Startups + science: crowdfunding as micro-patronage

Here’s part II of the Science-meets-startups series I’ve been writing over at O’Reilly Radar! The biggest problem in science today is the cost of conducting experiment, so this one looks at crowdfunding as a way to supplement experimental funds.

Throughout the 20th century, most scientific research funding has come from one of two sources: government grants or private corporations. Government funding is often a function of the political and economic climate, so researchers who rely on it risk having to deal with funding cuts and delays. Those who are studying something truly innovative or risky often find it difficult to get funded at all. Corporate research is most often undertaken with an eye toward profit, so projects that are unlikely to produce a return on investment are often ignored or discarded.

If one looks to history, however, scientific research was originally funded by individual inventors and wealthy patrons. These patrons Continue reading “Startups + science: crowdfunding as micro-patronage”

Startups + science: crowdfunding as micro-patronage

Here’s part II of the Science-meets-startups series I’ve been writing over at O’Reilly Radar! The biggest problem in science today is the cost of conducting experiment, so this one looks at crowdfunding as a way to supplement experimental funds.

Throughout the 20th century, most scientific research funding has come from one of two sources: government grants or private corporations. Government funding is often a function of the political and economic climate, so researchers who rely on it risk having to deal with funding cuts and delays. Those who are studying something truly innovative or risky often find it difficult to get funded at all. Corporate research is most often undertaken with an eye toward profit, so projects that are unlikely to produce a return on investment are often ignored or discarded.

If one looks to history, however, scientific research was originally funded by individual inventors and wealthy patrons. These patrons were frequently rewarded with effusive acknowledgements of their contributions; Galileo, for example, named the moons of Jupiter after the Medicis (though the names he chose ultimately did not stick).

There has been a resurgence of that model — though perhaps more democratic — in the modern concept of crowdfunding…Science-specific platforms have appeared on the scene. Petridish is currently showcasing projects looking for funding to study everything from rare butterflies to mass-fatality events. On Microryza, you can fund investigations into cannibalism in T-Rex or viral causes of lung cancer. RocketHub also has a science-specific project roster and recently had a researcher raise funds to study the psycopharmacology of amphetamines. Widely covered as “Help this scientist build a meth lab,” the researcher’s write-up of his proposal, including his reasons for crowdfunding it, is excellent and worth a read.

Do VCs Find Mobile Interesting?


This post is by David Hornik from VentureBlog

It has been a while since the last time I had a guest post on VentureBlog.  But it seems only natural for Howard Hartenbaum, my partner at August Capital, to be posting here.  Howard and I do a podcast together called VentureCast that is really fun (at least fun to do — I'll let you be the judge of how much fun it is to listen to).  He is a consumer Web superstar (among other things, he was the first investor in Skype and played a major role in the emergence of Skype as a powerhouse).  In any event, Howard has been doing a lot of thinking about the mobile space, so he decided to share his thoughts on the "emerging" mobile space.  Without any further ado, some thoughts on the mobile space by Howard Hartenbaum:

 

“Do VCs find mobile interesting?”  I know that I do.  And so do the partners at August Capital.  Every VentureBlog reader must have a location aware smartphone in their pockets by now.  Mobile is a game changer. It enables new business models, new consumer and enterprise services, and a better life with more fun.  While mobile, I regularly pay bills, get caught up on Facebook and check on the status of my family without having to disturb them.  I find my smartphone to be the most useful consumer device I have ever owned and it is hard to conceive leaving the house without it.

Here are a few classes of “mobile” that VCs get excited about:

  1. Companies that provide tools and services needed to make mobile applications and their business models work.  These include Flurry (mobile analytics), AdMob (mobile advertising) and Urban Airship (mobile push messaging) to name a few.  These are solutions for mobile application developers and these companies have straightforward business models that make sense for a venture investor.
  2. Mobile applications that use your device’s location to enable new services.  Uber and Lyft/Sidecar (ordering a ride when you need it), HotelTonight and Airbnb (find a place to stay overnight). There’s also Wrapp (mobile gift card gifting with in-store redemption) and Gigwalk (provides a mobile workforce of more than 100,000 across the US that can perform paid tasks for enterprise customers).  These businesses take a percentage of a transaction, again a straightforward business.  Another interesting service based on device location is Life360 (enables you to track the location of your family/friends in real time without disturbing them with a text or call). 
  3. Mobile applications that control non-mobile products and services such as Nest (mobile control of building thermostats) or eSecure (mobile control of building alarm systems).  The mobile application to control my Dish Network recording also falls into this camp.  These mobile applications make other services much more useful and are reason enough to convince me to buy those services, even if no money is generated directly from the mobile application. Turo, a peer-to-peer car rental service, has a mobile application that allows me to open a GM OnStar rental car’s door without a key.  These types of mobile applications make a solution more useful because they provide on-the-go access.
  4. Mobile payments such as Square take a transaction fee, and they can also provide loyalty programs and couponing.  There are many mobile payments related companies with their own twist, but they all have a strong value proposition for all parties involved.
  5. Mobile games – Angry Birds, Minecraft, most of the top applications in the app store are games.  Though it is a hit driven business, the winners generate hundreds of millions of dollars in sales. 
  6. Photo applications include Instagram, Cinemagram and Snapchat.  Mobile messaging applications include WhatsApp, Voxer, Tango and Kik.  These companies typically don’t have early proven business models, but the winners at scale can figure it out.  These types of products are often the most useful and engaging on a smartphone.

The wildcard – As a venture investor, the most interesting part of mobile is what hasn’t been proposed yet.  Undoubtedly there are visionary entrepreneurs who are designing mobile products right now that don’t fit in any of the above categories.  The next big thing may be a service that comes across as a bit unusual at first, but these are the kind of “brave new world” business proposals that we want to see. The best part about being a venture investor is meeting these entrepreneurs and hearing these proposals. 

Note – August Capital is an investor in Gigwalk, Urban Airship and Turo.  Howard is an investor in Flurry.

Do VCs Find Mobile Interesting?

Do VCs Find Mobile Interesting?


This post is by David Hornik from VentureBlog

It has been a while since the last time I had a guest post on VentureBlog.  But it seems only natural for Howard Hartenbaum, my partner at August Capital, to be posting here.  Howard and I do a podcast together called VentureCast that is really fun (at least fun to do — I'll let you be the judge of how much fun it is to listen to).  He is a consumer Web superstar (among other things, he was the first investor in Skype and played a major role in the emergence of Skype as a powerhouse).  In any event, Howard has been doing a lot of thinking about the mobile space, so he decided to share his thoughts on the "emerging" mobile space.  Without any further ado, some thoughts on the mobile space by Howard Hartenbaum:

 

“Do VCs find mobile interesting?”  I know that I do.  And so do the partners at August Capital.  Every VentureBlog reader must have a location aware smartphone in their pockets by now.  Mobile is a game changer. It enables new business models, new consumer and enterprise services, and a better life with more fun.  While mobile, I regularly pay bills, get caught up on Facebook and check on the status of my family without having to disturb them.  I find my smartphone to be the most useful consumer device I have ever owned and it is hard to conceive leaving the house without it.

Here are a few classes of “mobile” that VCs get excited about:

  1. Companies that provide tools and services needed to make mobile applications and their business models work.  These include Flurry (mobile analytics), AdMob (mobile advertising) and Urban Airship (mobile push messaging) to name a few.  These are solutions for mobile application developers and these companies have straightforward business models that make sense for a venture investor.
  2. Mobile applications that use your device’s location to enable new services.  Uber and Lyft/Sidecar (ordering a ride when you need it), HotelTonight and Airbnb (find a place to stay overnight). There’s also Wrapp (mobile gift card gifting with in-store redemption) and Gigwalk (provides a mobile workforce of more than 100,000 across the US that can perform paid tasks for enterprise customers).  These businesses take a percentage of a transaction, again a straightforward business.  Another interesting service based on device location is Life360 (enables you to track the location of your family/friends in real time without disturbing them with a text or call). 
  3. Mobile applications that control non-mobile products and services such as Nest (mobile control of building thermostats) or eSecure (mobile control of building alarm systems).  The mobile application to control my Dish Network recording also falls into this camp.  These mobile applications make other services much more useful and are reason enough to convince me to buy those services, even if no money is generated directly from the mobile application. Turo, a peer-to-peer car rental service, has a mobile application that allows me to open a GM OnStar rental car’s door without a key.  These types of mobile applications make a solution more useful because they provide on-the-go access.
  4. Mobile payments such as Square take a transaction fee, and they can also provide loyalty programs and couponing.  There are many mobile payments related companies with their own twist, but they all have a strong value proposition for all parties involved.
  5. Mobile games – Angry Birds, Minecraft, most of the top applications in the app store are games.  Though it is a hit driven business, the winners generate hundreds of millions of dollars in sales. 
  6. Photo applications include Instagram, Cinemagram and Snapchat.  Mobile messaging applications include WhatsApp, Voxer, Tango and Kik.  These companies typically don’t have early proven business models, but the winners at scale can figure it out.  These types of products are often the most useful and engaging on a smartphone.

The wildcard – As a venture investor, the most interesting part of mobile is what hasn’t been proposed yet.  Undoubtedly there are visionary entrepreneurs who are designing mobile products right now that don’t fit in any of the above categories.  The next big thing may be a service that comes across as a bit unusual at first, but these are the kind of “brave new world” business proposals that we want to see. The best part about being a venture investor is meeting these entrepreneurs and hearing these proposals. 

Note – August Capital is an investor in Gigwalk, Urban Airship and Turo.  Howard is an investor in Flurry.

Do VCs Find Mobile Interesting?


This post is by David Hornik from VentureBlog

It has been a while since the last time I had a guest post on VentureBlog.  But it seems only natural for Howard Hartenbaum, my partner at August Capital, to be posting here.  Howard and I do a podcast together called VentureCast that is really fun (at least fun to do — I'll let you be the judge of how much fun it is to listen to).  He is a consumer Web superstar (among other things, he was the first investor in Skype and played a major role in the emergence of Skype as a powerhouse).  In any event, Howard has been doing a lot of thinking about the mobile space, so he decided to share his thoughts on the "emerging" mobile space.  Without any further ado, some thoughts on the mobile space by Howard Hartenbaum:

 

“Do VCs find mobile interesting?”  I know that I do.  And so do the partners at August Capital.  Every VentureBlog reader must have a location aware smartphone in their pockets by now.  Mobile is a game changer. It enables new business models, new consumer and enterprise services, and a better life with more fun.  While mobile, I regularly pay bills, get caught up on Facebook and check on the status of my family without having to disturb them.  I find my smartphone to be the most useful consumer device I have ever owned and it is hard to conceive leaving the house without it.

Here are a few classes of “mobile” that VCs get excited about:

  1. Companies that provide tools and services needed to make mobile applications and their business models work.  These include Flurry (mobile analytics), AdMob (mobile advertising) and Urban Airship (mobile push messaging) to name a few.  These are solutions for mobile application developers and these companies have straightforward business models that make sense for a venture investor.
  2. Mobile applications that use your device’s location to enable new services.  Uber and Lyft/Sidecar (ordering a ride when you need it), HotelTonight and Airbnb (find a place to stay overnight). There’s also Wrapp (mobile gift card gifting with in-store redemption) and Gigwalk (provides a mobile workforce of more than 100,000 across the US that can perform paid tasks for enterprise customers).  These businesses take a percentage of a transaction, again a straightforward business.  Another interesting service based on device location is Life360 (enables you to track the location of your family/friends in real time without disturbing them with a text or call). 
  3. Mobile applications that control non-mobile products and services such as Nest (mobile control of building thermostats) or eSecure (mobile control of building alarm systems).  The mobile application to control my Dish Network recording also falls into this camp.  These mobile applications make other services much more useful and are reason enough to convince me to buy those services, even if no money is generated directly from the mobile application. Turo, a peer-to-peer car rental service, has a mobile application that allows me to open a GM OnStar rental car’s door without a key.  These types of mobile applications make a solution more useful because they provide on-the-go access.
  4. Mobile payments such as Square take a transaction fee, and they can also provide loyalty programs and couponing.  There are many mobile payments related companies with their own twist, but they all have a strong value proposition for all parties involved.
  5. Mobile games – Angry Birds, Minecraft, most of the top applications in the app store are games.  Though it is a hit driven business, the winners generate hundreds of millions of dollars in sales. 
  6. Photo applications include Instagram, Cinemagram and Snapchat.  Mobile messaging applications include WhatsApp, Voxer, Tango and Kik.  These companies typically don’t have early proven business models, but the winners at scale can figure it out.  These types of products are often the most useful and engaging on a smartphone.

The wildcard – As a venture investor, the most interesting part of mobile is what hasn’t been proposed yet.  Undoubtedly there are visionary entrepreneurs who are designing mobile products right now that don’t fit in any of the above categories.  The next big thing may be a service that comes across as a bit unusual at first, but these are the kind of “brave new world” business proposals that we want to see. The best part about being a venture investor is meeting these entrepreneurs and hearing these proposals. 

Note – August Capital is an investor in Gigwalk, Urban Airship and Turo.  Howard is an investor in Flurry.

Do VCs Find Mobile Interesting?


This post is by David Hornik from VentureBlog

It has been a while since the last time I had a guest post on VentureBlog.  But it seems only natural for Howard Hartenbaum, my partner at August Capital, to be posting here.  Howard and I do a podcast together called VentureCast that is really fun (at least fun to do — I'll let you be the judge of how much fun it is to listen to).  He is a consumer Web superstar (among other things, he was the first investor in Skype and played a major role in the emergence of Skype as a powerhouse).  In any event, Howard has been doing a lot of thinking about the mobile space, so he decided to share his thoughts on the "emerging" mobile space.  Without any further ado, some thoughts on the mobile space by Howard Hartenbaum:

 

“Do VCs find mobile interesting?”  I know that I do.  And so do the partners at August Capital.  Every VentureBlog reader must have a location aware smartphone in their pockets by now.  Mobile is a game changer. It enables new business models, new consumer and enterprise services, and a better life with more fun.  While mobile, I regularly pay bills, get caught up on Facebook and check on the status of my family without having to disturb them.  I find my smartphone to be the most useful consumer device I have ever owned and it is hard to conceive leaving the Continue reading “Do VCs Find Mobile Interesting?”

Why Humility is Essential for Every New Startup Hire

When interviewing product managers at Google, we ranked candidates on four metrics: technical ability, communication skills, intellect and Googliness. A Googley person embodies the values of the company – a willingness to help others, an upbeat attitude, a passion for the company, and the most important, humility. In the past week, I asked two heads of engineering to identify the most important characteristic in new hires. Both responded, “humility”. For one startup ascertaining humility is so important, it is the first filter in the interview process.

Why Humility is Essential for Every New Startup Hire

When interviewing product managers at Google, we ranked candidates on four metrics: technical ability, communication skills, intellect and Googliness. A Googley person embodies the values of the company – a willingness to help others, an upbeat attitude, a passion for the company, and the most important, humility.

In the past week, I asked two heads of engineering to identify the most important characteristic in new hires. Both responded, “humility”. For one startup ascertaining humility is so important, it is the first filter in the interview process.

Disruptive companies reinvent. They don’t copy and execute someone else’s playbook. To be disruptive, a startup’s team must cast aside preconceived notions and assumptions about doing things the “right way” and start inventing new ways.

The more time I spend in venture capital working with startups, the better I understand that there are no templates or stencils or best practices. Each startup team faces Continue reading “Why Humility is Essential for Every New Startup Hire”

Freemium Businesses Switch the Hunter and Farmer Sales Roles

Kenny Van Zant is a marketing wizard. Before his current role at Asana, Kenny managed products and marketing for Solarwinds, a publicly traded company that sells networking equipment to the mid-market. Solarwinds pioneered the low-friction, high-velocity sales model in their segment to great success.
SolarWinds offered free products to their customers to gain usage data that informs their sales and marketing efforts. As one might expect, inside sales reps would call upon the most likely customers to up-sell them to paid.

Freemium Businesses Switch the Hunter and Farmer Sales Roles

Kenny Van Zant is a marketing wizard. Before his current role at Asana, Kenny managed products and marketing for Solarwinds, a publicly traded company that sells networking equipment to the mid-market. Solarwinds pioneered the low-friction, high-velocity sales model in their segment to great success.

SolarWinds offered free products to their customers to gain usage data that informs their sales and marketing efforts. As one might expect, inside sales reps would call upon the most likely customers to up-sell them to paid. And of course, SolarWinds employed the enterprise sales team to win the business of the largest customers. Plain vanilla freemium, right?

But over a conversation earlier this week, Kenny pointed out that freemium businesses switch the hunter and farmer sales team roles, an important twist that had escaped me.

In traditional businesses, the enterprise team hunts. They acquire leads, cold call, and try to push the customers to Continue reading “Freemium Businesses Switch the Hunter and Farmer Sales Roles”

Come join the IA Ventures Family

I started IA Ventures a little over three years ago with Brad and Ben. The original thesis: build an early-stage venture firm designed for the long-term that focused on companies seeking competitive advantage through data. Infrastructure. Platforms. Applications. All of it. We’d take a life-cycle approach to investing, building our positions early, working hard in partnership with our founders to achieve “escape velocity” and providing additional capital to support growth over time. This was the playbook I articulated to investors in 2009 and the same holds true to this day. We remain convinced that our approach is well-suited to building valuable, long-lasting relationships with great business-builders and generating superior cash-on-cash returns for our Limited Partners. 

While our thesis and approach has remained largely unchanged since our founding, much has happened in the meantime. We have raised two funds, our first fund of $50 million which is now fully deployed, and a second fund of $105 million which has more than two years to be invested and over 2/3 of its capital untapped. We have 31 portfolio companies across the two funds, and have averaged approximately 10 investments per year. This has all been accomplished with an investment team that has remained essentially the same – the original three partners plus an analyst (initially the highly skilled Justin Singer who left to work for a portfolio company, and now the incomparable polymath Jesse Beyroutey). The good news is that we’ve created a very tight-knit team with a strong culture that is working well with and for our companies. The bad news is that given our strong deal flow and hands-on approach to working with our companies, we feel that our investment team is bandwidth constrained. Further, we are interested in getting some new perspectives in the Firm to help us look at opportunities through a different lens. We believe this is a positive and healthy development for our companies, our Limited Partners and the Firm. The time has come to grow the investment team.

We are already well on our way to bringing on a new analyst to work with us. The candidates have been spectacular and we are excited to announce a new member of the team in the next few weeks. But this is only one piece of the puzzle.

Now for the big news: We are committed to bringing on a new Partner at IA Ventures. This will be someone who shares our passion for early-stage investing in the mode of partnership with our portfolio companies. The person may have been an entrepreneur before becoming an investor or may have been investing all their life. We don’t have a pre-conceived notion of the “just right” background. Continue reading “Come join the IA Ventures Family”

The Religious Debate About Data

David Brooks has a great op-ed this morning on the Philosophy of Data. He argues that data offers one major advantage and one major drawback. Data enables humans to discover patterns otherwise unobservable by our senses/intuition or patterns that violate human intuition. But the religion of data engenders a fallacy: that everything can and should be measured; and with this data, the best answer will emerge. Belief in the power of data has become a sort of religious debate which has manifested itself in product design (data driven vs intuitive design), in politics, in baseball, in climate change debates and many others.

The Religious Debate About Data

science&religion.jpg

David Brooks has a great op-ed this morning on the Philosophy of Data. He argues that data offers one major advantage and one major drawback. Data enables humans to discover patterns otherwise unobservable by our senses/intuition or patterns that violate human intuition. But the religion of data engenders a fallacy: that everything can and should be measured; and with this data, the best answer will emerge.

Belief in the power of data has become a sort of religious debate which has manifested itself in product design (data driven vs intuitive design), in politics, in baseball, in climate change debates and many others. At some level, it’s an extension of the religion/ science debate: what I feel/believe vs what my instruments indicate. Which is better?

Great innovations can come from both disciplines. Apple’s product design is built from intuition and belief – not from programmatic user testing. On the other Continue reading “The Religious Debate About Data”

Valuations in the Series A and Series B Market are Booming

With a litany of articles in recent months highlighting the number of companies with valuations greater than $1B, I’ve started to wonder about the valuation trends for the highest profile venture backed companies. Venture capitalists are increasing market prices in Series A and Series B rounds aggressively in effort to reap disproportionate returns. And the variances in the prices of different startups in these early rounds is enormous, indicating a relatively inelastic market.

Can SaaS principles revolutionize scientific research?

What happens if you were to apply the principles of SaaS to science? I’ve got a new blog post up on O’Reilly Radar that asks that question…below is an an excerpt, go here for the full text.

Software as a service (SaaS) is one of the great innovations of Web 2.0. SaaS enables flexibility and customized solutions. It reduces costs — the cost of entry, the cost of overhead, and as a result, the cost of experimentation. In doing so, it’s been instrumental in spurring innovation.

So, what if you were to apply the principles of SaaS to science? Perhaps we can facilitate scientific progress by streamlining the process. Science as a service (SciAAS?) will enable researchers to save time and money without compromising quality. Making specialized resources and institutional expertise available for hire gives researchers more flexibility. Core facilities that own equipment can rent it out during Continue reading “Can SaaS principles revolutionize scientific research?”

Can SaaS principles revolutionize scientific research?

What happens if you were to apply the principles of SaaS to science? I’ve got a new blog post up on O’Reilly Radar that asks that question…below is an an excerpt, go here for the full text.

Software as a service (SaaS) is one of the great innovations of Web 2.0. SaaS enables flexibility and customized solutions. It reduces costs — the cost of entry, the cost of overhead, and as a result, the cost of experimentation. In doing so, it’s been instrumental in spurring innovation.

So, what if you were to apply the principles of SaaS to science? Perhaps we can facilitate scientific progress by streamlining the process. Science as a service (SciAAS?) will enable researchers to save time and money without compromising quality. Making specialized resources and institutional expertise available for hire gives researchers more flexibility. Core facilities that own equipment can rent it out during down time, helping to reduce their own costs. The promise of science as a service is a future in which research is more efficient, creative, and collaborative.

Frustration has led a recent crop of enterprising startup founders — many of them scientists themselves — to apply IT “best practices” to science. Their goal is to disrupt the slow-moving pace and high cost of research. To do this, they’re applying innovative business models traditionally used by B2B and B2C startups — everything from the principles of collaborative consumption to decoupling service workers from their traditional places of employment.

Valuations in the Series A and Series B Market are Booming

With a litany of articles in recent months highlighting the number of companies with valuations greater than $1B, I’ve started to wonder about the valuation trends for the highest profile venture backed companies.

Venture capitalists are increasing market prices in Series A and Series B rounds aggressively in effort to reap disproportionate returns. And the variances in the prices of different startups in these early rounds is enormous, indicating a relatively inelastic market. Investors are chasing fast-growth startups irrespective of the price.

I gathered data on 77 rounds in the last 18 months by “high flying” companies using my own admittedly biased definition. Below is a table of the median, average and standard deviation of those Series A, B and C rounds.

Round Median Average Std Dev Count
Series A 31 65 135 46
Series B 120 289 638 21
Series C 212 318 333 10

I’ve also plotted

Valuations.png

Continue reading “Valuations in the Series A and Series B Market are Booming”

How to Optimize Every Decision in Your Life and Accomplish Nothing

Even the greatest minds fear missing out. Nobel laureate Richard Feynman who assisted in the development of the atomic bomb, contributed substantial advances to quantum mechanics and particle physics, discovered the cause of the Challenger Shuttle disaster and popularized science as a witty and successful author, faced this fear when confronted with a menu. How many different dishes should he order from a menu before settling upon a favorite? Feynman used probability theory to solve the problem.

How to Optimize Every Decision in Your Life and Accomplish Nothing

menu.jpg

Even the greatest minds fear missing out. Nobel laureate Richard Feynman who assisted in the development of the atomic bomb, contributed substantial advances to quantum mechanics and particle physics, discovered the cause of the Challenger Shuttle disaster and popularized science as a witty and successful author, faced this fear when confronted with a menu.

How many different dishes should he order from a menu before settling upon a favorite? Feynman used probability theory to solve the problem. Below is the formula he developed with Ralph Leighton

The number of dishes to try = √2(Meals remaining at restaurant+1) - 1

Fear of missing out is a paralyzing force. It even drives geniuses to mathematics for consolation. Having calculated the number of dishes to try, Feynman could rest, his mind at ease knowing that in all likelihood, he was eating the best plate on the menu.

With the panoply of options before Continue reading “How to Optimize Every Decision in Your Life and Accomplish Nothing”