Thursday, July 18, 2019

“Hipcamp Gets Silicon Valley Backing From Andreessen Horowitz: Travel Startup Funding This Week - Skift” plus 1 more

“Hipcamp Gets Silicon Valley Backing From Andreessen Horowitz: Travel Startup Funding This Week - Skift” plus 1 more


Hipcamp Gets Silicon Valley Backing From Andreessen Horowitz: Travel Startup Funding This Week - Skift

Posted: 18 Jul 2019 10:26 PM PDT

Each week we round up travel startups that have recently received or announced funding. Please email Travel Tech Editor Sean O'Neill at so@skift.com if you have funding news.

Since last Friday travel startups announced more than $216 million in fresh funding.

On Thursday we reported that TravelPerk had closed its $104 million Series C round, the first $44 million of which we reported on last October. Kinnevik, partners of DST Global, Target Global, Felix Capital, Sunstone, and LocalGlobe participated. The company aims to build better business travel booking tools and has focused on Europe so far.

Earlier this week, Travelstop raised $3 million in a pre-Series A round led by top-tier U.S. venture firm Accel. The Singapore-based business travel management startup is led by co-founder Prashant Kirtane and former executives Vijay Aggarwal and Altaf Dhamani, who sold their past company, Travelmob, to Airbnb competitor HomeAway in 2013.

Finally, Skift reported on Life House having raised $100 million in a fresh round of funding.

Here's this week's other funding news.

>>Hipcamp, a site for booking campsites and related outdoor activities led by CEO Alyssa Ravasio, has raised $25 million in Series B funding.

Andreessen Horowitz, a top-tier venture capital firm that has backed companies like Airbnb, Lyft, and TripActions, led the round. Past investors Benchmark, August Capital, and O'Reilly AlphaTech Ventures also participated. Hipcamp has raised a total of $41.8 million in funding since its creation in 2013.

Andrew Chen, a general partner at Andreessen Horowitz, will join the Hipcamp board.

Hipmunk, based in San Francisco and founded in 2013, claims to have unlocked access more than 300,000 campsites on private land and in national parks and forests.

For example, it partners with private landowners, such as farmers, ranchers, and vintners primarily in the U.S. so far, to help them offer short-stays on their properties. The company has effectively created new places to camp.

Earlier this year, Hipcamp launched its mobile app.

>>EasyParcel, an online booking platform for parcel delivery, has received $10.6 million in Series B funding.

AirAsia's cargo and logistics arm Teleport invested. So did Gobi Partners, a venture firm that heavily invests in travel startups.

The Penang-based online courier platform startup helps deliver small items for small and medium enterprises across AirAsia's 10,000 flights per week. The funding will enable further network expansion.

>>HostNFly, a services company for property owners and managers of short-term vacation rentals, raised $10 million in a Series A round.

Highgate Ventures led the round in the Paris-based startup, which has raised $13 million to date.

HostNFly aims to help hosts with the online marketing and physical management of units.

>>Virtway, which helps create 3D virtual experiences for events such as conferences, raised about $4.1 million (€4 million). It didn't disclose the investor names or the series type.

Virtway, launched in Spain five years ago, claims to simulate a 3D experience of events. It also lets remote attendees interact with an event via their computers or mobile devices.

>>Avian, an online platform connecting airlines and travel agencies and to digitalize sales targets and incentives, has closed $2 million funding in pre-seed funding.

Village Global, Journey Ventures, and some angel investors participated. CEO and co-founder Mickey Haslavsky previously co-founded RapidAPI, a marketplace for application programming interfaces. CTO Oran Epelbaum was formerly a CTO at a large cybersecurity startup.

In brief, airlines often incentivize travel agencies with commissions. But the incentive process is typically managed manually. As a result, online travel agencies and travel management companies must cope with dozens of contracts. Avian scans and tracks these contracts, matching them with their sales performance.

CEO Haslavsky ultimately aims to enable airlines to run incentive campaigns via online platforms tailored by route, region, or other variables. He intends to build a tool that could communicate these real-time offers to a travel agency more quickly than today's processes can.

>>SignAll, whose technology translates American Sign Language to spoken and written English to help the deaf and hard of hearing, has raised about $1.9 million (€1.7 million) in its second round of financing to date that, while not specified, was approximately equivalent to a Series A.

Hiventures led the round, with past investor Credo Ventures also participating.

SignAll has raised about $3.6 million (€3.2 million) in equity investment to date.

The Budapest-based company has 20 full-time in-house employees.

CEO Zsolt Robotka said the company had piloted its technology at Gallaudet University in Washington, DC, and other projects in Houston and Salt Lake City. Its primary focus is the U.S. market to start.

Skift Cheat Sheet:
We define a startup as a company formed to test and build a repeatable and scalable business model. Few companies meet that definition. The rare ones that do often attract venture capital. Their funding rounds come in waves.

Seed capital is money used to start a business, often led by angel investors and friends or family.

Series A financing is typically drawn from venture capitalists. The round aims to help a startup's founders make sure that their product is something that customers truly want to buy.

Series B financing is mainly about venture capitalist firms helping a company grow faster, or scale up. These fundraising rounds can assist with recruiting skilled workers and developing cost-effective marketing.

Series C financing is ordinarily about helping a company expand, such as through acquisitions. In addition to VCs, hedge funds, investment banks, and private equity firms often participate.

Series D, E and beyond These mainly mature businesses and the funding round may help a company prepare to go public or be acquired. A variety of types of private investors might participate.

Check out Skift's Top Travel Startups to Watch in 2019, here.

Photo Credit: A tent put up on rented out land in Valhalla about a half-hour from Joshua Tree National Park in California. Hipcamp

The Israeli startup that will make McDonald’s fast food even faster - Haaretz

Posted: 18 Jul 2019 06:11 PM PDT

In April 2018, Liad Agmon, the CEO and co-founder of the startup Dynamic Yield, received an email asking for a meeting at the McDonald's headquarters in Chicago. The message was unexpected because six months had passed since the last meeting between the two sides and the startup wasn't expecting much.

"We launched a process with McDonald's for a pilot project in Miami, and 30 companies were reduced to eight and then four, not including us, and we didn't hear anything. And suddenly an email arrived Thursday, and they told us they wanted a meeting Monday," Agmon says.

"I was in Israel, I told myself that I wouldn't fly to such a meeting; they weren't treating me seriously enough to give me time to prepare, they probably wanted to have the discussion so they could check it off their list. I stayed at the office in a T-shirt, went upstairs for a video conference – and realized that there were 30 people in the room."

That discussion ended three months ago with the most surprising exit in Israeli high-tech this year: The world's most famous fast-food company acquired a tech outfit for more than $300 million – the fast food chain's biggest acquisition in 20 years.

Agmon, 42, and his partner Omri Mendellevich, 39, began thinking about the idea behind Dynamic Yield at the end of 2011. The theory was simple: All people are different, but they receive the internet the same way.

"If today I go on TheMarker website I'll get the same home page as you – it's crazy, it's an incorrect use of such expensive real estate, certainly on a phone," Agmon says. "If I've never read a certain section, I would expect that after seven years consistently using the website without reading that section, it would be dropped from my home page. It's so logical to do that."

Agmon and Mendellevich developed a system that helps news sites, and later e-commerce sites, adapt for the reader. Their customers today include Urban Outfitters, the Sephora cosmetics chain, Barnes and Noble and even the Liverpool soccer club.

McDonald's has kept Dynamic Yield as an independent firm. It plans to use the company's technology at its drive-thru restaurants to adapt the menu screens based on customers' preferences, and later also on the app and at the sit-down restaurants.

The connection to McDonald's began almost by chance when in 2017 Agmon flew to Seattle for meetings and was looking for a way to spend the morning. He decided to send an email to a partner at the McKinsey management consulting firm with whom he had a superficial online acquaintance.

The two met for breakfast, and at the end the partner mentioned that McKinsey was competing for a project at one of the largest retailers in the United States, and maybe Dynamic Yield would like to join the effort. That project succeeded, and eventually it was McKinsey that introduced Agmon to Bob Rupczynski, VP for global media and digital merchandising at McDonald's.

"In the startup business there are so many coincidences, and our goal as entrepreneurs is to increase the possibility that these coincidences will be to our benefit," Agmon says. "If you throw a die and you need a six, throw it once and your chances are one in six, but if you throw it 100 times, the chances that you'll get a 6 at least once are excellent. Your objective as an entrepreneur is to throw the die as many times as possible.

"We prepared for the meeting with McDonald's like crazy. Other firms came with a presentation, I came with an app that we wrote for an iPad that simulated a sale at a McDonald's kiosk, and I showed them how I had personalized it for all the sales channels I thought they had.

"When McDonald's said 'Maybe we'll buy you,' even I thought it was bizarre. I said to them – 'Why do you have to buy? Be customers.' But sometimes you need luck – the CEO was excited about buying a tech company. He wanted to come out with an announcement: McDonald's is buying a tech company as part of its investment in its digital vision.

"It's not for PR, they bought a winning company. I believe in something called knowledge arbitrage – in other words, they realized that they had knowledge gaps that we could fill, that we know about optimizing the customer service experience. And it's not about a product, it's about creating an entire solution that includes technology, people and ongoing work processes.

"We've been working for the past six months with McDonald's; they've never plumbed the depths of our product – they called 20 of our customers to ask if they were satisfied, made sure that we were telling them a reliable story and that the solution worked for them, and that's what's important. Companies don't buy companies; people create partnerships with people."

Agmon says McDonald's didn't want to publicize the size of the acquisition, but he insisted that they mention the sum.

"This is an acquisition that is so far from trivial, I didn't want anyone to think they bought us because we're weak," Agmon says. "We have over 300 customers, and I wanted them to know that McDonald's paid a handsome sum for the company and that it's a high-quality asset."

Cinematic start

Agmon launched his first startup when he was 27, after completing a B.A. at Tel Aviv University with an unconventional combination – computer science and cinema. At the same time he worked as Avi Nesher's assistant director in the Hebrew-language film "Turn Left at the End of the World."

"I worked for the terrifying salary of 5,000 shekels [$1,410] a month, and I started writing jokes for famous comedians, who paid me by the joke," Agmon laughs. "My roommate was a friend from the army, Ishay Green [who eventually started and sold the startup Soluto], and we sat on a balcony in Tel Aviv and thought about how to make a million dollars in two years.

"We served in the technology unit of Military Intelligence, and we thought maybe we'd do a project for a large defense organization. In the end we decided to start Onigma with a third partner, Amir Sadeh. Onigma developed a product that prevents information leaks at organizations. Today, when you say 'I was in a technology unit and I do cybersecurity,' you easily get $10 million, but back then, in 2004, it wasn't popular and it was very hard to raise money."

Onigma raised $3 million from so-called angel investors and, at the end of 2006, was sold for $20 million to the anti-computer-virus company McAfee. Agmon is believed to have taken in between $2 million and $3 million from the sale, and McAfee set up a development center in Israel that is still active and employs about 200 people.

In 2007, Agmon started his second company, Delver, which developed a search engine that takes into account the preferences of users and their social networks, and sold it within two years to Sears.

"I brought McAfee to Israel, as well as Sears and now McDonald's, and I'm proud of those acquisitions, which are all strong brands. It's not Microsoft buying a company, but still, it's acquisitions that open the eyes of companies worldwide that never considered buying a company in Israel," Agmon says. "The acquisition of a company brings in more venture capital to the Israeli high-tech industry, which fuels new startups."

About $83 million has been invested in Dynamic Yield since its establishment. The capital has flowed from investors including Bessemer, Vertex, Union Tech, Viola and DTCP. Today the company is believed to be generating revenues of about $25 million annually, though it's not yet profitable.

When the company started out, it received a tempting offer, Agmon says. They were three workers 10 months after starting out, and through connections they got to Neal Mohan, then a video ads leader at Google, today YouTube's Chief Product Officer.

"This is a man who became famous for being about to move to Twitter – and Google gave him a $100 million bonus in shares to stay. I met him to ask him to invest in us, but I didn't have much – I sketched my vision on a whiteboard, and he told me it was interesting, but he was working on tangential fields at Google and preferred not to have conflicts.

"The next day I got a phone call from Google. 'Neal was very impressed by you and said he wants you to develop this product at Google.' I asked how exactly, and they said: 'You're only three workers, we're willing to give you $8 million to $10 million.' I said, 'Wait a minute.' I was with my wife [Shaily Shindler, the presenter of the current events TV program "Hatzinor"] in a secondhand store in Soho in New York, and I told her 'Google is trying to buy us.'

"So I said, 'Let me think about it,' and an hour later I called and said no. Years later I said to myself – what an idiot, after 10 months I would have gotten $5 million without any effort. I would have had to be a Google employee for four years, probably at a nice salary – but I didn't even think about that at the time."

What did you think about?

"There were two reasons for saying no. First, the acquisition of Onigma had already changed my life, and that fast money, even though it was very significant, was no longer No. 1. The second reason was that I already had a term sheet on a deal from Adam Fisher, the partner at Bessemer, and I was supposed to sign it the next day. I told myself that I would probably disappoint Adam, and he would think that I gave up too soon.

And what was the everyday situation like at the startup in the next six years?

"Seven years of constant pressure and fears that didn't let up. There's no free time emotionally. I would sit at the Friday night meal with the family, but my mind was busy with analyses, thoughts, plans, crises, employees and customers who had left, and raising money from investors. Everyone's eyes are on the CEO, and he's expected to convey constant optimism, even when you have a lot of doubts inside.

"And my family paid a high price. Shaily was forced to leave her television show because I had to move to New York to promote the company. To ask your wife to stop her career for you and your company – that's no trivial thing. That's why I see this as a family success.

"Now they're writing about the fact that Jeff Bezos, the founder of Amazon, was forced to part with half his wealth because of the divorce. Come on, they were a couple even before he started Amazon; maybe the success is actually thanks to her?"

Media management

After 10 and a half years and three startups, Agmon has a lot of experience with the media, and plenty of criticism. When asked why he agreed to be interviewed he says frankly: "Because I have to maintain contact with journalists to recruit workers; that's part of the give-and-take."

What bothers you about high-tech journalism?

"They're preoccupied with how much money people have made, with lists and selections of 'promising' startups, which creates unnecessary hype that isn't necessarily based on facts – and often makes the coverage superficial. For example, last week I read that the Israeli startup Houseparty [a social video app] was sold to Epic Games. According to TheMarker it was sold for tens of millions of dollars, and less than the sum invested in it – $70 million.

"But instead of writing that it's a failure, that the investors lost a lot of money and the entrepreneurs didn't fulfill their dream, the article creates the impression that it's a good conclusion – because they sold the startup to a great company that developed Fortnite."

A startup that invented itself four times, failed, rose again and raised millions in a battle against giants like Facebook, Snapchat and Twitter, and in the end was sold to the most desirable game maker in the world – what's better, to frame it negatively or give credit for what it experienced?

"If you bought an apartment for 10 million shekels and six years later sold it for 4 million, do you care about the experience you had during those six years?"

An apartment is an asset that can't disappear completely as a company can. So you're saying that an ending of this kind has no element of success?

"No, none. Not even for the entrepreneur who invested six years of his life on an initiative that failed. As a CEO you have a commitment to give back as much of the money as you can to the investors, to preserve the employees' jobs. Yes, it's not a total failure, but it's still a failure.

"The true story in many transactions like this is an entrepreneur who had a week left before closing shop and laying off all the workers, and over the weekend managed to impress someone at the acquiring company to sew up a deal and return a little money to the investors; that's the story I want to read in the newspaper."

Do you prefer us to write about failures so some people won't try to become entrepreneurs?

"Of course. All these lies create a type of FOMO [fear of missing out]. There's too much culture of successful people here, but after all, most startups fail, and if there's a company that for years manages to create PR and be seen as a huge promise, like Houseparty, then there's room to talk and explain its failure too.

"What's much more interesting and important is an honest in-depth discussion with the entrepreneurs about what they learned along the way, where they made decisions that in hindsight turned out to be wrong. I admit that these are discussions that they don't always want to conduct with the media."

What about Delver, your second startup, which raised about $4 million and was sold for a million – is it a failure?

"Delver was also a financial failure, which was caused by the fall of a fundraising round that resulted from the collapse of Lehman Brothers. But in January 2009, when the entire financial and high-tech world almost ground to a halt, and employees who were laid off didn't find work for a long time, I'm proud that I was able within two weeks to sew up a deal that brought Sears to Israel, and we started a development center here that at its height employed 200 people. So I look at it as a minor success in the context of one of the greatest financial crises in history."

Is the sale of Dynamic Yield a kind of correction?

"I don't walk around on a daily basis feeling proud and successful; in my experience it's a mediocre transaction. On Shabbat I was at dinner with[Mellanox founder] Eyal Waldman, who sold a company for $7 billion. Gil Shwed, my second cousin, built a company [Checkpoint] that's trading at $20 billion – they're my reference points for success. The personal experience is a story you tell yourself. I don't get up in the morning and say to myself, 'Wow, I did something amazing here.' I get the children ready for preschool and go to work like everybody else."

For Innovative Ideas try a Cluster of Strangers – Innovation Excellence - Innovation Excellence

For Innovative Ideas try a Cluster of Strangers – Innovation Excellence - Innovation Excellence


For Innovative Ideas try a Cluster of Strangers – Innovation Excellence - Innovation Excellence

Posted: 18 Jul 2019 08:02 AM PDT

by Paul Sloane

For Innovative Ideas try a Cluster of Strangers

I recently ran a workshop for a group of CEOs of small companies from different sectors and industries.  We ran the following exercise.  Each person started with a blank sheet of paper on which they answered the following questions about their organization.

  1. What are your main products or services? List three or four.
  2. What are your main markets? These can be industry sectors, types of customer or geographical markets.
  3. What are your greatest strengths? These can be technologies, skills, market strength etc.
  4. What is your proudest achievement? What has your organization done that is really exceptional?

Each delegate spent about 5 or 6 minutes filling this in.  People then pass their sheet to the person on their left around the table.    Each person reads the sheet they receive and then turns the sheet over and has to write down two or more suggestions for new products or services and one or two new markets for existing products.  They then pass the sheet to their left.  You have to add something different from any earlier suggestions on the sheet.  We did this for four iterations and then the sheets were returned to their originators.

Each CEO now digested the suggestions.  Some ideas were routine, some were ridiculous but some were genuinely useful and innovative.  Every person had to select the best single idea from the ones they received and then had to develop a short plan for a minimum viable product.  How could they test this idea cheaply and quickly to see if it had real promise?  They then described this to the group for comment and feedback.

The whole exercise with ten participants took under 40 minutes.  People agreed that it was highly productive with some provocative and promising suggestions.  Running the exercise the way we did was quick and fruitful.  Some delegates suggested a longer session run in series rather than in parallel.  In this case each delegate in turn would answer the four questions orally to the group and people could quiz them on various points before making their suggestions.  The whole group would then move on to the next person's situation and make suggestions for them.  This approach would take more time but allow a better understanding of the current business model for each company.

I am not sure that a deeper understanding would necessarily yield better results.  You can hire consultants who pore over your business for weeks.  They then submit a detailed and expensive report containing very reasonable proposals for strategy and innovations.  But a diverse group of experienced business men and women who have a superficial understanding of your business are less constrained by conventional assumptions.  They are far more likely to come up with radical and challenging suggestions.

Gather a cluster of strangers and share this method.  It is quick, lively and productive.  The more varied the group the better it works.

How to make innovation work - The Business Times

Posted: 18 Jul 2019 02:50 PM PDT

Fri, Jul 19, 2019 - 5:50 AM

ASK any business leader what keeps her or him awake at night, and you will hear answers ranging from concerns about the risk of supply chain disruptions to difficulties coping with rising business costs. Chances are they will not say: "I need to improve the quality of our innovation processes." While phrases and challenges such as "blockchain-powered platform models" or "disruptive innovation" are discussed by many small and medium-sized enterprise (SME) leaders, terms such as "innovation value chain" or "phase-gate model" arguably have not quite made it into their strategic vocabulary. That is a pity because well-managed innovation processes represent powerful lubricants to create and capture new value.

According to management gurus Morten T Hansen and Julian Birkinshaw, typical innovation management challenges in "idea-poor organisations" include insufficient promotion of internal or externally-sourced ideas while "conversion-poor organisations" fail to screen or develop ideas properly - often resulting in the insufficient monetisation of sound ideas. In many organisations, tight budgets, risk-averse thinking and formal bureaucratic procedures grind execution to a halt. Attempts to build a culture of innovation often amount to little more than innovation theatre, despite top management's best intentions.

Such challenges can be tackled by implementing (or enhancing existing) innovation processes. The word "process" refers to a series of steps taken in order to achieve a particular end. In our context, it is to reach strategic innovation goals in a timely manner such as incremental improvements in core products and services or truly transformational innovations. Trying to make innovation work with the same old planning, budgeting and review approaches usually does not do the job. Instead, adding explorative flexibility to planning and control systems by creating a new emerging business unit and providing special funds for unexpected innovation opportunities can help to drive innovation more effectively.

Innovation processes represent a core component of Enterprise Singapore's Business Excellence Niche Standard for Innovation (besides customers, leadership, strategy, people, knowledge and results). Examples of "excellence indicators" include (i) the existence of a systematic process to acquire, evaluate and implement ideas that create value; (ii) improvements made to the innovation and design processes to shorten cycle time, improve design quality and reduce costs; or (iii) involving both internal and external stakeholders in the process of innovating and inventing new products, services and solutions such as staff, customers, trading partners, suppliers and distributors.

To create an idea-rich organisation, business leaders can initiate open innovation and/or crowdsourcing processes, leveraging on both internal and external sources for ideas and resources. A corporate example is The UBS Future of Finance Challenge which targets startups and established, growing companies which are keen to change the way that finance works by deploying client-centric, transformative digital technologies. Competition winners are invited to participate in a proof-of-concept or pilot programme to further scale their ideas and technologies, with input and support by dedicated coaches and mentors.

Another interesting case is the Future Shapers initiative of Oxfam, an international confederation of development non-governmental organisations (NGOs). Powered by Crowdicity's idea management software platform, the initiative helped to engage Oxfam's globally dispersed people in a collaborative conversation about organisational change issues.

External sources for ideas and resources may involve non-customers, the general public or a third-party organisation such as a licensee who may develop internally generated ideas and discoveries into marketable products or services. Another approach to carry out innovation via an external route to market is the proactive sourcing of ideas or discoveries with the help of external networks such as Innoget, an Open Innovation and Science Network for technology, knowledge and capabilities transfer where expertise seekers can reach thousands of experts around the globe.

One of Innoget's users is Nivea manufacturer Beiersdorf, which collaborates with external innovation partners from industries and the scientific community as part of its research and development (R&D) work. Imagine this scenario: your own salaried scientists need external help in developing a new skincare line for men above the age of 85. This is where the Innoget network kicks in by linking product innovation scouts with dermatology scientists, say in Japan, which is experiencing a fast-ageing society. Subsequently, further skincare-related development efforts may take place internally using the company's own resources.

Good innovation process management can help to create a conversion-rich organisation in which ideas are developed properly. One approach is to implement an effective screening process, eg on the basis of the so-called Stage-Gate approach, an innovation project management technique that divides the innovation initiative such as a product development process or process improvement into different phases or stages separated by decision points. During these control points or gates, the state of a particular project phase is reviewed and approved (or not). The key review purpose is to share project status information, discuss and resolve problems as well as review planned performance, cost and risks within a product or process (eg with the help of FMEA, a highly structured tool for failure analysis used in Six Sigma).

Information about how local firms have implemented such stage-gate processes can be obtained by studying the reports of Enterprise Singapore's Innovation Excellence Award winners such as Sheng Siong. Core steps of the firm's innovation process entail ideation, project planning, implementation and measurement of results. An outcome of a completed innovation project is Sheng Siong's hybrid self-checkout counter system with a cash management system which has significantly benefitted its business operations.

In many organisations, greenlighting an idea is riddled with problems such as flawed selection criteria (often decided by the most senior persons and/or a committee, and not actual customer behaviour), lack of funds to pursue ideas further or disgruntled employees who do not know why their ideas were not supported. Pumping innovation ideas and staff suggestions into a dreadful organisational culture will not work.

Lego's open innovation ecosystem exemplifies the power of good innovation processes. Lego fans can offer ideas to the Lego Ideas website by submitting pictures with self-explanatory descriptions. To convince decision-makers that the idea has merit, 10,000 supporters (votes) are required to kickstart the review process. This can be achieved by sharing ideas through Facebook or other social media. Once supporters are on board, the idea goes to the Lego review board which then decides whether it is good enough to advance to the next stage: turning it into an official set created by Lego (criteria include size, cost, part complexity, need for new parts, and licensing issues). While not all ideas are approved by the review board, chances are high that the winning idea will be turned into an official Lego product once the review board has given its go-ahead.

It is time to stop the innovation theatre and to achieve innovation process excellence aligned with strategy by enhancing the innovation value chain, eg by establishing an intrapreneurship programme, a corporate venture fund or an open innovation ecosystem that empowers those who dare to be different.

  • The writers are from Singapore Management University (SMU).
    Thomas Menkhoff is professor of organisational behaviour and human resources (education) at SMU's Lee Kong Chian School of Business.
    Alex Teo Hong Hak is business improvement specialist at SMU's Office of Business Improvement.

Colombian government agency to allocate US$24.6 million in seed capital for national founders - Contxto

Posted: 18 Jul 2019 01:34 PM PDT

Contxto – Although the Colombian government has had its ups and downs with revolutionary and innovative business models, it still has a soft spot for startups. Why else would it be offering COP$78 billion (approximately US$24.6 million) of seed capital to qualifying entrepreneurs over four rounds?  

In Summary

Colombian executives recently launched the SENA (National Service of Learning) Entrepreneur Fund to support startups. With entrepreneurship being a national priority, this government fund plans to finance over 190 new business initiatives, regardless of the economic sector. More than 970 jobs could result from this effort. 

"The support for new business ideas from the SENA Entrepreneurship Fund with financial, psychological, social and seed support, through the 4K Entrepreneurship Model, puts at the center the needs of the Colombian entrepreneur to ensure a comprehensive response," said Hernán Fuentes, the Director of Employment, Labor and Entrepreneurship at SENA.

In-Depth 

There will be four calls open to entrepreneurs via the SENA Entrepreneur Fund, the first of which began July 9. First round resources of COP$20 billion intend to sponsor new business creation while creating social inclusion and economic development vehicles.

With this, it seeks to support Colombians turn business ideas into tangible reality. Part of this involves formalizing business arrangements while generating new employment opportunities for citizens over time.  

Moving forward, the second call for COP$18 billion will cater towards entrepreneurs in Colombia's interior. Thirdly, seed capital of COP$20 billion will go towards members of the Orange Economy.

This term refers to creative industries producing cultural goods and services that can be protected by intellectual property rights. These range from acting, art, music, design, publicity, jewelry, photography, digital animation, etc. 

Last but not least, the fourth call of another COP$20 billion will assist in creating more companies, jobs and productiveness across various economic sectors in Colombia. 

Steps to apply are as follows: 

  1. Once you have a business idea, you must visit one of 117 national SENA Business Development Centers. You can find the nearest one here.
  2. If you fulfill all of the application requirements, SENA will assign you a manager to oversee your registration. They will also provide access to the Entrepreneurs Fund platform to ensure your participation in one of four open calls. 
  3. Following the evaluation process, your business plan will either be considered viable or not viable. If approved, you will go through a resource approval process to become a seed capital beneficiary to launch your business.
  4. With new seed capital, you need to sign an Open Pledge Business Cooperation contract to formalize the new business. The manager will continue supervising the company for one year, focusing on scalability such as increased sales, jobs, utilities, etc. 

So far, the SENA Entrepreneurship Fund has allocated over US$596,8000 and promoted more than 7,360 business plans. In the process, this has generated over 29,500 jobs in over 700 municipalities.

Some reports also call this fund one of the largest public funds in Latin America and the most influential in the Colombian entrepreneurship ecosystem. 

Raising seed money is no easy accomplishment for Latin American startups, so programs like this yield immense potential. Let's hope other countries replicate Colombia's model.

-JA

P&Z board seeks zoning innovation - Post Register

Posted: 18 Jul 2019 08:45 PM PDT

BLACKFOOT — For the last year, the Blackfoot Planning and Zoning Commission has been reinventing the city's zoning. P&Z continued its discussion on innovative land use rules for the city at its July 9 meeting.

"What we want to do is give people the tools to innovate. We want developers to come up with creative ways to use their property. We don't want to have land use ordinances that are just a list telling people what they can't do," remarked Kurt Hibbert, Blackfoot's P&Z administrator.

New ideas

P&Z began its deliberations on new business zoning at its March 12 meeting and continued that discussion in its May 12 and July 9 work meetings.

On July 9, the P&Z commissioners worked on the creation of designated business districts. These would be tailored for a specific type of commercial environment like Blackfoot's historic downtown or for businesses that target the traffic off the interstate.

The districts under consideration are a general business district, a highway business district, a neighborhood business district, and a historic downtown business district. The general business district zone would be for retail and professional offices but would also allow for the inclusion of residential units like upstairs apartments on two-story buildings.

A neighborhood business district would allow for small businesses which are compatible with residential neighborhoods. Examples include neighborhood barber shops and convenience stores.

The highways business district zone would be for businesses that require large facilities and extensive parking like big box retail, car dealerships, strip malls, restaurants, and motels.

Downtown Blackfoot

The proposed historic downtown district generated a detailed discussion. The downtown district under consideration would overlap with the current downtown urban renewal district.

The downtown district would use rules that are appropriate for the business practices that are unique to downtown Blackfoot, like small lot sizes, street parking, and zero setbacks. Allowed versus inappropriate business uses generated a lively debate.

"What we want is for traffic to go to downtown and not just through downtown," Hibbert remarked in his opening comments.

Commissioner Deborah Barlow expressed concern that the current downtown district proposal needed to list what would not be permitted.

"Isn't it easy to have what's not allowed as opposed rather than what's allowed," Barlow remarked. "For example, we wouldn't want a big box store or a sexually-oriented business (downtown) ... I'm just afraid we'll miss something."

"We need to be clear on our land use tables as to allowed business types which should be a use by right and for businesses that should definitely require a conditional use permit," Hibbert said.

Downtown parking

The one issue that which received the most comment was parking. The commissioners considered ease of parking and loading zones for businesses. Hibbert pointed out that the conversion to one-way traffic on North Broadway helped create more parking: "We picked up over 100 new parking stalls by reconfiguring the one-ways on Broadway."

Hibbert also pointed out that since the one-way was implemented, businesses have been able to use the parallel parking on the east side of the street for unloading without blocking traffic. Impeding traffic while unloading was previously a problem for the businesses on Broadway.

The discussion also covered parking for employees and the amount of parking, including the feasibility of adding a parking garage. "It costs $10,000 to $15,000 per stall to build a parking structure ... that's just the construction cost," Hibbert told the commissioners.

The P&Z board members approved a motion for Hibbert to expand the business district zoning proposals with the details discussed at the meeting. The commission will be revisiting this topic at their July 23 meeting.

Zoning innovations

The initiative to reinvent Blackfoot's zoning and land use regulations has already resulted in several new zones and new tools.

The most important of these changes was the creation of a new preferred land use map for the city. Under state law, every county and municipality must have an approved and published preferred land use map.

Land uses, zoning and variances must be compatible with the preferred land use map. The intent of the state's statute for this zoning tool is to ensure that business and residential development is consistent and that spot zoning is avoided.

Other recent zoning innovations include tiny house subdivision zoning; residential ranchette zoning to permit a small-scale livestock animal right for large-lot single residence properties; and the Pro Zone ordinance which created a process where developers can propose creative solutions for new business and residential.

P&Z also has plans to update its approach to how the city regulates conditional use permits (CUPs). The regulations on CUPs currently require yearly extensions for up to three years after which a new CUP application is required. P&Z is currently preparing a new process that will be more in line with modern CUP usage in Idaho. It will eliminate the need for yearly renewal. The proposal will recommend that future CUPs remain for the life of the business unless there are significant changes in the business or evidence of incompatible land use. The current draft for the CUPs revision will be introduced at a future work meeting session.

Over the last year, the P&Z commission has been opening up its work meeting to the public and inviting interested members of the public to join in with their discussions. Work meetings are held on the second Tuesday of every month. The topics for each work meeting are posted in advance in the agenda center portion of the city's website, at www.cityofblackfoot.org/AgendaCenter.

£125 million cash injection will support UK business innovators - GOV.UK

Posted: 18 Jul 2019 05:39 AM PDT

The UK's most innovative businesses can win a share of £125 million to help them turn their most innovative ideas into world-beating products and services.

Large and small businesses can take advantage of £100 million available from the Smart grant programme that helps take innovative ideas in any field from the concept stage to full commercialisation.

Previous winners of a Smart award include machine-learning company Magic Pony Technology, which was sold to Twitter for $150 million.

Introduction to Smart grants

Industrial Strategy aims to create jobs and growth

A further £25 million is available in Innovation Loans to support late-stage projects that are close to market. The loans scheme is aimed at getting businesses over the final hurdle to commercialisation. Recent recipients include Exeter-based Lightfoot, which is using the loan to extend its technology to reward better driving from the business to the consumer market.

Business Secretary Greg Clark said:

Through our modern Industrial Strategy we are backing our homegrown businesses to boost productivity and create jobs, growth and opportunity in every part of the UK.

Businesses benefit from innovation awards

Many UK businesses have benefited from funding to support innovative UK projects. They include digital risk business Digital Shadows, which has raised £20 million in private investment to support its innovation developed through a Smart award, and Oxehealth, which has used Innovate UK funding to develop improved patient care by combining computer algorithms with optical sensors.

Dr Ian Campbell, Interim Executive Chair of Innovate UK, said:

Smart grants are an excellent way of supporting innovation in single companies or, generating collaborations between companies, working with our world-class research base.

Our Innovation Loans suit late-stage-development businesses about to become, or just becoming, revenue earning. Both are awarded to projects that will make a real impact on the UK economy.

The Smart programme has a rolling programme of awards throughout the year.

Got a startup idea? Dubai to give Dh100,000 in new tech competition - Gulf News

Got a startup idea? Dubai to give Dh100,000 in new tech competition - Gulf News


Got a startup idea? Dubai to give Dh100,000 in new tech competition - Gulf News

Posted: 17 Jul 2019 10:43 PM PDT

startups
The Futurism Programme competition is part of the Dubai 10X initiative by the Government of Dubai to accelerate the city 10 years ahead of others. Image Credit: Pixabay

Dubai: Aspiring businessmen from around the world have been invited to participate in a competition and win Dh100,000 to help launch their project.

Spearheaded by the Department of Tourism and Commerce Marketing (DTCM), the six-week, zero-equity accelerator programme aims to tap into the creative startup community by inviting tech start-ups to the industry.

Yousuf Lootah, executive director of Tourism Development and Investments, Dubai Tourism, said: "Since the inception of the Futurism Programme in 2017, Dubai Tourism has helped shine a light on several pioneering startup businesses from around the world, supporting them to become true success stories, as their solutions have led to impactful improvements to the travel and tourism sector.

The Futurism Programme is part of the Dubai 10X initiative by the Government of Dubai to accelerate the city 10 years ahead of others.

"The launch of the third edition is testament to the Programme's ongoing success and the huge interest it has gained among Dubai Tourism's partners, venture capitalists, entrepreneurs and stakeholders within the startup and tourism ecosystems. The Futurism Programme forms part of our ongoing efforts to drive Dubai's tourism industry into the digital era, ensuring the city's leading position as a global destination," said Lootah.

This year's Futurism Programme invites entrepreneurs to submit their applications by July 31, 2019, which can be accessed on the website of DTCM.

In a statement, Dubai Tourism said: "DTCM and its partner network will mentor and collaborate with rising stars to help identify opportunities. Then, in the final week of the programme, applicants pitch their ideas on stage at Gitex Technology Week with winners receiving a cash prize."

The Gitex Technology Week will run from 6-10 October 2019, at Dubai World Trade Centre.

A judging panel comprising leading technology experts, Dubai Tourism's senior leadership and its partners across the industry, will select the top 10 startups from all entries submitted into the process.

The shortlisted entrants will be put through a six-week accelerator programme during which ten finalists will each be given the opportunity to finalise a pilot project with the support of Dubai Tourism, Tajawal-Seera Group, Atlantis The Palm, Emaar Hospitality Group and the Emirates Group.

The start-ups will pitch their unique concepts to a group of business owners, investors and venture capitalists at the Dubai Tourism stand at Gitex Future Stars, which will be hosted later this year.

Dubai Tourism will then announce the winning start-up and a runner-up, who stand to win a prize of Dh100,000 as the initial startup capital. In addition to licensing, the winner will receive relevant visas in Dubai, office space and the opportunity to secure potential future funding.

Next Billion-Dollar Startups 2019 - Forbes

Posted: 16 Jul 2019 02:50 AM PDT

Produced in partnership with TrueBridge Capital Partners.

Each year for the past five, Forbes has searched the country for the 25 fast-growing, venture-backed startups most likely to reach $1 billion in value. Graduates include: food delivery service DoorDash, home seller Opendoor, luggage brand Away and synthetic biology company Ginkgo Bioworks. 

This year, with the help of TrueBridge Capital Partners, we scoured the country again for budding unicorns. TrueBridge analyzed the finances of more than 150 startups, then our reporters dug deeper. That research caught problems at San Francisco-based Cleo, a parenting app with a troubled workplace and a CEO who lied about her age and background. The company was removed from consideration after our investigation, and its CEO resigned in mid-June. (The full story is here.)

7 Unicorns, A $2.6 Billion Acquisition And 1 FBI Raid: This Year In Forbes Next Billion-Dollar Startups

These Forbes 30 Under 30 Founders Are Now Running The Next Billion-Dollar Startups

Why Only Two Companies Founded By Women Made The Cut

Cryptocurrency Crimefighter Chainalysis Becomes First Blockchain Company To Make The Cut

The Next Billion-Dollar Startups: Where Are They Now? Exit Edition

3 Major Industries And Their Next-Gen Disruptors

CHAINALYSIS

FOUNDERS: Michael Gronager (CEO), Jonathan Levin, Jan Moller

EQUITY RAISED: $53 million

ESTIMATED 2018 REVENUE: $8 million

LEAD INVESTORS: Accel, Benchmark

New York-based Chainalysis makes cryptocurrency investigation software that can shine light on how people use bitcoin, ethereum, litecoin and more. Financial institutions use the technology to screen customers and comply with regulations designed to prevent money laundering, while government agencies such as the Internal Revenue Service and the Federal Bureau of Investigation can identify illicit transactions and investigate alleged criminals. Before teaming up to found Chainalysis, CEO Michael Gronager, 49, cofounded cryptocurrency exchange Kraken, while CTO Jan Moller, 47, built the Mycelium cryptocurrency wallet.

CONTRAST SECURITY

FOUNDERS: Arshan Dabirsiaghi, Jeff Williams; CEO: Alan Naumann

EQUITY RAISED: $122 million

ESTIMATED 2018 REVENUE: $25 million

LEAD INVESTORS: Acero Capital, Battery Ventures, General Catalyst, Warburg Pincus

In 2010, software security analyst Jeff Williams, 52, started dedicating resources at his consultancy, Aspect, to developing a program that would automate software security analysis. In 2014, he and former Aspect analyst Arshan Dabirsiaghi, 36, founded Los Altos, California-based Contrast Security to monitor the code within running apps and directly notify developers of potential vulnerabilities. "The work that previously had to go through security experts now goes directly to developers," says Dabirsiaghi, now the company's chief scientist. In 2016, the company brought in an outside chief executive, Alan Naumann, formerly CEO of online fraud detection startup 41st Parameter, to expand the business.

CYBEREASON

FOUNDERS: Lior Div (CEO), Yossi Naar, Yonatan Striem-Amit

EQUITY RAISED: $189 million

ESTIMATED 2018 REVENUE: $50 million

LEAD INVESTORS: CRV, Lockheed Martin, Softbank, Spark Capital

Cofounders Lior Div, Yossi Naar, and Yonatan Striem-Amit met during their service in the Israel Defense Forces' elite intelligence unit, Unit 8200, fertile ground for many high-tech startups. While working on cybersecurity in the military, they came up with the idea for Cybereason, a cloud-based cybersecurity platform specializing in continuous monitoring and response to advanced cybersecurity threats. The company launched in 2012, and relocated from Israel to Boston the next year. "You provide value by helping a big organization not to be in the news as someone that gets hacked," says Div, 41. 

DAVE

FOUNDERS: Paras Chitrakar, Jason Wilk (CEO), John Wolanin

EQUITY RAISED: $13 million

ESTIMATED 2018 REVENUE: $19 million

LEAD INVESTORS: Mark Cuban, Section 32

As a college student at Loyola Marymount University, Jason Wilk, now 34, blew through his budget, collecting overdraft fees. Wilk, an avid "Redditor," saw that overdraft fees are a common complaint among users. So in 2016, he founded Dave, short for David, who beat Goliath, which Wilk sees as the big banks. The app tracks expenses and warns when a user's account is in danger of being overdrawn. It hit a nerve: Dave was Apple's "app of the day" in April 2017, and has been downloaded nearly 10 million times in two years. "Entrepreneurs can keep their ear to the ground for the next idea," Wilk says. "Any idea that can be Reddit tested is a good place to start."

DIVVY

FOUNDERS: Blake Murray (CEO), Alex Bean

EQUITY RAISED: $257 million

ESTIMATED 2018 REVENUE: $8 million

LEAD INVESTORS: Insight Partners, New Enterprise Associates, Pelion Venture Partners  

Expense tracking service Divvy is taking on Concur and Expensify by offering its budgeting, fraud detection, and spend management tools for free. Instead of charging per user, Lehi, Utah-based Divvy gives businesses custom Mastercards and takes a cut of merchants' fees to the bank when people make purchases. Founders (and high school buddies) Alex Bean and Blake Murray, both 35, have won over more than 3,000 corporate customers so far, including WordPress, Evernote and Qualtrics. 

DUOLINGO

FOUNDERS: Luis von Ahn (CEO), Severin Hacker

EQUITY RAISED: $108 million

ESTIMATED 2018 REVENUE: $36 million

LEAD INVESTORS: CapitalG, Kleiner Perkins, Union Square Ventures

The world's most popular digital language-learning tool, seven-year-old Duolingo has 28 million monthly active users. Most use the free version of its gamified courses. Revenue, largely from subscription fees from ad-free Duolingo Plus, is expected to double this year. CEO Luis von Ahn, 39, is a 2006 winner of a MacArthur "genius" grant and a former Carnegie Mellon computer science professor. Before founding Pittsburgh-based Duolingo, he sold two inventions to Google, including reCAPTCHA, the software that spits out the squiggly lines you type to alert a website that you are not a bot. An immigrant from Guatemala City who says learning English transformed his life, he's driven to offer free language education to the masses. For our feature on Duolingo, click here.

FAIRE

FOUNDERS: Marcelo Cortes, Daniele Perito, Max Rhodes (CEO)

EQUITY RAISED: $116 million

ESTIMATED 2018 REVENUE: $100 million

LEAD INVESTORS: Forerunner Ventures, Khosla Ventures, Lightspeed Venture Partners, Y Combinator 

In a bid to help mom-and-pop stores survive in the age of Amazon, Faire wants to take the risk and hassle out of wholesale purchasing. The San Francisco-based company helps retailers discover and buy new products online, and will accept free returns from them within 60 days for items that don't sell. Today, it offers 5,000 brands to 35,000 stores. CEO Max Rhodes, a 32-year-old former Square employee, came up with the idea after he started working with a New Zealand-based umbrella brand and spent thousands of dollars to sit at a tradeshow booth to convince U.S. store owners to stock the high-end umbrellas.

FIGMA

FOUNDERS: Dylan Field (CEO), Evan Wallace

EQUITY RAISED: $83 million

ESTIMATED 2018 REVENUE: $3 million

LEAD INVESTORS: Greylock, Index Ventures, Kleiner Perkins, Sequoia

Figma wants to move design online, casting aside the old model of software downloads and siloed creation in favor of a browser-based tool where designers can work and collaborate together. Founders Evan Wallace, 29, and Dylan Field, 27, met at Brown University—Wallace graduated, Field dropped out with a Thiel Fellowship—and launched the San Francisco-based company in 2012. Five years later, Figma started charging professionals to use its product. (Individuals are still free.) Today, professionals pay $12 per editor per month and businesses $45 per editor month to use Figma. More than 5,000 teams, at companies like Microsoft, Volvo, Uber and Square, are users. "Design is like this viral infectant because once your competitor is well-designed, you have to be well-designed, otherwise you'll be disrupted," says Field.

FOURKITES

FOUNDERS: Arun Chandrasekaran, Matt Elenjickal (CEO)

EQUITY RAISED: $101 million

ESTIMATED 2018 REVENUE: $16 million

LEAD INVESTORS: August Capital, Bain Capital Ventures, Hyde Park Venture Partners

Matt Elenjickal, 37, a logistics geek with an MBA from Northwestern University's Kellogg School of Management, founded FourKites in 2014 to help companies know where their deliveries are, when they'll arrive and what's going on along the way. Its predictive supply-chain management software is now used by more than 260 of the world's top shippers — and upwards of 500,000 loads per day — including Best Buy, Kraft Heinz, Nestlé and Smithfield Foods. "If you are a shipper, once the truck leaves your facility you have no idea what is happening," Elenjickal says. "That is how supply chains are run even now without a solution like FourKites. You cannot compete against Amazon."

FRONT

FOUNDERS: Mathilde Collin (CEO), Laurent Perrin

EQUITY RAISED: $79 million

ESTIMATED 2018 REVENUE: $16 million

LEAD INVESTORS: Sequoia, Uncork Capital

Mathilde Collin, an alumna of Forbes' 30 Under 30 list, got the idea for Front while at her first job after graduate school. "I saw how much time was wasted with people sorting through their emails," she says. So in 2013, she launched the San Francisco-based startup to help companies become more productive with a shared email inbox that incorporates Facebook, Twitter and SMS, and encourages team collaboration. Today, Front has 5,000 customers including Shopify, MailChimp and Stripe.

FUBOTV

FOUNDERS: Sung Ho Choi, David Gandler (CEO), Alberto Horihuela

EQUITY RAISED: $145 million

ESTIMATED 2018 REVENUE: $74 million

LEAD INVESTORS: 21st Century Fox, Northzone, Sky

David Gandler, 44, a longtime network sales exec, launched FuboTV in 2015 to tap into pent-up demand in the United States for overseas soccer leagues. FuboTV offered live streams of soccer channels such as GolTV and Benfica TV to start, then expanded programming through deals with beIN Sports and Univision. Today, New York-based FuboTV is generally a cheaper alternative to cable (starting at $54.99 a month) that offers more than 90 channels.

GROVE COLLABORATIVE

FOUNDERS: Chris Clark, Stuart Landesberg (CEO), Jordan Savage

EQUITY RAISED: $213 million

ESTIMATED 2018 REVENUE: $104 million

LEAD INVESTORS: Bullpen Capital, General Atlantic, Lone Pine Ventures, Mayfield Fund, Norwest Venture Partners, Serious Change

Ask Grove Collaborative CEO Stuart Landesberg, 34, who his typical customer is, and he'll give you a specific answer: "A 29-year-old mother of two working as a substitute teacher in Lawrence, Kansas." Even in the age of Amazon, Grove has carved out a $104 million niche in e-commerce by selling natural products, from laundry detergent to sponges, in easy-to-order shipments. Around 60% of its revenue comes from products not sold on Amazon, says Landesberg. But he wants to do more than sell Seventh Generation or Method soaps online. In 2016, Grove started to manufacture its own all-natural products that now make up nearly 50% of its sales. The key? Designing products that are easier to ship. Its glass cleaner, for example, is highly-concentrated and smaller than a tube of toothpaste.

KONG

FOUNDERS: Augusto Marietti (CEO), Marco Palladino

EQUITY RAISED: $71 million

ESTIMATED 2018 REVENUE: $5 million

LEAD INVESTORS: Andreessen Horowitz, CRV, Index Ventures, New Enterprise Associates

Kong acts as a gatekeeper to companies' APIs (code developers use to build apps) and monitors how often they're used. Augusto Marietti, 31, and Marco Palladino, 30, launched the company out of a garage in Milan, where they both attended university, and were constantly flying back and forth to Silicon Valley to fundraise. "At this stage, we barely had enough money to eat," Marietti says. "We definitely lost a few pounds when we were first starting up." Now based in San Francisco, Kong has successfully penetrated the enterprise market with 130 customers that include SoulCycle, Yahoo Japan and WeWork.

LATTICE

FOUNDERS: Jack Altman (CEO), Eric Koslow

EQUITY RAISED: $27 million

ESTIMATED 2018 REVENUE: $7 million

LEAD INVESTORS: Shasta Ventures, Thrive Capital

Lattice founders Jack Altman, 30, and Eric Koslow, 28, learned first-hand the impact of work culture while working at startup Teespring, which sells custom t-shirts. In 2015, they decided to do something about it, starting Lattice. The San Francisco-based company's human resources software uses surveys to shift the focus of performance management from employee evaluation to career development. Today, Lattice works with 1,300 customers, including Coinbase, Instacart, Slack and WeWork. "Employees are looking for more meaning from work than ever before, and have more visibility into and access to other jobs than ever before," Altman says. Lattice helps their employers step up.

NEXT TRUCKING

FOUNDERS: Elton Chung, Lidia Yan (CEO)

EQUITY RAISED: $125 million

ESTIMATED 2018 REVENUE: $46 million

LEAD INVESTORS: Brookfield Ventures, China Energy Group, Sequoia

Cofounded by husband and wife team Elton Chung and Lidia Yan in 2015, Los Angeles-based Next Trucking is moving freight brokerage online. While other startups like Convoy and Uber Freight move cargo from point A to point B, Next Trucking focuses on drayage, or the "first-mile" of transferring goods from port to warehouse. "Drayage is a lot more complicated because it involves terminals and ports," says Yan, 38. As a result, Next Trucking has doubled revenue every year since 2016, reaching $46 million in 2018. Yan forecasts revenue will hit $120 million this year, helped by large contracts with retailers Dollar General, Rite Aid and Steve Madden. For our feature on Next Trucking, click here.

PATREON

FOUNDERS: Jack Conte (CEO), Sam Yam

EQUITY RAISED: $166 million

ESTIMATED 2018 REVENUE: $35 million

LEAD INVESTORS: Freestyle Capital, Glade Brook Capital Partners, Index Ventures, Thrive Capital

Musician turned entrepreneur, Jack Conte, 35, wants to break the "starving artist" archetype by helping creators earn a regular income. "Deciding to be an artist shouldn't have to be a difficult conversation," says Conte. "It should feel like a viable career choice." Using Patreon, artists offer exclusive experiences in return for contributions from their subscribers or "patrons." HBO's Issa Rae, Humans of New York founder Brandon Stanton and comedian Heather McDonald are some of the creators currently using Patreon and by 2019, the company expects to pay out more than $1 billion to its users.

PROXY

FOUNDERS: Denis Mars (CEO), Simon Ratner

EQUITY RAISED: $14 million

ESTIMATED 2018 REVENUE: $1 million

LEAD INVESTOR: Kleiner Perkins

The Proxy app is like having a set of keys on your smartphone: Your profile's signal gives you access to any building where you're registered, eliminating the need for traditional ID cards and keys. It's a straightforward idea, but Australian-expat founders Denis Mars, 42, and Simon Ratner, 39, are confident that they've just scratched the surface of its potential. So far, San Francisco-based Proxy has proven popular with commercial real estate clients like WeWork. Mars and Ratner now hope to expand their technology (which includes the app, management platform and signal-reading hardware) to identity verification for ride-sharing and event check-in. 

REDIS LABS

FOUNDERS: Ofer Bengal (CEO), Yiftach Shoolman

EQUITY RAISED: $147 million

ESTIMATED 2018 REVENUE: $50 million

LEAD INVESTORS: Bain Capital Ventures, Francisco Partners, Goldman Sachs, Viola Ventures 

Israeli tech veterans Ofer Bengal and Yiftach Shoolman set up a fast-database service, in 2011, to help businesses looking to speed up responses on their apps. Redis Labs relies on what's known as NoSQL, an alternative form of compiling data that is faster than traditional models. That lightening-fast processing speed has helped it sign on FedEx, Mastercard and other corporate behemoths. To scale up quickly, the Mountain View, California-based company offered a free, open-source version to hook developers. In 2013, it rolled out a paid version with costs starting at $5 per month per gigabyte. "You can't do without open source if you want rapid adoption," says Bengal.

REMITLY

FOUNDERS: Shivaas Gulati, Josh Hug, Matt Oppenheimer (CEO)

EQUITY RAISED: $312 million

ESTIMATED 2018 REVENUE: $80 million

LEAD INVESTORS: Bezos Expeditions, DFJ Venture Capital (now Threshold Ventures), Generation Investment Management, Naspers' PayU, QED Investors, Stripes Group

Remitly is taking on Western Union with lower fees — estimated 1.5% on average vs. the money-transfer giant's 5%. Matt Oppenheimer, who had worked for Barclays in Kenya, and his cofounders launched the business in 2011 to help people in developed nations like the U.S. and Australia send money cheaply to relatives in developing countries like Mexico and the Philippines. Today, Remitly serves 60 countries and processes $6 billion a year in money transfers, about 1% of the nearly $700 billion remittance market. Already one of the largest fintech firms targeting immigrants, the Seattle startup's long-term goal is to branch out into other financial services, potentially including credit cards, personal loans and auto loans.

RIGUP

FOUNDERS: Xuan Yong (CEO), Mike Witte

EQUITY RAISED: $94 million

ESTIMATED 2018 REVENUE: $21 million

LEAD INVESTORS: Bedrock Capital, Founders Fund, Quantum Energy Partners

There are nearly 1,000 rigs drilling for oil and gas in the U.S. Each well requires the input of dozens of service companies and workers — everything from high-horsepower compressors for fracking, to miles of steel pipe, and millions of gallons of water and truckloads of sand. Cofounder Xuan Yong, formerly of Citadel and D.E. Shaw, believes RigUp can improve on the good ol' boy network by more efficiently connecting the "hyperfragmented" market of roughnecks, engineers and business owners with the big oil companies that call the shots. RigUp pre-vets workers and vendors, and creams an estimated 4% off every contract made via its online platform. Yong isn't worried about machines invading the oilpatch. "Even with A.I. there will be demand growth for labor," he says. "Field tickets are still signed on paper and stamped." For now.

ROTHY'S

FOUNDERS: Stephen Hawthornthwaite, Roth Martin (interim CEO)

EQUITY RAISED: $42 million

ESTIMATED 2018 REVENUE: $140 million

LEAD INVESTORS: Goldman Sachs, Lightspeed Venture Partners

Founders Roth Martin, a former art gallery owner, and Stephen Hawthornthwaite (aka "Hawthy"), a former investment banker, launched the footwear brand after listening to their wives complain about the lack of stylish, comfortable shoes. Rothy's 3D-knitted round-toe and point-toe flats, made from recycled plastic water bottles, have gained cult status. In just three years, it expanded rapidly with direct-to-consumer sales online, reaching revenue of $140 million last year. For our feature on Rothy's, click here.

SIGNALFX

FOUNDERS: Phillip Liu, Karthik Rau (CEO)

EQUITY RAISED: $179 million

ESTIMATED 2018 REVENUE: $25 million

LEAD INVESTORS: Andreessen Horowitz, CRV, General Catalyst, Tiger Global Management

SignalFx monitors cloud infrastructure in real time for companies like Yelp, Shutterfly and HubSpot. In 2013, Karthik Rau, 41, who previously worked at tech startups LoudCloud and VMware, founded the company with ex-Facebook software architect Phillip Liu, 51. While competitors collect and query data in batches every two to three minutes, SignalFx evaluates and alerts users to anomalies in two to five seconds. "The difference between getting reliable alerts within seconds and getting them in minutes is the difference of seamlessly dealing with an issue," says Rau. "Or having all of your users on Twitter complaining."

SYNTHEGO

FOUNDERS: Paul Dabrowski (CEO), Michael Dabrowski

EQUITY RAISED: $157 million

ESTIMATED 2018 REVENUE: $20 million

LEAD INVESTORS: Founders Fund, 8VC

Gene-editing tool Crispr has unleashed a gold rush for new products made possible by cheaply and easily editing DNA. Synthego is cashing in by selling the genomic equivalent of pickaxes, shovels, maps and other tools. Its ready-made and custom kits allow researchers in academia and the private sector to rapidly develop gene-edited products, including new medical treatments. Its founders, brothers Paul and Michael Dabrowski, 34 and 38, previously worked at SpaceX as engineers and drew on that experience to bring a new way of thinking to biotech. 

TRUEPILL

FOUNDERS: Umar Afridi (CEO), Sid Viswanathan

EQUITY RAISED: $13 million

ESTIMATED 2018 REVENUE: $48 million

LEAD INVESTOR: Initialized Capital

If you buy birth control from Nurx or hair-loss products from Hims, behind-the-scenes pharmacy Truepill will actually fill and deliver your prescription. The three-year-old startup's founders Umar Afridi, 37, a former retail pharmacist, and Sid Viswanathan, 35, who previously worked at Johnson & Johnson and LinkedIn, see a growing market in bringing technology and efficiency to pharmacy. Although Truepill started with direct-to-consumer brands, it's now making a bigger play to bring on corporate customers with pricey, specialty medications. 

VERKADA

FOUNDERS: Benjamin Bercovitz, Filip Kaliszan (CEO), James Ren, Hans Robertson

EQUITY RAISED: $59 million

ESTIMATED 2018 REVENUE: $20 million

LEAD INVESTORS: First Round, Meritech, Next47, Sequoia 

While many startups have tackled the "smart home" with varying degrees of success, Verkada has exploded in shy of two years on the market by offering big businesses, municipalities and schools a cloud-based system that combines hardware and software to detect movement and easily store and share surveillance streams. In 2019, the company founded by three Stanford graduates and the former cofounder of Meraki (a cloud startup since acquired by Cisco) signed on the city of Memphis — a nearly 1,000-camera contract — Juul Labs and Newtown Public School District, the district of the 2012 Sandy Hook Elementary School shooting tragedy.

Additional reporting by Susan Adams, Elisabeth Brier, Dawn Chmielewski, Lauren Debter, Michael del Castillo, Jillian D'Onfro, Christopher Helman, Jeff Kauflin, Alex Knapp, Alex Konrad, Christian Kreznar and Monica Melton

Cover Photographs by Tim Pannell for Forbes | Illustrations by David Wilson

Don't sink your startup by creating a product in a vacuum - Indianapolis Business Journal

Posted: 18 Jul 2019 07:23 PM PDT

(IBJ illustration/Brad Turner and Shutterstock.com)

Entrepreneur Max Yoder failed out of the gate when he launched his first company.

No, not Lessonly, the training software firm that is still growing seven years after he co-founded it with the folks who created the High Alpha venture studio.

Yoder

Yoder's first company was Quipol, which offered a social polling product that he worked on for nine months, sequestered away from its potential customers, trying to make the product perfect before he released it.

"I thought I'd pull back the curtain and go, 'Ta-da,' and people would go, 'Wow, he really nailed it!'" Yoder said, looking back. "But that's not what happened."

Instead, Yoder emailed his final product to 300 people who had expressed interest in the idea. Within minutes, a recipient emailed back and said, "Good job, but why doesn't Quipol do X?" And X was a really good idea.

"It was an early indication that I had missed out on a tremendous opportunity to get early feedback from folks," Yoder said. "But I didn't have a big budget to keep going, to make the changes."

Roughly two years after launching, Quipol failed, having never recovered from skipping the feedback step.

Simmons

Yoder and Quipol are not alone. About 30% of startups fail by the end of their second year, according to the U.S. Bureau of Labor Statistics. By the fifth year, about 44% have failed. And by year 10, nearly 70% have failed.

"If anyone looked at the math around probabilities, no one would do it," said Mike Simmons, who founded the parking software firm T2 Systems in 1994 and stepped down as its CEO in 2016 after a sale. Now, he's the chairman and CEO of Sharpen Technologies, which makes customer service software, and managing director of Jupiter Peak LLC, which invests in startups.

"It just doesn't make sense," Simmons said. "I mean, you're absolutely fighting the odds."

But experts say there are plenty of ways for entrepreneurs to boost those odds—and chief among them is making sure there's a match between the product and a group of customers who will pay for it.

"The number one reason for new product failure is not meeting an unmet market need. You have an idea, and nobody wants it," said Kim Saxton, a clinical professor of marketing at the Indiana University Kelley School of Business at IUPUI.

Kim Saxton

'What do they need?'

That sounds simple enough, but the problem manifests itself in a number of ways.

It could mean the entrepreneur's idea is not a good one and should be abandoned. That's certainly a possibility.

But more likely, the idea just hasn't been fleshed out, or there's a better way to solve the problem. The key is doing what Yoder didn't do: Talk to the product's potential users early.

"A lot of startups really haven't done enough good customer research to think of, who really has this problem and what do they need to solve the problem?" Saxton said.

Startups "have this product idea in their head and they start spending money to develop this perfect product, but they overspend too early without really knowing who the buyer is," she said. "Those two things have to move in tandem, and they rarely do."

Todd Saxton

Saxton is co-author of the recently released book "The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups" with her husband, Todd Saxton, associate professor of entrepreneurship and strategy at the Kelley School, and Michael Cloran, who has founded multiple startups and is a partner at DeveloperTown.

Using the tragedy of the Titanic as its outline, the book details some of the icebergs entrepreneurs face on their journey to building what they hope will be successful companies. There are dozens of potential icebergs, but the Saxtons say the disconnect between what a company produces and what customers want is a huge one.

And they say it can happen when a company—like Quipol—develops its product in a vacuum. Conversely, it can also occur when a company hasn't thought enough about its product before it talks to customers.

Todd Saxton used his daughters' Girl Scout troops' strategies for selling cookies to illustrate the point.

Todd Saxton, Kim Saxton and Michael Cloran collaborated
on a guide for startups. (Photo courtesy of Indiana University)

One daughter is in a troop that spent hours planning how the girls would sell the cookies, what their pitch would be to customers, and how they would counter customer reasons not to buy. "They had it all nailed down," he said. "They knew the pricing, they knew the messaging." But they struggled to get moving. "At some point, you've got to leave the house and get out there and start ringing doorbells," he said.

Another daughter was part of a troop that immediately rushed out with its boxes and started knocking on doors. But when customers asked about cookie flavors and prices, the scouts were unprepared to answer.

Like the Girl Scouts, what entrepreneurs need, Todd Saxton said, is some balance. "You need enough of that kind of courage to go actually talk to a customer and show them a very early working prototype that you haven't invested a lot in to get feedback," he said. "At the same time, you've got to spend some time on thoughtfully experimenting and developing a product that you can take out without just, you know, running out and knocking on doors."

Tweaks, pivots

Business experts often refer to the minimum viable product. It's a term coined by Eric Ries, author of "The Lean Startup," who defines it as the "version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort."

It's not a shortcut. The minimum viable product is actually the start of a longer process that involves lots of interaction with potential customers. It helps a company try to prevent spending too much time or money developing a product that customers won't actually use. It allows tweaks and adjustments—sometimes wholesale pivots—along the way to creating a viable product.

Ready

"Entrepreneurs sometimes are in a very big rush to share their solution before they actually understand the problem through the customer's eyes," Todd Saxton said. "So that kind of customer empathy is really important in the early stages, to deeply understand their journey and what it is that they're going through, how they see it."

Jeff Ready—who has launched more than a dozen companies, including some successes and some failures—talks often to college students and entrepreneurs about that very issue.

Rule No. 1 of starting a company, he tells them: "Your idea sucks." And rule No. 2? "You need more ideas."

"Obviously, that's for shock value," Ready said. "But I'm leading them into this discussion of, 'Hey, before you go and write a business plan and get investors and start writing code or start doing marketing or whatever, pick up the phone and talk to some people that might be a customer.'"

Too many entrepreneurs spend their time Googling, bent over a computer instead of out talking to customers, Ready said. They check the prices competitors charge for similar products rather than asking customers what they're willing to pay.

He urges founders to contact potential customers and pitch their ideas as though they have a product or ask to meet with people in the industry to learn about the problems they are facing.

"You would find that a very surprising percentage of people are willing to give you two minutes, five minutes, an hour," he said. "Then you fast forward to six months, a year, two years later, when you actually have that product, and, well, guess who the first people are that you call as potential customers? Those same people—and then it's not cold calling."

The product you end up with at the end of all that listening and tweaking might not be the one you started with.

Why things went sour

Changing course

That's what happened to Ready when he founded Scale Computing about a dozen years ago. He set out with an idea that was simple: Compete with VMware, a company now owned by Dell Inc. that specialized then in a narrow aspect of cloud computing.

Ready went to VMware's website, read its case studies, and called those customers. He asked whether they would buy from him instead of VMware if he could provide the same services for 30% less. When they said no, he called other customers and asked if they'd buy it for 50% less. No. What about 70% less? No.

"Why not?" Ready asked. One customer finally explained that the amount of money he was spending on VMware services was just a tiny part of what he was spending overall for his project—a data center. What he really needed was a price cut on the most expensive part of the project: data storage.

So Ready and Scale Computing launched as a data storage company. "Not because that's what I was pitching at the time, but because that's where I found the need," Ready said. And that customer, the one who explained the problem, became one of Scale's first customers.

Over the years, Scale expanded its products—as technology and customer needs changed. And today, it's actually providing services that compete directly with VMware. Still, without talking to customers and making changes accordingly, Scale "would have just been a complete failure from the beginning," Ready said.

So what about Yoder?

When he had his next idea—create a simple platform to handle corporate training—he embraced the concept of the minimum viable product. Yoder and his team at Lessonly spent several months on the initial idea, but they left plenty of time and resources for making changes.

"We were out of the gate super-early," said Yoder, who has written his experiences in the book "Do Better Work."

"I was not shy with our prospective customers, that this was a very early draft of something that we were going to continue to improve on for a very long time, and that, by coming aboard, they could help us improve on it," he said.

Even after Lessonly made its first sale, the team continued to evolve the product methodically, "because we didn't want to guess—we wanted to know."

The good news, he said, is that some customers like to be first. They like to help mold a product and put their fingerprints on it and help a company make it better—a process, Yoder said, that never stops. And the product is paramount.

"Your business doesn't exist just because you have a good logo or a website," he said. "Your business exists because you're able to sell your product—and it's a good product. To do that, you have to get out and talk to people. It solves everything."•

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