from MediaFile:
Online education site raises $3 mil in a round led by Groupon founders
Groupon co-founders Eric Lefkofsky and Brad Keywell have invested in online educational site (with one complicate name) Udemy through their venture capital fund Lightbank. Udemy just announced a $3 million Series A round of financing led by Lightbank that also includes funding from MHS Capital and 500 Startups.
Udemy plans to use the money for hiring and marketing and biz development.
Udemy "the academy of you" offers 6,000 courses covering all sorts of hobby-related subjects like social marketing, how to build a iPhone app, and Art 100 in addition to more traditional topics like intro to psychology. About 90 percent of Udemy's courses are free.
Online education is a pretty hot sector now -- just go ask the Washington Post and its Kaplan division which for the most part has been the driver of growth behind the company synoumous with Watergate and newspapers . Even News Corp is getting in on the act and set up an education unit focused on technology last year.
The $3 million round follows $1 million in funding from MHS Capital, 500 Startups, and several other individual investors.
Chicago’s startup community sticks by struggling Groupon
– Connie Loizos is a contributor for PE Hub, a Thomson Reuters publication. This article originally appeared here. The views expressed are her own. –
Not long ago, daily deals giant Groupon was the toast of Chicago, a press darling that received the blessing of Oprah Winfrey, was commended by Forbes as the “fastest growing company ever,” and even reportedly spurned a multibillion-dollar buyout offer from Google.
A Chicago Tribune headline from last December summed up its place in the ecosystem: “Groupon’s Success Adds Luster to Chicago’s Startup Community.”
Things have changed somewhat, of course, with Groupon experiencing numerous setbacks since filing for an IPO in June. Among them, the company has been forced to amend its S-1 three times to satisfy SEC concerns over its accounting practices; it lost a COO who’d joined five months prior; and an email leaked to the press led the company to cancel its IPO roadshow. Early this week, a financial analysis firm released a report suggesting that Groupon may now be on a “self-reinforcing path to insolvency.”
If Groupon suddenly looks to leave a mixed legacy in Chicago, the city’s startup community is loath to acknowledge it publicly or privately. Indeed, talk with regional entrepreneurs and investors and two things quickly become clear: they say they still believe in Groupon; they also think no matter what happens to the company, their fortunes will not be tied to it.
“Groupon put Chicago on the (startup) map,” said one longtime Chicago VC who asked not to be named. But if Groupon should stumble after all its advanced billing, “I don’t think it will blow up the community or cause venture money not to come into Chicago,” he added.
“It’s true that Groupon is closely associated with the Chicago tech scene,” said venture capitalist Steve Miller, co-founder of Origin Ventures outside of Chicago. “But as someone who has been closely involved here for the last 12 to 13 years, I can tell you there’s much more to Chicago than Groupon.”
Sittercity founder to launch “social recommendation engine”
– Connie Loizos is a contributor for PE Hub, a Thomson Reuters publication. This article originally appeared here. –
Genevieve Thiers is not a household name in Silicon Valley, but many Chicagoans know her as the founder of Chicago-based Sittercity, a 10-year-old online subscription-service that marries families to caregivers around the country for help with their children, pets, and aging parents.
Thiers is also among a small, but growing number of second-time entrepreneurs beginning to emerge from Chicago’s young, but maturing tech scene. Next month, Thiers officially launches her newest startup, Contact Karma, with co-founder Maureen Wozniak (no relation to Apple co-founder Steve).
Her timing looks ideal. Sittercity appears to be on solid footing. It lists more than 2 million caregivers; its corporate customers include the Department of Defense, which uses the service to assist military families; and in April, it raised $22.6 million led by New World Ventures, bringing its total funding to date to $30 million. According to Thiers, Sittercity, along with the well-financed restaurant discovery and ordering service GrubHub, may not be far behind their local peer Groupon in filing for a public offering.
“There are a number of (Chicago-based) companies that could very well IPO if they wanted in future years,” she said.
Now, Thiers — who is expecting twins in November and passed along Sittercity’s CEO role to the company’s COO last year –- is hoping to create a second, long-standing Chicago company with Contact Karma, which Thiers and Wozniak characterize as a “social recommendation engine.”
For the last few months, the two have been creating a database of recommended service providers that businesses can find both by surfing Contact Karma’s platform, as well as through daily deals that Contact Karma sends out via email. Want a marketing pro for a particular project? You can visit Contact Karma and see who comes recommended and by whom. Meanwhile, you can probably land a cheap company lunch through an emailed coupon for group takeout.
from Reuters Money:
Raw deal: Why Groupon might be bad for business
When Fan Bi wanted to get the word out about his new company, Blank Label, he instantly thought of popular daily-deal sites like Groupon and LivingSocial. By offering a healthy discount for custom-designed dress shirts, “it wouldn’t cost us anything up-front, and we’d get all these new customers,” Bi remembers. “It sounded like a no-brainer.”
So he signed up with the deal site BuyWithMe, offering $100 gift certificates for $50. Only thing is, the discount worked a little too well. Almost 250 customers snapped them up, and after the deal site took its cut, “we were losing around six dollars a shirt,” he says. “If we’re losing money on every single order, it’s not even worth doing.”
It’s a common refrain from merchants who are testing out the increasingly popular daily-deal sites. For customers, as long as you actually cash in the coupon, it’s often a terrific bargain; for business owners, it can be a riskier gamble than they realize.
According to a new study by researchers at Houston’s Rice University, such promotions lost money for more than a quarter of businesses surveyed, and less than half said they would run such a deal again. “Consumers are getting a heavily subsidized product or service, so for them it’s a great deal,” says Utpal Dholakia, a Rice management professor and author of the report. “But businesses are hoping that those buyers will come back again and again, and by and large, they’re not achieving that goal.”
Indeed, for business owners, there are a number of potential mines that could blow up in your face. If the discount is too deep; if the deal site’s take is too large; if the duration is too long; or if those new customers never come back to pay usual retail prices, then you could be seriously endangering your bottom line.
That’s what Olivia Trevino found out. When Trevino offered Groupon discounts for electrolysis treatments at her Seattle skin-care shop, the hundreds who signed up made her think twice about ever doing a daily deal again. “I can’t just give stuff away,” says Trevino, whose commission-based staff started to grumble about the swarming hordes of bargain-lovers. “I have to pay my staff, and make a little money myself. How am I supposed to pay my bills and my rent?”
To be sure, there are strategies you can employ to make sure you’re not sunk by an overly popular promotion. A few tips from the experts:
Is Airbnb growing too fast?
– Connie Loizos is a contributor to PE Hub, a Thomson Reuters publication. This story originally appeared here. The views expressed are her own. –
Airbnb is on a tear. Three years after the San Francisco-based company began inviting real people to list for rent their homes and apartments, castles and houseboats, users have booked 1.9 million nights in more than 184 countries; bookings are growing an astonishing 40 percent month over month; and roughly 1,000 new properties are entered into its system each day.
The company is growing so fast, in fact, that it’s reportedly raising $100 million at a whopping $1 billion valuation — a mighty addition to the $8 million in capital it has previously raised from Sequoia Capital, Greylock Partners, and numerous individuals.
Unfortunately for Airbnb, all the hype has captured the attention of the Samwer brothers, who’ve famously created a number of successful clones. Indeed, just two weeks after rumors of Airbnb’s massive fund-raise surfaced, the Samwers’ months-old European clone, Wimdu, announced it raised $90 million.
Considering that the majority of Airbnb’s business comes from Europe, one might consider the development troubling. But Brian Chesky, Airbnb’s 28-year-old CEO and co-founder, said he doesn’t think that it “changes things much. We were always expecting some competition. We just have to grow as quickly as possible.”
The question is: how fast is too fast? For example, Chesky talks about the challenges of building what he anticipates will fast become a thousand-person organization. Airbnb has already absorbed employees through one startup, Accoleo, for which it paid an undisclosed amount. And while Chesky said he “can’t confirm (Airbnb’s) rumored ($100 million) financing,” he added that “we’re open to other acquisitions.”
Yet hiring the right people is “inherently very complex,” said Chesky — even before folding entire companies into Airbnb, which now employs 130 people in San Francisco and Hamburg and has begun training people in “batches” of 15. “The product, the Web platform – you develop a playbook that allows (the business) to scale itself,” he said. “But when you’re hiring two or three people a day, keeping the culture and ensuring that people are aligned is complicated.”
Note to entrepreneurs: Your idea is not special
– Brad Feld is a managing director at the Boulder, Colorado-based venture capital firm Foundry Group. He also co-founded TechStars and writes the popular blog, Feld Thoughts. The views expressed are his own. –
Every day I get numerous emails from software and Internet entrepreneurs describing their newest ideas.
Often these entrepreneurs think their idea is brand new – that no one has ever thought of it before. Other times they ask me to sign a non-disclosure agreement to protect their idea. Occasionally the emails mysteriously allude to the idea without really saying what it is.
These entrepreneurs think their idea is special and magic. And they are wrong.
The great entrepreneurs are already focused on the implementation of their idea. They send me links to their website or software. They describe the business they are in the process of creating (or have already created). They point me to what they’ve done to implement their idea and show real users who validate that the idea is important. And they quickly move past the idea to the execution of the idea.
Google? Not the first search engine. Facebook? Not the first social network. Groupon? Not the first deal site. Pandora? Not the first music site. The list goes on. Even when you go back in time to the origins of the software industry: MS-DOS – not the first operating system. Lotus 1-2-3 – not the first spreadsheet.
The products and their subsequent companies became great because of execution. First, they had to execute on building a great product. Next, they had to execute on building a great business. Finally, they had to execute on scaling, sustaining, and evolving a great business.
I agree. with execution be paramount.
The ideas that I have had, and continue to have, jump into my mind have been counted into hundreds of usable ideas many worth billion or trillion dollar valuations – if launched with capable people. However, my execution and business skills suck, so the valuation is zero. The real question is how to integrate ideas guys and execution guys?
david.apexx@gmail.com
Silicon Valley recruiter on tech hiring frenzy: “Everyone’s desperate”
Robert Greene, the founder and CEO of Silicon Valley-based GreeneSearch Inc, specializes in recruiting hands-on talent for technology-focused companies, primarily startups. He provided his perspective on the current boom in technology hiring.
Q: How would you characterize the tech hiring market now? A: It’s very competitive right now. It’s been like that for a while; it’s probably heated up even more of late. You have the bigger companies – Groupon, Zynga, Google, LinkedIn, companies that have been proven and successful – and then you have all these startups. The supply doesn’t meet the demand.
Q: Is there an advantage to being a small company? A: The advantage they have over those (big) companies is that they can move really quickly. They’ll do everything in a day and make an offer and hope that person will accept right away before they get into the bigger companies. Those are their selling points. They have to move quickly, they have to be agile, have to have the compelling story, have to give equity, along with competitive salaries.
Q: Do you think we’re heading toward another tech bubble like we saw in 2000? A: I’ve been recruiting for seven years. I know back in the boom companies were offering cars and huge bonuses and stuff to attract engineers, and that’s not happening. I’m seeing real money – I’ve heard that Google is making huge counter offers, real money.
Q: How many offers are your top engineers getting? A: I had a guy out of Amazon in Seattle who had three offers. We’re seeing multiple offers. I had one instance where an offer was signed and Google countered and made him a huge offer back and he stayed at Google.
Q: Are you seeing companies looking less at top-tier schools? A: No, I’m not seeing them sacrifice the quality. Everyone’s desperate, trying to figure it out. I don’t know if there’s any simple solution other than move quickly, have a compelling story.
Q: How long do you think this boom will last? A: I hope it lasts for a while. Usually it goes in cycles. It’s been reported on more recently – but it’s been happening for a while. The news is on this now because of the LinkedIn IPO. Now there’s some real exits and big exits. We’re not going to have a time like we had in 2000 where companies didn’t have business plans or revenues and were going public. I’ve been hearing the B (bubble) word a lot – but I think it’s more realistic.
Exactly what are they looking for? More MBAs? Salesmen? Certainly not engineers.
from MediaFile:
Are we living through another tech bubble?
By Kevin O'Connor
The views expressed are his own.
Yesterday’s announcement that Groupon is planning an IPO has accelerated the view (at least in some quarters) that we are living through a second tech bubble, fueled by social media companies.
Perhaps we are, but the conclusions to draw from that are not so simple. I still remember the negative reaction we received from potential investors back in 1995 concerning our forecast for Internet growth. Well, they were right – our forecasts were way, way off – the Internet grew a lot faster than we or anybody else could envision.
I lived through the bursting of the dot-com bubble and watched in horror as our stock – DoubleClick – plummeted, with 75% of our customers going out of business. My mother was so embarrassed I was a CEO of an Internet company she began telling friends I was a mid-level crack dealer.
Thankfully, sanity prevailed, as “great” Internet companies continued to produce real value for both their customers and shareholders.
Now, fifteen years on, I’m CEO of another Internet startup – FindTheBest. Six months ago we raised venture financing, and it’s clear things are far different from 1998. Back then, if you moved you got money and if you could crawl you did an IPO. Today, VCs are far more tight-fisted and the few companies that have done IPOs have real revenue.
“Lean Startup” evangelist Eric Ries is just getting started
– Connie Loizos is a contributor for PE Hub, a Thomson Reuters publication. This article originally appeared here. –
“Except in very narrow cases, where there’s breakthrough science that needs patent production, worrying about competitors is a waste of time,” Eric Reis told me. “If you can’t out iterate someone who is trying to copy you, you’re toast anyway.”
Ries speaks with confidence, likely because people seem to listen. In fact, he’s become one of Silicon Valley’s best salesmen, largely by preaching what seems to be common sense: in order to maximize resources, companies need to find out what customers want as quickly as possible and capitalize on those findings.
Just one indicator of Ries’s power: entrepreneurs from 100 countries watched his sold-out, second-annual “Startup Lessons Learned” conference streamed live recently from San Francisco. (Its aim? “To unite those interested in what it takes to succeed in building a lean startup,” said Ries.) Another indicator: Ries’s new book, “The Lean Startup”, doesn’t come out until September, but is already the 11th-most popular book in the business and investing section of Amazon.
Ries, 32, never expected he would make his mark as a tech evangelist. A Yale grad who studied computer science, he began his career as an entrepreneur while still in school. (He now calls his short-lived startup, Catalyst Recruiting, “a footnote to a footnote.”) But even then he found himself “considered not only an expert in programming but in startups” by local incubators and two venture firms who asked him to be an adviser.
He’s quick to note the absurdity of the situation. “We spent all (of Catalyst’s) money on marketing, thinking there would always be more. Based on what I was reading in magazines at the time, I thought the rules for entrepreneurship meant being at the right place at the right time, working hard, breaking all the rules, having great perseverance, then pounding the keyboard some more and having a beer.”
A broader network of people began listening to Ries in 2008, after he began espousing lessons he’d learned as the CTO and co-founder of the 3D virtual world IMVU. Many of those lessons centered on figuring out what works as quickly as possible through constant iteration and customer feedback. (IMVU, which Ries left four years after its 2004 founding, used to toss fresh code into its production cycle 50 times a day, he said.)
PeopleDeals offers its spin on group buying
It appears there’s no end to the number of startups the group-buying space can contain. The latest entrant offering a better mousetrap is PeopleDeals, which allows small and medium-sized businesses to create deals that increase in value the more they’re shared across social networks.
Whereas Groupon-type deals are basically a two-for-one model that doesn’t change, PeopleDeals makes the price cheaper after a certain number of participants share the virtual coupon across social platforms such as Facebook and Twitter. To illustrate, a pizza joint could offer an online deal for 50 cents off a slice, then as soon as it’s shared with another person it increases to 60 cents and then to 70 cents after it’s shared five more times, up to a maximum of $1 when 20 or more people share it.
“The key is the business owner decides. At any given time they can make it go from 50 cents to $5, or from 50 cents to 70 cents,” said Darin Myman, the CEO of Red Bank, New Jersey-based social network PeopleString Corporation (PLPE.OB), which launched PeopleDeals last week. “When they (customers) share it with their friends and their friends share it they’re becoming your new social media.”
PeopleString, which Myman said originally raised $500,000 from friends and family when it launched two years ago, began trading on the secondary market in January, which “allowed us to get into the market in a timely fashion.” He added the company now has 1,100 sales reps, a million users and is already profitable.
Myman said PeopleDeals is a more cost-effective way for small businesses to use social coupons, as it charges merchants a subscription fee of $80 a month or $649 a year that lets them run a maximum of 10 deals simultaneously (they are charged more for each additional deal above 10). A typical Groupon deal for a $25 coupon that nets them $50 worth of food, ends up costing the merchant $12.50. Should the deal explode in popularity, the business owner is able to stop it immediately or keep increasing the discount.
“One thing that we capitalize on is the loyal customers spreading your word. Hey look, I go here, help me save more, but you could save more also – it’s a team sport,” said Myman, noting PeopleDeals should be available on Android smartphones at some point this week and eventually on iPhone and BlackBerry devices. “I think we disrupt the industry for both the traditional Valpaks and clipper magazines out there and also the new guys like the Groupons and the Living Socials.”
Just found out about PeopleDeals moments ago, Groupon is not my favorite anymore http://www.peoplestringsignup.net
