StrictlyVC: February 25, 2014

110611_2084620_176987_imageHappy Tuesday, everyone! Hope it’s off to a good start.

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Top News in the A.M.

Please do not give up on bitcoin, plead leading bitcoin startups, after Mt. Gox, once the world’s biggest bitcoin exchange, went down yesterday. Its founder is still unaccounted for, reports Reuters. (According to the Winklevoss twins’ new Winkdex, shares of bitcoin are currently trading at slightly less than $500. Since December, they’ve been as high as $1,163 and as low as $382. )

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Paul Graham Gets Back to Basics

Y Combinator cofounder Paul Graham spoke at the Launch conference in San Francisco yesterday afternoon in a “fireside chat” with the event’s founder, Jason Calacanis.

While it wasn’t exactly a hard-hitting interview – these things are rarely intended to be – Calacanis managed to surface a lot during their conversation. Graham spoke at length about about Y Combinator’s earliest days, for example; addressed a couple of the controversies he has found himself embroiled in over recent months; and explained the rationale behind his decision to relinquish day-to-day control over Y Combinator. (He’s basically exhausted and wants his “brain back.”) Calacanis also asked Graham plenty about what indicates to him that a startup might succeed or fail. Here’s some of what Graham — whose platform has helped launch Airbnb, Dropbox, and Stripe, among more than 600 other companies — had to say:

On one of the quickest ways to get crossed off the list during an application interview with Y Combinator:

“The founders have to get along. If the founders hate each other, you’re in big trouble,” and it happens “very, very often,” said Graham. “You don’t know how good friends you are with somebody until you try to start a startup with them. That’s why it works so badly when you have some startup that’s started by some dude in business school who has this idea for some startup, and then he goes and finds some, like, 20-year-old meek, undergraduate computer science major to realize his vision, and that’s the founding team … If you go into a Y Combinator interview, and one of you looks in terror to the other one before answering questions, that’s one of our secret tells. Or if you roll your eyes while your cofounder is speaking, which has actually happened, or if you stand up your cofounder – like you don’t show up for the interview… these have all happened.”

On a founder type that Graham may have misjudged earlier on his career:

“The one thing is people who are very smart, but that’s it. People who are very smart but ineffectual. We used to have more faith in brains. It turns out you can be surprisingly stupid if you’re sufficiently determined. And anyone can tell this empirically. There are some parts of America where there are a lot of rich people and they’re not very smart – parts of Manhattan and Florida and L.A. You don’t have to be supersmart if you’re fearsomely effective.”

Calacanis asked him the most important thing for startups to focus on:

“There’s a meta answer to that,” said Graham. “The most important thing for startups to do is to focus, because there are so many things you could be doing, but one of them is the most important, so you should be doing that and not any of the others. So you should not be grabbing coffee with investors. When you want to raise money, you shift into fundraising mode and you go and raise money. You do not promiscuously meet with investors in the middle of the day when you should be working simply because they send you an email saying, ‘Hey, let’s grab coffee.’ There are a 1,000 things you could be doing, and only one of them is the most important … and you work on that.”

On the essence of growing a startup:

“You have to start with a small, intense fire. Suppose you’re the Apple I. I think they made something like 500 of those things. So all they had to do was find 500 people to buy these things and they launched Apple. Apple! So you’ve got to find a small number of people – it’s necessarily going to be a small number of people…who want what you’re making a lot… You don’t have to do any better than Apple and Facebook. You’ve got to know who those first users are and how you’re going to get them, and then you just sit down and have a party with those first few users and you just focus entirely on them and you make them super, super happy.”

(If you’re interested in reading more from this interview, click here.)

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New Fundings

AdStage, a two-year-old, San Francisco-based ad tech startup, has raised $1 million in seed financing from previous investor Digital Garage in a round that brings the company’s total funding to $2.5 million. Others of AdStage’s earlier investors include Freestyle CapitalQuest Venture Partners500 StartupsLaunch FundXG Ventures and individual investors.

Quanttus, a two-year-old, Cambridge, Ma.-based maker of wearable devices, has raised $19 million in Series A funding from Khosla Ventures and Matrix Partners. The round follows a previous $3 million seed financing led by Vinod Khosla of Khosla Ventures.

Shape Security, a three-year-old, Mountain View, Ca.-based enterprise security company that automated malware and bots by way of a polymorphic security appliance that it produces, has raised $40 million in Series C funding led by Norwest Venture Partners and Sierra Ventures. Other participants in the round, which brings Shape’s total funding to $66 million, included Kleiner Perkins Caufield & ByersVenrockGoogle VenturesTomorrowVentures, and Allegis Capital.

SimilarGroup, a 6.5-year-old, Tel Aviv-based company whose sites analyze Web sites across the Internet, has raised an undisclosed amount of Series C funding entirely from Naspers, the South African multinational media group that owns minority stakes in major Internet companies, including Tencent and Mail.ru Group. TechCrunch sources say the Series C is in the tens of millions of dollars. Up to this point, SimilarGroup has raised $7.1 million, says Crunchbase, including from Yossi Vardi, the renowned Israeli investor.

SpareFoot, a 6.5-year-old, Austin, Tx.-based online storage marketplace, has raised $10 million in funding from earlier investor Insight Venture Partners. Its other major investors include Capital FactoryFloodgate and Silverton Partners. SpareFoot has raised $26 million to date.

TraceLink, a four-year-old, Woburn, Ma.-based company whose software helps companies connect, integrate, and collaborate with their supply chain partners, has raised $5.5 million in its first round of venture funding; it was led by FirstMark Capital.

Voalte, a five-year-old, Sarasota, Fla.-based healthcare-focused mobile communications platform, has raised $36 million in Series C funding led by Bedford Funding, a tech-focused private equity firm. Voalte’s technology is designed help improve care coordination through voice calls, alarms and alerts and secure text messaging.

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New Funds

Athenahealth, the 17-year-old, publicly traded, Watertown, Ma.-based company that sells Internet-based business services to physician practices, is launching an accelerator to cultivate digital health care startups, reports Venture Capital Dispatch. The company says that demand for its services have surged as doctors look to outsource more, including billing; the accelerator hopes to come up with new services more quickly. According to Venture Capital Dispatch, the accelerator plans to recruit two to three companies this year that will operate out of a 2,500 square-foot space at its headquarters and expects to house 10 companies altogether.

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IPOs

2U, a 6.5-year-old, Landover, Md.-based company that builds online learning platforms to help nonprofit colleges and universities in their student enrollment and other services, has filed the paperwork to raise up to $100 million in an IPO. The company has raised nearly $100 million in private funding over the years; its biggest shareholders include Redpoint Ventures, which owns 23.2 percent of the company; Highland Capital Partners, which owns 11.4 percent; Novak Biddle Venture Partners, which owns 11 percent; and Bessemer Venture Partners, which owns 8.3 percent.

Everyday Health, the 12-year-old, New York-based health sites operator and apps maker, has filed for an IPO valued at up to $115 million. The company has raised $30 million from VCs, according to Crunchbase. Among its biggest shareholders are: WF Holding Company, which owns 25.4 percent of the company; Rho Ventures, which owns 25.4 percent;Scale Venture Partners, which owns 7.2 percent; Foundation Capital, which owns 5.2 percent; and NeoCarta Ventures, which owns 5.2 percent.

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Exits

BlueKai, a 6.5-year-old, Cupertino, Ca.-based “intelligent marketing” company, was acquired yesterday by software giant Oracle. Terms of the deal weren’t disclosed, but the outlet AdExchanger pegged the price at $300 million to $450 million. BlueKai is the fourth marketing and advertising tech company that Oracle has acquired in recent years. As AdExchanger notes, in May 2012, Oracle bought the social marketing software startup Vitrue for an estimated $300 million. It then purchased the marketing automation firm Eloqua for around $810 million in December 2012. And last December, Oracle acquired the email and cross-channel marketing software company Responsys for $1.5 billion. BlueKai had raised around $50 million from investors, including Redpoint Ventures,Battery VenturesGGV CapitalSplit Rock Partners, and e.ventures.

Cloudant, a 5.5-year-old, Boston-based cloud database startup, has been acquired by IBM for an undisclosed amount. Cloudant had raised roughly $16 million from investors, including Avalon VenturesIn-Q-Tel, andSamsung Ventures. GigaOm has more on the deal here.

Monster Worldwide yesterday announced that it has acquired TalentBin, a 3.5-year-old, San Francisco-based startup that used data to help recruiters discover hard-to-find technical talent, and Gozaik, a 20-month-old, Woburn, Ma.-based “social recruiting” startup that relied heavily on Twitter to find its job listings. Terms of the transactions were not disclosed. TalentBin had raised $3.2 million from investors, including First Round CapitalCharles River VenturesFoundation CapitalLightbank, andNew Enterprise Associates. Gozaik doesn’t appear to have publicly disclosed any outside funding.

StopTheHacker, a 5.5-year-old, Burlingame, Ca.-based anti-malware firm, has been acquired by CloudFlare, a website security and content delivery service. StopTheHacker had raised just $1.1 million, reportedly, including from Runa Capital. Terms of its acquisition aren’t being disclosed, says TechCrunch.

Veveo, a 10-year-old, Andover, Ma.-based intelligent search, personalization, and recommendation mobile phone service, is being acquired by Rovi Corp. for $62 million in cash and up to $7 million in additional cash payments based on certain milestones. Rovi supplies information on TV programs, movies, celebrities, books, games, and sports to content providers in more than 50 countries. Veveo disclosed just one, $14 million, round of funding in 2007, from Matrix PartnersNorwest Venture Partners, and North Bridge Venture Partners.

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People

Investor Marc Andreessen says more net neutrality laws aren’t going to help anything. Here’s his point of view laid out in tweets.

In what’s becoming an intriguing corporate governance battle, activist investor Carl Icahn has accused eBay board members Marc Andreessenand Scott Cook of conflicts of interest in a public letter published yesterday. Forbes has some of the strongest allegations here, including that Andreessen profited unfairly by participating in a consortium that bought a controlling stake of the eBay subsidiary Skype for $1.9 million. (The group sold Skype to Microsoft just 18 months later for $8.5 billion.) eBay quickly came to the defense of both board members, saying Icahn “unfortunately has resorted to mudslinging attacks against two impeccably qualified directors.” Of Skype specifically, eBay said the “company explored all options for divesting Skype, including an IPO and sale to a strategic buyer, and pursued the option that offered the highest return at the time, which was the sale of a controlling stake.”

Sibyl Goldman, executive vice president of new media at Ryan Seacrest Productions, has been recruited by Facebook to become its head of entertainment partnerships. According to Variety, Goldman will be based in L.A. and charged with building a bigger team focused on outreach efforts to studios, networks and celebrities. More here.

Yahoo CEO Marissa Mayer has reportedly been trying, without success, to recruit Mary Meeker of Kleiner Perkins Caufield & Byers to the company’s board. Re/code, which has the story, notes that the last time Mayer added a renowned tech player, entrepreneur Max Levchin, it was late 2012.

Yesterday morning, on CBS, where he was promoting his newest book, Google Chairman Eric Schmidt was asked about reports that Google had bid $10 billion for the messaging service WhatsApp. His response: “Not in the way you’re thinking about. We’re certainly aware of them…Let me not talk about this specific conversation with WhatsApp. Let’s just say that we like WhatsApp…and we like some other things, too, including our own products.”

Ted Schlein, a longtime general partner at Kleiner Perkins Caufield & Byers, talked with Deborah Gage of the WSJ yesterday about some of the more interesting trends he’s seeing around cyber security. Among his many observations: “Crowdsourced threat intelligence or vulnerability analysis is an idea that’s going to be used by a lot of other parties to help us solve our problems because we ourselves can’t afford to do that. AlienVault, the open threat exchange which is crowdsourcing the threats, is brilliant. Rather than buy a threat feed, you get it from the universe. It’s the closest you’ll get to real-time threat detection.”

Eric Tilenius is the newly appointed CEO of BlueTalon, a Redwood City, Ca.-based big data startup that helps companies analyze information from both internal and external databases and that has just completed a $1.5 million seed round from Data Collective. Prior to joining BlueTalon, Tilenius was an EIR at Scale Venture Partners, and before joining Scale, he was a general manager at Zynga. (He has also served as CEO of Netcentives and Answers.com.) Tilenius told StrictlyVC last week of the move,”Ultimately, the team and product at BlueTalon won me over; I felt this was an incredible opportunity I could not afford to miss.”

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Happenings

Launch Festival is rolling into its second day in San Francisco. You can learn more about the agenda here; to see a live stream of the event, use this link.

Mobile World Congress continues on in Barcelona. You can see a live feed here.)

Apparently, it’s also not too late to register for the RSA Conference, happening all this week at San Francisco’s Moscone Center. More information here.

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Job Listings

Coinbase, the well-funded, San Francisco-based bitcoin startup that has been likened to an early PayPal, is looking for a business development exec. To apply, send your resume here.

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Essential Reads

Samsung revealed its Galaxy S5 yesterday at a trade show in Barcelona and it looks like a big hit.

A San Francisco-based high-tech writer was robbed of her Google Glassat a local bar last weekend while explaining to friends how the device works. After pursuing her attacker and getting the Glass back, a second assailant reportedly stole her purse and its contents. According to the San Francisco Chronicle, she was told that she and her friends were “destroying the city.”

Ford is reportedly dropping Microsoft as a software partner to power its in-car entertainment and communications systems, in favor of, erm,Blackberry. (Tweeted Upstart founder Dave Girouard of arrangement: “Blackberry? Seriously? Ford moves from internal combustion engine to horse-drawn carriage.”)

The difference between beacons and geofencing. (You already know this, of course. We include it for StrictlyVC’s other readers.) H/T: MediaREDEF

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Detours

American Aqueduct: The Great California Water Saga

A list of the “go-to” law schools, 2014 edition.

Sunday night, HBO broadcast the hilarious full trailer for Mike Judge’s new series, “Silicon Valley,” which debuts April 6. (We were already excited; now we can hardly wait.)

It’s random, but this clip also made us horse laugh.

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Retail Therapy

Starting to think about your next billion-dollar idea? You might use this to get inspired.

Throwing knives. For the friend who has everything(?).

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