For this group of old friends, assembled for an impromptu reunion, the venue would feel familiar: an online chat room running on a secure private server. Each were former members of the elite hacking group “w00w00” and they had reconvened that afternoon to celebrate and share in the success of one of their own. In some ways it was just like old times.
But rather than success being the discovery of a new software exploit or penetration of a computer network, this was something more extraordinary. One of the group’s former members had just sold their company for $19 billion dollars.
His name is Jan Koum (known to the group simply as “yan”) and his startup is WhatsApp, the messaging app acquired by Facebook. “Is there a minimum net worth to be in here now?” quipped one of the chat room’s participants.
However, what makes this story more remarkable is that Koum isn’t the first former w00w00 member to achieve entrepreneurial success or the fame that often comes with it. Nor is he necessarily the first from the group to have become a billionaire.
Napster co-founder Shawn Fanning (“napster”) is known to have been a member of w00w00, along with a number of other early employees of the pioneering music file-sharing service. Meanwhile, although not universally recognised by the group, Sean Parker (“dob”), Napster’s other co-founder and the ex-president of Facebook, is said to have been present at the beginning of w00w00’s formation.
Everyone talks about the PayPal mafia, but nobody talks about the w00w00 mafia.
Many other former members of this elite hacking crew have become leaders in the Internet security and related industries, founding or working in senior roles at companies such as Cloudmark, Duo Security, Hotmail, Google, Yammer, Veracode, CloudVolumes, Symantec, SecurityFocus, Immunet, and Sourcefire.
“Everyone talks about the PayPal mafia, but nobody talks about the w00w00 mafia,” says a person familiar with the group, comparing the impact its participants have made on the tech industry to the much-publicised successes of ex-PayPal employees and founders.
Formed sometime around 1996 and still active until the early 2000s, not a huge amount is known publicly about w00w00 or its precise activities. Its online footprint consists almost entirely of the security tools and advisories issued by various participants of the group and media coverage garnered through the discovery of such software exploits.
The official website — or what remains of it — vaguely describes w00w00 as “the largest nonprofit security team in the world,” which at one point included 30+ active participants and spanned 12 countries on five continents.
“w00w00 is, at its core, a social collective of people who are, or were at one time, interested in computer security,” founding w00w00 member Jonathan Bowie (“jobe”) tells TechCrunch. “It was also created out of the acknowledgement of a bunch of teenage whiz-kids that we needed a platform for social networking with people we’d consider our peers.”
w00w00 is, at its core, a social collective of people who are, or were at one time, interested in computer security.
At the age of 17, taking inspiration from stories he had read about Xerox PARC, Bowie started the “#!dweebs” channel on EFNet and invited other like-minded hackers to join. But eight to nine months into the chat room’s existence, some of its participants decided a change of name was required. Jokingly, Matt Conover (“shok”), currently founder and CTO of CloudVolumes, suggested they call the channel “w00w00” and the name stuck.
Although they mainly congregated online, Bowie says w00w00 members would sometimes meet in-person at local “2600″ events or at major security conferences. “There were also pockets of the group that were working for the same companies,” he says.
Contrary to our use of the term “members” to describe those who have gained entry into the group, the w00w00 website explicitly states “there are no ‘members,’” only participants, since to a certain extent membership remained informal. Framing it that way also likely protected the autonomy of its participants, many of whom already worked for major security companies.
“I believe at one point in the late 90s/early 2000s we had representative membership with ties to every major security consulting firm, hacker think tank, and security team on Wall Street,” says Bowie.
Another aspect of w00w00’s implicit mission was to be more open than other hacker groups and the “somewhat closed-off world of black hat research.” New members of the group were vetted simply by requiring that they be invited to the channel by an existing w00w00 member and that they could demonstrate a level of technical curiosity and expertise.
“You just had to be invited… w00w00 was a really friendly and open group and a lot of the people in w00w00 were also part of other groups,” former member Anthony Zboralski (“gaius”) tells TechCrunch. The other hacker groups active at the time included “HERT,” “TESO,” and “ADM.”
That didn’t stop people attempting to join w00w00 without an invitation. In one story I came across, a hacker from Denmark tried to gain entry to the group’s private chat room by exploiting a weakness in the original IRC protocol. In retaliation, a member of w00w00 attacked the intruder’s box and retrieved his home phone number. They then called him up and asked him to explain in 20 words or less why he wanted to join w00w00.
His answer: “I want to change the world.”
In an interview with BME Online’s “HYPE,” published sometime in 2000, a w00w00 representative likens the group’s activities to a security conference, but one that runs 365 days of the year and takes place online. “Acceptance into the group is based on technical knowledge and not reputation,” explains the representative.
“We would spend hours exchanging ideas and crazy thoughts about everything, mostly computer hacking and security stuff but also business, life…” says Zboralski.
The base ideology for the group was encouraging positive collaborative research in ways that not only benefited the community, but also could act as a launching pad for the success of the individual members.
In one chat log seen by TechCrunch, the young hackers discuss the age-old topic of matters of the heart and getting laid. “I have in quotes ‘love != productive,’” says one participant. “Lack of sex makes it hard to work,” counters another.
“We liked to tinker with things,” says Bowie. ”We liked to create, manipulate and, most importantly, discover technology. We researched everything from discovering and exploiting software vulnerabilities, security tools ranging from password analysis to packet generation to exploit platforms.
“The base ideology for the group was encouraging positive collaborative research in ways that not only benefited the community, but also could act as a launching pad for the success of the individual members,” he says.
That dichotomy of collaboration and individualism caused some tensions within the group, as it found itself caught up in the “antisec” debate relating to how much information to disclose after discovering a vulnerability.
But it also created an environment that would set the seeds for members of w00w00 to pursue their own entrepreneurial endeavours, individually and in collaboration.
An early example was the creation of Napster in the late 90s when Shawn Fanning recruited a number of other w00w00 members to help develop the music file-sharing service. They included system architect Jordan Ritter (“nocarrier’), who played a key role in helping Napster scale and is sometimes credited as a co-founder, and server admin Evan Brewer (“dmess0r’). Ritter has since co-founded multiple companies including Cloudmark and Servio.
Members of w00w00 were also some of the first users of Napster after initially reverse-engineering various aspects of the service in protest of Fanning’s refusal to allow them to inspect the source code. “This is, in our opinion, the greatest tool for finding MP3s in the world,” a cached version of the w00w00 website reads.
“It’s safe to say without w00w00, the world would’ve never gotten Napster,” says Bowie.
We were young, smart, ambitious and crazy; we could do things that few people thought were possible.
Other notable w00w00 alumni include Dug Song (founder of Duo Security), Michael A. Davis (CTO of CounterTack), David McKay (early employee at Hotmail and Google), Josha Bronson (Director of Security at Yammer), Joshua J. Drake (Accuvant Labs), Andrew Reiter (Researcher at Veracode), Simon Roses Femerling (ex-Microsoft Research), Gordon Fyodor Lyon (creator of Nmap Security Scanner), Adam O’Donnell (co-founder of Immunet), and Tim Yardley (researcher in critical infrastructure security), to name but a few.
Talking to a number of former w00w00 members, what’s striking is that none seem particularly surprised at the success that they and other members of the group have seen, including Jan Koum’s multi-billion-dollar home-run with WhatsApp — even if one member confessed to not knowing that “yan” was the Jan until news of the acquisition broke.
“The only surprise is that we didn’t all end up in jail,” joked one w00w00 participant.
“We felt the world was ours to take,” says Zboralski, who is currently founder and CEO of Belua. “We were young, smart, ambitious and crazy; we could do things that few people thought were possible. A lot of us had a ferocious sense of entitlement.”
Adds Bowie: “We all thought great things would happen; we all saw the writing on the wall.”
Illustration by Bryce Durbin
Read more: Inside The Billion-Dollar Hacker Club
The collapse of Mt.Gox this week has sent shockwaves through the early-adopting tech community. Hundreds of millions of dollars worth of bitcoins have been lost, and account holders are justifiably angry about their missing balances. It is easy to heap blame on Mt.Gox’s founders and call this a once-in-a-lifetime calamity, but the context behind the company’s demise is far more pernicious and occurs far more frequently than it should in the tech community.
Users today take incredible risks when starting to use a product, risks that they don’t appreciate when they click on a trial button or download an app. System reliability is often assumed when it is unwarranted, and data integrity and loss prevention is rarely guaranteed. Worse, we make little mention of the beta status of new services, misleading users to believe that the product they are using is far less risky than it appears in the glossy product pages. In no other industry would companies be able to get away with this, and if we don’t change things fast, our exceptional absence of regulation may become part of the past.
Users today take incredible risks when starting to use a product, risks that they don’t appreciate when they click on a trial button or download an app.
The Mt.Gox saga lays bare a dirty little secret of Silicon Valley: the users of our products are our test subjects. We experiment with them, we A/B test on them, we fail them, sometimes repeatedly. My own data has been overwritten, modified, deleted, leaked, and deleted again by early startups. Multiply by the multitude of services we all use in our daily lives, and suddenly it can seem that every few days something is going wrong.
Even early-adopting tech users are starting to become wary. As Jeff Atwood wrote on his blog this week, “I’m not excited by the prospect of installing an app on my phone these days. It’s more like a vague sense of impending dread, with my finger shakily hovering over the uninstall button the whole time.”
He is not just talking about system reliability, but also the corrosive business models that encourage data to be leaked to any number of revenue-generating affiliates. When I installed Secret a few weeks ago, I hesitated for several days when it asked for complete access to my contacts, an ironic notion given its anonymous functionality. While the company has done nothing to abuse my trust, it is the ecosystem that is encouraging this level of cynicism.
There is plenty of blame to go around for the state of affairs. It starts with founders who take a lean startup approach and attempt to hoodwink customers into believing that their software is far more developed and stable than it actually is. How many times have we heard about the “100 year startup” that gets talent-acquired a mere 14 months after its existence? We also need to look toward VCs and other investors who demand steep growth profiles even at the expense of core business operations. Startups should always be building the proper foundation for a long-lived company, even if that means a slightly less intense focus on growth.
Part of the problem is that technology startups are very different from other kinds of new ventures. Due to the lock-in nature of software and services, users often become reliant on a product very shortly after signing up. Unintentionally, their data starts to accumulate, and they may develop processes with the service that are difficult to transition to another system. Every company needs to deeply protect their customers, and yet, we see startups like Mt.Gox act so completely cavalier with customer information.
Furthermore, many users are still living with a software mentality, because the software they purchased in the past works for years. Most of the world does not upgrade all of their software in lockstep with the latest product releases. That is one reason for the success of cloud services, but it also remains an Achilles’ heel – the company behind the service needs to survive in order for the service to continue functioning. My elementary school was still using computers from the late 1980s without too much hassle, but today, a company failing literally means it is no longer available to me.
Every company needs to deeply protect their customers, and yet, we see startups like Mt.Gox act so completely cavalier with customer information.
To be fair, startups are necessarily experimental — more art than process. There are going to be hiccups, as there are in any new business as the team determines the best fit for a product in the market, or the right pricing structure. Large corporations are also not immune to these problems. Apple deserves some serious blame between the failed rollout of its new Mail application and the encryption vulnerability crisis of the past two weeks. Google’s shutdown of Google Reader last year was also quite damaging to many news junkies. But at least in that case, Google created sufficient lead time with its shutdown that other startups like Feedly were able to make the transition relatively seamless. Few startup users enjoy such convenience.
There are ways to avoid these outcomes. An easy one would be to take an open approach to data, ensuring that customers and users are always allowed to export their data. That open approach should also follow through in a startup’s communications, which should clearly indicate the expected reliability and guarantees of a service. Startups that are more advanced should begin to think through service-level agreements that guarantee certain levels of uptime, data integrity, and data-loss prevention. By making a lot of the reliability statistics key performance indicators for the company that are also contractually binding, a founder can set a high and consistent bar for service.
More simply, though, we need to commit to a founder culture in which we first do no harm. We owe nothing less to the early adopters of our software. Such a commitment does not have to come at a cost. WhatsApp was the largest acquisition of all time, and it used the programming language Erlang to build highly reliable systems for communications.
There is incredible opportunity for the next generation of startups to take reliability as their given, and for founders to prepare to build for the long-term. As users increasingly use services that fail their expectations, they are going to become more and more educated about what services to use, and which to avoid.
Here is the original post: With Mt.Gox In Flames, A Lesson: When Building A Company, First Do No Harm
We have a busy week in the TechCrunch TV studio for our Ask A VC show. This week, we have Merus Capital’s Sean Dempsey, Javelin Venture Partners’ Alex Gurevich, And YL Ventures’ Yoav Leitersdorf, sitting down for interviews, separately. You can submit questions for our guests either in the comments or here and we’ll ask them during the show.
Demspey, who co-founded early stage venture firm Merus Capital, was previously a Principal of Corporate Development at Google, responsible for acquisitions and investments including Android, YouTube, and Postini. Prior to Google, he spent over six years at Microsoft in the Corporate Development team. At Microsoft, he led over 40 acquisitions and investments. His investments include AdROlle, Runa (acquired by Staples), Apptimize, and AllClear ID.
Prior to joining Javelin, Gurevich was a Principal at DFJ Aurora, where he helped establish one of the first venture capital funds focused on high tech investments in Russia and Eastern Europe. Prior to DFJ, he was the first employee at ooma, a venture-backed company in the consumer electronics, VoIP (voice over IP) space and the co-founder of Say-Hey-Hey.com, one of the web’s first free video dating sites.
Leitersdorf invests early in core-technology software companies, and his portfolio include Seculert (cloud-based malware detection), Upstream Commerce (online retail intelligence), BlazeMeter (self-service performance testing cloud), FireLayers (security, compliance and IT governance for cloud applications and data) and 6Scan (website security suite). He was previously the CEO and cofounder of Movota, acquired by Bertelsmann, the CTO and cofounder of ExchangePath (online payments) acquired by CMGI, and the CEO and cofounder of PcEntertainer Magazine.
Please leave your questions for our guests either in the comments or here!
With hardware suddenly all the rage, accelerators devoted entirely to the genre are popping up all over the place. And that includes the far-flung regions of Russia.
The Navigator Campus will be the first private hardware technology park in Russia’s Kazan region. If you’re unsure where that is, well, it’s at the confluence of the Volga and Kazanka Rivers in European Russia. Ok, nevermind. Suffice to say that the Navigator project will focus on consumer robotics, 3D-printing, smart electronics for “smart home” systems and wearables. And we are talking hard-core Russian tech expertise here.
Navigator is launching with $4 million in backing by founders Ramil Ibragimov (Runa Capital) and Vasil Zakyev (shtrafy-gibdd.ru, Ohmymentor.ru). It may not sound like much, but you can do quite a lot with $4 million in Russia. And they are not stopping there. The GRAVIZapp angel fund, specializing in hardware startups, will co-locate there. And they plan to build a network of hardware hackspaces and accelerators in the region, hoping to raise that funding to top $30 million spread across the region. Thus, neighboring cities like Ufa and Perm will get their own Navigator spaces.
Serguei Beloussov, Runa Capital senior partner and Acronis CEO, believes that access to scientific and business experts, VC mentors and hardware industry players like Dell, Samsung, IBM, Cisco, Intel and Foxconn will mean “we will soon see more venture-backed hardware deals in Russia.”
Some 93 out of 120 spots have already been taken by startups, covering various fields including 3D printing, robots, healthcare hardware, and consumer electronics.
A few hardware projects located there have already raised early money:
• iBlazr – a crowdfunding startup from Kiev (with $150K+ raised on Kickstarter previously) is building a ‘smart’ LED-flashlight for smartphones and tablets.
• Krisaf – robotized gym equipment for accelerated rehabilitation of children with cerebral palsy.
• ENNOVA – a startup manufacturing NOVA 3D printers.
“Our ambitious aim for the next 5-10 years is to launch this kind of projects in each and every Russian city with up to 1 million citizens in order to create a powerful hardware-community based on the Russian engineering history,” says Ibragimov, of Navigator.
It sounds like they might just do it. The Russians are coming…
You probably have not heard of Oren Zeev, and he would prefer it that way.
There’s a small breed of early investors in Silicon Valley who primarily invest their own money, but who want to have an active role in building a company. This model isn’t for everyone. It’s a hybrid of a traditional VC with a dash of the early-stage angel investor, and it requires getting your hands dirty. They aren’t writing checks in the six figures. They’re putting in seven figures, and, in turn, own more of a startup than the average angel investor. This isn’t about scaling. It’s about building. And this is what Oren Zeev excels at.
The results speak for themselves. Zeev, the early investor behind Chegg, Houzz, Audible, Tipalti and others, has quietly seen a 100 percent IRR each year on his collective investments.
Zeev’s career in investing began at Apax Partners in Israel. As he recalls, he was fresh out of business school and he saw the industry as nascent. There were only a handful of funds, each of which only had around $20 million in capital. While at Apax, Zeev focused on creating a private-equity business for the firm in Israel. In 2002, Zeev had an opportunity to move to the U.S. to work on Apax’s VC business in Silicon Valley. While moving away from his family across the world with his wife and two young kids was a risk, Zeev had always dreamed of “coming to the mecca of technology and venture.”
But Silicon Valley was still reeling from the bubble bursting. Zeev was focused on Internet investing, and people thought he was crazy for even making the move. Most VCs weren’t in the mood to do new deals because they had portfolios full of problems. But Zeev took a wait and see approach, and stumbled upon Audible, an online audio technology company that had gone public in 1999 but hadn’t seen any traction on the public markets.
“It was a total penny stock and the entire company was worth $30 million. People did not think it would make it but I thought the company may have gone public too early and I saw value,” he says. Apax’s $11 million investment bought 40 percent of the company. And a month after investment, Audible signed an exclusive deal with Apple to provide books on iTunes. In 2008, Amazon bought Audible for $300 million.
“There was an advantage of being an outsider and looking in to Silicon Valley,” he adds.
Don Katz, the CEO of Audible, explains to me that many of the VCs at that time came out of the MBA mold more so than the operator mold. “Their core competency was founder removal. Whenever things got tough that was their first instinct,” Katz says. “Oren was so different. He was a partner and was supportive of the founder as well as the company. He could have judged us through the eyes of a financial investor, a number cruncher, but that wasn’t helpful at the time. And he knew that.”
Zeev continued to work for Apax until 2006, but when the firm moved away from investing to concentrate on mega buyouts, Zeev knew he needed to move on. He was burnt out and, while his time at Apax had been lucrative, he needed a change. He started to teach middle school math at a school in Los Altos and took a few graduate courses at Stanford.
On the side, he started investing his own money. “Back then angel investing was less common. Most angel investors would write small checks but people weren’t really doing it for the money. These investors actually liked the company-building part of it,” says Zeev.
He also started to pool his money with three other investors in a consortium of sorts called Primera Capital. There were four equal partners, but Zeev was the only one sourcing deals full-time.
In 2008, Zeev was introduced to the co-founders of then textbook rentals startup Chegg. At the time, the company was looking for a Series B investment, and Zeev, along with his consortium, invested $3.5 million into the company (a quarter of which was Zeev’s own money), and Zeev joined the board. The entity put another $4.5 million in the Series C round when Kleiner Perkins came in. And Zeev helped recruit Dan Rosensweig to join the company as CEO.
Rosensweig cites Zeev’s network as being one of the defining factors that differentiates him as an investor. As Rosensweig recalls, when he joined, the company was at a turning point when it was trying to figure out its business model. “It was a tense, difficult situation and Oren was calm, and positive throughout the experience.”
While Rosensweig and the company were focused on making the transition from print to digital, Zeev was helping him source talent to help develop for mobile platforms and made the introduction to the 3D3R team in Israel, which, via an acquisition, became Chegg’s R&D and mobile team.
Along the way Zeev also invested in Cramster, a community to help students do their homework. When Chegg was looking to acquire compatible technologies and talent, Zeev made the intro to Cramster but recused himself from any discussions, and told Rosensweig that there was no pressure from his end on making the acquisition. Chegg ended up acquiring the company, which became the foundation for Chegg Study.
While there are a sea of angel investors, there aren’t many individuals who can grow with a startup that it matures into a late-stage company, and then a public company. Zeev is one of these unicorns, Rosensweig says. “It’s rare to have an investor and board member that can be useful at multiple stages of a company.”
“Oren is not the guy who will pound his fist on the table and demand answers. He’s thoughtful and asks the right questions,” Rosensweig explains. While Zeev is no longer on the board, Rosensweig still asks him to be in board meetings because his enthusiasm continues to help the company as it encounters new goals and challenges. “He’s really a jack of all trades and works tirelessly on behalf of his companies” Rosensweig says of Zeev.
Even when it came down to the money, Zeev didn’t sell much of the stock before Chegg’s IPO last fall. He sold 20 percent after the company’s Series E round and still owns 8 percent. The fact that he still holds stock (which is a rarity for early investors, and even some VCs) is a testament to his long-term vision for Chegg.
In Zeev’s subsequent deals after Chegg, he started to pull in different people in his network to participate in certain deals. As Katz tells me, he became “Oren 2.0.”
In perhaps the earliest, offline version of AngelList Syndicates, Zeev chooses these syndications very carefully, and says generally there is more demand than supply. And he never charges people to be part of the syndicate. While Zeev is responsible for the investment and the company-building aspect of things with the founder, members of the syndicate can get involved, as well.
Some are CEOs he has backed in the past like Rosensweig and Katz, and others are key individuals in his network who could be of help to startups, including Richard Sarnoff, an adviser to private-equity giant KKR and a former chairman of Bertelsmann, or former News Corp. exec Gary Ginsberg.
For the past few years, Zeev has been averaging around one to two deals per year. He’s also been investing primarily with Israeli entrepreneur Oren Dobronsky, the owner of Palo Alto restaurant Oren’s Hummus. Dobronsky and Zeev share an office in Palo Alto and Zeev has also backed Dobronsky’s current startup Mallpad. In total, Zeev has pulled in 40 to 50 different partners for his investments.
In 2009, Zeev backed social browser toolbar startup Wibiya with $2.5 million, which was eventually sold to Conduit for $45 million. In 2010, he backed DudaMobile, a mobile website maker, which has seen success after partnerships with Google and others. Other investments include Crossrider (acquired by Market.com for 19X the total money raised), Tipalti, Gogobot, Infolinks, Webflakes, Bonobos, Streamonce (acquired by Jive), and Preen.Me.
In late 2010, Zeev was introduced to Adi Tatarko and eBay engineer Alon Cohen, a married couple who had created a network around sharing photos and information around home remodeling and building. There was something about the startup, called Houzz, that struck Zeev as being a massive opportunity. As Tatarko recalls, Zeev went to her and Cohen’s home and saw what they were working on. Within days, the money was wired. Zeev invested the first million in Houzz for a sizeable portion of the company.
As Zeev promised Tatarko and Cohen, “I’m not going to make your life harder, I’m going to make it easier.” And Zeev stayed true to his word. He’s been a constant protector, she explains. “He’s never asked us to do anything, and he’s always there to help us, and we have leaned on him more than any other investor.” Zeev has been so involved with the development of Houzz that Tatarko compares him more to a co-founder than an investor. Zeev has taken on the task of recruiting many of the company’s strategic hires, as well as helping form deals and partnerships, and his track record helps him make inroads with investors.
When Tatarko and Cohen considered taking another round of funding in 2011, Zeev knew that he wanted to connect Houzz with Sequoia’s Michael Moritz. Tatarko and Cohen maintained that they didn’t want to visit VC offices and go through the traditional pitch process. Zeev didn’t know Moritz himself but his old friend Katz did (who Zeev had brought in on the seed round a year earlier), and he asked for an intro. Zeev pitched Houzz to Moritz over email at 9 p.m. on a Sunday night, and by Monday morning Moritz was visiting the Houzz office. Along with the Moritz email, Zeev also pitched four or five other Sand Hill VCs.
Moritz, fellow Sequoia partner Alfred Lin, Zeev, Tatarko and Cohen met and within two hours. Moritz told them that as long as terms could be agreed on, Sequoia would back the company. By the time other VCs had their assistants schedule meetings for Tatarko and Cohen, the ink had already dried on Sequoia’s first funding round in Houzz.
In the case of one of Zeev’s more recent investments, gifting service Loopt Commerce, he helped bring in PayPal as an investor, one of the few startup investments the payments giant has made. Zeev had seen PayPal CEO David Marcus at an event and was telling him about Loopt — the company actually wasn’t raising more money, but Marcus, and PayPal as an investor, is a key partnership and hard to turn down for a startup in the gifting space.
While Zeev’s network is vast, he’s also not afraid to put some old-fashioned hustle into his company building. “Everyone in the Valley is reachable within one degree of separation, thanks to LinkedIn. Recently, a portfolio company wanted to speak to someone at NetSuite and Zeev was able to connect with someone via LinkedIn.
Another element of Zeev’s network worth calling attention to is the Israeli connection — many of the entrepreneurs he backs are from Israel. Zeev acknowledges that a disproportionate part of his portfolio are startups from Israeli entrepreneurs, but he says part of his network involves founders and investors from his home country.
As I mentioned above, looking at the numbers, Zeev’s track record speaks for itself. He’s invested $20 million personally since 2008, and is responsible for around $60 million invested with other partners included. Zeev has seen his money return 100 percent annually since 2008. Good VC funds return around 20 to 30 percent per year, on average. The current value of Zeev’s portfolio is several hundred million (much of which is attributed to his 10 percent ownership in Houzz).
What is clear about Zeev is that he can’t scale, and he’s never going to be able to compete with some of the established seed and early-stage funds with larger funds. And it’s worth noting he doesn’t have a WhatsApp in his portfolio. Yet.
“What drives me is I really feel that my job is to work for founders and serve them. I like that I don’t have any other constituencies, like LPs or partners,” he says. That comes with some sacrifices as well, he adds. Zeev says he has no interest in building a firm, and acknowledges that what he does is not scalable.
But in a sea of early-stage capital and investors, Zeev offers a commitment and thoughtfulness that typically doesn’t come with scale.
Here is the original post: Meet Oren Zeev, Silicon Valley’s Builder-Investor
500 Startups is undertaking an initiative to help fund more women-led startups. The firm has launched two AngelList syndicates to enable its limited partners (LPs), mentors, founders, and other investors to make quick and easy co-investments with the 500 Startups partners. Each syndicate will be allocated $1 million with each funded company receiving between $250,000 and $500,000.
Earlier this week, Dave McClure, the self-proclaimed “Sith Lord” of 500 Startups, penned a post where he addressed the need for more to be done in the name of diversity in the startup community. When discussing its importance, McClure writes:
Diversity is not a tactic or strategy, rather it is at the core of what we believe, and what we desire. Diversity is not even a choice, rather it is the most natural expression of who we are as humans, at our best and worst — curious, selfish, giving, greedy, loving, lusting, proud, humble, fearful, angry, happy, hungry, lazy, hateful, despicable… and wonderful human beings.
AngelList syndicates will be one way McClure hopes will help address this issue. In case you’re not familiar, syndicates are groups within AngelList that allow angel investors to create, lead, and collect carry for a fund of money to help fund early-stage startups. 500 Startups is using this method to create a group to support not only early-stage startups, but also women.
The firm says that its overall investment criteria will remain the same, companies eligible for the “500 Women” syndicates must have at least one female founder, who owns at least a 10 percent stake. The fund is backed by notable women, including SlideShare CEO Rashmi Sinha, Khu.sh CEO Prerna Gupta, DCM general partner Ruby Lu, and Citi Ventures’ Asia head Wei Hopeman.
In its pursuit of diversity, 500 Startups says that additional syndicates may be established in the future.
Photo credit: EMMANUEL DUNAND/AFP/Getty Images
As we have been writing, startup accelerators in India’s nascent ecosystem are beginning to seek more mature, late stage companies to work with. The latest to join this trend is Microsoft Ventures, which announced its Summer 2014 batch for the Indian accelerator today. Of the 16 startups selected, six will be part of Microsoft’s new Accelerator Plus program, aimed at helping companies who already have customer traction and are more mature.
“This program is for more mature companies which are closer to VC funding. Most of them have made significant progress, so much so that the startup ecosystem is taking their eyes off them,” Ravi Narayan, director of Microsoft Ventures said in a statement.
Microsoft Ventures in India has graduated 35 startups since August 2012, and about 80% of them have been funded so far. Two graduates, Adepto and Plustxt, have been acquired.
As we reported last week, accelerators are trying to figure out ways to get involved with more fundable, mature startups. This is because despite more money chasing early ideas, the Series A crunch seems to be even more real for those graduating from the accelerators. Accel India scanned around 1,000 companies across 62 different accelerators and incubators in India over last few years, and the results speak for themselves — only 30 of them went on to receive Series A funding.
Mukund Mohan, director of Microsoft Ventures had told me last time that the Y Combinator model won’t work in India because it takes longer than just $20,000 and 4 months. Even globally, Y Combinator and Tech Stars are the only two successful accelerators that provide any meaningful exits for company founders.
This week, VegasTechFund’s Jen McCabe is joining us in the TechCrunch TV studio to talk hardware and more. You can submit questions for our guests either in the comments or here and we’ll ask them during the show.
McCabe, who leads the new hardware arm of Tony Hsieh’s seed stage investment fund, VegasTechFund; previously joined Romotive, a Sequoia-backed personal robotics company, as an early employee running operations. While there, she led manufacturing and new product lifecycle activities for the company.
McCabe is also a Y Combinator alum, and founded Contagion Health, a social exercise challenge site funded by Esther Dyson and Founders Fund Angel.
We’re going to ask McCabe about how she is evaluating hardware startups at the early stage, and how she’s advising companies to approach manufacturing, and sales (i.e. Kickstarter, or pre-orders on a site).
Please send us your questions for McCabe here or put them in the comments below!
Read this article: Send In Your Questions For Ask A VC With Vegas Tech Fund’s Jen McCabe
Enrique Allen is the co-director of Designer Fund where he provides angel funding, mentorship and connections to designers creating businesses with meaningful impact. He is also teaches at the Stanford d.school.
We’re on a roll as more designers succeed on the path of entrepreneurship, but how do we decide which startups to work with? We need to be more diligent about not spending our scarce attention working on startups that go nowhere and learn how to pick ones that actually live up to all the hype.
Here are five simple questions we asked before deciding to partner with startups like Airbnb, Dropbox, Pinterest, Square, Khan Academy and Coursera for our design education program, Bridge.
Start with the “Why?” when you talk with the founders and the rest of team. Ask them to articulate the mission and what gets them up in the morning day after day. Do you think they genuinely believe in the purpose of the company and does it strike a chord in your heart?
The mission is what intrinsically motivates and sustains you through all the ups and downs of startup life. It makes getting in early and staying up late sweating details worth all the effort because you know you’re contributing to something positive that’s greater than yourself.
In the case of Airbnb, its mission is to “make people feel at home, anywhere in the world.” If you are someone who believes in living like a local to authentically experience a foreign place, this is where your missions align.
Arguably the most important factor in deciding to join a startup is the team.
Ideally, you can surround yourself with teammates who are “better” than you in many ways because of their diverse backgrounds, skills and experiences. You’re greatly influenced by your peers and if they’re extraordinary, you’ll learn from them and continuously be pushed to improve yourself.
Just like great engineers attract other great engineers, the same is true with designers. As you talk to designers and engineers at a startup, do you feel inspired and confident that you can learn a ton from them? Do you see evidence that the founders invest in design and value it at the same level as engineering and business?
One essential criteria to ask is if the startup even has a design team. If the company has dozens of engineers and only one or no designers, this could be an opportunity for you to lead and create a design team… if you’re prepared for that.
If not, try to look for your design dream team. For instance, many of designers at Dropbox have “past experience shipping wildly successful products including the original designers of Facebook, Spotify, Rdio, Instagram, and many more,” says Andrew Chin, Bridge alum.
You want to surround yourself with people who are going to push the quality of your work to the next level.
Watch out for big companies that have multiple layers of bureaucratic hierarchy or companies that are so established that they only make incremental changes for fear of losing what they’ve already gained. You want to be able to take risks and influence everything from the product all the way up to how the company itself is designed.
Dig into how decisions actually get made at the company. Is there essentially a waterfall method where the founders or engineers make all the key decisions and then want designers to make it “pretty?”
If so, turn around and walk away. You want a place with true collaboration.
“We don’t like drawing lines between skill-sets like Design, Engineering, and Brand,” says Evan Sharp, Pinterest’s designer and cofounder. ”We know that we’ll only be successful as a company if we empower the best people to build their absolute best work, and so design everything around that.
“In this way, we’re always “knitting” and collaborating to produce the best results we can for Pinners.”
Keep an eye out for how the company is organized. Does design have a strong voice and seat at the executive level or is it subordinate to some vice president? Does the company give designers amble budget to build the right team and invest in creativity, everything from supplies like white boards to large format printing?
Also take a look at basic indicators like how the space is designed. Has the company invested in creating an environment that fosters collaboration across disciplines? When you talk to anyone at the company are they finding meaning in their work and does their behavior actually imbue the company’s values?
I remember walking into Square’s creative space and being blown away by the creative energy flowing through the place – not just from product designers. There was something special when I saw photographers, filmmakers, and storytellers – roles you don’t normally see in startups.
These kind of small details add up to create a culture that shows it values design in everything they do.
Last but not least, if you join a startup, make sure you know what you could work on and how valuable your work might be.
Are you going to be able to solve problems holistically or will you be pigeon holed into polishing off a feature? Is there a design need the company has that you can uniquely fill and if you succeed, will it move the needle for the business?
Consider whether the company is at an interesting stage of growth, where they’re just at the cusp of taking off or at the early stages of developing a transformative product – these are moments where design can really make a difference.
Ideally, there’s potential for you have a hand in affecting millions of people and potentially creating billions of dollars’ worth of value in the long run. You also want to make sure that if the company does well, you will too by having a significant equity stake.
Very few opportunities in the world offer the type of upside startups can have in terms of impact and scale.
“Working on a product that is used by millions of people is awesome, but one that empowers those millions to improve their lives and the lives of those around them creates orders of magnitude more impact in the world,” says Jason Rosoff, lead designer at Khan Academy.
I hope these questions serve you well before you consider joining a startup.
If you’re interested in connecting with world class designers and startups in San Francisco, check out Bridge. Apply early by February 9th; applications close March 2nd.
Go here to see the original: 5 questions designers should ask themselves before joining any startup
Last summer we covered Petzila’s answer to keeping a pet pooch happy when you’re not at home: a remote treat dispenser called PetziConnect which also let absent dog owners view and talk to their pooch while delivering treats from afar. Fast forward a few months and prepare to greet iCPooch: another gizmo aiming for the not-so-stay-at-home dog owner, but one which takes the remote petting to the next obvious level: doggy facetime.
iCPooch, currently seeking $20,000 on Kickstarter to go from prototype to production, provides a plastic housing for repurposing an Android/iOS smartphone or tablet as a video terminal through which you can see and be seen by your dog when you’re not at home.
So, to be clear, you’re going to have to provide the most expensive chunk of hardware required to power this device yourself, fitting it between iCPooch’s adjustable brackets. Although, your old smartphone that’s languishing unused in a drawer is probably going to be perfectly up to the task of treat-talking Fido.
As with PetziConnect, iCPooch holds pet treats (although it’s specifically designed for larger dog biscuits) that the owner can dispense remotely via the ‘drop cookie’ button in the corresponding app.
The differentiator is that because you’re using a smartphone/tablet, the app can also support placing a videocall (via Skype and piggybacking on your home Wi-Fi network) so you can view your dog while you send a treat, and — crucially — be seen by them. That’s one up on PetziConnect which included a camera and microphone so the owner could see and talk to the dog, but no screen to be seen.
Whether your dog will care as much for seeing your remote visage as receiving the tasty treats that materialise in iCPooch’s tray remains to be seen — and judging by the Kickstarter video, the dog’s Pavlovian attachment is likely to quickly transfer to the tray portion of the device, i.e. the place where the treat appears. But at least you get to pretend they’re really happy to see you.
Also remaining to be seen: whether the remote sight and sound of a beloved owner, coupled with the tasty scent of dog biscuits wafting from a box on the floor, drives Fido into such a frenzy of excitement that he systematically deconstructs iCPooch, returning it to the constituent parts from whence it came.
iCPooch was apparently the brainchild of 14-year-old Brooke Martin, who is credited as inventor and spokesman on the Kickstarter project page, with her dad as founder and COO. The idea came to her after the family dog suffered “separation anxiety” as a result of everyone having less time to spend hanging out at home. Ergo she wanted a way to maintain some contact with the dog, when she was out and about.
The family startup is aiming to raise $20,000 on Kickstarter by March 4 to get iCPooch to market, with an estimated shipment date of this May. Early backers can bag the device for $99. But as noted above, that price-tag does not include the cost of the smartphone or tablet you’ll need to turn iCPooch from dumb plastic to working gadget.
(Petzila’s rival PetziConnect, which incorporates its own HD camera and Wi-Fi connectivity into the treat-dispenser, has not yet shipped but is due to arrive in early 2014. It’s available for pre-order costing $170.)