Good Monday morning!
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Top News in the A.M.
Super Bowl ads: a retrospective.
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Lunch with Mr. Marketplace
Josh Breinlinger could have easily been a hardware investor. One of his first assignments out of M.I.T., where he graduated with a mechanical engineering degree, was working for a management consulting company, where he was tasked with dreaming up better fryolators for Burger King and helping design armor for army helicopter pilots.
But a college friend convinced Breinlinger to become the fourth employee of the online staffing company oDesk in 2004 (which merged with archrival Elance last year), and he became completely hooked on marketplaces.
In fact, since entering the world of venture capital a few years ago as a venture partner at Sigma West, Breinlinger has made it his mission to seek out the next big marketplace, leading investments in OfferUp, a Seattle-based mobile marketplace that’s trying to take on Craiglist; and Contently, a New York startup that’s helping companies produce articles that appear on their own websites, in native ad placements, and across social media. (OfferUp will be disclosing the details of a new funding round soon; Contently has raised $12 million, including a $9 million newly closed Series B led by Sigma West.)
Last week, I asked Breinlinger to tell me more about his ideal deal over lunch near Sigma West’s San Francisco office, and he offered up both the obvious and unexpected.
For example, like every other VC on the planet, Breinlinger looks for high recurring usage. (“It’s why Uber is so phenomenal,” said Breinlinger, tucking into his lemon grass beef dish. “I use it all the freaking time.”)
Also appealing to him: any marketplace that sees irregular usage and that can lock users into a subscription as a result. “Most people want housecleaners to come on a very regular basis and they have a relationship with that provider,” he noted. “On the other hand, when it comes to babysitters, it’s probably more irregular and as a result, you’re never going to have someone on demand, whenever you want.”
Breinlinger highlighted the success of Care.com, an online service for hiring nannies and other at-home caregivers that went public a couple of weeks ago. It shares were priced at $17 a piece; today they’re trading at $28.
Breinlinger’s time at Odesk also helped form some other specific views on what makes marketplaces click. He might not have funded the freelance labor force TaskRabbit, for example, primarily because the “best marketplaces lower costs, and TaskRabbit doesn’t meet that criteria for me because I used to be able to pick up my groceries for free [and paying for someone to pick up those items for you] is an added cost.”
Breinlinger cares about a startup’s Net Promoter Score, a customer satisfaction metric that centers on the question, “On a scale of 0 to 10, how likely would you be to refer X to a friend or colleague?”
And he’s exceedingly interested in the value that marketplaces add to relationships after they’ve made a match between a buyer and a service provider or product. As he told me, “The test we always used at oDesk was, ‘Could we find a buyer and a freelancer who have an existing relationship and get them to move their work to the Odesk platform because it would be easier and better for both of them?’”
Breinlinger said he thinks more marketplaces need to focus on internal feedback systems and a lot less on the “normal” starred feedback systems that are commonplace but wildly imbalanced, in his experience. “There’s no incentive for someone to rate someone a one, unless they’re really mad for some reason,” he noted. Meanwhile “everyone else gets a five.”
To learn who is actually good at their job and who isn’t, more startups should be building in a lot of internal reviews that include private, anonymous feedback.
“That’s how you improve the product. And when you build the system correctly, you can grow as fast as you want.”
New Fundings
Boombotix, a 3.5-year-old, San Francisco-based company that make s a line of “intelligent” speakers, has raised $4 million from new investors Social+Capital Partnership, Baseline Ventures, Red Hills, Great Oaks Venture Capital and Grishin Robotics. Earlier investors Walden Venture Capital and David Dolby also participated in the round, which brings the company’s total funding to just more than $5 million.
GetYourGuide, has added $4.5 million to the $14 million Series A round that it closed last year. Its new investors include Kees Koolen, former CEO of online hotel reservation agency Booking.com; Fritz Demopoulos, founder and former CEO of Chinese-based Qunar.com, and Sunstone Capital, a Nordic venture firm.
Nanomix, a 16-year-old, Emeryville, Calif.-based nanotech company focused on next-generation diagnostic tests, has raised $12 million in fresh funding from an unnamed strategic corporate partner and existing investors.
Vinted, a four-year-old, Vilnius, Lithuania-based social, mobile marketplace for second-hand clothes, has raised $27 million in Series B funding led by Insight Venture Partners, with participation from existing investor Accel Partners. The company has raised $33.6 million to date, according to Crunchbase.
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New Funds
Amadeus Capital, a 16-year-old, U.K.-based early-stage venture fund,has raised $44.7 million for Amadeus IV Early Stage Fund, a pool that will be used to back enterprise-focused startups in the U.K. Amadeus’ biggest LP is British Business Bank. The firm’s founder is Austrian entrepreneur Hermann Hauser. Amadeus’ last fund was a $13.5 million seed fund.
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IPOs
Castlight Health, a six-year-old, San Francisco-based company that provides employees with personalized shopping tools for healthcare benefits, has confidentially filed paperwork with the SEC for an initial public offering, according to Fortune’s Dan Primack. The company was founded by Todd Park, an Athenahealth co-founder who has since become the country’s U.S. chief technology officer. Much more here.
Coupons.com, the 16-year-old, Mountain View, Ca.-based network for online and printable coupons, just filed its S-1. The company, valued at a billion dollars when it closed its most recent, $200 million, round of financing in 2011, has raised $277 million altogether, including fromPassport Capital, which owns 22.6 percent of the company. Others of its principal shareholders include T. Rowe Price, which owns 11.66 percent of the company; entities affiliated with Warren Spieker, Jr., which own 8.41 percent; Abu Dhabi Investment Council, which owns 5.82 percent; and American Funds Smallcap World Fund, which owns 5.25 percent.
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Exits
CollabNet, a 14-year-old, Brisbane, Ca.-based agile development platform, has been acquired by the tech-focused private equity firm Vector Capital from its existing venture investors and other stakeholders, including Benchmark, Norwest Venture Partners, and Intel Capital. CollabNet had raised roughly $31 million in equity and $2.5 million in debt. Terms of the deal aren’t being disclosed but concurrent with the buyout, Vector has also made a growth equity investment in the 300-person company, including to accelerate its product development and enable add-on acquisitions.
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People
Twitter cofounder Jack Dorsey hasn’t tweeted since January 7. This is reportedly causing some a bit of a panic.
Bing Gordon of Kleiner Perkins, tells CNBC where he sees the next big trend in tech. “I predict in 10 years, 10 percent of people connected to the Web are wearing some kind of visual wearable [such as Google Glass],” says Gordon. “These things that measure the quantified self are addictive, fun, useful, and social.”
Y Combinator cofounder Paul Graham has announced a change in the way his outfit invests in the startups that pass through the program. Specifically, to minimize signaling risk, YC Partners will no longer participate in the first $500,000 unless it’s at least three weeks past startups’ “Demo Day.” Graham says too many investors had begun to follow YC Partners’ lead, backing what they back and avoiding those startups it didn’t.
Investor Peter Thiel talks to the Globe and Mail about how he chooses which dreamers to back. His simple calculation, he says: “How many leaps are required for your solution to work? Having to invent one or two major things, that’s doable. More? Doubtful.”
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Jobs Listings
Attorney readers, take note: One Kings Lane, the very well-funded home decor company, is looking for an associate general counsel in San Francisco. Apply here.
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Happenings
500 Startups is hosting an invite-only Demo Day in Mountain View, Ca., this Wednesday for the startups in its current accelerator batch. You canlearn more here.
The Innovation Forum is launching its first Innovation Leaders Conference at Cambridge University on February 27th and 28th. The conference aims to promote the translation of cutting edge research into commercial products and services. More details here.
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Data
This morning, Cambridge Associates and the National Venture Capital Association released new performance numbers through last September 30, and they show continued improvement, but VCs are still getting bested by the DJIA, Nasdaq, and the S&P 500 over the one-year, three-year, and five-year period. Things flip at the 10-year mark, where VC returns have hit 8.6 percent, outpacing public indices slightly. You can see the numbers right here.
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Essential Reads
Batteries, long the “poor cousin to computer chips in research-obsessed Silicon Valley, are now the rage,” says the New York Times in a report that suggests our smartphones could eventually pull energy from the air or power themselves through TV, cellular or Wi-Fi signals.
According to Yale University, Johnson & Johnson is providing the Yale University Open Data Access (YODA) project access to its clinical trial information vault, meaning researchers across the globe will be able to use the company’s data in their clinical trials.
The Economist has put together a 16-page report on the rise of technology startups around the world. It’s well worth reading, as TechCrunch notes.
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Detours
Inside “Billionaires Row”: a look at nearly $500 million worth of rotting, derelict mansions in London.
Social psychologists say it takes 36 days after a tragedy before jokes about it become funny. The New Republic on the science of humor.
The operating system played by Scarlett Johansson in “Her” has far more emotional intelligence than Siri does today. Can Siri catch up? Maybe, butdon’t hold your breath, says Siri’s cofounder.
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Retail Therapy
Magic wallets. Cheap, functional, and fun. Available at J.Crew or here.
Ah, yes, our kind of tent.
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