Startups
Auto Added by WPeMatico
Here are the top Midwestern states and cities for startups
The American Midwest has a long history of making stuff. During the 20th century, it was the manufacturing center for the nation, and indeed much of the world. It’s still where a surpassing majority of agricultural commodities are grown and processed. But is it also a major producer of technology startups? Maybe not as much as the coasts, but the Midwest’s bustling metropoli and vast expanses of rural land prove to be fertile ground for quite a bit of startup activity.
And that’s what we’re going to take a look at here. In a similar vein to our recent analysis of startup fundraising in the South, we’ll break down the region into its constituent parts, assessing deal and dollar volume trends in the Midwest’s two primary sub-regions, some of its individual states and the most active metropolitan areas in the U.S.’s midsection.
And, to be clear, this is not Crunchbase News’s first foray into the region. We’ve covered the region’s seed-stage interest in AI and hard tech, a few notable rounds and have always included the Midwest in all manner of data-spelunking expeditions. And to this, we’ll add a deep dive into the numbers.
Defining the midwest
Borders and boundaries are a deep well of disputes. To preempt debate, we use the U.S. Census Bureau’s definition of the Midwest region which, unlike its definition of the South, shouldn’t be too controversial. If you have something against Kansas or Ohio being included in this group, take it up with the Feds.
The good folks at the Census Bureau split the Midwest into two distinct — and rather unimaginatively named — sub-regions: the West North Central and East North Central states, which are separated by the Mississippi River. We’ve included the map below.
By splitting the Midwest into two distinct parts, we’ll be able to see where most of the startup and funding activity is concentrated. Spoiler alert: The farther west you go, the startup population (and the population itself) grows more scattered.
Capital flows into Midwestern startups
Based only on reported data in Crunchbase, the Midwest appears to be affected by the same phenomenon as the rest of the country. Crunchbase News has previously found that the number of seed and early-stage deals has gone off a cliff in the U.S., resulting in a top-heavy market featuring many large, late-stage deals. And this wouldn’t be a problem if it weren’t for a shortfall in new startups to fill the next cycle of early-stage funding. The “hollowing out” of the Midwestern venture deal pipeline becomes readily apparent when you look at funding data for the past several years, which you can find in the chart below.
To wit, deal volume is down markedly since 2014, as Crunchbase News reported in its Q4 2017 report of startup funding activity in the U.S. and Canada. But somewhat counterintuitively, the amount of money being invested into startups is on the rise in the Midwest and throughout many other parts of the country, reaching fresh multi-year highs in 2017. Almost one full quarter into 2018, the trend appears to continue unabated.
But this chart abstracts away a lot of nuance, so let’s take a closer look at the region and its states.
Focusing in on Midwestern deal and dollar volume
We’ll start first with deal volume, because that’s a fairly decent indicator of a geographic region’s level of startup activity. Below, we’ve plotted venture deal volume, divided by sub-region.
Again, based on the reported data from Crunchbase, we found that deal counts have been on a downward trend for several years. And though some of this may be attributable to reporting delays, projected deal volume data for the whole of the U.S. and Canada (fourth chart down in the Q4 quarterly report) shows a years’-long downtrend. There’s no reason to believe that startup activity in the Midwest is materially different from the rest of the U.S. and Canada.
But what about the relative “balance of power” between the two sub-regions? At least when it comes to deal volume, has one sub-region waxed while the other waned? To a limited extent, the answer is yes. Between 2012 and 2017, the percentage share of all Midwestern dealflow going to West North Central states like the Dakotas, Minnesota and Missouri has grown from 25.4 percent to 31.2 percent, up by nearly one-fifth in relative terms.
Now let’s check out dollar volume. The chart below displays aggregate reported venture capital dollar volume raised by startups in the Midwest.
As far as the amount of money Midwestern startups have raised over time, the trendline is generally up and to the right. But that’s not the only way this differs from the deal volume data we looked at earlier. For dollar volume, there appears to be no appreciable change in the “balance of power” between the two sub-regions since 2012. Depending on the year, East North Central states like Illinois, Michigan and Ohio raked in between 70 and 78 percent of total dollar volume, but that variance doesn’t appear in an orderly trend.
Where are most Midwestern deals done?
We started first at the regional level, then compared smaller groupings of states. Now, let’s see how deal and dollar volume is distributed on a state-by-state level. Doing so will point to the states that lead the region in venture-backed startup activity. Below, you’ll find a chart of how deal volume is split between the top five Midwestern states.
And here is how dollar volume is distributed.
As we saw with our analysis of the South, the top five Midwestern states for deal volume are the same five top-ranked states for dollar volume. But there is some notable variation in how these states rank among each other and the amount of deal and dollar volume they account for.
Considering that Illinois is home to Chicago and a number of downstate universities with deep tech startup roots, the fact that it places first for both metrics shouldn’t come as much of a surprise.
What might be more of a head-scratcher is Minnesota, which ranks third in deal volume but second in dollar volume. Why does it switch places with Ohio? The answer could lie in the industrial mix which, in the case of Minnesota, includes a disproportionately high number of medical device and other life sciences companies, which typically take a lot of capital to get off the ground.
The top Midwestern startup cities
Longtime readers of Crunchbase News may remember a ranking of Midwestern startup cities we wrote back in August 2017. However, here we’re just focusing on deal and dollar volume over the past 15 months, since the start of 2017.
Let’s start first with the top 10 Midwestern cities as measured by number of startup funding rounds.
And in the chart below, you can see the top cities, as ranked by venture dollar volume, from the same period of time.
In both rankings, four of the top five cities are the same, but the odd one out appears to be Columbus, Ohio. Although there were a fairly large number of rounds raised by startups in that metro area, most of the rounds were fairly small by national standards. And one of the main reasons why Kansas City, Missouri jumped so much in the dollar volume rankings was a $100 million Series F round raised by C2FO.
But, again, as far as the Midwest goes, everything pales in comparison to Chicago alone.
For many, the Midwest is in a kind of Goldilocks zone. The East and West coasts seem to hold more or less equal sway over the culture and economy and most of its cities are neither too big nor too small. The only extreme it seems to occupy is its winter weather.
Powered by WPeMatico
Zuck apologizes for Cambridge Analytica scandal with full-page print ad
Facebook chief Mark Zuckerberg has taken out a full page ad in the Washington Post, the New York Times, the Wall Street Journal and six UK papers today to apologize Cambridge Analytica scandal, according to CNN’s Brian Stelter.
The ad starts in bold letters, saying:
“We have a responsibility to protect your information. If we can’t, we don’t deserve it.”
Facebook took out full page ads in the NYT, WSJ, WashPost, and 6 UK papers today https://t.co/kMA822kTpU pic.twitter.com/CUEYwyWuTT
— Brian Stelter (@brianstelter) March 25, 2018
The ad was published on Sunday, following Zuck’s first public acknowledgement of the issue on Facebook and a subsequent media tour earlier this week.
Congress has also put Mark Zuckerberg on notice to potentially come speak with them, with Senator Kennedy of Louisiana encouraging Zuck to “do the common sense thing and roll up his sleeves and take a meaningful amount of time talking to [them].”
For those of you still unsure what’s going on with Facebook and Cambridge Analytica, you can see a full play-by-play here.
Here’s the full transcript from the print ad:
We have a responsibility to protect your information. If we can’t, we don’t deserve it.
You may have heard about a quiz app built by a university researcher that leaked Facebook data of millions of people in 2014. This was a breach of trust, and I’m sorry we didn’t do more at the time. We’re now taking steps to make sure this doesn’t happen again.
We’ve already stopped apps like this from getting so much information. Now we’re limiting the data apps get when you sign in using Facebook.
We’re also investigating every single app that had access to large amounts of data before we fixed this. We expect there are others. And when we find them, we will ban them and tell everyone affected.
Finally, we’ll remind you of which apps you’ve given access to your information — so you can shut off the ones you don’t want anymore.
Thank you for believing in this community. I promise to do better for you.
Mark Zuckerberg
Powered by WPeMatico
Monarch is a new platform from surgical robot pioneer Frederic Moll
Auris Health (née Auris Surgical Robots) has done a pretty good job flying under the radar, in spite of raising a massive amount of capital and listing one of the key people behind the da Vinci surgical robot among its founders. With FDA clearance finally out of the way, however, the Redwood City-based startup medical startup is ready to start talking.
This week, Auris revealed the Monarch Platform, which swaps the da Vinci’s surgical approach for something far less invasive. The system utilizes the common endoscopy procedure to a insert a flexible robot into hard to reach places inside the human body. A doctor trained on the system uses a video game-style controller to navigate inside, with help from 3D models.
Monarch’s first target is lung cancer, the which tops the list of deadliest cancers. More deaths could be stopped, if doctors were able to catch the disease in its early stages, but the lung’s complex structures, combined with current techniques, make the process difficult. According to the company, “More than 90-percent of people diagnosed with lung cancer do not survive, in part because it is often found at an advanced stage.”
“A CT scan shows a mass or a lesion,” CEO Frederic Moll tells TechCrunch. “It doesn’t tell you what it is. Then you have to get a piece of lung, and if it’s a small lesion. It isn’t that easy — it can be quite a traumatic procedure. So you’d like to do it a very systematic and minimally invasive fashion. Currently it’s difficult with manual techniques and 40-percent of the time, there is no diagnosis. This is has been a problem for many years and [inhibits] the ability of a clinician to diagnose and treat early-stage cancer.
Auris was founded half a dozen years ago, in which time the company has managed to raise a jaw-dropping $500 million, courtesy of Mithril Capital Management, Lux Capital, Coatue Management and Highland Capital. The company says the large VC raise and long runway were necessary factors in building its robust platform.
“We are incredibly fortunate to have an investor base that is supportive of our vision and committed to us for the long-term,” CSO Josh DeFonzo tells TechCrunch. “The investments that have been made in Auris are to support both the development of a very robust product pipeline, as well as successful clinical adoption of our technology to improve patient outcomes.”
With that funding and FDA approval for Monarch out of the way, the company has an aggressive timeline. Moll says Auris is hoping to bring the system to hospitals and outpatient centers by the end of the year. And once it’s out in the wild, Monarch’s disease detecting capabilities will eventually extend beyond lung cancer.
“We have developed what we call a platform technology,” says Moll. “Bronchoscopy is the first application, but this platform will do other robotic endoscopies.”
Powered by WPeMatico
JASK and the future of autonomous cybersecurity
There is a familiar trope in Hollywood cyberwarfare movies. A lone whiz kid hacker (often with blue, pink, or platinum hair) fights an evil government. Despite combatting dozens of cyber defenders, each of whom appears to be working around the clock and has very little need to use the facilities, the hacker is able to defeat all security and gain access to the secret weapon plans or whatever have you. The weapon stopped, the hacker becomes a hero.
The real world of security operations centers (SOCs) couldn’t be further from this silver screen fiction. Today’s hackers (who are the bad guys, by the way) don’t have the time to custom hack a system and play cat-and-mouse with security professionals. Instead, they increasingly build a toolbox of automated scripts and simultaneously hit hundreds of targets using, say, a newly discovered zero-day vulnerability and trying to take advantage of it as much as possible before it is patched.
Security analysts working in a SOC are increasingly overburdened and overwhelmed by the sheer number of attacks they have to process. Yet, despite the promises of automation, they are often still using manual processes to counter these attacks. Fighting automated attacks with manual actions is like fighting mechanized armor with horses: futile.
Nonetheless, that’s the current state of things in the security operations world, but as V.Jay LaRosa, the VP of Global Security Architecture of payroll and HR company ADP explained to me, “The industry, in general from a SOC operations perspective, it is about to go through a massive revolution.”
That revolution is automation. Many companies have claimed that they are bringing machine learning and artificial intelligence to security operations, and the buzzword has been a mainstay of security startup pitch decks for some times. Results in many cases have been nothing short of lackluster at best. But a new generation of startups is now replacing soaring claims with hard science, and focusing on the time-consuming low-hanging fruit of the security analyst’s work.
One of those companies, as we will learn shortly, is JASK. The company, which is based in San Francisco and Austin, wants to create a new market for what it calls the “autonomous security operations center.” Our goal is to understand the current terrain for SOCs, and how such a platform might fit into the future of cybersecurity.
Data wrangling and the challenge of automating security
The security operations center is the central nervous system of corporate security departments today. Borrowing concepts from military organizational design, the modern SOC is designed to fuse streams of data into one place, giving security analysts a comprehensive overview of a company’s systems. Those data sources typically include network logs, an incident detection and response system, web application firewall data, internal reports, antivirus, and many more. Large companies can easily have dozens of data sources.
Once all of that information has been ingested, it is up to a team of security analysts to evaluate that data and start to “connect the dots.” These professionals are often overworked since the growth of the security team is generally reactive to the threat environment. Startups might start with a single security professional, and slowly expand that team as new threats to the business are discovered.
Given the scale and complexity of the data, investigating a single security alert can take significant time. An analyst might spend 50 minutes just pulling and cleaning the necessary data to be able to evaluate the likelihood of a threat to the company. Worse, alerts are sufficiently variable that the analyst often has to repeatedly perform this cleanup work for every alert.
Data wrangling is one of the most fundamental problems that every SOC faces. All of those streams of data need to be constantly managed to ensure that they are processed properly. As LaRosa from ADP explained, “The biggest challenge we deal with in this space is that [data] is transformed at the time of collection, and when it is transformed, you lose the raw information.” The challenge then is that “If you don’t transform that data properly, then … all that information becomes garbage.”
The challenges of data wrangling aren’t unique to security — teams across the enterprise struggle to design automated solutions. Nonetheless, just getting the right data to the right person is an incredible challenge. Many security teams still manually monitor data streams, and may even write their own ad-hoc batch processing scripts to get data ready for analysis.
Managing that data inside the SOC is the job of a security information and event management system (SIEM), which acts as a system of record for the activities and data flowing through security operations. Originally focused on compliance, these systems allow analysts to access the data they need, and also log the outcome of any alert investigation. Products like ArcSight and Splunk and many others here have owned this space for years, and the market is not going anywhere.
Due to their compliance focus though, security management systems often lack the kinds of automated features that would make analysts more efficient. One early response to this challenge was a market known as user entity behavior analytics (UEBA). These products, which include companies like Exabeam, analyze typical user behavior and search for anomalies. In this way, they are meant to integrate raw data together to highlight activities for security analysts, saving them time and attention. This market was originally standalone, but as Gartner has pointed out, these analytics products are increasingly migrating into the security information management space itself as a sort of “smarter SIEM.”
These analytics products added value, but they didn’t solve the comprehensive challenge of data wrangling. Ideally, a system would ingest all of the security data and start to automatically detect correlations, grouping disparate data together into a cohesive security alert that could be rapidly evaluated by a security analyst. This sort of autonomous security has been a dream of security analysts for years, but that dream increasingly looks like it could become reality quite soon.
LaRosa of ADP told me that “Organizationally, we have got to figure out how we help our humans to work smarter.” David Tsao, Global Information Security Officer of Veeva Systems, was more specific, asking “So how do you organize data in a way so that a security engineer … can see how these various events make sense?”
JASK and the future of “autonomous security”
That’s where a company like JASK comes in. Its goal, simply put, is to take all the disparate data streams entering the security operations center and automatically group them into attacks. From there, analysts can then evaluate each threat holistically, saving them time and allowing them to focus on the sophisticated analytical part of their work, instead of on monotonous data wrangling.
The startup was founded by Greg Martin, a security veteran who previously founded threat intelligence platform ThreatStream (now branded Anomali). Before that, he worked as an executive at ArcSight, a company that is one of the incumbent behemoths in security information management.
Martin explained to me that “we are now far and away past what we can do with just human-led SOCs.” The challenge is that every single security alert coming in has to go through manual review. “I really feel like the state of the art in security operations is really how we manufactured cars in the 1950s — hand-painting every car,” Martin said. “JASK was founded to just clean up the mess.”
Machine learning is one of these abused terms in the startup world, and certainly that is no exception in cybersecurity. Visionary security professionals wax poetic about automated systems that instantly detect a hacker as they attempt to gain access to the system and immediately respond with tested actions designed to thwart them. The reality is much less exciting: just connecting data from disparate sources is a major hurdle for AI researchers in the security space.
Martin’s philosophy with JASK is that the industry should walk before it runs. “We actually look to the autonomous car industry,” he said to me. “They broke the development roadmap into phases.” For JASK, “Phase one would be to collect all the data and prepare and identify it for machine learning,” he said. LaRosa of ADP, talking about the potential of this sort of automation, said that “you are taking forty to fifty minutes of busy work out of that process and allow [the security analysts] to get right to the root cause.”
This doesn’t mean that security analysts are suddenly out of a job, indeed far from it. Analysts still have to interpret the information that has been compiled, and even more importantly, they have to decide on what is the best course of action. Today’s companies are moving from “runbooks” of static response procedures to automated security orchestration systems. Machine learning realistically is far from being able to accomplish the full lifecycle of an alert today, although Martin is hopeful that such automation is coming in later phases of the roadmap.
Martin tells me that the technology is being used by twenty customers today. The company’s stack is built on technologies like Hadoop, allowing it to process significantly higher volumes of data compared to legacy security products.
JASK is essentially carving out a unique niche in the security market today, and the company is currently in beta. The company raised a $2m seed from Battery in early 2016, and a $12m series A led by Dell Technologies Capital, which saw its investment in security startup Zscaler IPO last week.
There are thousands of security products in the market, as any visit to the RSA conference will quickly convince you. Unfortunately though, SOCs can’t just be built with tech off the shelf. Every company has unique systems, processes, and threat concerns that security operations need to adapt to, and of course, hackers are not standing still. Products need to constantly change to adapt to those needs, which is why machine learning and its flexibility is so important.
Martin said that “we have to bias our algorithms so that you never trust any one individual or any one team. It is a careful controlled dance to build these types of systems to produce general purpose, general results that applies across organizations.” The nuance around artificial intelligence is refreshing in a space that can see incredible hype. Now the hard part is to keep moving that roadmap forward. Maybe that blue-haired silver screen hacker needs some employment.
Powered by WPeMatico
Hip hop finds its beat in the startup scene
Hip hop stars are taking their reputations to Wall Street and Sand Hill road.
Unlike their rock star brethren, who’ve historically been disinterested in dabbling with startups, quite a few hip hop artists have amassed good-sized portfolios. They’ve seen a few big hits too, most recently including a massive up round for zero-commission stock trading platform Robinhood, which counted Jay-Z, Nas and Snoop Dogg among its earlier backers.
But just how deep does the hip hop-startup relationship go and where is it headed? To shed some light on that question, we put together a review of Crunchbase data on the startup investment activity of famous musicians. We looked at both hip hop and pop stars, culling a list of 21 artists who are either active investors or have joined one or more rounds in recent years.
The general conclusion: Artists are doing more deals, raising more funds and backing more companies that graduate to up rounds and exits. Here are a few examples:
- Besides getting a slice of Robinhood, Jay-Z and his entertainment company, Roc Nation, also saw an early portfolio company, flight club startup JetSmarter, go on to raise financing a year ago at a reported valuation more than $1.5 billion. Roc Nation also made headlines this week for investing in Promise, a startup providing alternatives to incarceration for people who can’t afford bail.
- QueensBridge Venture Partners, the investment fund co-founded by Nas, was an early-stage investor in video doorbell maker Ring, which Amazon just bought for $1.1 billion. The firm could also see some paper gains this week in the much-anticipated market debut of Dropbox, which it backed in a 2014 Series C round. In addition, QueensBridge participated in a $25 million Series B round for cryptocurrency trading platform Coinbase back in 2013. Coinbase’s last reported valuation was around $1.6 billion.
- Casa Verde Capital, a cannabis-focused venture fund co-founded by Snoop Dogg, has closed its debut fund with $45 million. Just this week it backed a $3.5 million round for vape manufacturer Green Tank.
That’s not to say everything a star touches turns multi-platinum. We found quite a few flops in their portfolios and assembled a list here of 10 startups now shuttered that counted a hip hop or pop star among their backers.
Becoming and remaining famous requires many of the same skills and qualities as running an entrepreneurial venture, including an exceptional degree of tenacity.
Of course, flops are part of life for early-stage investors, so there’s no reason we’d expect celebrities to be an exception. Moreover, most of the now-shuttered companies were not heavily capitalized by venture standards.
However, there are some higher-profile or more heavily funded companies on the flop list. One is Washio, a laundry delivery service, which raised $17 million from Nas and 20 other investors before hanging itself out to dry in 2016. Another is Viddy, an app for shooting and sharing video clips backed by Roc Nation.
Why the rich, hip and famous like startups
A number of venture pundits and pop culture mavens have previously pontificated why celebrities, and hip hop stars in particular, are drawn to startups.
One possibility is that rap music and startups resemble each other at the earliest stages, postulates Cam Houser, CEO of the 3 Day Startup Program. Rap music starts with a rapper and a producer. This duality, he says, is similar to the beginning stages of a startup, which commonly also brings together two people, a business and a technical co-founder.
Rap and startup entrepreneurship are also both longshot career tracks that celebrate raw ambition and unabashed self-promotion. To make it, however, both require an excellent grasp of what sells in the real world.
Branding is perhaps the most common rationale provided for the celebrity-startup connection. With their massive fan bases, swooning coverage and millions of social media followers, celebrities can certainly help get the word out about a new product or app. That said, the attention usually works only if said product also has compelling attributes of its own.
One of the less controversial explanations is that becoming and remaining famous requires many of the same skills and qualities as running an entrepreneurial venture, including an exceptional degree of tenacity.
It’s also true that in venture capital and the music business, it’s the hits that matter. It helps that we’re seeing plenty of those.
Powered by WPeMatico
How Raya’s $8/month dating app turned exclusivity into trust
The swipe is where the similarity ends. Raya is less like Tinder and more like a secret society. You need a member’s recommendations or a lot of friends inside to join, and you have to apply with an essay question. It costs a flat $7.99 for everyone, women and celebrities included. You show yourself off with a video slideshow set to music of your choice. And it’s for professional networking as well as dating, with parallel profiles for each.
Launched in March 2015, Raya has purposefully flown under the radar. No interviews. Little info about the founders. Not even a profile on Crunchbase’s startup index. In fact, in late 2016 it quietly acquired video messaging startup Chime, led by early Facebooker Jared Morgenstern, without anyone noticing. He’d become Raya’s first investor a year earlier. But Chime was fizzling out after raising $1.2 million. “I learned that not everyone who leaves Facebook, their next thing turns to gold,” Morgenstern laughs. So he sold it to Raya for equity and brought four of his employees to build new experiences for the app.
Now the startup’s COO, Morgenstern has agreed to give TechCrunch the deepest look yet at Raya, where the pretty, popular and powerful meet each other.
Temptation via trust
Raya COO Jared Morgenstern
“Raya is a utility for introducing you to people who can change your life. Soho House uses physical space, we’re trying to use software,” says Morgenstern, referencing the global network of members-only venues.
We’re chatting in a coffee shop in San Francisco. It’s an odd place to discuss Raya, given the company has largely shunned Silicon Valley in favor of building a less nerdy community in LA, New York, London and Paris. The exclusivity might feel discriminatory for some, even if you’re chosen based on your connections rather than your wealth or race. Though people already self-segregate based on where they go to socialize. You could argue Raya just does the same digitally.
Morgenstern refuses to tell me how much Raya has raised, how it started or anything about its founding team beyond that they’re a “Humble, focused group that prefers not to be part of the story.” But he did reveal some of the core tenets that have reportedly attracted celebrities like DJs Diplo and Skrillex, actors Elijah Wood and Amy Schumer and musicians Demi Lovato and John Mayer, plus scores of Instagram models and tattooed creative directors.
R
aya’s iOS-only app isn’t a swiping game for fun and personal validation. Its interface and curated community are designed to get you from discovering someone to texting if you’re both interested to actually meeting in person as soon as possible. Like at a top-tier university or night club, there’s supposed to be an in-group sense of camaraderie that makes people more open to each other.
Then there are the rules.
“This is an intimate community with zero-tolerance for disrespect or mean-spirited behavior. Be nice to each other. Say hello like adults,” says an interstitial screen that blocks use until you confirm you understand and agree every time you open the app. That means no sleazy pick-up lines or objectifying language. You’re also not allowed to screenshot, and you’ll be chastized with a numbered and filed warning if you do.
It all makes Raya feel consequential. You’re not swiping through infinite anybodies and sorting through reams of annoying messages. People act right because they don’t want to lose access. Raya recreates the feel of dating or networking in a small town, where your reputation follows you. And that sense of trust has opened a big opportunity where competitors like Tinder or LinkedIn can’t follow.
Self-expression to first impression
Until now, Raya showed you people in your city as well as around the world — which is a bit weird since it would be hard to ever run into each other. But to achieve its mission of getting you offline to meet people in-person, it’s now letting you see nearby people on a map when GPS says they’re at hot spots like bars, dance halls and cafes. The idea is that if you both swipe right, you could skip the texting and just walk up to each other.
“I’m not sure why Tinder and the other big meeting-people apps aren’t doing this,” says Morgenstern. But the answer seems obvious. It would be creepy on a big public dating app. Even other exclusive dating apps like The League that induct people due to their resume more than their personality might feel too unsavory for a map, since having gone to an Ivy League college doesn’t mean you’re not a jerk. Hell, it might make that more likely.
But this startup is betting that its vetted, interconnected, “cool” community will be excited to pick fellow Raya members out of the crowd to see if they have a spark or business synergy.
That brings Raya closer to the Holy Grail of networking apps where you can discover who you’re compatible with in the same room without risking the crash-and-burn failed come-ons. You can filter by age and gender when browsing social connections, or by “Entertainment & Culture,” “Art & Design,” and “Business & Tech” buckets for work. And through their bio and extended slideshows of photos set to their favorite song, you get a better understanding of someone than from just a few profile pics on other apps.
Users can always report people they’ve connected with if they act sketchy, though with the new map feature I was dismayed to learn they can’t yet report people they haven’t seen or rejected in the app. That could lower the consequences for finding someone you want to meet, learning a bit about them, but then approaching without prior consent. However, Morgenstern insists, “The real risk is the density challenge.”
Finding your tribe
Raya’s map doesn’t help much if there are no other members for 100 miles. The company doesn’t restrict the app to certain cities, or schools like Facebook originally did to beat the density problem. Instead, it relies on the fact that if you’re in the middle of nowhere you probably don’t have friends on it to pull you in. Still, that makes it tough for Raya to break into new locales.
But the beauty of the business is that since all users pay $7.99 per month, it doesn’t need that many to earn plenty of money. And at less than the price of a cocktail, the subscription deters trolls without being unaffordable. Morgenstern says, “The most common reason to stop your subscription: I found somebody.” That “success = churn” equation drags on most dating apps. Since Raya has professional networking as well, though, he says some people still continue the subscription even after they find their sweetheart.
“I’m happily in a relationship and I’m excited to use maps,” Morgenstern declares. In that sense, Raya wants to expand those moments in life when you’re eager and open to meet people, like the first days of college. “At Raya we don’t think that’s something that should only happen when you’re single or when you’re 20 or when you move to a new city.”
The bottomless pits of Tinder and LinkedIn can make meeting people online feel haphazard to the point of exhaustion. We’re tribal creatures who haven’t evolved ways to deal with the decision paralysis and the anxiety caused by the paradox of choice. When there’s infinite people to choose from, we freeze up, or always wonder if the next one would have been better than the one we picked. Maybe we need Raya-like apps for all sorts of different subcultures beyond the hipsters that dominate its community, as I wrote in my 2015 piece, “Rise Of The Micro-Tinders”. But if Raya’s price and exclusivity lets people be both vulnerable and accountable, it could forge a more civil way to make a connection.
Powered by WPeMatico
Storytelling for B2B startups: Avoiding ‘buzzword bingo’ to make your wonky enterprise company worth talking about
If there’s one thing I learned from my time as both a journalist at The Wall Street Journal and Forbes and, now, advising a global venture capital firm on communications, it’s that storytelling can make or break a company.
This is especially true the more complicated and arcane a company’s technology is. Stories about online-dating and burrito-delivery apps are easily understood by most people. But if a company specializes in making technology for hybrid-cloud data centers, or parsing specialized IT alerts and cybersecurity warnings, the storytelling task becomes much harder — but, I would argue, even more important.
Sure, a wonky company will still be able to talk easily to its customers and chat up nerdy CIOs at trade shows. But what happens when they raise a Series C or D round of financing and actually need to reach a broader audience — like really big, potential business partners, potential acquirers, public investors or high-level business reporters? Often, they’re stuck.
It can be painful to watch. When I was a reporter, I was amazed at the buzzwords thrown at me by some technology companies trying to get me to write about them. For fun, my colleagues and I would put some of these terms into online “buzzword bingo” websites just to see what indecipherable company descriptions they would spit out. (Example: “An online, cloud-based, open-source hyperconverged Kubernetes solution.”) Often, when pressed, PR representatives couldn’t explain to me what these companies actually did.
These companies obviously never made it into my stories. And I would argue that many of them suffered more broadly from their overall lack of high-profile press coverage; large business publications like the ones for which I worked target the very big-company executives and investors these later-stage startups were trying to reach.
Now, of course, I’m on the other side of that reporter/company equation — and I often feel like a big chunk of my job is working as a technology translator.
A natural-born storyteller
So why is this B2B storytelling problem so common, and arguably getting worse? Lots of reasons. Many of these hard-to-understand companies are founded by highly technical engineers for whom storytelling is (not surprisingly) not a natural skill. In many cases, their marketing departments are purely data-driven, focused on demand generation, ROI and driving prospects to an online sales funnel — not branding and high-level communications. As marketing technology has gotten more and more advanced and specialized, so have marketing departments.
As a result, many B2B and enterprise-IT companies are often laser-focused on talking about their products’ specific bells and whistles, staying in “sell mode” for a technical audience and cranking out wonky whitepapers and often-boring product press releases. They’re less adept at taking a step back to address the actual business benefits their product enables. Increasingly, this tech-talk also plays well with the legions of hyper-specialized, tech-news websites that have proliferated to serve every corner of the technology market, making some executives think there’s no need to target higher-level press.
Everyone has a story to tell. It’s up you to figure out what your company’s is, and how to tell that story in a compelling, understandable fashion.
One prominent marketing and PR consultant I know, who has worked with hundreds of Silicon Valley startups since the 1980s, says she is “shocked” by how poorly many senior tech industry CEOs today communicate their companies’ stories. Many tend to “shun” communications, considering it too “soft” in this new era of data-obsessed marketing, the consultant Jennifer Jones, recently told me. But in the end, poor communications and storytelling can create or exacerbate business problems, and often affect a company’s valuation.
So how do you get to a point where you can talk about your company in plain terms, and reach the high-level audiences you’re targeting?
One tactic, obviously, is to ditch the jargon when you need to. The pitch you use on potential customers — who likely already have an intimate understanding of your market and the specific problems you’re trying to solve — is not as relevant for other audiences.
A big fund manager at Fidelity or T. Rowe Price, or a national business journalist, probably knows, for example, that cloud computing is a big trend now, or that companies are buying more technology to battle complex cybersecurity attacks. But do they really understand the intricacies of “hybrid-cloud” data center setups? Or what a “behavioral attack detection solution” does? Probably not.
The David versus Goliath angle
Another tip is to put your company story in a larger, thematic context. People can better understand what you do if you can explain how you fit into larger technology and societal trends. These might include the rise of free, open-source software, or the growing importance of mobile computing.
It’s also helpful to talk about what you do in relation to larger, more established players. Are you nipping away at the slow-growing, legacy business of Oracle/EMC/Dell/Cisco? As a journalist, I once wrote a story about a small public networking company called F5 Networks that specialized in making “application delivery controllers.” But the story mostly focused on F5’s battle with a much larger competitor; in fact, the editors titled the story “One-Upping Cisco.” That’s the angle most readers were likely to care about. Journalists, particularly, love these David versus Goliath type stories, and national business publications are full of them.
Start focusing on high-level storytelling earlier, not when you’ve already raised $100 million in venture funding and have several hundred employees.
Another key storytelling strategy is leveraging your customers. If your business is boring to the average person, try to get one of your household-name customers to talk publicly about how they use your technology. Does your supply-chain software help L’Oréal sell more lipstick, or UPS make faster package deliveries?
One of our portfolio companies had a nice business-press hit a few years ago by talking about how their software helped HBO stream “Game of Thrones” episodes. (The service had previously crashed because too many people were trying to watch the show.) You can leverage these highly visible customers for case studies on your website. These can be great fodder for your sales team as well as later press interviews, as long as they’re well-written and understandable. Try to get more customers to agree to this type of content when you sign the contract with them.
From “Mad Men” to math men
Finally, there’s the issue of marketing leadership inside tech companies. In my experience, most smaller, B2B or enterprise IT-focused startups have CMOs or VPs of marketing who are more focused on data and analytics than brand communications — more “math men” than “Mad Men.” This isn’t surprising, as these companies often sell data-rich products and have business models where PR and general advertising don’t directly drive sales (unlike, say, a company making a food-delivery app). The CEOs of these companies value data and analytics, too.
I encourage B2B tech CEOs to focus on hiring CMOs with some brand/communications experience, or at least a willingness to outsource it to competent partners who are experts in that area. After a couple of early rounds of funding, you should be outgrowing your highly specialized PR firm (if you even have one) that focuses on a narrow brand of trade publications, for example. These firms usually don’t have contacts at the bigger, national business and technology outlets that are read by big mutual fund managers, and the business development folks at Cisco or Oracle. Hiring ex-journalists — not technical experts — to write content and develop messaging can be a good idea, too.
In other words, start focusing on high-level storytelling earlier, not when you’ve already raised $100 million in venture funding and have several hundred employees. By that point, it can simply be too late: Your company has already been typecast by the trade press and written off by higher-level reporters, and sometimes even potential business partners, as too niche-y and hard to understand.
As a journalist, I learned that everyone has a story to tell. It’s up you to figure out what your company’s is, and how to tell that story in a compelling, understandable fashion. If you do, I’m pretty sure the business benefits will follow.
Powered by WPeMatico
Y Combinator’s Jessica Livingston on Dropbox IPO: ‘It was just a dream of ours’
Dropbox, after more than a decade, finally went public this morning — and the stock soared more than 40% in its initial trading, making it a marquee success for one of the original Web 2.0 companies (at least for now).
While we still have to wait for the dust to settle, it’s been a very long road for Dropbox. From starting off as a file-sharing service, to hitting a $10 billion valuation in the middle of a massive hype cycle, to expectations dropping and then the announcement of a $1 billion revenue run rate. Dropbox has been a rollercoaster, but it’s another big moment this afternoon: it’s Y Combinator’s first big IPO. And Y Combinator still has a very deep bench of startups that are, thus far, obvious IPO candidates down the line like Airbnb and Stripe.
That isn’t to take away anything from the work of CEO Drew Houston and the rest of Dropbox’s team, but Y Combinator’s job is to basically take a bunch of shots in the dark based on good ideas and potentially savvy founders. Houston was one of the first of a firm that now takes in a hundred-odd founders per class. Y Combinator Founder and partner Jessica Livingston was there for the start of it, recalling back to the day that Houston rushed to her and Paul Graham to show him his little side project.
We caught up with Livingston this morning ahead of the IPO for a short interview. Here’s the conversation, which was lightly edited for clarity:
TC: Can you tell us a little bit about what it’s like to finally see the first Y Combinator company to go public?
JL: I feel like 13 years ago, it was just this dream of ours. It was this seemingly unattainable dream that goes, ‘maybe one of the startups we fund could go public someday.’ That was the holy grail. It’s an exciting day for Y Combinator. It shows what a long game investing is in early-stage startups. I do feel kind of validated.
TC: How did Y Combinator first end up in touch with Houston?
JL: He applied as a solo founder. We had met Drew the summer before. Back then, we were so small that we always encouraged people to bring friends to a Y Combinator dinner. [Xobni founder Adam Smith] brought [Houston], and we met him then and talked it through. When he applied, we invited him to come to an interview, and Paul [Graham] before the interview reached out to [Houston]. He said, “I see you’re a solo founder, and you should find a cofounder.” Three weeks later Drew showed up with [co-founder Arash Ferdowsi]. It was a great match that worked well.
TC: As Dropbox has grown, what’s stood out to you the most during changes in the market?
JL: They’re a classic example of founders who are programmers who built something to solve their own problem. Clearly, this is a perfect example of that. Drew gets on the bus, he forgets his files, and he can’t work on the whole trip down. He then creates something that will allow him to access files from everywhere. At the time, when he came on the scene with that, there were a lot of companies doing it but none were very good. I feel like Dropbox, regardless of market dynamics, from the very beginning was always dedicated to wanting to do well by building a better solution. They wanted to build one that actually works. I feel like they’ve stuck to that and that’s been driving them since. That’s been their guidepost.
TC: What was your first meeting with Houston like, and do you think he has changed in the past 10 years?
JL: When I first met him, he was young — he was very young — and he was always a good hacker, and very earnest. During Y Combinator he was very focused on building this product and was not distracted by other things. That’s when there were just two people. He’s really evolved over the years as an incredible leader. He’s grown this company and he’s navigated through all different parts of his life cycle. I’ve witnessed his growth as a leader and as a human being. He’s always been a great person. It’s sort of exciting to see where he is now that he’s come a long way, it’s really cool.
TC: Houston and Ferdowsi still own significant portions of the company even after raising a lot of venture capital. Do you think Y Combinator had any effect on companies looking for more founder friendly deals?
JL: I think when Y Combinator started, our goal in many ways was to empower founders. It was to level the playing field. You don’t have to have a connection in Silicon Valley to get funding. You just have to apply on our website. You don’t have to have gone to an Ivy League school. We [try to tell them], don’t let investors take advantage of you because you’re young and have never done this before. In general, times have changed over the past 15 years. Hopefully Y Combinator played a small role in some of those changes in making things a little more found friendly.
TC: What’s one of your favorite stories about Houston?
JL: He was always very calm, cool, and collected under pressure. I remember that was definitely a quality about him. His feathers didn’t get ruffled easily. One of the things I remember most clearly is from that summer when we had demo day. Back then it was, like, 40 people tops. Still, there was a lot of pressure. I remember Paul [Graham] came up with this idea that, ‘hey, Drew, during your demo day you should show people how well Dropbox actually works by deleting your presentation live and restoring it through Dropbox.’ That’s kind of risky, right? To delete your presentation. You’re just standing up there without anything. And he did it and he nailed the presentation. It sounds a little gimmicky, but it really worked and showed his product worked. I remember thinking, like, wow, he’s pretty calm. If it were me I don’t think I could hit the delete button in front of these people. That’s an important quality in someone, not to get flustered.
By the way, we funded them in 2007. If you asked me in 2008 how were they doing, I would say, well, they’re making progress. But it wasn’t like we funded them and we could say, ‘this is gonna be a great one.’ We just knew, yeah they’re making progress, but it’s always hard to know there.
TC: Back then, what were you just expecting? M&A? Did you even anticipate an IPO?
JL: As we were formulating the idea, the hope was rather than going to work at Microsoft — I use them as an example because that was the company back then — and rather than going to get a job out of college, why not build a company and make Microsoft acquire you to get you to work for them? We had low expectations back then. We were hoping there’d be some small acquisitions. But yes, the hope was always acquisitions, but maybe someday in our wildest dreams there’d be an IPO. We didn’t even think YC would work when we started, people didn’t believe in YC’s models for many years.
TC: Looking back, what would you say is one of the biggest things you’ve learned throughout this experience?
JL: What a long road it is for startups. When we started YC back then, it wasn’t a popular thing to do a startup. Now, thank goodness, more people are starting them, and more types of people are starting them. It’s not just super high-tech companies. That’s exciting, but what I think a lot of people don’t realize is how hard startups are. You say, yeah, I know how hard, but people don’t realize how difficult they are and how long the commitment is. If you’re successful, it takes such a long time. For [someone like Houston] to make it to that point, they’ve committed a lot of their life and energy and all their intellectual capacity to making this work. To me, that’s so exciting, but I think it would surprise people to know realistically how long that could take.
TC: What would you tell startups with the hindsight of what happened with Dropbox’s valuation hype cycle?
JL: I will say, with startups, sometimes you just have to stick to what you’re doing. There’s a lot of stuff going on around you, especially now with social media and things like that. With a startup, you just have to keep moving forward with building a company and building a great product.
Powered by WPeMatico
Tapas Media aims to turn digital comics into the next big entertainment franchise
Tapas Media has its own platform for digital comics — but like a lot of publishers, CEO Chang Kim has ambitions beyond the comics world.
Comixology is the big name in digital comics. The company, which was acquired by Amazon in 2014, is focused on selling print comics from major publishers in web- and mobile-friendly formats. (It’s also working with publishers like Marvel to create exclusively digital content.)
That’s a very different approach from Tapas, which Kim compared to YouTube — it allows individual creators to publish their work and (hopefully) reach an audience. And unlike the superhero-dominated world of American comics, the most popular titles on Tapas seem to be more romance and fantasy themed, and are usually drawn in a style that’s closer to Japanese manga.
Tapas was founded in 2013, and it now says the platform has more than 32,000 creators who have created more than 48,000 titles. And it’s reaching an audience of 2.1 million monthly visitors.
The comics themselves are monetized through micropayments. Usually, the first few chapters of a title are free, then you have to pay to keep going.
Chang said his team is also working with some of the most popular creators on the platform to develop new intellectual property, which could be translated into movies or TV or other media. Eventually, he said he’s hoping that Tapas could launch the next Harry Potter.
That level of success is a long way off, but Tapas is already exploring ways to adapt its IP. For example, it’s announcing a partnership with Red Kraken Apps to develop a mobile puzzle game based on its Dungeon Construction Co. comic.
In addition, the company has partnered with Hachette Book Group and Ten Speed Press on titles, and it’s signed distribution deals with Tencent and Kakao.
Tapas announced earlier this month that it has raised $5 million in additional Series A funding. (The company has raised $10.8 million total.) Now it’s revealing more details about the round, which comes from ID Ventures, SBI Investment Korea, Medici Investment and EN Investment. Sean Park of ID Ventures is joining the board of directors.
“ID Ventures invested in Tapas Media because we believe in the impact their platform has on the digital and mobile publishing industries,” Park said in a statement. “Their remarkable extension into licensed content and co-development will see their continued dominance, as ID Ventures’ investment looks to help Tapas Media capitalize on their platform’s adoption and innovation as well.”
Powered by WPeMatico
Ansarada gets $18M in Series A funding to help companies better prepare for major deals
Australian startup Ansarada, which provides tools for companies preparing for a major transaction, will expand in the United States, Europe, the Middle East and Africa after raising an $18 million Series A. The funding was led by Ellerston Capital, with participation from Tempus Partners, Belay Capital and Australian Ethical Investments. A noteworthy detail about the raise is that all advisory fees from the deal will be donated to Ugandan and Nepalese charities through Ansarada’s partnership with Adara Partners, a corporate advisory firm made up of financial services experts who donate their fees to help women and children living in poverty.
Ansarada provides data rooms, or secure virtual spaces that enable companies about to undergo a complex event or transaction, like a merger or fundraising, gather all relevant data and files in one place. This allows the process of performing due diligence, legal compliance, writing contracts and other tasks to go more smoothly and also lets companies track who accesses which documents. Ansarada’s clients have included some of the biggest names in tech and financial services, including Google, VMWare, Sony, Microsoft, Deloitte, PwC and KPMG. The Sydney-based company, which claims up to 80% of deals in Australia happen through its platform, will use its new funding for sales and marketing in its target countries, especially the United States, and on product development.
Other virtual data room providers include Firmex, Intralinks and Merrill Corporation, but Ansarada chief executive officer Sam Riley says one of its competitive advantages is its recently launched Material Information Platform (MIP), which serves as a complement to its data rooms. MIP uses machine learning and natural language processing algorithms trained with a dataset gathered from more than 20,000 transactions to give companies information that can potentially reduce deal risks and improve their ongoing business operations. These include an algorithm that Riley says is “up to 97% accurate by day 21 into an M&A deal at benchmarking a bidder’s behavior, scoring their engagement levels and predicting their likelihood to submit an offer and win.” It also scores the completeness of material information and tracks if risk and compliance requirements are being met.
“We’ve seen thousands of companies find out their biggest risks and opportunities too late in their life cycle, which prevents them from performing better pre-deal and ultimately getting less-than-ideal outcomes when they sell or raise capital,” Riley told TechCrunch in an email. He added “We define readiness as being able to express the value of your company very well and very fast, especially to an investor, advisor, auditor or any party that’s critical to success in your company’s most important events. Companies get control and visibility over their most important information and ensure improvement by scorecarding and assigning accountability to their management teams.”
As one would expect, Ansarada used its own products while raising its Series A.
“We eat our own ice cream, so even using the product for our own capital raise resulted in less time by our management team to prepare for the deal and more time spent executing our strategy,” said Riley. “We are now using the platform to give our board an objective score over how well our vital information and key risks are being managed. Simultaneously we are now ready for the next event on our calendar, which is likely to be a financial audit.”
Powered by WPeMatico