Microsoft will unveil a $2.5 billion bid to buy Mojang, the Swedish developer of Minecraft, Monday morning US time, sources have told Reuters. Minecraft has over 100 million players and the deal is aimed at pulling users onto Microsoft’s mobile platform, as opposed to its PC systems, or Xbox console. Minecraft is the top paid app on both the iOS and Android. After launching five years ago on PC, about 40% of copies are now downloaded onto phones and tablets. Product Hunt raises $6 million Aggregations site Product Hunt, which helps surface new tech products and startups, has raised $6 million in Series A funding, TechCrunch reports. According to the report, the round was led by Andreessen Horowitz at a valuation of $22 million although sources were unsure whether that valuation was pre or post money. The startup raised $1 million in seed funding in August. Before $100 million raise, Square was in talks with Apple Mobile payments platform Square has raised another $100 million in capital, according to a filing obtained by VCExperts, TechCrunch reports. Multiple sources have told TechCrunch that Square and Apple were in acquisition talks recently, but Square walked away, the sticking point being price – Apple wanted to buy Square for less than half of the $6 billion valuation it would eventually raise at. Overnight The Dow Jones Industrial Average is down 61.49 to 16,987.51. The Australian dollar is currently trading at US90 cents.
Yahoo! has acquired Israel-based advertising startup Clarity Ray. The startup raised $500,000 about two years ago, when it was offering tools for online publishers to circumvent ad blockers, but has since shifted its focus from ad blocking to ad security and fraud detection. Yahoo! confirmed the acquisition to TechCrunch, but the terms of the deal are unknown. In a statement on its website, Clarity Ray says its vision is to make “the eco-system safe, compliant and sustainable for consumers, publishers and advertisers”. “This once-in-a-lifetime opportunity enables the mass scaling of our technology, impact and ideas to the absolute forefront of our field, while working with an amazing team who shares our passion,” the statement says. Twitter experiments A sizeable number of users are seeing tweets favorited by others in their timeline, just like retweets, in an experiment that is annoying a lot of people, according to The Next Web. Those users are also getting notifications when others follow someone new. Washington Post now inserting Amazon affiliate links into news articles The Washington Post, which is owned by Amazon founder Jeff Bezos, is now including “buy it now” buttons wedged into its online book reviews, as well as on news items and letters to the editor. The button links to related content available for purchase on Amazon. Overnight The Dow Jones Industrial Average is down 50.67 to 16,662.91. The Australian dollar is currently trading at US93 cents.
Australian IT DevOps company ScriptRock, a graduate of Sydney's Startmate 2012 program, has successfully raised a $US8.7 million ($9.8 million AUD) series A round led by August Capital, which also led investment in Splunk. Also participating in the round were Peter Thiel's Valar Ventures, Square Peg Capital and Scott Petry. TechCrunch reported on the raise, citing an SEC filing, but got the lead investors and other key facts wrong. Vivek Mehra of August (founder of Cobalt Networks) and Scott Petry (founder of Postini and Authentic8) are joining the board, while Australian VC Hamish Hawthorne of ATP Innovations, who was previously director, is moving on. Mountain View-based ScriptRock was cofounded by Australians Mike Baukes and Alan Sharp-Paul who, having worked in large scale enterprises all their life, wanted to make process more efficient. Their product GuardRail has ridden the DevOps wave with its focus on configuration discovery, validation and collaboration. Baukes told StartupSmart that their traction to date had been a result of providing a simple and powerful DevOps solution. The company has 600 customers, including ADP, Cisco, Amadeus and Trek, after launching in October last year. "We're getting traction because existing solutions are too complicated, too specialised. Your typical IT department wants something that is simple, powerful and flexible. They want something everyone can use," Baukes told StartupSmart. They will use the funds to build up their sales, marketing and engineering teams with a focus on growth. By his own admission, Baukes says ScriptRock has taken an interesting approach to the industry and has not been shy at poking fun at the DevOps movement, something he says might be explained by the fact they're Australian. It's not gone unnocticed by incumbents in the space like Chef and Puppet. Cofounder Alan Sharp-Paul says the attention doesn't concern them. "We're taking a different approach to the other configuration management players in this space," says Sharp-Paul. "They're predominantly open source and bleeding edge focused. We've spent years working in the enterprise. We're building a business, and whilst we're based in the Valley, we target the real world; SMBs and enterprises outside of the bubble." As for the company having two CEOs, an arrangement TechCrunch called an "unusual division of labour", Baukes says it's great. "We're pretty happy with the way that's all worked out," he says. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Startups are hard. But life is better when you have sales. Here is why I encourage people to spend a ratio of 50:1 on sales versus capital. Startups are far too ‘popular’ right now and, unfortunately, reading too much TechCrunch will have you believing that you start, raise capital and exit. The goal is to build a business, not start a startup. Good business is the creation of value and the realisation of that is profit, which is when your revenues are more than your costs. Sounds dumb, but it’s easy to lose sight of that amongst the ‘thrill’ of entrepreneurship. You want to keep your costs down, but none of that matters without revenue. 1. Sales shows value Product market fit is the goal of all startups and nothing says that those two things fit together in a real, business-like way more than sales. A customer saw so much value in the product that they gave you hard earned money for it. 2. Sales pays for things Cash in the bank lets you pay for servers, two minute noodles, bandwidth. For team members, it’s a great day when your equity is worth more than cash, so you would rather pay for things than give away equity. 3. Sales pays for growth Having a scalable growth model means when you spend a dollar on sales and marketing, more than a dollar comes back. Without revenue, the only way to keep growing is diluting through capital raising or crossing your fingers for ‘going viral’. 4. Sales attracts investors Of all the numbers we think about, sales is the hardest for someone to reject. Visits, users, engagement and retention are all nice but nothing says ‘there is something here’ to an investor like sales. 5. Sales avoids investors On the flip side, having enough sales can mean that you don’t need an investor. Who wants to raise money if they can fund costs and growth with sales? So stop going to capital raising events and start going to sales events. Read sales books. Hire sales people. Be a salesperson. Mick Liubinskas is a co-founder of Pollenizer, director at WooBoard, entrepreneur in residence at muru-D and director at Oomph. This post originally appeared on the Pollenizer blog.
Apple has reported its third quarter results, posting a quarterly revenue of $37.4 billion and a quarterly net profit of $7.7 billion, or $1.28 per diluted share. International sales drove 59% of the quarter’s revenue. Apple chief executive officer Tim Cook says the company’s revenue in the quarter “was fuelled by strong sales of iPhone and Mac and continued growth of revenue from the Apple ecosystem”, which drove “the company’s highest EPS growth rate in seven quarters”. “We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce,” he says. Microsoft Cloud drives strong fourth quarter results Microsoft has announced revenue of $23.38 billion for the quarter ended June 30, posting a gross margin of $15.79 billion, an operating income of $6.48 billion, and diluted earnings per share of $0.55 per share. Microsoft chief executive officer Satya Nadella says the company’s focus cloud technology was behind the strong results. “I’m proud that our aggressive move to the cloud is paying off – our commercial cloud revenue doubled again this year to a $4.4 billion annual run rate,” he says. Timehop raises $10 million Timehop, an app that serves as a personal “today in history” memo by sourcing social networking photos and posts from your past has raised $10 million in new funding, TechCrunch reports. The Series B funding round was led by Shasta Ventures with the participation of previous investors Spark and O’Reilly Tech Ventures and angel investors including Randi Zuckerberg. Overnight The Dow Jones Industrial Average is up 61.81 to 17,113.54. The Australian dollar is currently trading at US94 cents.
Facebook chief operating officer Sheryl Sandberg says the company never meant to upset its users after an experiment on nearly 700,000 of them was reported recently. “This was part of ongoing research companies do to test different products, and that was what it was, it was poorly communicated,” she told The Wall Street Journal. “And for that communication we apologise. We never meant to upset you.” Facebook acquires LiveRail The social media giant has just bought video advertising technology startup LiveRail. LiveRail connects marketers to publishers on the web and mobile to target 7 billion video ads to visitors per month. According to TechCrunch sources Facebook paid between $400 and $500 million for the company. Facebook and LiveRail will share data in order to improve their respective ad targeting. Tim Draper lone winner of Silk Road bitcoin auction Investor Tim Draper has bought 29,655 bitcoins from the US government’s Silk Road bitcoin auction. The government seized the bitcoins following the closure of the Silk Road online marketplace. Overnight The Dow Jones Industrial Average is up 20.17 to 16,976.24. The Australian dollar is currently trading at US94 cents.
Over 90% of tech startups fail, but I never thought my baby, 99dresses, would be one of them. If there is one thing that doing a startup has taught me, its that I am much more resilient than I could have ever imagined. Looking back, when I started 99dresses fresh out of high school I was very naive and had zero idea what I was doing. In fact, I didn’t even know what a startup was! I just knew I wanted to solve a problem I personally experienced: Having a closet full of clothes but still nothing to wear. Since then I’ve survived being stabbed in the back by cofounders, investment rounds falling through, massive technology fuckups that brought sales to a halt, visa problems, lack of money, lack of traction, lack of a team, hiring the wrong people, firing people I didn’t want to fire, lack of product-market fit, and everything else in between. I learned so much, and yet I failed. I won many battles but I lost the war. I take complete responsibility for this failure. Were other people involved in 99dresses? Of course. Was any of this their fault? Absolutely not. The startup press glorifies hardship. They glorify the Airbnbs who sold breakfast cereal to survive, and then turned their idea into a multi-billion dollar business. You rarely hear the raw stories of startups that persevered but ultimately failed — the emotional roller coaster of the founders, and why their startups didn’t work out. As things were looking bleak at 99dresses I started seeking out these stories, desperately hoping for someone — anyone — to relate to. Failing is lonely and isolating. Every time I’d scroll through my Facebook feed all my startup friends were launching new products on Techcrunch, announcing their new fundraising rounds or acquisition, and posting photos of their happy teams. Ask any founder how they’re doing, and you’ll hear something positive. Whether that’s the truth or not, that’s what we’re trained to say. I found postmortems of startups outlining what didn’t work and why the company went under, but I was hard pressed to find anything that talked about the emotional side of failure — how it actually feels to invest many years of your life and your blood, sweat and tears, only for your startup to fall head first off a cliff. Maybe its because most founders are men, and men generally don’t like talking about their feelings. Maybe its because failure is embarrassing. I don’t know why this is the case, but here is my contribution to the cause: my story. This is what failure feels like. I hope it helps. Where it all began… Many startup folk say that failure should be celebrated. “Fail fast, fail early, fail often!” they all chant, trying to put a positive spin on the most excruciating pain any founder could experience. Let me tell you — failure fucking sucks. If I would have failed fast, early and often then I would have given up 99dresses years ago when, in 2011, I travelled to my parent’s place in the countryside of Australia, locked myself away in my room and cried for what seemed like an entire week. I had launched 99dresses in Australia 9 months earlier and received some great traction, but I was losing momentum due to technology problems that I didn’t understand and battling a whole host of other issues. I felt like I was drowning in a black ocean, and I couldn’t see any light at the surface. I didn’t know which way to swim. At the same time the Australian press would continue to approach me for interviews. The fact that I was a teenage girl working on a startup in a male dominated industry seemed to garner a lot of attention, and I’d take the interviews that came my way because that was my job. It was my job to be positive and paint a happy picture for the media, who seemed to talk about me as if I was some kind of entrepreneurial wunderkind because of my age and the fact that I had breasts. This didn’t help my impostor syndrome — the constant feeling that everybody was always giving me way too much credit. I remember one reporter saying “you must be so proud of what you have achieved” and I was completely stumped by that statement because I’d never actually thought about it. Was I proud? What had I actually achieved? We had some traction, sure, but we also had many problems that needed solving. I was just waiting for the day when everyone would figure out that I’m not that extraordinary. “But you’re taking a massive risk! That’s so brave!” they’d say. I never thought so. The biggest risk in my eyes was going to university, getting a stable job, and sliding into a comfortable life. There’s nothing wrong with that, but I knew it wasn’t me. Plus, the worst that could happen if I failed was that I’d end up living with my parents. I think the really brave founders are the ones who will be out on the street if they fuck it up, and still do it anyway. Its easy to take risks if you have nothing to lose. My mother said “Nikki, are you sure that you really want to do this? It is so much pressure for a 19 year old to take on. No one will think less of you if you decide this isn’t what you want”. My parents are my number one supporters but my mum hated seeing me in so much pain, even if it was character building. But despite the horrible sinking feeling in my stomach, and the fact that I had no money left, and the fact that I had no stable team, and massive product problems, and was feeling burnt out, and had no idea how to overcome any of the aforementioned obstacles, and felt completely alone in it all, I persevered. I didn’t fail then. I couldn’t fail. This was my baby, and if it was going to fail it would be over my dead body. I became numb to the pain, and despite waking up for weeks on end with no glimmer of hope and no desire to get out of bed, I still made myself sit at my desk and work. Eventually, things took a turn for the better. When you’re at your lowest, the only way forward is up I applied for a university team business planning competition with a $10k prize, paid a friend $500 of the prize money to be on my ‘team’ so I could qualify to enter, wrote a winning business plan and took out first place. That was enough money to buy me a plane ticket and some accommodation to the US. I met my friend and advisor, Matt, who took me under his wing and helped me more than I could ever have hoped. My developer was admitted to hospital with a very serious illness and dropped out of the company, but I replaced him with 2 co-founders. I got into Y Combinator and headed to Silicon Valley — startup Mecca for a starry eyed young founder like I was — for 5 months. We rebuilt the 99dresses product and launched it in the US. We were getting traction. I signed a $1.2 million seed round with a group of investors on a valuation cap that I honestly thought was ridiculously high. 99dresses was back, baby! And then, all of a sudden, we weren’t. Another trip down the emotional rollercoaster I had to fly back to Australia to get a working visa as soon as the funding paperwork was signed, and the next day my two “co-founders” decided to tell me they were leaving the company without even a hint of warning. The $1.2 million hadn’t hit our account yet, but even if it had I would have felt uncomfortable accepting it with no team in place to execute my vision. I would have looked like a fraud and an idiot anyway — what kind of founder announces to her investors that she suddenly has no team the day after she takes their money? And furthermore, how could I not have seen this coming? I was completely blindsided. I went over to Matt’s office, and he proceeded to pour vodka down my throat whilst telling me I was much better off without them. Like most of Matt’s lessons it was hard to see that then, but he was right. The next day I rang up our lead investor who decided to pull out of the round. Then another investor fell off. Everything I worked so hard for was crumbling to pieces. If only I’d closed everyone individually, instead of agreeing to round up at least $1mil to get the lead on board. But then I realized that these “co-founders” would have left anyway, leaving me in this same position. I was stuck back in Australia still with a big vision, but as a single, non-tech founder with no team, no product (I needed these co-founders to keep the product running), no US visa and just some money that I’d gotten from being a YC company. I remember my sister taking me for a walk after it all happened. She sat me down in a park overlooking Sydney harbor at night time and made me listen to ‘Shake it out’ by Florence and the Machine. She told me I’d bounce back, that I’d overcome this like I always did. I wasn’t sure I believed her, but I knew I’d survived worse. This ended up becoming my motivational song that I would listen to when times were tough, because it reminded me that I could surmount huge obstacles if I wanted to. I didn’t fail then. I just started again. Starting over There were 5 investors who invested in me, despite all of this. They believed in me when I was having trouble believing in myself, but I couldn’t show them that — that’s the cardinal sin of any entrepreneur. Always be confident. Always be smiling. Always stay positive. Sell, sell, sell! I remember one investor sending me an email saying “Shit happens. Take the money and go sort it out.” Another told me to go make him some crack for women. My cap got sliced in half, but at least I wasn’t broke again. So I closed $595k and started looking for a new co-founder. Problem was, I didn’t trust anyone. Not after what my previous co-founders had just put me through. But then I met Marcin, who quit his corporate IT job and joined me in an office we referred to as ‘The Cave’ because it was cheap and nasty and had no natural light. I remember he came in on his first day, and midway through a conversation my chair completely collapsed. The next day he bought in his own chair. I was very jealous. We rebuilt 99dresses again and launched it in the US which was proving to be ridiculously hard when we weren’t physically in the US and having to handle some stock and seed a community from another continent. We were having trouble getting traction. The market had moved on, competitors had flooded the space and the product we had built just didn’t provide enough value in comparison. Add to that the fact that we were building a 2 sided marketplace, and you might get a sense for how tough things were. The US market is huge, hyper-competitive and way harder to crack than the Australian one. We were frustrated by our lack of progress, and the product I’d promised our investors just wasn’t working. I didn’t fail then. We pivoted. Our big pivot I caught a plane to the US and talked to as many women in our target market as I could. We interviewed more customers. We discovered a very clear set of problems that explained why our product just wasn’t working in the US market. I rang up the team in Australia, and told them, quite bluntly, that we needed to chuck everything out and approach the problem from a different perspective. I presented a new idea for a product that seemed to resonate with the girls I was talking to. The team did not take it well, and I definitely communicated the change very poorly. I almost got on an early flight home because I felt a mutiny brewing — we were throwing out many months of hard work. This wasn’t my finest moment as a leader. Despite this, the team rallied together. We threw out our website and concentrated entirely on mobile. We had a mobile website prototype in front of users within a week and iterated based on that before building out the native version. We hustled to get anyone we could to try out our beta app. We must have emailed thousands of bloggers, and some ended up giving it a go. Items were being traded, and girls were paying us money. This new thing was working! We couldn’t wait to launch it in the US, but we needed to physically move there first in order to do things properly. Visa issues Problem was, we didn’t have any visas. You see, its very easy to get into the US as an Australian if you have a degree in a specialized field, which I did not. Marcin had to wait it out to first become an Australian citizen with his wife, then get his E3 visa. However, right before joining 99dresses his wife had fallen pregnant with their first child, which they needed to give birth to in Australia. Marcin was then tasked with moving his wife and baby halfway across the world to chase our startup dreams. Needless to say, he’s a very brave man. I, on the other hand, was faced with my next big challenge: proving that I was ‘an alien of extraordinary ability’ that was worthy of living and working in the US without a degree (after all, I gave up my scholarship and dropped out of university when I got into Y Combinator). After about 7 months of working on my petition, I was ecstatic and incredibly grateful when I got approved for an O1 visa. I practically skipped over to the US consulate in Sydney for my appointment, where I was to pick up the visa. Instead, I was interviewed by a lady who took an obvious immediate disliking to me. She told me she was putting me through extra processing, so I wouldn’t be getting my visa that day. She told me it was random. She told me it would take 2 weeks. I later found out this processing was not random — it was reserved for potential terrorists, and could take up to several years. As an entrepreneur I HATE feeling helpless. I’m used to taking action on something and producing some kind of result. I like being in control. In this instance I felt completely helpless, and my startup was at the mercy of a government worker on a power trip. We were already running behind on launching this app in the US, and the consulate had my passport. I couldn’t get out of Australia. The consulate made me jump through hoop after hoop, and a few months later I still didn’t have my visa. It got to the point where I had to call the consulate hotline every single day and split test different types of crying (machine-gun bursts of sobs vs. long sad silences vs. loud ugly cries) on the operators (males were much more receptive to helping out), and occasionally I’d get lucky and have one of them put in a report for me. I hated doing it, but it was the only way to push things forward. I finally got my visa, and took the next flight I could get out of Australia with four suitcases — 2 full of clothes, 1 full of shoes and another with all my electronics and miscellaneous items. The contents of these suitcases just about summed up my life. I’d achieved my dream of moving to NYC, and I was living in a shoebox. It was all I could afford on my startup salary. Soon after, my 25 year old sister and 19 year old brother both bought gorgeous apartments in Sydney. Whilst I was absolutely thrilled for them, I also couldn’t help feeling a little jealous as I sat in my tiny convertible bedroom with no windows. If this all didn’t work out I’d be financially left with nothing, whilst my siblings were off investing in their financial future. That didn’t really scare me — I’ve realized that money isn’t a huge motivator for me — but it did flare my competitive side. We probably all compare ourselves to others way more than we should… Re-launch time! After hiring a few people and finding an office in NYC we were ready to launch. We solved the chicken-and-egg problem using techniques that we promised never to speak of again because they squarely sat on the grey/black spectrum of naughtiness. If there was a line, we definitely crossed it. We had to. These hacks were harmless to others, so I figured it was only a problem if we got caught. Our plan worked better and faster than I’d budgeted. Within three months we were doing over 1000 trades a week, and bringing in revenue on every trade. We continued to grow. Our app store reviews were overwhelmingly positive. Obsession did not begin to describe how some girls treated 99dresses. Within a few short months several power users had spent over $1000 each and traded hundreds of individual items. We steadily grew our stock turnover rate from 17% to 50% — that was 2-3x better than our competitors. Everyday I’d be wearing a new outfit that I’d received off the app. Our retention rates were really exciting. If my investors had wanted crack for women, then that is what we had created. Based on the way we were growing, we thought we could get cash-flow positive before our funding ran out. I had 99 problems and our runway was one… But then growth started to slow down. The average value of items listed steadily declined and our fees were based on this value, so although we were growing transaction volume our revenue wasn’t budging. We started to see some holes in the business model. Whilst our retention was great, we worried about our activation rate. In an attempt to save ourselves we made one more pivot; this would turn out to be our last one. The pivot made complete logical sense based on all of our research, but introducing it to our community was a nightmare. There was mutiny within the app. While our top line metrics shot up in a massive way, our one metric that mattered — transactions — plummeted. Meanwhile, I had approached our existing investors about getting a bridge. I knew we had something really special with amazing potential, if we just had enough runway to give it an extra push. I also knew we weren’t perfectly poised to raise a bridge round, unless our existing investors were going to pony up the cash. We’d been in the market a while, and although we had to overcome a number of setbacks to get out here, that didn’t seem to matter too much to external investors. Bridge rounds just aren’t that sexy. We only had one institutional investor in our previous funding round, and I was so relieved when they told me they wanted to lead this bridge. Boom! It looked like we were going to live to see another day. I sent through the due diligence documents and worked with them to answer all their questions. They were taking longer than anticipated to get back to me so we could get the deal done and move on. Then one Wednesday I got a call from them, and the line was kind of crackly. However, it sounded like they not only wanted to lead, but they actually wanted to fill up the entire round! Relief flooded through my body. I was so nervous. Then I heard a ‘but…’ And the rest of the conversation explained why they would not be doing that. My stomach dropped. I knew they were our best shot of getting the money, and some of the angels who had previously invested were interested in coming in but only if I could get a VC to lead it, probably for some oversight. We now had very little cash left, and very little time to find someone else. Turns out, under closer scrutiny some of the other partners in the firm didn’t like how competitive the market was. 99dresses was squarely focused on trading cheaper fast fashion (fast fashion is really hard to re-sell for cash), but all the competition were mainly focussed on buying & selling designer fashion. Despite our differentiation, the space is crowded and the competitors are well funded to the tune of tens of millions of dollars each. I felt my voice crack whilst I was talking back on the phone. I was trying so hard to hold it together and be professional, but I could barely speak without it being obvious I was crying. Damn emotions! I was embarrassed. Our last attempt It was night time and I walked over to Marcin’s home in tears, fully expecting him to take the safe and responsible route of deciding to get another job. He had a family to support, and I felt an extraordinary amount of guilt for putting him in that position. Instead, Marcin surprised me. He wasn’t willing to give up that easily. None of the team were. I was taking on this massive burden and internalizing everything, when in actual fact my team was prepared to fight to the end alongside me. We made a plan for cutting our costs to extend our runway whilst we tried to get some more cash in the door. The next day I gave notice on our office, and let someone go. We were already a very lean operation, but now the work of 2 was being done by 1 person on operations, and we shifted our focus to only the most essential tasks to buy us more time. I didn’t tell many people about what was happening. You’re not supposed to talk about this shit. If someone asks how your startup is doing, you fire off some kind of positive phrase like a reflex. My friend gave me a hug and told me to go read ‘The Hard Thing About Hard Things’ by Ben Horowitz. I bought the book and sat in a coffee shop that Saturday afternoon reading it through. I identified so much with the struggle — I’d been through it many times before whilst aboard this emotional rollercoaster. I realized something: I was fucking tired — physically and emotionally. I wasn’t sleeping properly. I hadn’t been on a proper holiday since our ‘schoolies’ beach celebration straight after I finished high school in 2009. The holidays I had tried to go on just ended up being long strategy sessions in my head to figure out my next move whilst lying beside a pool. All I could think about was this damn startup and it was completely consuming me. I had no bandwidth for anything else. When someone asked what hobbies I had outside of work, I’d laugh. I’d recently started having mini panic attacks whilst I was doing ordinary things, like taking a shower or doing my hair. I felt like a shitty friend. I couldn’t even contemplate having a relationship (I tried that before, but yet again this startup won out over him). I wasn’t sure how much longer I could do this. My mother told me to trust my gut. If my gut told me that I didn’t have faith in the business, then there is no shame in winding down the company and moving onto something more productive instead of raising more money. I’d learned an awful lot in the past few years. I told my mum I didn’t trust my gut when it came to this. My gut was telling me to quit. Problem was, my gut had told me that before in my darkest hours and I still pulled through. If I had trusted my gut then I would have quit years ago. I knew the only way this was going to die was if we were killed. I am not a quitter. I owed it to myself, my team, my investors and the 99dresses community to see this through. I continued approaching investors without luck. I’d be invited to cocktail parties full of VCs where I’d don my painful sky-high heels because I’d split tested heels vs. flats, and for some reason a 5'11 woman in 7 inch heels commands more talking time and attention from investors than one in the comfy flat booties I wear to work. Apparently height gives you presence. Once or twice I’d have an investor asking if I knew what an angel was, or if I also modelled because of my height, or some other unintentionally patronizing comment that I doubt any guy would be subjected to. I learned to take it all in my high-heeled stride. I kept hearing the same thing from these investors. “That’s a very interesting business, but we’ll either put in the first money or a series A. We don’t do in between. I’d love to keep in touch though, and see you progress to a series A where we might be able to help. Oh, and why aren’t you getting this bridge from your current investors?” I remember one day Marcin joked that I was a control freak, and I was really surprised. I’d never perceived myself that way — I just liked things done a certain way and to a certain standard that matched the vision in my head. When it came to non-99dresses related stuff, I thought I was pretty chill. Over the past few weeks leading up to this event I did start to get a sense for what he was talking about, though. I wasn’t a control freak in that I was obsessed with controlling outcomes — I was a control freak who just needed to be in control of the inputs. This became more obvious as everything started looking more and more hopeless at work. I started eating much healthier, strictly cutting out wheat, sugar and anything processed. To take a mental break I would read about bio-hacking, which is incidentally all about understanding and controlling how inputs effect your body. I told myself this would give me more energy to hustle, but really I think I just had to feel like I had control over something — anything — when my startup’s fate felt so out of my control. Closing down With a few weeks of cash left, Marcin and I agreed to use our remaining time to shut down the app gracefully for the sake of ourselves and the community. I came into the office that day prepared to have a hard conversation with him, but we both looked at each other and knew it was over. There were some tears, and I was grateful to have a curtain of long dark hair to hide my bloodshot eyes behind as I walked through our co-working space. I felt physically sick all day, and my stomach wouldn’t let me keep any food down. I lost my appetite for the rest of the week. My first instinct was to apologize — to Marcin, to my team, to my investors, to the loyal community we’d built. I felt shame, guilt, embarrassment — like a shepherd who’d led her sheep off a cliff when it was my responsibility to keep them safe. I logically knew that I shouldn’t feel these things, but emotions aren’t always logical. In fact, I didn’t really know what I should be feeling. I’d been working on this company ever since I finished high school, so 99dresses was all I’d ever known. It was a huge part of my identity — I was “that 99dresses girl”. Who was I without this startup? I had no idea. Just an ordinary girl, I guess. My friends invited me out to drink away my sorrows and get my mind off things, but I just didn’t feel like it. I was scared I’d meet someone new and they’d ask me what I do, and I wouldn’t know how to answer. I was also embarrassed because I couldn’t afford to pay for anything superfluous anymore — I still don’t know how I’m going to pay rent at the end of the month. As a woman going out in NYC my nights were normally cheap because cute guys would buy me drinks, but I am not the kind of woman who expects that. I’m independent. If I couldn’t pay for myself then I wasn’t going out at all. I wasn’t depressed so much as disappointed. I tried so fucking hard, and I still couldn’t make it work. There are many things I would have done differently were I to do this all again, but Marcin and I agreed not to get sucked into the ‘shoulda woulda coulda’ trap. “No regrets”, he said. We both learned some hard lessons from our mistakes, but it also made me realize how much luck and timing are often huge factors in success and failure. The next day a report came out by a startup with a very similar model to us, but in a different vertical. We’d traded 3x more items than them in our first 8 months of the US app being live, had 2.5x more members and had a business model in place — all with a team half their size. They’d gone on to raise a sizable series A; we’d failed. Our investors said we did a lot with the money we had. It’s easier to accept defeat if you try and try and try but don’t get anywhere. You call it a failed experiment. The failure is easy to justify. It’s incredibly frustrating to try and try and try, and when you finally start to get some good traction you fall off a cliff. Our business still had problems, sure, but so does every other startup. Moving on So this is where the story comes to a close. My friends all ask me if I’m fine, and I honestly think that I am. It’s been a wild ride, but its time to move on. A cruel consequence of my failure is losing the US visa I worked so hard to obtain. Once I stop being the CEO of 99dresses I technically have 10 days to sell all my possessions, pack my bags, say goodbye to my amazing team, my friends and the life I’ve been building here, and leave. That being said, I’m excited to start a new chapter. As much as I love startups, its somewhat liberating to have no responsibilities to anyone but myself — no team, no investors, no customers to look after. Maybe now I can be a normal 22 year old for a while: indulge my wanderlust, make some bad decisions, try something new. I’ll be taking some time out to recharge whilst living with my parents in a country town of 2,000 people where the internet is slow and there is no Seamless. I hope I survive. Honestly, I’ll probably get bored within a week and start working on a new idea. I already have a few. When I started 99dresses I was going to go big or go home. It’s been a great adventure, but now I’m going home. The end So that’s it. That’s my story of what failure feels like. I hope reading it was as helpful to you as writing it was cathartic to me. Most startups fail, and yet this industry doesn’t talk about failure nearly enough. I’d encourage anyone who has failed to write about how it felt, as I can’t tell you how much that would have helped me in those final months & weeks. I just wanted someone to relate to. Instead, I was left feeling isolated and ashamed. In fact, I thought it might be therapeutic to curate a collection of stories from founders who have failed and put them together in a book. It might be a little project for me whilst I take some time off, and I’m sure it would be helpful to someone in my current position. If you want to get involved or contribute your story then shoot me an email. My email address is nikki @ 99dresses dot com (yep, I’m going to need a new email too — still haven’t sorted that out yet). Thank You I thought I’d end this post by publicly thanking everyone who has been a part of the 99dresses journey. To my co-founder, Marcin — there is no one I would have rather had by my side through this experience. The sacrifices you made to make this all happen are nothing short of inspiring. If Zoe was old enough to say anything other than “this!”, I’m sure she’d tell you how proud she is of her dad. I’m going to miss your terrible jokes. To the team, past and present — thank you so much for all of your hard work, perseverance and loyalty. Chandra and Oguz, you guys are amazing. I loved coming in to work every day because you always made it fun. I’m going to miss you all immensely. When I do another startup I’ll be coming after you guys again :p To the wives, Natalie & Semiha — I’m sure its not easy having your husband involved in a startup. You were both so supportive of the long hours, sacrifices and emotional ups and downs, so thank you. To my family — you guys have always been my #1 supporters. A special thanks to my mum for putting up with me, even when I was a stressed out and horrible daughter. You’re the strongest woman I know, and I hope one day to be as bad-ass as you. To my friends — I couldn’t have done this without your support. You celebrated my highs and comforted me in my lows, and for that I’ll always be grateful. To Matt — You’re the reason I got this far in the first place. If it weren’t for you I probably would have failed in 2011. To my investors — thank you for believing in my vision and trusting me to fulfill it, even through the rough patches. I really do appreciate it. To our community — without you, we’d be nothing. Thank you for loving 99dresses, and spreading the word. Many of you I now consider friends, and I’m so grateful for your support and loyalty. Ok, that’s it. It’s over. Now its time for a nice long sleep. Nikki Durkin is the Founder & CEO of 99dresses. This post originally appeared on Medium.
Using eBay just got a whole lot lazier, with the company today launching a new app that will sell your items for you. This is the latest release for the company after having recently launched its Pinterest-style eBay Collections in Australia. The eBay Valet app takes every step of the selling process – from determining an item’s value to listing it online and shipping it when sold – and handles it on behalf of users, according to TechCrunch. The company already had a similar web-based platform named, Sell For Me, and Valet is set to make online selling even easier and more approachable, for both first-time buyers and those who find the eBay process time consuming. The process will now only require sellers to take a picture of their item and enter a description. The item then gets sent to one of eBay’s ‘valets’, someone who works for eBay, and within 30 minutes the seller will receive a valuation range and be asked if they still want to sell the item, reports TechCrunch. If you have a box handy, eBay will send you a shipping label. If not, the company can send you a free, prepaid box instead. Then you simply log on and watch the sale happen, typically via a seven day listing. After the items are sold, you pocket 70% of the profits straight into your PayPal account. Valets are vetted by eBay to rigorous standards, according to Business Insider. Valets must be able to: List 100,000 eBay listings each month, have storage capacity to hold and manage items received for at least 21 days, List items across all eBay categories, Have a physical presence in all major metropolitan hubs in the US, Have a demonstrated ability to reach Top Rated Seller status within 90 days of starting valet services.
The business world is abuzz this morning with news that China’s biggest e-commerce business Alibaba has filed its initial public offering, which could become the largest IPO in history. Alibaba Group was established by billionaire Jack Ma in 1999. The business has two main shopping websites, Taobao and Taobao Mall (or Tmall), which serve an estimated 79 million customers in more than 240 countries and territories. The group also has investments in a Chinese department store operator, mobile messaging apps maker Tango, and China’s version of Twitter, Weibo. Described as “eccentric”, Ma is known for both his unconventional career trajectory and idiosyncratic business style. Here’s five things you didn’t know about the man nicknamed “Crazy Jack”. 1. Ma started out at as a teacher Alibaba’s chairman studied to become a teacher after twice failing university entrance exams. Ma’s struggle with formal education and finding employment, including being knocked back from Harvard 10 times, is well-documented. He says he was even tuned down from a job as a secretary to a general manager at KFC. 2. He founded China’s first internet company Ma’s first foray into the digital world was with China Yellowpages, believed to be the country’s first internet-based company. According to the Wall Street Journal, it was a trip to Seattle in 1995 that sparked Ma’s interest in the internet, after he discovered during the trip how little information about Chinese companies existed on the web. 3. He enjoys singing pop songs and hit musical tracks Ma also apparently has a soft spot for performing Chinese pop songs and his favourite songs from the Lion King in front of crowds of thousands at his annual company conferences, called “Alifest”. In the past he shared a stage with former US President Bill Clinton, Los Angeles Lakers basketballer Kobe Bryant and Arnold Schwarzenegger. 4. Ma is huge fan of kung fu Ma is such a fan of kung fu novels that Alibaba employees are all required to take nicknames from kung fu novels. According to the Financial Times, which named Ma its Person of the Year in 2013, Ma’s nickname is “Feng Qingyang”, which refers to an “unpredictable and aggressive” swordsman. 5. He admits to knowing very little about technology Despite being the founder of one of the globe’s largest online businesses, Ma admits that he is not an expert when it comes to technology. According to TechCrunch, the entrepreneur says he cannot write code and knows little more than how to send an email.
In recent weeks, many commentators have pointed out the similarities between the current Silicon Valley scene and the tech boom of the late ‘90s. Meanwhile, recent falls in tech related stocks have led some to fear that another dot-com crash could be around the corner. A first-hand witness of the tech boom of the late ‘90s was author and web pioneer Bill Lessard. In 1999, Lessard and his co-author, Steve Baldwin, wrote a book about the experience of being an ordinary IT worker at a startup during the tech boom, titled Net Slaves: True Tales of Working the Web. It was followed-up by a book chronicling the experience of those same IT staff after the bubble, titled Net Slaves 2.0: Tales of Surviving the Great Tech Gold Rush. The books led to the creation of a pioneering and now defunct online community called Netslaves.com, which bought together many people connected with the tech startup scene. StartupSmart spoke to Lessard about how the current US tech startup scene compares to the ‘90s tech boom. Working the web in the ‘90s According to Lessard, working in a tech company in the US during the late ‘90s was often the opposite of the hype portrayed by many in the media. “For every [Netscape founder and venture capitalist] Marc Andreesen getting rich quick, there were thousands of people getting old fast. The situation was ridiculous. It was akin to saying that everyone who moves to Hollywood becomes Brad Pitt or Angelina Jolie,” Lessard says. “And it wasn't just your mom who was falling for such nonsense, either. Otherwise perfectly reasonable people I'd meet at parties would gush when I told them what I was doing for a living. “After a while, I wanted to punch such people on sight. Working the Web 1.0 was 14-hour days, not cleaning your apartment for six months, having three different jobs in the course of a year.” Many people cite the infamous takeover of media giant Time Warner by tech company AOL as representing the pinnacle of the hype surrounding the early web. Lessard says it was the experience of a round of layoffs at Swiss bank UBS that led him to write the Netslaves books. “I was getting downsized from my seventh job in seven years when I looked up a friend of mine from Time Warner. I was 32 at the time. I was way past my Web 1.0 due-by date. “I wanted to do something different. It was Steve's idea to write about this industry. I added the Studs Terkel aspect of profiling the real people who power tech.” The books led to the creation of Netslaves.com, an online community filled with the tales of disgruntled employees from tech start-ups. However, it wasn’t just IT workers who visited. “It was a sterling example of online community in the pre-Facebook era. There were disgruntled techies, sure. But there were also members of the investor and executive classes. “There were also garden-variety freaks, fruitcakes and lunatics. It's fun to remember the site now, but back then, it was a mess. What started out as an outlet for tech industry workers devolved into a mosh-pit of post-9/11 political extremes.” Lessard explains how, in some ways, the Netslaves website was a forerunner to modern tech startup sites such as TechCrunch, StartupSmart and Valleywag. “We took the bitchiness of Suck.com and brought it to tech. TechCrunch and StartupSmart are definite influences in their willingness to question the sacred cows of the industry. “But Sam Biddle at Valleywag, who criticizes West Coast tech cultist insanity from his Brooklyn perch, seems the closest to what we were doing as New York guys (and gals) with a digital axe to grind.” A particularly notable contributor to the Netslaves website was freelance journalist and pioneering US political blogger Steve Gillard. Gillard, who passed away in 2007, was cited by progressive blogger and Daily Kos founder Markos Moulitsas as a being a key influence on his work. “Steve was a gentleman. He was an educated, honest person in a world where educated, honest people are in too-short supply. Steve appeared out of nowhere. First he was on the mailing list that was the precursor to the bulletin board, then he was sending us reams to stuff to publish, then he was posting even more material directly when we got ourselves a proper CMS. “Steve brought history and a strong sense of social justice to what we were doing. He had no tolerance for the whole rich-kids-messing-around ethos of the industry because he was a moral person and a black dude from Harlem who had witnessed the consequences of such foolishness. “I was so glad to see him taking off as a political blogger. My only regret is that he didn't live longer to enjoy it.” The problems with Web 1.0 Lessard recalls a common complaint from many on the site was that tech startups were often started by young people straight out of college, and the founders lacked basic management skills or training. “It's okay to get some pizza and code all night when you're in college, but if you've got millions in venture and employees with bills to pay and some even with families and mortgages, it's not a good look, particularly if the company is going to be out of business in six months. And your best option seems to be to get another job just like the one previous.” Reclining upmarket office chairs by Aeron came to be a symbol of the tech startups that failed during the ‘90s tech crunch. “In an industry that had rejected suits and ties and other traditional symbols of corporate power, the Aeron was the seat of power in the Web 1.0 ‘game of thrones’. “The closest contemporary equivalent is Mark Zuckerberg's hoodie, where the ultimate expression of authority resides in the rejection of authority. It's all very American. And it's all very rock-n-roll.” Story continues on page 2. Please click below. Key differences to the ‘90s tech crunch Lessard points out there are several crucial differences between now and the tech wreck on the late ‘90s. The most important is the frequency with which companies file for an IPO. “Back in the Web 1.0 Boom, you had dozens of companies going public every week. Every company seemed dumber than the last, but that didn't stop them from going to market and jumping to 90 bucks a share on their first day of trading. “These days, there are offerings, but there are fewer and the companies have stronger fundamentals. Also, another difference is that acquisition is an accepted exit strategy. In the '90s, it was IPO or bust. “If nothing else, it seems like companies are more careful today because they have to be. There's money out there, but not a plethora of dumb money willing to throw cash at anything with a "dotcom" in its name.” Life after startups Since the tech boom of the late ‘90s, Lessard has returned to the public relations industry, with his company counting startups amongst its clients. “I did PR before I got into tech, right after I got out of grad school... I run my own shop, so I get to pick and choose the projects I work on. “I have a great job because I get to advocate for things I believe in. I don't represent crooks and hucksters. I represent people who are trying to make a difference in their own little way. I have worked with videogame charities who distribute used games to kids in hospitals and cancer wards. “I have gotten a street named after a favourite jazz artist. I have partnered with major sports franchises and food startups to get fresh food to people in underserved communities. I choose people as much as they choose me. It's not going to make me rich, but that's okay. My wealth is the satisfaction of being able to live the way I was intended to live.” Four tips for startup founders According to Lessard, there are four key lessons from the tech wreck that startup entrepreneurs should apply to their businesses: 1) Create a company that will make the world a better place. There are already enough apps for simulating fart noises. 2) Failure will teach you the lessons that you need to know the most. 3) Take better care of yourself. Cut out all the pizzas and the all-night coding marathons. That bro stuff is nonsense, and it will kill you. 4) Figure out what kind of person you are: Are you an overdog who needs to run stuff? Are you an underdog who just wants a check and weekends off? Are you a lone wolf who neither wants to run things nor be told what to do? These are important questions. The world is the way it is because it is full of people who are trying to fit themselves into slots they don't belong in.
Augmented reality (AR) is often understood in terms of wearable technology and device-driven capabilities, but an Australian technology company, buildAR, has built technology to enable it in your browser. Often thought of as a futuristic play, the augmented reality and virtual reality (VR) markets are expected to grow 15.18% from 2013 to 2018, reaching $US1.06 Billion in 2018, and that’s excluding mobile based AR and non-immersive VR. It puts some perspective into Facebook’s recent $US2 billion acquisition of Oculus Rift – a VR play in that it creates a virtual world, where AR lets you see the world with more information overlaid on what you’re looking at. According to TechCrunch, Microsoft is also reported to have bought the augmented reality-related intellectual property of wearable tech company Osterhout Design Group for between $US100 and $US150 million. What makes buildAR unique is that they are “augmenting the web” and bringing the experience into your browser. BuildAR founder Alex Young says there was a lot of fragmentation in the app world when it comes to augmented reality, but using it in a browser got around this problem and democratised the technology for everyone. It has recently launched a Kickstarter campaign that makes it possible for anyone to deliver AR using standard Web browsers, but their focus is on utility based applications, particularly in education. The Kickstarter campaign will allow anyone to “create a project and embed it directly in their webpage as easily as you do with a YouTube video.” The campaign highlights some of the uses of the technology: “If you back us as an educator, we'll give you the tools to create experiences such as an AR treasure hunt or historical exploration that'll have your students running around your school or campus having fun while they learn. “If you back us as a curator, we'll give you the tools to enable your visitors to point their phone at items in your exhibition to unlock extra information that extends your collection beyond what's physically on show.” The buildAR platform enables anyone to create digital content into the physical world around you by linking it to images, locations and more. When it comes to education this could mean using the technology to bring learning objectives to life. The technology will work on smartphones and tablets, as well as wearable devices such as Google Glass and Oculus Rift. There are limitations in the use of the technology on Apple devices though, something the buildAR team wants to draw attention to, claiming that “commercial decisions made by Apple have put the [iTunes] App Store ahead of their customers”. As Young points out, Apple have consciously decided not to support the latest open web standards. buildAR have created a demo for their technology to show that how you can run augmented reality within your standard web browser, presenting the "Projects We Love" newsletter as AR images, floating in the real world. If you open this on a modern Android device using the latest version of Chrome, Firefox or Opera you'll see a rich combination of augmented reality and the web, which is called the augmented web. However, if you open the exact same page using an iPhone or iPad, you'll find that it works but that you can only see a very limited user experience. Young says the company has a much higher profile overseas, than locally, but were committed to staying in Australia if it can. They have also launched some local meetups for those interested in Wearable tech, in both Sydney and Canberra.
With a high traffic and low margin business to grow, the team at No Yelling quickly ruled out pay-per-click advertising and decided to invest their limited cash into boosting their SEO ranking. The driving lesson aggregator and lead generator launched in 2010. Founder Jasper Boyschau told StartupSmart investing in quality SEO was the best business decision he’s made so far. “We weren’t anything two years ago really, and all it took was a bit of effort and all of a sudden we’re one of the major providers Brisbane.” SEO rapidly emerged as the only viable option for No Yelling. “Even if it’s only a couple of dollars per click, that’s still 20% of our margin. We couldn’t afford to lose that even though we need to get people through the door,” Boyschau says. No Yelling focused on creating good content sprinkled with their key search terms and getting the pieces published trusted, high profile sites. “That’s pretty much the core of it. The internet is full of trashy content and cheap SEO tricks are 100% dead,” Boyschau says. “We invested a fair bit at the start, and we’ve been number one on the terms ever since.” Sometimes the tactic worked so well it caused other issues for the business. Late last year, one of their pieces appeared on leading US start-up site TechCrunch. When over 200,000 people hit their website within a few hours, the server crashed. No Yelling’s Google growth tactics also included a concerted campaign to drive customers creating Google business reviews. “Word of mouth doesn’t just happen, you can definitely influence it,” Boyschau says. “Offer a good service and then ask for a favour. Most of our customers were happy to do that. Now we’ve got over 180 reviews, more than any competitor.” No Yelling has launched localised expansions in Ipswich and the Gold Coast. They intend to roll out across the country later this year.
The Australian Competition and Consumer Commission has blocked a $1.5 billion takeover of New South Wales government-owned power generator Macquarie Generation by AGL, citing market concentration concerns. “The proposed acquisition would result in the largest source of generation capacity in NSW being owned by one of the three largest retailers in NSW,” ACCC chairman Rod Sims says. “With this acquisition the three largest retailers in NSW would own a combined share of up to 80% of electricity generation capacity. “This is likely to raise barriers to entry and expansion for other electricity retailers in NSW and therefore reduce competition.” Building approvals jump nearly 7% in January Building approvals have jumped by nearly 7% seasonally adjusted during January, a faster rate than many economists had expected, according to new figures from the Australian Bureau of Statistics. Approvals for detached houses were up by 8.3%, while apartments and other dwellings were up 4.6%. In another piece of good news, the ABS figures also show Australia’s current account deficit shrank by 19% to $10.1 billion during the December quarter, with increasing exports and declining imports. Facebook looks to purchase drone aircraft maker Facebook is gearing up for another major takeover, with TechCrunch reporting the company is planning to launch a $60 million takeover of Titan Aerospace. Titan manufactures solar-powered near-orbital drones that can fly for up to five years continuously, with the social media giant reportedly interested in the aircraft in a bid to bring affordable internet access to 5 billion people worldwide who still lack connectivity. The project is set to compete against Google’s Project Loon R&D program, which aims to use hot air balloons to provide connectivity to remote areas. Overnight The Dow Jones Industrial Average is up to 16416.8. The Aussie dollar is up to US89.52 cents.
When two-year-old Envato received a firmly worded legal letter from tech juggernaut Adobe in 2009, the team thought their business was over. “We were terrified. It was just, oh my god our company is about to be demolished. Terrible things are going to happen and our world was rocked,” co-founder and business intelligence director Vahid Ta’eed told StartupSmart. Launched in August 2006 by four co-founders in Sydney, Envato was originally called Flash Den, after their first marketplace that connected buyers and sellers of Flash content. Despite registering a logo including the word “flash den” when they launched, they didn’t attempt to trademark the word until 2009. This is probably what triggered Adobe, which owns the trademark for “Flash”, to send the young company a sternly worded letter. “We got a concerning, and I would even say ugly, letter from Adobe’s lawyers. I still remember reading it, my heart was beating crazily and sweating,” Ta’eed says. According to Ta’eed, the letter informed Flash Den of a series of legal consequences if they didn’t change their company name, website and trademark swiftly. “They were a massive company. It felt like the Borg had come and we were about to be devoured,” he says. (For those who may not watch Star Trek, the Borg are an alien race that forces other races into their collective by turning them into cybernetic organisms.) Flash Den was managing four marketplaces with a team of 15 who had worked hard for two years to build their brand. “We worked through the panic. At first you’ve just got to get past the denial and anger, but then we realised we wanted to switch away from just selling Flash anyway, so maybe a forced branding change wasn’t such a bad thing,” Ta’eed says. They renamed that particular marketplace and their business from Flash Den to Active Den, which enabled them to include emerging technologies such as Microsoft’s Silverlight. They negotiated with Adobe to keep the Flash Den domain for a few months so they could redirect users to their new site. “We’d spent two years and didn’t want to just vanish,” says Ta’eed, adding the Adobe team were actually pretty good about the situation after their first exchange. The team decided to be transparent about the issue and communicated the brand change through a concerted PR effort that included stories in TechCrunch and the Washington Post. “We’d moved beyond just Flash, but we were still that brand, bolted onto that word. To move beyond it was challenging but as a start-up you do what you have to do,” Ta’eed says. The plan had always been to build a portfolio of marketplaces selling online content such as website templates and stock photography. Armed with a deeper understanding of trademarks and a more nimble approach to branding, the Flash Den team went on to explore new company brand names. They originally explored the possibility of rebranding to Eden but abandoned that plan due to the difficulty of trademarking a common word. In 2010, they bought Envato for about $1000 out of a catalogue of brands, complete with the brand, domain and first logo. “I remember when we picked it; I wasn’t convinced we seemed like an Envato. But now it feels like we’ve always been this,” Ta’eed says. Armed with a new brand, they went on to launch four new marketplaces. The team never took any external funding. “Being entirely self-funded is pretty cool. You get to make your own decisions and your own mistakes, which you learn from and live with,” Ta’eed says. Envato now employs over 100 people in Melbourne, with another 100 scattered around the world. In seven years, they have paid out over $140 million in payments to the marketplace “authors” or content creators.
When Daniel Pizzata and Adam Ellison were offered the chance to present their industrial quality robot building blocks start-up ModBot at leading international tech conference the Consumer Electronics Show, they scrambled to incorporate their company and get across to the US in time. They did. Speaking to StartupSmart from Las Vegas, the pair have been overwhelmed with advice and interest from people across the robotics industry after their presentation during TechCrunch’s Hardware Battlefield event. “Everyone keeps telling us that America is tapping the robotic industry as the next trillion dollar industry, especially at the high end of the scale. We’re further down towards consumers, and heaps of people have reached out to us, so it’s been very validating,” Ellison says. The ModBot product is a series of robot building blocks common to most robots. “From humanoid to spider-shaped, any useful robot you want to build will use some of these parts,” Pizzata says. Likening the toolkit to Lego, Pizzata says their primary goal for presenting at the event has been to start developing a community for their testing, upcoming crowdfunding campaign and launch. “Our goal is to raise awareness of the concept and get the tech community excited because this project is going to require a lot of collaboration. We want the maker movement involved as they’re the early adopters who will build the early impressive projects so other people can understand and get excited,” he says. Ellison adds the biggest challenges they anticipate will be marketing ones. “The consumer robotic market is so new, so the first big challenge is explaining the possibilities and triggering other people’s imaginations about how they could use it.” Pizzata and Ellison have both worked in robotics companies prior to launching the start-up this year, and have been developing the idea for three years. They are planning a crowdfunding campaign for around $100,000 and a seed funding round shortly. “We’re going to do both. Our capacity to reach a very large audience is making us very popular over here and there has been investment interest,” Ellison says. “The crowdfunding isn’t so much for capital, it’s about marketing, validation and triggering ideas. This was one of the big reasons we jumped at this opportunity to come to Vegas and present at CES. We need this community to get behind it before we start so the crowdfunding campaign works.”
What does an Australian start-up need to get investment? NICTA new ventures director crunches the numbers12:49AM | Thursday, 19 December
After an article about the similarities between 39 American billion-dollar software start-ups went viral last month, Andrew Stead, the director of new ventures at NICTA, decided to research the most successful investment-backed Australian start-ups. ‘Welcome to the Unicorn Club’, the TechCrunch article by seed-stage fund Cowboy Ventures founder Aileen Lee, detailed the key factors start-ups that received investment and became worth more than a billion dollars had in common. The findings were companies that became worth more than a billion dollars had two or more founders who were over 30 years old with university degrees and who had worked together before and launched companies previously. Stead analysed 71 investments in Australian start-ups in 2012. This included 44 deals totalling around $30 million from angel investors and smaller venture capital firms, 20 deals worth $24 million from early stage venture capital investors and seven deals worth $17 million from venture capital. “There is certainly not a formula and plenty of exceptions to every rule,” Stead says. “Building successful businesses takes time, experience, a team that knows each other and the ability to convince an investor that you are the team to exploit a big opportunity. With this in mind and the preferences of Australian venture investors, start-ups can go into a pitch forewarned and forearmed.” He found early stage venture capital and venture capital firm investments demonstrated a preference towards enterprise-oriented start-ups (80%), with two or three founders (67%), aged between 35-45 (71%), who have previously founded a business (68%). A key difference was Australian investors appear to be more open to backing single founder companies (41% of the companies were single founder led) than the findings of the American research, compared to only four of the American companies. “Determining whether the founders knew each other before was more difficult, with only 14% with obvious connections, compared to 90% in the US,” Stead says. “Australian founders had a solid track record of building businesses before with over 65% having done so and around 6% had sold a business.” The majority of the Australian founders were university educated with 95% of the founding teams had at least one person with a university degree. Of the founders who were also chief executives, 83% had university degrees. “In the US there is a focus towards the top schools but here that is less relevant, with a good spread across states and universities,” Stead says. The peak age for founding a business in Australia was similar to US, with 35-45 the most common bracket and just over half (62%) older than 35. Only 5% of Australian founders were under 25.
With new figures from Sensis revealing 67% of businesses expect to see an increase in sales in 2014, 99designs chief executive Patrick Llewellyn saysrefreshing your business’s image could be the key to boosting sales. Just as you need streamlined back-end technology in business, a company’s image is also fundamental to its success and longevity. Llewellyn told SmartCompany if a business is underperforming, or if it wants to address a new market, it needs to consider changing its image. “If things are going great, I wouldn’t be changing up your look for the sake of it. You need to have a purpose for why you’re doing something and have a clear reason,” he says. “But if your brand feels and visually looks dated, you should clean up and use flattering design principles. It’s an element of taking stock and having a good look at all of your materials and asking yourself hard questions about how your design represents your brand and reflects you.” For businesses in need of a facelift, Llewellyn has the following advice: 1. How does your design translate? Llewellyn says businesses need to consider how their design works on the different mediums. “Think about how it looks on social media, on mobile devices, on websites and whether or not your site needs to be more responsive. All of these things need to be considered,” he says. Llewellyn says when thinking about redesigning, businesses should find out what customers think of the brand. “Think about it as though you’re taking stock of yourself. Survey your customers and ask them what they think of the brand, how they perceive it and what values it represents to them. This process can give you a springboard,” he says. 2. Start with a clear vision Businesses need to start with a good understanding of what they want to achieve through the redesign process. “Spend some time trying to articulate this and engage others in this process,” Llewellyn says. “When coming up with a vision about making these changes, engage with your staff and try and involve as many stakeholders as possible.” Llewellyn says businesses can have fun with the process and use it as a way to bring everyone in the business together. 3. Think about the future When redesigning, businesses need to think about what they want their brand to present going forward. “Think about the future and your audience going forward and combine the best of the old and the new elements of the brand,” Llewellyn says. “Any new brand needs to be able to work on mobiles and also consider how the brand will interplay with the importance of content marketing. We will continue to see the rise of this in 2014 and any new branding effort needs to take this into account.” From here, businesses need to construct a design brief. “Talk about what the industry is, who the customers are, your mission and vision, and what visual styles you’re looking to represent,” Llewellyn says. “Look at brands you inspire to be like and where you want to go and really articulate this.” 4. Refresh all brand interaction points Llewellyn says brands now need to consider how they’re presented on every medium. “You also need to refresh your social and visual representation – so things like Facebook covers, blogs, emails and different interactions points with the brand could benefit from a redesign, rather than just your logo,” he says, “With content marketing a key trend, also think about repurposing existing content and turning it into something else, like an infographic or video.” Llewellyn says the notion of needing to stay relevant and be present on a “myriad of devices” is only just starting to take hold. “The trend is starting to permeate down to smaller and smaller businesses. The old paradigm of small businesses just caring about how their advertising looked in the Yellow Pages is changing. Small businesses now also care about SEO and SEM,” he says. “Every time there is a new device, your design needs to be rethought and redone. We’ll continue to see an evolution of these trends going forward as lots of small businesses still need to go online.” 5. Aspirational businesses Llewellyn says businesses big and small are reinventing in positive ways. “Looking at the big players, Google has done a really great job of enhancing its individual style. There’s been a noticeable change and it’s brought its products together in a more unified way with a good aesthetic and responsive design,” he says. “In terms of smaller sites, The Next Web and TechCrunch are trying to reinvent pretty often. They’ve done an okay job with their latest reiterations and their visual design styles continue to evolve.” This story first appeared on SmartCompany.
Gamified polling app Play2Lead received a warm international reception after being used by over 100 investors at international conference TechCrunch Disrupt last week. Co-founder and chief executive Theresa Lim says the three minute pitching opportunity was amazing, but she was more thrilled about the fact her app was used for the audience choice award at the AngelHack Global Demo day just prior to the conference. “I think I was the only product that was used by everyone in the room. The organisers told me that the judges really loved my product, but I’m really clear that even though I can’t ignore the US market because it’s so big, my focus is on the Asia-Pacific region first, especially China, and I want to stay put here,” Lim says. Just before departing for the US, Lim had signed up as a provider with events company InfoSalons. “They do 500 major events a year, and that gives me access to Australia, China and the Middle East. So I’m lucky enough to be one of the very few start-ups that has distribution ready to go, before coming out of beta,” Lim says. The app, which is due to exit beta in late October, was pitched at the global start-up day along with 300 other apps. Lim pitched shortly after two Australian developers, Jethro Clayton and David Boulton, who have since come under fire for pitching a sexist app called ‘Titstare’. Lim and her co-founder Evgeny Dudin were part of the TechCrunch pre-pitch training program, after coming second to Boulton and Clayton during an Angel Hackathon in May. Straddling the gamification, engagement and data trends, Lim says she’s developing a range of apps for events and in the next few months she’ll focus on partnering with a high-profile event to launch the app. Lim says she had a series of very positive conversations with representatives of Fortune 500 companies at the conference, who were keen to use the app for their events. “I already have some possible customers and I’m looking for a big event launch partner,” Lim says. The app operates on a monthly subscription model, funded by the event coordinating company so it’s free for users to download. Lim adds they are also about to start seeking seed capital to ensure they can get the app out to big events and markets quickly.
Last week I experienced my first taste of controversy in this arena. I contrasted Posse to Foursquare in an interview with Fast Company, who ran it as a feature with the headline 'What Foursquare would look like if it had been founded by a woman'. The article sparked a barrage of comments and tweets arguing why Foursquare is or isn't a good product for women and how Posse shapes up. It's the first time we've been so publicly compared to a competitor; the experience was both flattering and scary – a tiny Australian start-up set against a US industry heavyweight. Posse is not a revolutionary idea; many competitors are trying to solve the same problem as we are. And being first in line to seek a solution to a problem isn't always best. I found this recent Techcrunch article interesting: it points out that almost all of the nine tech companies that have exited for more than $1 billion in the past four years haven't created a new product category. Rather, they have developed in areas where the existing solution isn't up to snuff. Facebook provided a better experience than MySpace or Friendster, and Zappos just sold shoes in a better way with better service. We designed Posse because we felt the existing solutions weren't working for us. Now that we've officially launched in the US, it's natural that we'll be compared to competitors. In my blog today, I wanted to reflect on the process we used to design our product and how we took inspiration and ideas from others, like Foursquare and Yelp. 1. Define the problem and the audience We started with a hunch that some people preferred recommendations from friends to reviews from strangers on Yelp or TripAdvisor. We also thought that the process of asking for recommendations from friends through email, SMS or Facebook was cumbersome and inefficient. We set up an initial 10 focus groups to test our theory and asked questions like, 'Describe the last time you were in a new place looking for a restaurant or hairdresser. What did you do first?' The most common answers followed a pattern of, 'tried to contact a friend who knows the area,' then, 'couldn't get hold of them so ran a Google search or checked Yelp'. We also asked group participants to recommend places to each other on the spot, so we could understand exactly why they enjoyed sharing recommendations. Not everyone had a problem with this. Some were happy to use Google or Yelp to find places. The people who were dissatisfied tended to be like us: slightly fussier urban types who wanted to visit the best bars, restaurants, fitness centres, hairdressers and so on. They needed recommendations from friends and almost panicked at the thought of going somewhere cold. We continued the interview cycle until we identified four audience definers: gender, age, behaviors, and 'preferences'. By this I mean, what they sought in recommendations from friends and why they enjoyed giving recommendations to friends. Three of the four audience segments turned out to be female, so while we didn't design Posse just for females, we expected that the majority of users would be women. This may appear cold and calculating: breaking down users into audience segments, then designing features and artwork to appeal to those users. It certainly helped us understand who would want to use our product and why they'd use it instead of the competition. 2. Who has previously tried to solve the problem? Why did they succeed or fail? For this exercise, we mapped out every platform, past or present that had tried to solve social search. Yelp and Trip Advisor obtained lots of reviews and great data but failed to get a high enough proportion of their users writing reviews to show what your friends think of places. Both sites seemed littered with irate customers writing negative reviews. These upset the merchants, and many users we interviewed were skeptical about who was writing the reviews. Apps like Stamped and Fondu emerged to solve the social recommendation problem, but appeared to fail because not enough people were making recommendations to sustain long-term engagement. The only platform we could find that had managed to crack the problem of persuading lots of socially connected people to give it content was Foursquare. To understand how, we interviewed 100 Foursquare users. We invited friends who used the platform and put up posters around our office building offering to pay anyone who used Foursquare $50 for an interview. I wanted to know what was so compelling about checking in on Foursquare. We found that the overwhelming number of people who responded to our ads were male (+80%) and I was amazed when they described how they used the product. One guy told us about how he drove out of his way home every day to check-in at a supermarket where he was the Mayor. Others said they would check-in to places that they didn't even visit as they walked past. They were addicted and didn't understand why. As I struggled to make sense of check-in addiction, I couldn't help but notice the parallel between what these guys described and the behaviour of my small male chihuahua 'Steve' who dragged me to random posts, marking that he'd been there more than other dogs. Many women using Foursquare wanted to secure recommendations from friends for the best bars and cafes but found it frustrating that the most popular places around them were subway stations, people's offices or alleyways. They also didn't like 'checking in', broadcasting where they were, and were irked by random guys asking to be friends with them. I'm not saying that Foursquare, Yelp, Trip Advisor and many other local discovery platforms aren't great products that are loved by lots of users. Foursquare in particular was revolutionary in the way they use game mechanics and design to make participation in their platform fun: Posse and many others since have taken inspiration from these ideas to develop other products. I'm just saying, this is a process we went through: analysing the competition to design what will hopefully be a better product for a certain part of the market that doesn't seem to be well served by the existing players. Story continues on page 2. Please click below. Above: Steve the dog. 3. Designing the principles behind our solution Once we'd defined our problem, our audience, and analysed the competition, we created a list of principles. These principles underpinned the product for which the platform we designed would work. They included statements like: >Our audience make recommendations to signal social status. >Our audience like to collect and display their favorite things (Pinterest/Wanelo). >Our product category is so competitive that our product must be delightful and fun so people want to share it with friends. >Our audience doesn't want to earn currency for making recommendations but love recognition with authentic unexpected gifts from their favorite retailers. There were many others. 4. Designing the product With these principles in place, we set about designing the actual product. It all came together surprisingly quickly. The whole team took part in daily product design and we brought in lots of outside help for fresh perspectives on ideas. This whole process of defining the problem and audience, analysing the competition, designing our product principles and then the product took around four months and involved more than 200 outside interviews before the first line of code was written. It's something I didn't do the first time around when I built a site for selling music tickets. While we're constantly evolving and coming up with new feature ideas and design improvements, the fundamental strategy behind the product is solid and hasn't changed. Execution is the next big challenge and we're getting better at that too. We're still a tiny team with an early product that doesn't really stack up against the competition yet. Who knows if we'll make it? We're giving it our best shot. I know most people who read this blog are in the process of starting a company. I think that an in-depth analysis of the competition is vital, without fearing to enter a product category because of the big incumbents there already. We've found it helpful to take inspiration and learn from the successful trailblazers in our field, and if others do the same then we'll all end up with better products as a result.
It's been a while since the tech industry has seen a massive takeover deal, but this weekend delivered: cloud-storage group Dropbox agreed to acquire the popular new email app Mailbox for a price rumoured to be as high as $US100 million. The price is a huge premium for the app, which has only been available for a few weeks. But it also shows businesses in Silicon Valley are still willing to shell out massive amounts of money for very early, or even premature, ideas. Mailbox has become popular for its mail system, which allows users to delay receiving messages until certain times to help clear inboxes as quickly as possible. Mick Liubinskas, the co-founder of Australian start-up incubator Pollenizer, says email has become "one of the biggest areas of opportunity". "There are a lot of people attacking this in many different ways and it's a very good one to crack as well," he says. "But it's also a problem, because how do you disrupt something that's so embedded?" Reports, first from The Wall Street Journal, started emerging over the weekend that Dropbox had acquired Mailbox, where the company confirmed Mailbox would remain a separate app. Dropbox chief Drew Houston said he believed the acquisition would help the app grow "much faster". Houston also said he believed the deal would help Mailbox add new features quickly, such as handling attachments. In a blog post, he said the app's simplicity caught the company's attention. "Dropbox doesn't replace your folders or your hard drive: it makes them better. The same is true with Mailbox. It doesn't replace your email: it makes it better. Whether it's your Dropbox or your Mailbox, we want to find ways to simplify your life." With both Dropbox and Mailbox working so closely with cloud-based services, an acquisition makes sense. Mailbox is created by Orchestra, which was founded by Gentry Underwood. The app caused a splash during its release by creating a digital queue, with users having to wait days or even weeks to access the app – the company wanted to avoid any downtime caused by a rush of users. It was a smart move, bringing attention to the app's main feature – the ability to not only archive email quickly, but also tell email messages when they should be sent. For instance, users can decide to read an email later that day, or even in a few days. The Mailbox servers handle the message in the meantime, and then send the message back as per the user's instructions. Orchestra had already raised $5 million in funding from Charles River Ventures, SV Angel, Kapor Capital and Crunch Fund. The app already has 1.3 million users. The amazing part of the deal is the price, with TechCrunch claiming the deal was done for "well over" $50 million, to as high as $100 million, although All Things Digital says the structure of the deal makes an actual valuation difficult. The deal is in many ways a throwback to the past few years when small, relatively unproven businesses won millions in funding, such as the $1 billion Facebook-Instagram deal. More recently, however, those deals have become rarer. Telsyte analyst Rodney Gedda says the acquisition is a smart one, as email has been ripe for innovation – it's essentially the same product as it was 20 years ago. "It was designed for simple messages that weren't time-critical. It was never designed for collaboration and sorting in the sense that a structured data application would be." Some have tried to advance the email process, such as Google with Google Wave, although the tech giant eventually shut that project down due to poor usage. The biggest change, Gedda says, is the move to cloud-based services. "The challenge now is to build upon that base line of email to make it more functional, collaborative and user-friendly, and then extend it to any device." This story first appeared on SmartCompany.