StrictlyVC: March 4, 2014

Hi, good Tuesday morning, everyone!

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Top News in the A.M.

Facebook is reportedly in talks to buy drone maker Titan Aerospace to extend Internet access to parts of the world that still go without it.

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Ben Horowitz on the “Irrational Desire” Needed to Succeed

For people with Andreessen Horowitz fatigue, things are about to get worse with the publication of co-founder Ben Horowitz’s new bookThe Hard Thing About Hard Things.

Here’s the hard truth: the book is outstanding. This reporter has never met a business tome she could finish; not so with Horowitz’s newest effort, which manages to be equal parts entertaining, harrowing, and instructive as both a business manual and as an autobiography. Even the pacing is excellent, helped in part by both emails and exchanges, like this brief conversation with Horowitz and longtime partner Marc Andreessen as their company, LoudCloud, appeared to be at death’s door: “Do you know the best thing about startups?” Andreessen asks Horowitz. “What?” “You only ever experience two emotions: euphoria and terror. And I find that lack of sleep enhances them both.”

Horowitz talked with StrictlyVC about his new book late last week. Our conversation has been lightly edited for length.

Some authors hire research teams to help with their books. Did you have support in writing this?

I wrote it. It was a hard thing, but I kind of had to do it. [Freelance editor Carlye Adler, who recently co-authored a book with Yahoo’s chairman, Maynard Webb] edited it, so she kind of fixed a few things like grammar. The most corrections [owed to] my general tone, which was a little casual for the book. [Adler tweaked things] so it wouldn’t sound too street. [Laughs.]

What made you think, okay, next month, I’m going to sit down and start work on this thing?

It was combination of stuff. I kind of had this concept in my head, but the problem with management advice is that it’s highly related. Management is very dynamic, very situational, so any advice you give is based on your [experience]; it’s not general advice. People try to generalize it — and I try to generalize it, too — but without knowing where it comes from it’s not nearly as useful. So I thought the stories about where it came from and what I got out of it [would be helpful]. I had been planning to publish them [as blog posts]. But after [publisher] Hollis Heimbouch at Harper Collins found me on Facebook, I thought it might work better as a book.

You’ve said the book’s proceeds will go to the American Jewish World Service to support women’s rights globally. Does that include your advance and royalties? For some perspective, can you share how much you were offered to write this book?

The contract is confidential, but yes, it’s all going to AJWS.

How long did it take you to write the book?

It’s funny because when it first came up, I like was like, “I need to take a little time off to do this.” And everybody immediately said, “No. You cannot. You have to be here.” So it took a little longer than I would have liked, a little over a year. It was definitely a nights and weekends kind of thing, and I’d find some time in the day. But it was good because I remembered stuff in bits and pieces. There’s a story about [LoudCloud’s struggle to go public], when my wife was sick [with an extreme allergic reaction], and that was such a traumatic experience, I’d sort of blacked it out in my memory; it kind of [came back to me] late in the process.

You have a lot of rich, detailed material in the book – dialogue, emails. Did you solicit help from your friends and acquaintances?

Carlye helped me quite a bit with this. I’d made a list of all the people I’d worked with over the years, and she interviewed them about their experience and some of [the book material] came out of those interviews.

The second half of the book provides pretty concrete advice for operators in a wide variety of tricky situations, though you don’t spell out how to engender loyalty. Many people from your past companies – John O’Farrell, Scott Kupor, Marc Cranney – wound up at Andreessen Horowitz. What’s the trick?

If you really believe in the people who are working in the company and you believe they can be more than they can be — even more than they themselves think they can be — that comes through. And then if they grow [into that expectation], it becomes a very strong bond.

I did an attrition survey at Netcape [Horowitz was put in charge of its enterprise Web server product line at age 29], and people leave companies for two reasons: People either hate their manager – that’s number one – or they’re just not growing or developing. Training is important, but it’s really about what the CEO believes about you. If the CEO doesn’t believe in what you can become, it’s hard for you to become it.

When it comes to being a great CEO, what would you say are the top three qualities in order of importance?

The number one thing is you have to have an irrational desire to build something. Any kind of rational reason for being in it gets pretty screwed up over time, because you end up in very bad situations now and again. I’d say the second quality would be the ability to find your courage at some point — the ability to stand up to a lot of pressure.

And not quitting is probably number three. I think the only reason I stayed [with Opsware, which Horowitz essentially yanked from the ashes of LoudCloud and eventually sold for $1.6 billion] is that I didn’t quit; I stayed at it long enough that it worked out.

You recently published an anecdote on your blog, which didn’t make it into the book, about how you avoided an options backdating scandal by not taking the advice of a well-regarded CFO you’d hired.

Yes. People called the character and harassed her. She was actually grateful for the way I portrayed [what happened].

Is there any danger that other characters in your new book will make a fuss? You write about one executive who was “born in the oilfields of Oklahoma, graduated from West Point, and was in charge of anyone who touched any servers at EDS,” which was one of your biggest customers at the time. We later learn that he lingers at airport bars to escape his work and family.

I tried to run a lot of stuff by as many people as I could, because I [didn’t want to upset people]. I’ll bet I missed some, though. I think my biggest fears are that, and the acknowledgements. I know I didn’t acknowledge people who were a huge help, and I just don’t know how to go back [and do that now].

How much of your adventures at LoudCloud and Opsware would you say owe to luck versus quick, reactive decision making?

Luck played a major role. We had so much bad luck early – an overwhelming amount of bad luck – beginning with the whole change in macroeconomics [LoudCloud raised tens of millions of dollars months before most of its customers were done in by the 2000 dot.com implosion.] Then we had tremendously good luck [i.e., Opsware’s eventual sale to Hewlett Packard]. There’s no question that if a couple of things had gone a different way, we wouldn’t have made it.

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New Fundings

Appian, a 15-year-old, Reston, Va.-based company whose platform helps enterprises to build their own customer applications, has raised $37.5 million in Series B funding from New Enterprise Associates, $35 million of which will go toward repurchasing shares of common stock, reports the WSJ. Appian had raised an earlier, $10 million, round from Novak Biddle Venture Partners; it still holds a stake in Appian, says the company’s CEO.

Boqii, a 6.5-year-old, Shanghai-based e-commerce platform for pet owners, has raised $25 million in Series B financing led by an undisclosed U.S.-based firm; earlier investors Goldman Sachs and Jafco Asia also participated in the funding. China’s pet industry stood at roughly $6.5 billion in 2012, compared with the $53.3 billion U.S. pet market, according to the China Money Network.

Caspida, a new, Palo Alto, Ca.-based cyber security startup, has raised $9.5 million from True Ventures and Redpoint Ventures, shows an SEC filing. The company was cofounded by Sudhaker Muddu, who sold his last company, Cetas, to VMWare in 2012.

Invuity, a 10-year-old, San Francisco-based maker of advanced medical devices designed to improve access and visualization in minimally invasive surgeries, has raised $36 million in Series E funding led by HealthCare Royalty Partners. Earlier investors Valence Life SciencesInterWest Partners, and Kleiner Perkins Caufield and Byers also joined the round, along with individual investors. The financing is a combination of $21 million in equity and up to $15 million in debt.

Mashable, the 8.5-year-old, New York-based media company, has added $700,000 to its Series A round from Tribune Digital Ventures, bringing total funding for the round to $14 million. Others of its investors includeUpdata PartnersNew Markets Venture PartnersSocial Starts.

Mela Artisans, a 3.5-year-old, Boca Raton, Fla.-based online market for decor, jewelry and more from artisan clusters in cities like Uttar Pradesh and Rajasthan in India, has raised $3 million from the social venture firm Aavishkaar Venture Managementreports the Economic Times.

Speek, a 1.5-year-old, Ashburn, Va.-based company focused on simplifying conference calls, has closed $5.1 million in Series A funding. The investors included 500 StartupsEd Norton (yes, the actor), Crystal Tech FundCNF Investments and Middleland Capital.

Vires Aeronautics, a year-old, San Francisco-based company that develops airplane wing designs, has raised $1 million in a Series AA round of financing led by Draper Associates, with participation from Lemnos LabsVegasTechFundPromus Ventures, and numerous individual investors.

Wickr, a 1.5-year-old, San Francisco-based startup that promises to allow users to send encrypted and self-destructing messages, has raised raised a $9 million Series A round led by Alsop Louie PartnersGilman Louie, the firm’s cofounder, has also made a personal investment in the company, alongside Thor Halvorssen, president of the Human Rights Foundation; the networking company Juniper; former counterterrorism czar Richard ClarkeEileen Burbidge of Passion Capital in London and other investors, says TechCrunch.

Zumper, a 1.5-year-old, San Francisco-based online home and apartment rental search service, has raised $6.5 million led by Kleiner Perkins Caufield & Byers, with earlier investors New Enterprise Associates andDawn Capital also participating in the round. The company has raised $8.2 million to date.

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New Funds

Harmony Ventures, a four-year-old venture firm with offices in Menlo Park, Ca., and New York, is raising its second fund, according to an SEC filing that shows a $75 million target. Harmony looks to back capital-efficient companies that are raising a small expansion round. It was cofounded byMark Lotke, formerly a general partner at FTVentures and Pequot Ventures; and Gregory Eaton, who was once a managing director with Cheyenne Partners (which raised money from LPs on a deal-by-deal basis) and a founding general partner at Rembrandt Venture Partners.

Harmony raised between $20 million and $30 million for its first fund, closed in 2012, according to a separate filing. The firm’s site suggests it has backed 11 companies startups with that capital, including Aveksa, a security software and identity management firm that was acquired last year by data storage giant EMC for undisclosed terms. Its newest investment appears to be PlaceIQ, a startup that uses location data for mobile advertising and that raised $15 million in Series C funding last month led by Harmony.

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IPOs

Five9, a 13-year-old, San Ramon, Ca.-based maker of call center software, has registered with the SEC to raise up to $115 million in an IPO. The company has raised roughly $72 million from investors over the years, according to Crunchbase. Its biggest shareholders are Hummer Winblad Venture Partners, which owns 23.2 percent of the company; Adams Street Partners, which owns 19.8 percent; Partech International, which owns 17.4 percent; Mosaic Venture Partners, which owns 17.4 percent; and SAP Ventures, which owns 6.7 percent.

Opower, a 6.5-year-lld, Arlington, Va.-based company that provides software to utilities to help customers reduce their power bills, has registered with the SEC to raise $100 million in an IPO. The company has raised roughly $66 million over the years, according to Crunchbase. Its biggest shareholders are New Enterprise Associates, which owns 21.8 percent of the company; MHS Capital, which owns 8.3 percent; Accel Partners, which owns 5.4 percent; and Kleiner Perkins Caufield & Byers, which owns 5.4 percent.

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Exits

Basis Science, a three-year-old, San Francisco-based company that makes a health tracking wristwatch, has been acquired for between $100 million and $150 million, sources tell TechCrunch. Basis had raised roughly $32 million in funding, including from Intel Capital, the Dolby Family TrustStanford UniversityMayfield FundDCMNorwest Venture PartnersiNovia Capital, and Peninsula Ventures.

Telerus, a 7.5-year-old, Denver-based developer of interactive voice response systems created for corrections industry, has been acquired by fellow jail communications service provider Securus Technologies, which is backed by the media-focused private equity firm Abry Partners. Telerus doesn’t appear to have disclosed any outside funding. Financial terms of the acquisition weren’t disclosed. The two companies produce inmate audio, video, GPS parolee tracking, big data analysis, and automated information services, according to Tech Rockies.

WebDAM, an 8.5-year-old, San Mateo, Ca.-based maker of digital asset management software, has been acquired by the publicly traded, stock photography service Shutterstockreports TechCrunch. WebDAM was bootstrapped by its founders. Terms of the deal haven’t been disclosed.

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People

Forbes has published one of its famous lists of superrich people: This time, it’s the “richest tech billionaires” 2014 edition, the very richest of whom remains Microsoft cofounder Bill Gates. Here are the rest of members of this very elite club.

Former NAACP President Benjamin Jealous is joining Kapor Capital, the venture capital firm of Mitch Kapor. The Associated Press has more on Jealous’s shift from East Coast political activist to West Coast VC, a switch he hopes will help in growing opportunities for blacks and Latinos in the tech economy.

Rupert Murdoch is on to the next. Could that be Juliet de Baubigny? The Daily Mail is certainly excited about the prospect, noting that on Sunday, in the in the wake of his split with wife Wendi Deng, the “82-year-old News Corporation Chairman posed outside the Vanity Fair Oscar party in a sharp suit alongside” the Kleiner Perkins Caufield & Byers partner, who “gave the Hollywood stars a run for their money in a strapless turquoise gown, accessorised with a gold necklace and matching earrings.” The press has been fascinated with de Baubigny for some time, seemingly. In excerpts of British Vogue published last November by Valleywag, the British-born, “stylish venture capitalist who lives in a $3 million home in nearby Atherton with her husband, Andre, and their two children” was characterized as “an immaculate blonde who bears a resemblance to her friend Gwyneth Paltrow,” “boasts a wardrobe of Azzedine Alaia, Chanel, Derek Lam, and Alexander McQueen,” and “manages her frenetic family life, including holiday packing, through judicious spreadsheeting.” (The account likely surprised de Baubigny; as Valleywag noted yesterday, she divorced her husband, a cofounder of the venture firm Deep Fork Capital, in 2012.)

Apple‘s CFO Peter Oppenheimer will retire at the end of September, after 18 years at the company, reports The Verge. He’ll be replaced by Luca Maestri, Apple’s vice president of finance and corporate controller, who joined Apple roughly a year ago from Xerox, where he was CFO.

In other fun Daily Mail mail news (and StrictlyVC loves it, genuinely), the outlet reported yesterday that Facebook COO Sheryl Sandberg, “one of the business world’s biggest champions of correcting gender inequality in the workplace, is eying a rebellion against Democratic Californian Senator Barbara Boxer” by planning to run for her seat in 2016. It added in the very next bullet point: “But [a] source close to Sandberg told MailOnline this morning the claims were ’100% untrue.’” So much intrigue, so little to go on. Stay tuned!

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Happenings

Morgan Stanley’s Technology, Media & Telecom Conference rolls into its second day at San Francisco’s Palace Hotel. If you aren’t going, you can register for its Webcast here.

The 11th Annual Media Summit conference is also underway today and tomorrow. Details about the New York show are here.

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Job Listings

VMWare is looking to add an associate to its strategy and corporate development team in Palo Alto, Ca.

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Essential Reads

Wired has published what it’s calling “The Inside Story of Mt. Gox, Bitcoin’s $460 million Disaster.” (Unsurprisingly, it’s great.)

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Detours

Whatever this cool customer is being paid, he deserves a raise.

People are more likely to trust strangers with names that are easier to pronounce, according to a new study from the University of California-Irvine.

Hugo Boss’s “Bottled Night” men’s cologne is a “seductive and supremely masculine scent,” according to the company. It has also driven at least one cat to attack his owner.

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Retail Therapy

This is a movable building. It can be delivered to you anywhere. How cool is that?

Really? Who would do this to themselves?

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