to a question about how LinkedIn messages are used by Clozer.

Close's employer, Dunster House, told Business Insider that it has no relationship with Clozer and made it clear that Close's actions were unrelated to his work at the company.

Other people on Twitter have also been complaining about emails from Clozer.

The London Startups Facebook group took the rare step of banning multiple Facebook profiles because they repeatedly posted links to Clozer.

Dan Quine, a group administrator, wrote on March 18: "Several GoClozer members have indeed been removed from the group for spamming. They were extensively warned and were unwilling to stop their activity."

Clozer ban Facebook group

Bloomer told Business Insider that "bad press sells ... the work myself and my team are doing is focused on delivering $50,000 sales target to all companies. And we will continue to work hard to serve the companies who have entrusted us as their sales solution." 

Bloomer has also published a LinkedIn post defending her company after she was contacted for comment by Business Insider. In the post, she takes responsibility for errors on Clozer. "I messed up," she says. She claims in the post that Business Insider contacted her and called her site "the worst company in the world." At no point did we make such a statement.

Clozer Facebook section

An archived section of the post that was shared on Facebook and seen above, shows Bloomer comparing herself to Jesus. That section has now been removed.

Join the conversation about this story »

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An angel investor who's helped start over 100 companies explains why it's a good thing to be in business for the money

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david rose

In most social settings, it would come off as crass to proclaim your love of money, and your ambitions to make lots of it.

Better to talk about your passion for your job and how it allows you contribute to society at large.

But if you're an entrepreneur trying to convince an investor to get behind your business idea, a sense of passion and purpose is hardly enough.

That's according to David Rose, a serial investor and entrepreneur who's founded or funded over 100 companies. Rose is the founder and CEO of Gust, which runs a platform and community for entrepreneurs and early-stage investors. He's also the author of two books, most recently "The Startup Checklist."

Rose told Business Insider that, when deciding whether to invest in an entrepreneur's business, he looks for someone who has passion and wants to make money.

"You can't be in it just for the money," Rose said. "There are a lot better ways to make money than being an entrepreneur."

On the other hand, Rose said, he sometimes sees entrepreneurs who are well-intentioned but lack a solid business plan — and almost always passes on them:

I give them lots of props for trying the heal the world and do good things. But all too often they come in with a very fuzzy business plan that doesn't make sense. And they say, "Oh it doesn't matter if it makes sense. This is all for a good cause, and I don't care about making money; I just care about doing good."

He added: "If somebody tells me they're not in it for a profit, I do not want to invest — because I'm in it for a profit!"

Instead, he looks for a balance between passion for the job and financial ambition: "What I want it somebody who says, 'I'm doing this because I love doing this. I love starting a company; I love the business that I'm doing; and I'm passionate about doing it. And yeah, by the way, I really hope this makes me a billion dollars.'"

SEE ALSO: An angel investor who's helped start over 100 companies reveals the No. 1 thing he looks for in entrepreneurs

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Large companies used to gobble up San Francisco real estate, but 'they're just not there today,' says developer

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Twitter office

It's not just the tech funding cycles that have slowed down.

In an earnings call on Wednesday, Boston Properties President Doug Linde cautioned that the race for commercial real estate has also tempered in San Francisco.

"I think the big difference between the market then i.e. in 2014 and 2015 and today is really the lack of large growth requirements, and by that I mean big tenants over 300,000 square feet," Linde said in the company's earnings call, according to a Seeking Alpha transcript. "So at the moment, there is no 300,000 square foot greater requirement that we are tracking in the market."

Linde continued: "In 2013, 2014 and 2015, you had unprecedented large growth from Google, and Dropbox, and Salesforce.com, and Uber, and Stripe, and Slack, and LinkedIn, and they're just not there today."

But there's still strong demand overall. By Linde's measurement, tech users now make up 31% of all of the space leased in San Francisco, and Airbnb, Twilio, Quantcast, Lyft, Fitbit, and Uber have expanded into spaces in the last quarter, although much of it was from the sublet markets.

Plus, his company is continuing to lease out the floors to Salesforce's new giant tower, which will open next year.

But the huge all-at-once office-space grabs seem to be slowing down.

"So technology is still a vibrant part of the market, it's still expanding, it's not quite in the same manner that it was in 2014 and 2015," Linde said.

The market is still red-hot to the south in Silicon Valley, though.

Silicon Valley "continues to be very active" thanks to public companies like Google and Apple. Plus, Facebook, Nvidia, Broadcom, VMware, and Palo Alto Networks all continue to grow, Linde adds.

He said that these "are growing companies and what they are looking for is new modern efficient product to house their growth."

SEE ALSO: 'Silicon Valley' stars: Some techies are wonderful; some are 'grandiose' and 'slimy'

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Here's why there are so many hot AI startups being built in the UK right now

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ex machina osscar

The UK's AI scene is the talk of the town at the moment, with a number of significant startup exits happening over the last few years. 

Evi was acquired by Amazon for a reported £18 million in 2013, DeepMind was bought by Google for around £400 million in 2014, VocalIQ was acquired by Apple for an unknown amount in 2015, and SwiftKey was bought by Microsoft for £175 million in 2016.  

Saul Klein, a venture capitalist at London-based LocalGlobe, believes there are a number of factors that have led to a general surge in AI. 

"Clearly this [AI] has been decades in the making," said Klein during an interview with Business Insider at LocalGlobe's office in King's Cross. "There are conditions that exist now that make mainstream AI and the application of AI possible. Like cloud, like big data, analytics, connectivity as well."

In terms of what makes the UK so special, Klein believes the Oxbridge-London triangle is playing an important role in the creation of the UK's best AI companies.

Oxford, Cambridge, Imperial, and UCL all have deep expertise in applied mathematics, computer science, and machine learning, according to a blog post by two AI investors. As a result, several of Britain's best-known AI companies started off as research projects within these institutions before being spun out. Evi and VolalIQ began at Cambridge, for example, while DeepMind has close ties to all four institutions. 

There are also a number of organisations in the UK that incubate AI startups in their early days. Entrepreneur First in London, for example, helps deeply technical people to find cofounders to launch a tech startup with; at least half of their last cohort focused on applying machine learning to different challenges. 

Then there's the money. LocalGlobe, which Klein founded with his father Robin, is using its £45 million fund to make a number of investments into UK AI startups, as are VCs like Playfair Capital and White Star Capital. 

"There are really amazing AI-driven businesses that are emerging and some of the companies that we will announce investments in are squarely focused in and around that," said Klein. 

In terms of whether AI could one day pose a threat to humanity, as famous scientist Stephen Hawking predicts, Klein said:  "I guess the way I would look at it is that there are lots of technologies that we have created over time, including nuclear weapons, that have existential risk. I don’t know if AI is one of them but the best thing to do is to study these things and to be actively engaged, and it’s great that people like [Skype cofounder] Jaan [Tallinn] are doing that in Europe. He’s created the Centre for the Study of Existential Risk at Cambridge with Martin Rees and Stephen Hawking.

"Obviously [LinkedIn founder] Reid Hoffman, [PayPal cofounder] Peter Thiel, and [Y-Combinator president] Sam Altman have put a billion dollars into OpenAI on the west coast. It’s great that people are researching this stuff."

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A startup that claims to be the 'Uber for sales' has been using fake profiles and endorsements

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  • Clozer, a startup that allows businesses to outsource sales to specialist negotiators, has been found by Business Insider to use fake endorsements, inaccurate LinkedIn profiles, and aggressive emailing tactics.
  • The site features its sales professionals, but their photos are sometimes actually stock images or pictures of people not associated with Clozer.
  • Business Insider was able to create a fake Clozer sales profile with no checks or verification.
  • CEO Ami Bloomer's LinkedIn profile included a false claim about investing in technology company TransferWise.
  • Bloomer says she fired her team in Vienna and has 20 virtual assistants to help her run the company.

How it works

The concept for Clozer is pretty simple: It'sthe "Uber for sales." When a company has a big sales deal coming up you log onto the website and select a specialist (known as a "clozer") who can sell your goods or services for you. You pay them a fee, and Clozer takes a cut that's between 5% and 20%. 

Clozer came to our attention because it has targeted small businesses in the UK and tech startups in particular. The company wants to become the go-to, on-demand sales force for small companies. Business Insider spoke to one customer of the site who said he had paid $499 for a subscription in order to list opportunities on Clozer, and the company has actively solicited for new business, contacting 150,000 potential clients.

The company has promoted its services in the media. In January, blogger Edmund Ingham called it"another sharing economy win," in a post on Forbes. A few months later, Clozer CEO Ami Bloomer was invited onto "BBC Business Live" on BBC World News to talk about her site live on air. Presenters called it"a fantastic idea so long as your salespeople are good at actually selling things" and "really interesting."

Clozer CEO Ami Bloomer

The CEO's LinkedIn profile falsely claimed that she invested in TransferWise

Clozer CEO Ami Bloomer claims to be a veteran technology executive who has experience investing in major tech companies. Business Insider saw a copy of Bloomer's old LinkedIn profile which says she has invested in London startups TransferWise and Crowdcube, both of which are worth hundreds of millions of pounds.

Clozer CEO Ami Bloomer LinkedIn profile

But TransferWise denies that Bloomer is an investor. Bloomer told Business Insider that the error came about after she handed her LinkedIn profile over to the 20 virtual assistants that she uses to help her run her company and they became confused about the payments method she uses. She insists, however, that she has invested in Crowdcube. That company declined to comment on whether she is an investor, citing data protection laws. Both claims have since been deleted from Bloomer's LinkedIn profile.

Bloomer's LinkedIn profile also listed a Mensa IQ score of 156. That score would place her in the very top section of the UK in terms of intelligence, and is almost the maximum score achievable on Mensa's tests in the UK. Business Insider asked Bloomer about it but she did not respond. The score was deleted from LinkedIn after we got in touch.

Separately, Bloomer's cofounder Mattia Varriale says on LinkedIn that he attended "Magna Carta College Oxford." There is no such college with that name in Oxford University — it's a private business school that has an office in Oxford and is not affiliated with Oxford University.

Clozer founder LinkedIn

The homepage of the site includes fake users

The Clozer homepage includes professional headshots of Clozer users along with some extraordinary claims. "Maureen" from London claims to have sold over £200 million of software. "David" from Melbourne says that he has sold $400 million (£283 million) of medical devices.

But none of the photographs currently displayed on Clozer's home page are genuine images of users. Their headshots are stock images or photographs sourced from other websites. One woman who had her photograph used by Clozer, Fox 5 DC TV news anchor Annie Yu, angrily tweeted at Clozer to demand it remove her image from the homepage.

Annie Yu tweet to Clozer

Bloomer says that the images were uploaded by an intern who has since been fired, along with her team in Vienna. "The team made many mistakes," she said, blaming their "incompetence" for the errors on the site.

The photograph of Yu was recently replaced with another photo of someone who isn't a real Clozer user, despite Bloomer's insistence that the intern who made the original error has been fired. Clozer's homepage has also been updated to include a tiny line of text which reads "We do not show images of Clozers on our homepage. You can search to see photos of Clozers with their biographies/ clozers."

Clozer homepage

Misleading endorsements

Clozer's website includes a page of endorsements by people who claim to have used the site and found it useful. But Andrew Jenkins, whose employment is listed as "Cambridge," is actually just a stock image with the description "Business man with hand to face" that's available to download for free on fabulousfaces.com. There's no indication that Jenkins exists or has ever endorsed the company.

Clozer

Daniel Barford of volunteer site Give What You're Good Atclaims that Clozer has helped him improve his company's cash flow. However, the company he works at was founded by Ami Bloomer, the CEO of Clozer, and she's still listed on the company's contact page. There's no indication on Clozer's endorsements page of the link between the two companies. Barford did not respond to a request for comment.

Bloomer told Business Insider that the endorsements page was added to her site "without permission." Shortly after we contacted her, it was modified to remove several endorsements, including Andrew Jenkins from Cambridge and Daniel Barford of Give What You're Good At.

A LinkedIn post published by Bloomer claims that "there is now [sic] way to find that page without getting a direct link," and she accuses her former employees of sending Business Insider a link to the endorsements page in what she calls "a bit of darkness" and "bad blood." However, we actually found it by simply Googling her company.

Clozer doesn't verify every profile shown on the site

Bloomer told Business Insider that her company has a system to test and verify "Clozers." But Business Insider was able to create a fake profile that was featured at the top of the website and has remained on the site for weeks.

We used a photograph of music producer and Snapchat star DJ Khaled to create a LinkedIn profile for a "Michael Richards" who works as a sales consultant at HSBC.

Clozer

We signed up to Clozer and indicated that we had experience in technology sales. Straight away the profile was listed at the top of searches for Clozers in London. It has remained highly visible for weeks.

A simple Google Image Search for the photograph used on Clozer shows that our profile is really DJ Khaled. But it doesn't appear that Clozer has carried out even the most basic verification to ensure that customers are viewing genuine users.

DJ Khaled Google Image Search

The site does verify Clozers, but only further on in the signup process, Bloomer explained in a statement to Business Insider. 

"The verification is a test and Linkedin signup, along with checks of three references. No one will be matched to a deal until that is complete," she said.

However, weeks after signing up with the fake profile, we received an email from Clozer telling us that we had been matched with a deal. It was a contract to do deals for an online marketplace similar to Clozer. But the company's cofounder told Business Insider that he was surprised to learn he had a listing on Clozer, as he had only experimented with the site and ignored requests for money.

"They've created a post using our name," he said.

Business Insider also spoke to other businesses that had listings on Clozer. One business owner who wished to remain anonymous told us that he'd been introduced to a salesperson in San Francisco through the site. Another business said that the site didn't work properly — something we heard from several Clozer users.

Clozer's business strategy involves sending 150,000 messages on LinkedIn

Business Insider spoke to multiple technology investors who were asked to invest in Clozer but declined to do so. (It is common for investors to decline to invest in a company in its early days — most investors pass on most chances to invest. The fact that they decline the chance is not on its own an indicator that something is wrong.) A copy of Clozer's pitch deck to investors that was sent to Business Insider shows that part of its business strategy is to send 150,000 messages to potential customers in order to attract users to the site.

Clozer pitch deck

Sending cold emails or other social media messages is a normal tactic for new companies. Bulk emailing is a standard marketing practice and almost all companies do it. There is no evidence that there was anything unusual about Clozer's email marketing tactics, other than the sheer size of the campaign. Bloomer says her marketing tactics are in line with the technology industry generally and that "lots of companies" operate in the same way. She added that the emails and Facebook comments were "not aggressive" in their volume.

Here is an example of what that campaign looked like: Rob Close is an operations manager at Bedford log cabin company Dunster House, who says on the Clozer endorsements page that he pays "$499 a year" for Clozer. Twitter user Martin Power posted a screenshot of a LinkedIn message he received from Close, promoting Clozer:

Rob Close LinkedIn message

Close told Business Insider that he was unaware of the level of emails being sent through his LinkedIn account. He declined to say whether the emails were sent automatically or by him personally. It's not clear how many messages were sent in total, beyond the 150,000 that Bloomer claims in her pitch deck. But Close said he is now going to change his passwords. Bloomer didn't respond to a question about how LinkedIn messages are used by Clozer.

Close's employer, Dunster House, told Business Insider that it has no relationship with Clozer and made it clear that Close's actions were unrelated to his work at the company.

Other people on Twitter have also been complaining about emails from Clozer.

The London Startups Facebook group took the rare step of banning multiple Facebook profiles because they repeatedly posted links to Clozer.

Dan Quine, a group administrator, wrote on March 18: "Several GoClozer members have indeed been removed from the group for spamming. They were extensively warned and were unwilling to stop their activity."

Clozer ban Facebook group

Bloomer told Business Insider that "bad press sells ... the work myself and my team are doing is focused on delivering $50,000 sales target to all companies. And we will continue to work hard to serve the companies who have entrusted us as their sales solution." 

Bloomer has also published a LinkedIn post defending her company after she was contacted for comment by Business Insider. In the post, she takes responsibility for errors on Clozer. "I messed up," she says. She claims in the post that Business Insider contacted her and called her site "the worst company in the world." At no point did we make such a statement.

Clozer Facebook section

An archived section of the post that was shared on Facebook and seen above, shows Bloomer comparing herself to Jesus. That section has now been removed.

Join the conversation about this story »

NOW WATCH: Here's what happens to your brain when you check your phone — and why it's so addicting

Crowdmix has finally launched an app after 3 years — but you can't sign up to use it

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listening to music on headphones

Crowdmix, the London music social network that has been in development for three years, has finally launched its app onto the App Store.

But users can't sign up for the app just yet as it's currently invite-only, and there are no plans to bring in revenue any time soon.

It's all about communities: users can join different groups based around genres or musicians and share music, discussions, and view charts of the most popular tracks

The app also connects to your streaming service, whether that's YouTube, iTunes, or Spotify, and you can play music through the app.

Crowdmix app

Crowdmix was started at London's Google Campus in 2013 and it has since grown to around 160 employees. The company raised £14 million of investment in 2015. That's a remarkable achievement for a startup that's not just pre-revenue, but is also pre-launch too.

It hasn't been smooth sailing for Crowdmix, however. Business Insider reported in April that the company had laid off 8% of staff following a reorganisation of its marketing team.

The company isn't rushing to make money from its app, though. Crowdmix says that brands and partners are going to be using the app first, then it will be opened to everyone, and only then will promoted posts start appearing. 

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