Sunday Morning Tech Buzz 10/25: Why some Unicorns are in trouble; SevOne celebrates 10 yrs; IMPACT 2015 Capital Conference November 3rd & 4th

Tom Paine

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(Where I somehow try to answer questions I haven't been able to answer the rest of the week, at a time when I'm least capable of doing so. And sometimes don't finish on time. This week, my excuse is that I made a rare visit to church.)

Well...that's one way to respond when a VC passes... pic.twitter.com/C5WWYnk5KV

— Josh Kopelman (@joshk) October 22, 2015

Also on the First Round Capital front, Uber, which on paper is worth alot to FRC, is said to be talking about raising another $1 billion, possibly pushing its valuation near $70 billion. These reports about Uber, when appearing in the "responsible press", usually turn out to be accurate and often conservative.

Meanwhile, an NYU professor and well-known expert on valuations thinks Uber is only worth about $23.4 billion, approximately. And Fortune looks at the private
company valuation game and why there are so many unicorns now.

The problems with some unicorns is that they are built upon a pile of assumptions,
one stacked on top of another, that can collapse like a house of cards. Its too early to say, but there's a chance that DraftKings and FanDuel may have suffered irreperable damage from the alleged insider dealing scandal at DraftKings, Even if every one is cleared of wrongdoing, it still puts the spotlight on them and its unclear whether states and the federal government will continue to find their games legitimate. The US Attorney for Southern New York subpoenad DraftKings this week, reportedly asking for information about an employee’s activities and potential misuse of inside data.

I don't understand the science behind the Theranos situation as well, but that company's been valued at $9 billion, so there's a lot at stake.

Another unicorn, restaurant search engine Zomato, laid off 300 out off some 3,000 employees globally, the primary targets being people who collect content about restaurants. Technical.ly Philly reported that it ditched Philly entirely, shutting down its 15 person office, consisting of mostly content collectors.

TechCrunch reported that Zomato has raised over $223 million in funding, and in April the company disclosed its $1 billion valuation.

And that's how bubbles get started. Some people have a great deal of money to invest and their hurdle rates (expected returns) are low because interest rate are so historically low. Irrational assumptions, questionable due diligence, and failure to consider possible risk scenarios compound the problem. I'm not really crying for those investors who get burned on some of these deals.

But I won't call it a bubble now because I haven't seen enough blood in the street, as some people say. There have been rounds of layoffs at several area banks and FMC is cutting 800 + employees (some locally), as examples, but I haven't seen it hit much in Philly's tech sector.




SevOne held its first User Conference last week at UDel, though it was fairly small because its customer base is still a concentrated group of large customers and it was closed to the public. And it was fairly quiet, with not a great deal of information coming out of it, probably by design. But it certainly attracted considerable attention. My post on the user conference received amazing traffic on Twitter, though I suspect much of it were from bots set to respond to any mention of SevOne, paticularly after my post was retweeted by SevOne.

But its an exciting time for SevOne, which may or may not have attained unicorn status by now. In terms of dynamic, scalable monitoring of large network performance (and it handles some huge ones) SevOne appears to be ahead of the pack at the moment. And the market for large network management tools is exploding, with the emergence of mobile devices, Internet of Things applications, and the sheer number of devices now in use. SevOne will face big decisions in the next year or two: whether to go public, acquire or be acquired, and how broad its product line should be (right now its rather narrow). As well as tactical decisions about how to manage the products it has.

SevOne also used the occasion to celebrate its tenth anniversary of its founding, holding it at the University of Delaware where the Bakalovs started it. And part of the event was held in its future Delaware head offices at the Star complex on campus.

.@tanyabakalov celebrates 10 years of #SevOne at the new STAR campus office. pic.twitter.com/xZ6YXZ7NbU

— SevOne Inc (@SevOneInc) October 21, 2015

But one other firm that deserves much credit for SevOne's success was quiet; Osage Venture Partners, a fairly small VC at the time, had the vision to get in early. Osage is still in SevOne because it participated in its latest round; I don't know whether it got anything out at the time of Bain's investment snd partial recap.


Just a reminder, and I'll have more info next week, that the IMPACT 2015 Capital Conference, one of PACT's most important annual events, is right around the corner, to be held on November 3rd & 4th at the Ritz-Carleton Philadelphia.

Saturday Highlights: More Uber $ said to be coming; Why ESPN's video clips are disappearing from YouTube

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The Wharton Network At Its Best (Wharton Entrepreneurship Blog)
On Josh Kopelman being awarded the 2015 Alumni Achievement Award.

Uber Said to Plan Another $1 Billion in Fund-Raising (New York Times)

Township in New Jersey (Evesham) partners with Uber and BeMyDD to cut its DUI numbers (Ars Technica)

How the Mets moved on from Madoff (Fortune)

Here's why ESPN's video clips are disappearing from YouTube
(Fortune)

First Round Capital. first institutional investor in Uber, has yet to comment on controversy

Tom Paine

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Josh Kopelman/ Uber Blog

Josh Kopelman and First Round Capital are in an interesting position relative to Uber, although there might not be much they can do to influence it.

I wrote in June about how First Round Capital came to lead the seed round in Uber, as described by Business Insider. The First Round team knew of the concept of Uber through its association with Garret Camp, co-founder of FRC-backed StumbleUpon who reportedly came up with the idea for it (Camp at last word is Uber's non-executive chairman). FRC became Uber's first institutional investor. Now, by Fortune's assumptions, those seed round stakes of $500,000 may be worth up to $1 billion or more. And there is talk of raising another round at a somewhat higher valuation.

Kopelman is also, personally, an investor in Sarah Lacy's website PandoDaily, as is a partner with another VC firm that's invested in Uber (at least two other VC firms have invested directly in both). Lacy has been in many ways at the center of the conflict with Uber.

The long-simmering, but relatively quiet, controversy about Uber's corporate behavior exploded after BuzzFeed's piece published November 18 alleged that a senior Uber executive, Emil Michael, suggested at a dinner with media present (thought to be off the record) that it might hire opposition researchers to look into reporters' personal lives. That stirred up several other questions about Uber's corporate behavior. Despite CEO Travis Kalanick's tweeted apologies for Michael's comments, a lot of crap is still flying from all sides, as they say.

Some have tried to portray this struggle in political terms, though along confusing lines; some compare Uber users to Republicans, while others compare Uber to a progressive movement against a long-entrenched taxi monopoly trying to halt progress. No doubt a key hire is former Obama campaign manager and top White House aid David Plouffe (I wrote about his hire in August, and pointed out his Delaware roots) as SVP, Policy & Strategy. I don't know how much his fingerprints are on Uber's PR yet, but his aggressive tactics and dependence upon social media influence at the grass roots level as used on the Obama campaigns might be evident here.


Kopelman hasn't commented (and didn't respond to a Philadelphia Business Journal request for comment). Garret Camp hasn't commented. I tried to find out the current makeup of Uber's board but found multiple versions on the web and none on Uber's website; a request for an update to Uber was not answered.

Lacy said on Fox Business Wednesday that she emailed several common investors in Pando and Uber that "said, you know, I need to know frankly for our relationship what the ground rules of journalism are between your firm and Pando. And frankly, for the safety of my family, where do you stand on this alleged proposed plan to spend $1 million discrediting me? And no one’s written back" as of Wednesday.

Kopelman personally made an appearance behind the wheel for UberX in its abortive attempt to start up in Philadelphia in late October, before the PPA crackdown. And he followed up with a string of tweets pointing out some other ridiculous laws on the books in Pennsylvania.

To be sure, FRC is a small minority shareholder in Uber at this point. If its shares were worth $1 billion as of the last valuation, it was out of a total of $18.2 billion post money (after the funds were booked). Fortune's Dan Primack commented in today's TermSheet email that he didn't know how Uber is structured, "but do know that many of Silicon Valley's hotter startups structured their early investment rounds in a manner that precludes actual VC control." (Update: Primack: Don't overstate investor power at Uber. I don't think FRC has a board seat any more, as often happens. I believe Rob Hayes was taken off to make room for a larger investor.

There is a legitimate debate over the degree of regulation required in the Taxi industry, though its over regulated now. I'm not going to draw a conclusion on how Uber has acted, though it does seem in several respects to be boorish and overbearing. Many First Round Capital portfolio companies have pushed it to the brink in the process of creating a new market or service, and have tested the legal system while doing so (think Aereo), but have almost always been above board ethically. But Uber presents a different set of issues, that may or may not be smoothed over, at a critical point in its growth trajectory.

Update 11/25: Uber directors (per Form D filed with SEC 11/13/2014) include Travis Kalanick (CEO), David Bonderman (TPG Capital), Garret Camp, David Drummond (Google), Ryan Graves (Uber Head of Global Operations) and J. William Gurley (Benchmark Capital).


Update 11/26: Bloomberg reports that Uber is seeking to raise another $1 billion at a $40 billion valuation.

Update 11/29: Uber shut down in Nevada, Thailand, awaiting key court decision in France.

Update 12/6: Uber Raises $1.2 Billion At A $41 Billion Valuation, Vows To Become 'Smarter And More Humble' (Business Insider)

How has First Round Capital made out on its early bet on Uber?

Tom Paine

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Josh Kopelman as "Rider Zero" for Uber Philadelphia in 2012/Uber Blog

Earlier this year, Business Insider told a (perhaps somewhat dramatized) version of the story of how First Round Capital came to co-lead Uber's first post-seed round with $500,000 in late 2010. Of course, the connection goes back to Josh Kopelman and his colleagues knowing Uber co-founder and Chairman Garret Camp from FRC's backing of his prior startup, StumbleUpon, which was sold to Ebay for $75 million before two years later being repurchased by Camp and an investment group (including FRC) for a reported $29 million. Of course, why Ebay needed StumbleUpon in the first place is a different question, for which I'm sure there was a good rationale at the time. Camp is said to have come up with the idea for Uber after complaining about how hard it was to find a cab in San Francisco.

So after Uber's recently announced new round at a pre-money $17 billion valuation, where do the early investors stand?

That $1.5 million 2010 angel round led by FRC valued Uber at $4 million, according to Fortune Magazine. "Investors in that round," Fortune adds, "assuming reasonable dilution, saw their investments grow to between 400x and 600x in the round that valued Uber at $3.5 billion. At $17 billion, they’re worth around 2,000x, according to people familiar with the deal." FRC is listed among participants in the $11 million Series A in 2011, according to CrunchBase, but not in the megarounds that followed.

So First Round Capital's stake in Uber could easily be valued in the $1 billion range, according to this logic. Which seems a bit on the high side to me; if FRC contributed
$500,000 to the angel round with the $4 million valuation, that would theoretically have given it an eighth of its total value at the time. Its hard to believe that it still holds more than 5% of the company if it did not participate in the larger of the later rounds.

Update 3/1/17: Uber's valuation is now said to be $67 billion.

First Round Capital’s Kopelman Challenges Conventional Thinking at NJ Tech Meetup

@Alan Skontra

                                   Josh Kopelman spoke to the NJ Tech Meetup in December. | Aaron Price

College entrepreneur, Internet pioneer and award-winning investor Josh Kopelman schooled more than 100 attendees of the NJ Tech Meetup’s 43rd monthly meeting Dec. 16, 2013 at the Stevens Institute of Technology campus in Hoboken.

Kopelman shared success stories and offered contrarian opinions about entrepreneurship, which meetup organizer Aaron Price praised for highlighting many of the ideas the group has explored this year.

Kopelman started his first company, a homework helper called Infonautics, in 1992 while he was still a student at the Wharton School of Business. He listed Infonautics on the NASDAQ exchange in 1996, and three years later he founded Half.com, which created a resale market for books, movies and music.

Kopelman sold Half.com to eBay in 2000, and three years after that he founded TurnTide, an anti-spam company that Symantec bought after just six months.

In 2004 Kopelman turned to investing by founding seed firm First Round Capital, which Kopelman said explores more than 3,000 ideas annually out of offices in New York, Philadelphia and San Francisco. This year Forbes magazine ranked Kopelman 12th on its annual “Midas’ Touch” list.

Kopelman said he is from Philadelphia, a large city but no Silicon Valley or even Silicon Alley. He mentioned his background to show that the adage of “right place, right time” covers a much larger map these days.

 “Great entrepreneurs can come up with great ideas anywhere in the country, just like great actors aren’t all born in Hollywood,” he said.

He then said he wanted to share some contrarian opinions.

First, he challenged a notion, taught by one of his Wharton professors, that successful entrepreneurs find an unmet market need.

 “It took me about 10 years to realize that I disagree with that professor,” Kopelman said. “We’ve funded many companies that are not trying to find an unmet market, but are instead finding a solution to an existing market but doing it faster, better, cheaper,” he said.

For example, Kopelman’s company was one of the seed investors of Uber, the new taxi service similar to AirBnB, through which private individuals use their own cars to give rides to people. Riders can use an app to request a driver, follow that driver’s progress en route, pay for the trip via credit card, and rate drivers for performance. “Uber is about solving an existing need of getting from place A to B faster, better, cheaper,” he said.

From the Uber story Kopelman segued into another idea about shrinking markets. He mentioned how Microsoft toppled what was a $1.2 billion print encyclopedia market by adding the digital Encarta encyclopedia to its software suite. The market soon collapsed in half, but Microsoft took a larger share of it.

Kopelman further promoted his idea of shrinking markets by telling the story of Half.com. “Our whole business model was based on the fact that when people buy books or movies, they typically read or watch them only once,” he said. “We would send an email to people asking, would you like your $30 back?”

Half.com found that people are interested in reselling their entertainment. Kopelman said that a Harry Potter book would resell an average of four times, with Half.com taking $3 from every sale. The site challenged established and larger retailers that only sold new.

“That’s a really asymmetric way to compete,” Kopelman said. “We cost our competitors 10 dollars for every dollar we made but we were able to turn them in such velocity and such volume that we were shrinking the market by removing the inefficiencies.” The plan worked; a year later eBay bought Half.com for $350 million.

Kopelman dispelled one more myth, that seed investing and venture capital are the same. “The goal of venture investing is to take a business and to scale it, to pour fuel into the engine,” he said. “That’s not the goal of seed investing.”

Seed investing, Kopelman explained, is about validating or disproving an entrepreneur’s hypothesis. “Oftentimes people pitch venture capitalists without validating the hypothesis and when they need to be pitching growth, and they pitch seed investors on growth when they should be talking about the hypothesis they want to validate,” he said.

Kopelman told the story of how as a seed investor he supported TechForward, which enables buy-back programs for electronics. At the time, retailers were losing traditional revenue because customers stopped extending warranties for products, such as televisions and phones, that they would soon upgrade.

TechForward thought to replace the lost revenue by creating a buy-back program in which a customer would pay money upfront for a guarantee that a retailer would buy back a product later, when the customer wanted to replace it. By offering store credit, retailers could lock customers into a cycle of upgrades.

Kopelman said that as a seed investor he gave TechForward $300,000 and asked the company first to test its hypothesis by collecting data from eight used computer stores in Los Angeles. He said that research enabled TechForward to hone its idea, and that later it was able to earn exponentially larger investment amounts from venture firms.

“At the seed stage you’re trying to run a series of experiments,” Kopelman said.

He ended his talk by opening the floor to audience questions, such as on what he looks for in a successful pitch. He said that entrepreneurs should be able to tell a story and have strong marketing ideas.

He added that he always looks for a team with a diversity of member strengths. “We’ll turn down ideas if we don’t like the team, though we won’t tell them that,” Kopelman said.


Alan Skontra is a journalist and writer based in Hoboken, and a contributor to NJTechWeekly.

This article originally appeared in NJTechWeekly, and is republished here with its permission.

Daily Links 2/11/2013: ESPN Accused in Dish Case of Giving Comcast Better Terms

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First Round Has the Most Exits of Social Business Startups – By a Nose (PE Hub)

Nomi Raises $3M To Help Retailers Understand Their Customers, Online And Offline (TechCrunch)
Founded by Buddy Media & Salesforce.com vets; round led by First Round Capital.

It Took Only 13 Days For Former Salesforce Execs To Raise $3 Million For Their Startup, Nomi (Silicon Alley Insider)


“Buy When There’s Blood in the Streets” and Other Lessons from Venture Capitalists Fred Wilson and Josh Kopelman (Wharton Entrepreneurship Blog)

NBCUniversal, Esquire To Launch New Channel (Broadcasting & Cable)

Comcast May Add Video Subscribers, First Since '07 (Investor's Business Daily)

ESPN Accused in Dish Case of Giving Comcast Better Terms
(Bloomberg)

New call for AWS spinoff (IT World)



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Daily Links 2/8/2013: Report: BI vendor Tableau picks bankers for summer IPO

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Lockheed Martin Completes Major GPS III Flight Software Milestone (PR Newswire)

Fox to unveil sports channels for ad buyers in challenge to ESPN (Reuters)

Software maker Tableau picks banks for summer IPO - sources (Reuters)

SAP’s “Platform Agnostic” Approach to Mobile Devices (ASUG News)

Kopelman on VC branding and the PR hype machine (PandoDaily)

Synchronoss Spikes As Q4 Results Cruise Past Estimates
(Eric Savitz/Forbes)
Synchronoss is based in Bridgewater, NJ, with Engineering R&D in Bethlehem.

Apple hires AMOLED TV Application Expert James (Jueng-Gil) Lee from LG (9to5Mac)


Christie sets terms for online gambling (Asbury Park Press)




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Josh Kopelman speaks at Philly Tech Meetup last week (video)

Saturday links 10/27/2012: Cause of AWS outage; Dell Boomi's role in SAP cloud integration

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Amazon Web Services Outage Caused By Memory Leak And Failure In Monitoring Alarm (TechCrunch)

SAP details policies, pricing for linking cloud apps (Computerworld)
Dell Boomi's role: Bundled with SuccessFactors, but positioning for other SAP cloud
integration tasks unclear.

SAP Innovation Halo Drives Strong Quarter
SAP's revenue is mostly from core ERP apps, but its database, mobile, and cloud initiatives are sparking double-digit growth. (Doug Henschen/InformationWeek)

Philadelphia Mayor to startups: Take the money and don’t run
(PandoDaily)

Ben Franklin Technology Partners Speak at Venturef0rth (Venturef0rth Blog)

Lessons for Data Driven Businesses (TechCrunch)
By RJMetrics co-founder Robert J. Moore.

Betches Love This College: University of Pennsylvania (Betches Love This)



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MoneyTree VC report: Which startups really are based in Philly area?

Tom Paine

In sorting through the Q2 2012 PricewaterhouseCoopers/National Venture Capital Association MoneyTree Venture Capital report (free registration) based on ThomsonReuters data, you can often come across some confusing information.

For instance, be wary of startups shown as being based in Delaware. Often they have nothing more to do with the state other than being registered there. For instance, Speaktoit, a Siri-like app for Android, is shown in the report as being based in Newark, DE, but CEO Ilya Gelfenbeyn told me by email when the funding was first announced in May that "we are in DC and now opening an office in Sunnyvale, CA", and only has a registration office in Delaware. Speaktoit recieved funding from Intel Capital. Another example is Roqbot, a social music service for businesses, which is shown as being based in Dover, DE, but is actually based in California. Google Ventures is among its backers.

Also, there are a number of startups listed as being located in Conshohocken. which happens to be the current location of First Round Capital's office until it moves to Philadelphia (as Josh Kopelman announced today). So it is no surprise that First Round is an early stage investor in each of them, although they won't be located there or in the Philly area at all in some cases. One, crowdfunding VC site FundersClub, lists three UPenn alumni as its top principals, although I haven't been able to determine yet where it is they call home. Another crowdfunding startup, Upstart, which lets investors back individuals rather than companies, is located in Palo Alto according to FormDs.com. Grokker looks like it is a reincanation of a visual search engine of the same name that shut down in 2009. which was also located in the Bay area. Another, Perceptual Networks, may have bi-coastal roots in terms of its founders, but Kopelman confirmed in his post today that it will have a Philly presence in that it will have space in FRC's new offices. I have no information on what Perceptual Networks is out to do yet.

Another interesting investment is that of Norwest Venture Partners in Media-based Alarm Capital Alliance, which provides home security systems through a network of third party dealers. The size of the investment wasn't disclosed. I know little about ACA, but I do know that Norwest usually invests in fairly sizable amounts of a few million or more. If I understand correctly, part of what ACA does is to provide dealer financing, so the Norwest investment could be related to that.

In all, it was a weak quarter for IT and digital-related investments in the Philly area. The total of all investment was less than $58 million, according to MoneyTree, but a quick glance indicates at least $44 million of that was in Pharma ventures and even some of remainder included the report was for companies not actually located in the area.

Philly Tech News' own database tracking Philly area (IT-related) VC investments doesn't exactly match the MoneyTree data, often because of timing differences. Some partial rounds often appear in different quarters. For example, MoneyTree shows a $3 million investment in InstaMed for the quarter, while my report includes the entire $14 million round the company announced in May.

Philly Tech News Philly VC Investments Database (Updated 8/15/2012)



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Daily Links 8/15/2012: First Round Capital moving from Conshy to Philly

Hello Philly! (Redeye VC)
First Round Capital moving from Conshohocken to Philadelphia.

SevOne P2P Sharing and Big Data Clusters For Monitoring On A Massive Scale (TechCrunch)
SevOne is based in Newark, DE.

Verizon, Comcast Agree to U.S. Demands on Airwaves (Bloomberg)

Here's Comcast's Coming Speed, Pricing Lineup
Competitive (FiOS) Areas to See Changes First (Broadband Reports)

Best Buy, Target, Walmart, and others team up to create new mobile wallet solution (The Verge)

OLED displays to hit sales of $44B by 2019, with growth in TVs and mobile devices (VentureBeat)
If accurate, would be promising news for Ewing-based Universal Display.

Astea Reports Profitable Second Quarter 2012 Results (PR Newswire)
Horsham-based provider of field service management solutions grows revenue 32% and swings to net income of $885,000 from a loss of $839,000 a year ago.

USA Technologies Enters Mobile Acceptance Market
ePort Mobile Brings Turn-key ePort Connect Service Platform to Smart Phones and Tablets for Business Customers (Business Wire)



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Infonautics alumni meet to share experiences and what followed

Tom Paine

Former Infonauts (L to R) Edwin Watkeys, Alan Preston, Ron Berg, Lucinda Duncalfe, Rick Mosenkis, Josh Kopelman,
Marvin Weinberger, Andrea Michalek, Rich Gallagher, Mike Krupit (photo courtesy of John Ashmead)

"The Infonautics Team & A Generation of Startups" was held this past Tuesday at Quorom at University Science Center. I had written a brief background piece on Infonautic's history prior to the event. Although I wasn't able to cover the event, Mike Armstrong of the Inquirer and Technically Philly's Juliana Reyes both provided excellent reports.


Although this event was certainly most worthwhile, co-sponsors Novotorium and Seed Philly subsequently announced they had decided to cancel most of the remaining "Entrepreneur Summer Camp" schedule, of which this was the kickoff event, citing what might have been an overly ambitious program competing with many other activities for a sometimes sparse summer crowd, as Novotorium's Mike Krupit explains. However, the Summer Camp Not-a-Hack-a-Thon Entrepreneur Sleepover on June 27 & 28 is definitely a go.

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Philly Tech News VentureWatch 6/7/2012: Philly Startup Leaders, General Assembly, First Round Capital & more

Tom Paine

Venture Capitalist Bill Trenchard has joined First Round Capital, at least for the summer, Fortune's Dan Primack reports. Trenchard will spend his summer working out of FRC's West Coast office. Trenchard has most recently been working with Founder Collective, where he remains listed as a founder partner. In an email to Primack, Trenchard wrote "Just to clarify, I have not left my position as a Founder Partner at Founder Collective. I am continuing in the role at FC, while working in residence at First Round Capital this Summer. I have been closely involved with both funds since their inception and have collaborated with both funds actively over the past few years. I look forward to finding more opportunities to deepen the relationship between Founder Collective and First Round Capital through my current efforts".
I can see at least two investments from Josh Kopelman's early Midas Capital fund in which Trenchard was involved: LiveOps, which he ran, and IronPort, a deal he managed that was later a Cicso acquisition.

Thomas Charlton, whom I profiled late last year, recently departed as CEO of Center City-based PHD Virtual Technologies. The company announced in May that James Legg would be its new CEO. I asked PHD Virtual what was behind the change, since by all accounts things had been going well there. A company spokesperson told me by email: "Thomas moved on to devote his full attention to running his own company" (Conshohocken-based Goliath Technologies). "This was a smooth transition and not unexpected. Furthermore, Thomas was at the company transition meeting and helped introduce Jim Legg to the PHD Team".
Charlton has long been associated with Insight Venture Partners, which is an investor in PHD Virtual; he previously ran another Insight-backed Center City company, Shunra Systems. In fact, Charlton moved both companies to Philly; Shunra from New York, and PHD Virtual from New Jersey.

As Technically Philly initially reported late last month, Philly Startup Leaders President Bob Moul announced the organization had added Josh Kopelman and DuckDuckGo founder and angel investor Gabriel Weinberg to its board of directors. The other members are Moul and Chris Cera, with one open seat remaining to be filled. PSL also approved a new mission statement with three main areas of focus: resources (where to find space, talent, capital, mentors /advisors etc.), education (PSL University), and connectivity (circles, events, clubs, partnerships etc.). PSL also worked to bring Philly Uncubed, a startup-oriented job fair, to World Cafe Live on June 21. The Uncubed job fairs are a creation of Wakefield, a New York-based daily email newsletter on the startup scene.
Hopefully, the new structure of PSL will lead to a stronger, more stable organization with access to the resources needed to accomplish more.

New York-based General Assembly, which describes itself as "a campus for educational programming, space, and support to facilitate collaborative practices and learning opportunities" in the entrepreneurial community, is sticking its toe in the water in a few other geographical areas, and Philadelphia is one of them. GA held its first Philly event on May 30-"The Art of Business Development: An Interview with TicketLeap and Lokalty". It has bought on Sunny Shah, a Wharton & engineering student at UPenn, for the summer to start exploring the Philly market. It doesn't appear to have concrete plans right now, only to look at offering some courses and events. GA has opened campuses in London and Berlin, is also reported to be expanding into Boston, and may be looking at the Bay area.


A Baltimore tech entrepreneur named Ron Schmelzer has been holding monthly "Baltimore TechBreakfasts", and they been drawing quite a crowd, the Baltimore Sun's Gus Sentementes reports. Schmelzer says the breakfast meetings, which feature area tech startups, are getting up to 150 attendees, some from as far away as the DC area. He hopes to draw from the Philly area as well. Of course, in the Philly area Novotorium's Mike Krupit has started organizing monthly "Bootstrappers Breakfast" sessions.

Quewey, the Philly-based business-oriented Q&A startup that I wrote about when it launched in March, has produced an infographic that shows how to use it, and its really not that complex.





The University Science Center's QED Proof of Concept Program is opening it fifth round with an additional area of emphasis: a special track focusing on digital health technology. As many as sixteen projects will be supported in this round, up from 10 in the past. A new Independence Blue Cross program announced yesterday may also provide additional opportunities for digital healthcare startups in the Philly area.

At the urging of Philly area entrepreneur Anthony Coombs (SoLoMo app Interact), TechCrunch will be holding what it calls a "mini-meetup" at the Field House in Philadelphia on June 19. TechCrunch says it will also hold office hours on the 19th at the nearby Caribou Cafe, the exact time of which will be announced. A Mashable Meetup/Social Media Day is also on tap for the evening of June 30 at Morgan's Pier on N Columbus Blvd.

Sad to see Canada closing its consulate in Philly. The office had helped sponsor a number of interesting activities promoting trade and events in the tech and healthcare IT areas. I would have thought that with all of its oil and gas revenues, Canada would be in relatively better shape then we are.



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"Entrepreneur Summer Camp" to kick off events with look back at Infonautics and what grew from it

Tom Paine

Life can be slow in the summer if you're in the city and looking for interesting tech events. Two business incubators/accelarators, though, Novotorium of Bucks County and Seed Philly of Philadelphia, are joining together to present Entrepreneur Summer Camp, consisting of a moderately priced series of weekly events featuring topics of interest to area entrepreneurs, plus the opportunity to opt into additional programs and
services the incubators offer.

The first event, to be held on the morning of June 12 at The University Science Center's Quorum, features a retrospective look back at Wayne-based Internet startup Infonautics, the people who came out of it, and the impact the resulting ecosystem has had in growing the Philly Tech community. Infonautics was co-founded in 1992 by Josh Kopelman, then a sophmore at Wharton, along with founder Marvin Weinberger, an entrepreneur who had previously co-founded Telebase Systems Inc., an online media company in Wayne. Weinberger was CEO and Kopelman was Executive VP with responsibility for sales & marketing. One of Infonautics' early investors and advisors was Howard Morgan, the former computer science professor at Penn turned VC who later co-founded First Round Capital with Kopelman and is a managing partner of the firm today.






Infonautics set out to become an online resource for children, providing curated content that helped young students learn and study. Its products included Homework Helper, delivered primarily via early online service Prodigy, and Electric Library, delivered via the Web. Infonautics did an IPO on the NASDAQ in April 1996 and raised close to $30 million, an offering that would be difficult for such a small early stage company to pull off today.


The company had difficulty selling a subscription-based service to a mass market, particularly as so much information was beginning to appear for free on the Web. In terms of technology, Infonautics also had to scramble to convert from the closed garden world of legacy online services such as Prodigy to the open Web, which really took off in the 1994-95 period. That transition, Novotorium GM Mike Krupit (who served as Infonautics' Director of Technology ) told me in a phone interview, spurred a period of tremendous innovation at the company. For example, Infonautics pioneered an early business model and developed related technology for managing affiliate marketing programs. And at a later stage of the company's history, in an effort to pivot, it developed an online service called "Company Sleuth", which I remember using. Company Sleuth allowed you to track several sources of records and information about a company that at the time were difficult to put together from one single email signup. And since the web was like a frontier then, with only slightly defined and rapidly evolving standards, Infonautics' staff was constantly looking for fixes or new ways of doing things.

Founder Weinberger, who Krupit described as a visionary, was a somewhat unorthodox businessman with penchant for dressing informally for meetings (not as common then as now), usually wearing an Infonautics baseball cap.




Infonautics posted 1996 results of $1.4 million in revenue and an operating loss of nearly $14 million. Its stock, which opened at $14, went down 19% during its first week of trading and was down to $2.38 by early 1997. The company was able to grow revenue to $23 million by 1999, but continued to have large operating losses. At the time, the technology infrastructure needed to run an online Internet service required significant fixed costs that were difficult to scale down. Employment at one point exceeded 130; a company 10-K indicated it reached about 80,000 paid subscriptions.

Josh Kopelman left Infonautics to start Half.com in mid-1999. Weinberger left in 1998 and started other ventures, some that worked and some that didn't. Also in that year, Infonautics began to sell parts of the company, selling its Education products group to Bell & Howell, gaining net proceeds of $18.5 million, and also ending up with a 20 % stake in bigchalk.com, the rest of which was owned by Bell & Howell. Infonautics intended to focus its resources on its Company Sleuth offering and other targeted personal information tools marketed under the Sleuth brand. The pivot to Slueth did not pay off financially fast enough, and in 2001 Infonautics merged with Tucows Inc., with the combined firm taking on the Tucows name. Toronto-based Tucows, which still exists today, specializes in domain registration and other Internet services.

Other pieces of Infonautics' product and IP portfolio ended up in different places; for instance, patent firm BTG acquired a portion of the patent assets of Infonautics covering navigational tracking on the Web and online affiliate programs. In fact, in 2004 BTG sued Amazon.com, BarnesandNoble.com, Netflix and Overstock.com over their alleged infringement of the patented Infonautics technologies. BTG apparently reached settlements with each of the four, with Netflix agreeing to pay an undisclosed sum (said to be millions of dollars in one report) in return for a non-exclusive license. BTG subsequently sold the web patents in 2006 for $5 million plus profit sharing, as it decided to focus on Life Sciences.

The event on the 12th, titled "After Infonautics: A Generation of Startups", will feature a panel of former Infonautics execs and employees discussing how their experiences there led to a number of other startups in the Philly area. Participants scheduled to appear include Kopelman, Weinberger, Lucinda Duncalfe (who went on to Destiny, TurnTide, Click Equations, and now Real Food Work), Krupit (who ended up running CDNow after Bertelsmann acquired it, and now runs Novotorium), Rick Mosenkis (VerticalNet, WorkZone), Ram Mohan (Afilias CTO and a member of ICANN's board of directors), Andrea Michalek (1800CTO, Topular, and a new startup, Plum Analytics), and Ed Watkeys (Half.com, Transmogrify, ActionX).

You can register for the event here. Additional Entrepreneur Summer Camp events will run through July 27.



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Daily Links 5/31/2012: Comcast gets it from both sides at shareholder meeting

Comcast CEO Hears Labor, MSNBC, Other Criticism at Annual Meeting (Hollywood Reporter)

Cable still beating telcos at the broadband game (Gigaom)

T-Mobile pits its math against Verizon’s; The loser? Common sense (Gigaom)

Ellison 'to tweet' announcement of new Oracle cloud-based products
(ZDNet Blogs)

Ellison Says Oracle Looked At Buddy Media Before Vitrue (Bloomberg)

Oracle CEO Larry Ellison: Dog Fight in the Cloud (All Things D)
Ellison on Léo Apotheker: "Then they brought in Leo. Then when we subpeonaed him, he went on the lam!
They sent him to Bolivia to talk to customers. And then they sent him to Mongolia to talk to customers, just beyond the reach of the federal subpoena. They should have left him in Mongolia, because when he got to California, it got bad."

The Ariba Fallout — How the SAP Procurement Partner and BPO Ecosystem Could be Shaken Up (Jason Busch/Enterprise Irregulars)


Two Years Ago, VC Said Change Was Due — He Was Right (PYMNTS)
Josh Kopelman was the VC.

Looks Like Pinterest, Takes On Evernote: Clipboard Launches Its Web Clipping Service To All (TechCrunch)
First Round Capital was a seed investor in Seattle-based Clipboard.

Philly Startup Leaders adds Gabe Weinberg, Josh Kopelman (Technically Philly)

Amazon to build warehouses in N.J., collect sales tax (Philadelphia Inquirer)

How We Founded myYearbook (Inc. via Yahoo)

Two Architects of Library Discovery Tools Launch an Altmetrics Venture (Library Journal)
On Philly area startup Plum Analytics.



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First Round Capital Roundup 4/13/2012

Tom Paine

First Round Capital has been a very lean firm in terms of overhead as it has grown its portfolio to some 120+ companies (according to its website). But recently it has taken some steps towards adding more support infrastucture. Early this month First Round announced the addition of Jack Leidlein, previously Head of Business Operations & Recruiting at Scribd, as Head of Talent. Late last year FRC added Cece Cheng, a Princeton grad whose background is mostly in PR and corporate communication, as an Associate. Other staff (excluding Partners or Principals) are Brett Berson, who was recently promoted to VP of Platform, and CFO Jeff Donnon, who goes back with Josh Kopelman to Half.com. I'm sure there must be some other support staff, but don' know how many or where they are located. I believe Berson and Donnon are based out of Conshohocken, but Cheng is based in San Francisco and Leidlein will split time between New York and San Francisco.

To what extent FRC may add additional centralized support resources is unknown. As a seed stage investor, First Round's assets under management are still relatively small (a few hundred million as opposed to $1 billion plus), and it is difficult to support the type of overhead some larger venture firms are developing.

Chances that FRC might move from Conshohocken to Philadelphia (in a job ad earlier this year caught by Technically Philly the firm said it was considering such a move) could get a boost if Mayor Nutter signs a bill recently passed by City Council 16 to 1 exempting investment funds and their general partners from the city's 6.5 percent business tax on profits. The Inquirer reported early this month that Mayor Nutter was "leaning toward" signing the bill.

Josh Kopelman took an active role in publicly supporting the JOBS Act, which in an amazing event for this day and age was passed by both houses of Congress and signed by the President on April 5.

Portfolio company Monetate lists 18 open positions on FRC's job board, about 7 of which appear engineering-oriented. The Conshohocken-based eCommerce software firm recieved seed funding and a follow on round led by FRC and later a much larger round lead by Boston's OpenView Venture Partners.

FRC is moving to larger quarters in the same building on Union Square in New York, so it is offering a sublease on its old 3,000 square foot office on 200 Park Avenue South.

FRC is one of many (big name seed and angel) investors in mobile development startup Cabana, which has just launched a product called Fan Page Mobilizer aimed at bringing small businesses' Facebook fan pages to smartphones. The goal is to provide an easy to use tool that non-technical small business users can set up by themselves. Cabana is based in San Francisco.

Silicon Alley Insider reports that New York-based Fab continues to do very well since its pivot and relaunch last June. The FRC-backed fashion-oriented site now has a $100 milion annual run rate and 225 employees.

Forbes has a piece on New York-based SinglePlatform, which as its name implies provides one platform from which a small business can manage its content across all of its social media sites. Sales are expected to grow from $2 million last year to $15 million in 2012.

LA-based DogVacay raised $1 million led by FRC to address a need any dog owner can relate to: it matches people seeking a nice environment for their dog to stay while they're away with qualified people willing to take in and care for the dogs in their own homes. And Yummly, a recipe site with an emphasis on eating healthy, came back for a second helping of funding ($6 miilion) from a prestigious investor group, including Unilever. FRC was a return investor. Co-founders David Feller and Vadim Geshel are both veterans of Half.com who moved to California (where Yummly is based) after its acquisition by eBay.

I wrote about myYearbook (in which FRC was an early investor) and its now parent company Quepasa's decision to rebrand as MeetMe. They reportedly paid a good deal of money for the rights to the Meet.me domain name. I also covered Solve Media's intoduction of its CAPTCHA-like offering for opting out of pre-roll video ads, and got some info on the size of Solve's current presence in Philly.



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Five Below: Another winner for First Round's Kopelman?

Tom Paine




Last night, after reading about Philly retailer Five Below's reported IPO plans, I remembered who one of its early investors was: Josh Kopelman. He had invested in Five Below through his personal (non-institutional) pre-First Round Capital fund, Midas Capital.

Midas Capital's portfolio also included Boomi (acquired by Dell), a little company called LinkedIn, Delicious (acquired by Yahoo and later sold back to founders), Philly-based medical payments processor InstaMed, and TurnTide, on which Kopelman turned a quick and tidy profit by selling to Symantec. While most of these were likely very small stakes, as an early investor Midas probably saw some outstanding returns. One can only imagine what the IRR on that fund is.

Of course, Kopelman hasn't been perfect. He passed on an early opportunity to invest in Twitter.



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Daily Links 3/21/2012: Ellison says SAP "must be on drugs"

Oracle: Hardware business decelerates, cloud combat coming into view (ZDNet Blogs)

Oracle defies gravity, not out of the woods yet (Dennis Howlett/ZDNet Bloogs)

Ellison on SAP's database plan: "They must be on drugs" (Bloomberg via Times of India)

Verizon to the Cable Industry: Let’s Be Friends (Susan P. Crawford/Bloomberg)
Susan P. Crawford, a law professor and Bloomberg columnist, served as President Obama's Special Assistant for Science, Technology, and Innovation Policy.

Comcast, Verizon Say They’re Itching to Fight Google, Apple (Peter Kafka/All Things D)

Verizon, Comcast Clash With Opponents Over Cable Spectrum Deal (PC Magazine)

Global Deal: QVC Expands in China Through Joint Venture (Wall Street Journal: Deal Journal India)

The JOBS Act Can Rebalance Risks and Rewards for Emerging Growth Companies, Investors (Jon Callaghan, Jeff Clavier, Josh Kopelman and Jason Mendelson/PE Hub)

Boston's OpenView Venture Partners closes 3rd VC fund at $200M (Boston Business Journal)
OpenView made major investments last year in Philly area startups Monetate, NextDocs and Xtium.

Comcast, Liberty Global Lead $11M Round In Ad Startup Integrate
Company's Solution Designed to Track Ad Impressions Across Multiple Platforms (Multichannel News)

Medidata Gains Raves on Wall Street for Drug Development Tools (Xconomy New York)
Article cites importance of Medidata's 2008 acquisition of Conshohocken-based Fast Track Systems.

CRF Health Announces Record Breaking Revenue and Earnings Growth in 2011 (Business Wire)

Daily Links 7/27/2011: paidContent profiles Philadelphia newspaper owner Randall Smith

Safeguard Scientifics Announces Second Quarter 2011 Financial Results (Business Wire)


Jim Snabe, co-CEO SAP explains current business drivers (ZDNet Blogs)

SAP Co-CEO McDermott Talks up HANA, Mobility and SaaS (PC World)

Google and SAP Team-Up to Help You Visualize Big Data (ReadWriteWeb)

InterDigital Announces Second Quarter 2011 Financial Results (Business Wire)

Huawei 'puzzled' at InterDigital patent complaint (CNET News)

Who Is Randall Smith And Why Is He Buying Up Newspaper Companies? (paidContent)
About the mysterious character whose company controls Philadelphia Media Network and Journal Register (a Wharton MBA by the way); will Journal Register CEO John Paton have a new job soon?

Founder Office Hours With Chris Dixon And Josh Kopelman: Schedit (TechCrunch)

Gamma Basics Launches grayCAD, Groundbreaking New Medical Radiation Safety Software (PR Web)
Backed by Bentley family interests.

VITA Products Launches Innovative Contactless Payment Program (Business Wire)

The Pros and Cons of Moving Your Business Into the Cloud (Mashable)
Interviews Chris Cera, CTO for Philly-based Vuzit.

Comcast, Level 3 Still At Impasse Over Internet Connection Fees
Level 3 CEO Crowe: 'Huge Battle' With MSO Over Terms of Traffic Exchange (Multichannel News)

Quality Systems Leverages Fed Stimulus In Health IT (Investor's Business Daily)
Quality Systems' primary business, NextGen Healthcare, is based in Horsham.

Beige Book: Third District-Philadelphia, July 27, 2011 (Federal Reserve Board)



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Daily Links 6/16/2011: Philly Fed Index drops; Capital One reported winner of Wilmington's ING Direct

Ernst & Young Entrepreneur Of The Year 2011 Greater Philadelphia Award Winners Announced (Business Wire)

June Philly Fed index drops into negative level (MarketWatch)
Not a good sign.

Philly Fed factory activity lowest level in 2 years (Reuters)
Philly Fed Press Release

Churchill Club podcast: Venture capital roundtable 2011 (ZDNet Blogs)
First Round Capital's Josh Kopelman was on the panel. Very interesting listen.

Capital One Near Takeover of ING Direct USA (Bloomberg)
Update: deal reported to be reached.

Providence Equity Partners Is Said to Be Leading Bidder to Buy Blackboard (Bloomberg)
Some analysts had suggested that SunGard, through its SunGard Higher Ed unit, might have been a possible bidder. (Although its worth pointing out that Providence Equity was a major investor in SunGard's LBO.)


WPCS agrees to be bought by DirecTV installer Multiband (Philadelphia Business Journal)

Alan Haberman, Who Ushered In the Bar Code, Dies at 81 (New York Times)
Implemented technology that had been pioneered earlier at Drexel.


WCI Consulting Expands to Philadelphia
Business Intelligence Provider Establishes East Coast Presence (Business Wire)



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