CapLinked, Backed By Thiel and McClure, Gains Traction

Deal room software isn’t new. Companies and investors have long had online places to securely manage their due diligence, update investors, and bring in other interested parties. IntraLinks, a publicly traded New York company that is used by one million people every day, charges subscribers thousands of dollars each month to host their most critical information exchanges.

CapLinked, an L.A.-based startup backed by Peter Thiel and Dave McClure, wants to put those places out of business. At the very least, it wants to snag the many companies and investors who can’t — or won’t — pay top dollar to transact their business online in a safe, regulatory compliant environment.

After 15 months in business, CapLinked’s prospects seem promising, too. The company is announcing this morning that 90,000 investors, entrepreneurs, and related service professionals have signed up for the service so far, and it says 18,000 of them are using the service actively. Soon, says one of the company’s investors, expect CapLinked to announce additional financing, too. (CapLinked wouldn’t comment on a round, but back in February, it closed on $900,000 in seed funding, including from Thiel, McClure and others.)

Why is CapLinked gaining traction? Founder and CEO Eric Jackson partly credits the company’s proprietary technology, which makes it easy for users to set up a virtual deal room, as well as provides them way to control information flow, tools to collect digital signatures, and so on. CapLinked has also integrated with LinkedIn’s API, enabling folks to more easily scour their business contacts for their funding needs. Plus, CapLinked in free, though it plans to introduce two additional pay-for models in the next several weeks, both of which will cost $100 or less per month.

The question is whether enough people need the service to turn it into a sustainable, profitable business. While Intralinks may be pricey, plenty of investors are making do with storage solutions on the other end of the spectrum, including Dropbox and Box.net, not to mention Google Docs and the online collaboration software of Basecamp.

Jackson acknowledges that “people have used [such platforms] in the past for this kind of functionality,” but says that “having something more targeted is really our objective. We’ve built in a lot of analytic and communications tools…So as much as I think the others are awesome platforms, it’s a little bit of a hack” to use them for deal processing.

To help potential customers figure out where the company fits in the grand scheme of thing, Jackson positions the company as complimentary to the popular Website AngelList, for example, which replaces pitch meetings with Internet-based matchmaking. “You can get your prospects over there, then set up a CapLinked account to download your term sheets or your cap table or whatever confidential information you want to store,” he says.

But CapLinked is also beginning to compete with AngelList. Specifically, CapLinked just announced DealRocket, a new “tool” that allows professional investors to access deals based on their stage, location, and other criterion. In other words, rather than strictly facilitate communications between entrepreneurs and investors who know one another, CapLinked will now facilitate new introductions as well, even while Jackson is quick to note that CapLinked isn’t a broker-dealer. “If an entrepreneur chooses to make his or her deal available, then investors will be able to find it. But we aren’t screening the deal flow beyond ensuring that it’s a real deal.”

Jackson says that unlike AngelList, which “works really well for super angels,” DealRocket is “meant more for institutions: PE funds, hedge funds, VCs.” (In fact, plenty of VCs, and probably hedge funds, use AngelList too.)

Either way, CapLinked is slowly but surely extending its reach. Jackson says tech-related deals now represent 30 percent of what goes on in CapLinked’s deal rooms, down from 50 percent earlier this year, as other industries grow increasingly represented. Among them are real estate (6 percent of deals), energy (5 percent) and financial services (4 percent). (The average deal size is $9.5 million.)

As interestingly, a third of the company’s traffic is suddenly coming from overseas. Most of that foreign traffic is coming from India, but investors and entrepreneurs from Japan, the U.K., and continental Europe are also signing up, according to the company. It’s an “interesting” trend, says Jackson, who hasn’t paid for any advertising yet. “We haven’t pursued any foreign press, and the site is English language only.”


VCJ Cover Story: Biofuels Litmus Test

The IPO market has been quiet for a couple of months, and the Solyndra bankruptcy has cast a pall over the VC-backed cleantech sector.

But that could change soon, as a total of 15 cleantech companies wait in registration for a chance to launch public offerings, including a handful of biofuels developers. Combined, they could offer a useful barometer of just how far the cleantech window will open for the remainder of this year and in 2012.

As Mark Boslet reported in the November issue of VCJ, which comes out today, among the strongest candidates in the current line up is Silver Spring Networks, a Redwood City, Calif.-based company with $115.5 million in revenue through the first six months of the year and a growth rate of 432 percent. The smart grid networking company needs to continue its surge by landing more contracts with utilities, but is likely to be well received by investors when it launches its public debut.

Also at the top of the list and expected to do well are Northborough, Mass.-based Aspen Aerogels and Enphase Energy of Petaluma, Calif.

Aspen, a maker of piping insulation with such customers as NextEra Energy and ExxonMobil, had six-month revenue that grew 43% to $26.1 million, although the company is not yet at positive cash flow.

Enphase, the manufacturer of a micro-inverter that converts energy from solar modules to usable power, reported $48.1 million of revenue through June that grew 115 percent. The company, however, needs better penetration of the commercial market and has yet to generate a positive cash flow.

If they can successfully float shares, the path will look far more inviting for the several hundred cleantech companies believed to be candidates for public offerings.

“If these companies can get out and they are able to perform, it will open a huge window,” Peter Grubstein a managing member of cleantech venture firm NGEN Partners, tells VCJ.

To read more about the cleantech IPO market and how 10 of the 16 companies tracked by VCJ have shares trading above or close to their offering prices, click here for the full story.

Not a VCJ subscriber? Click here for a free trial.

And if you want to chat more about the cleantech sector or other hot trends, send an email to Alastair Goldfisher at alastair.goldfisher@thomsonreuters.com.

(Photo by Monkey Business Images/Shutterstock)


SecondMarket Tries to Get a Piece of Groupon IPO

(Reuters) - SecondMarket Inc, a leading player in the market for private company stock, is trying to get a piece of the initial public offering of Groupon Inc, according to an email obtained by Reuters on Monday.

SecondMarket Senior Vice President Jeff Thomas emailed potential investors on Friday who previously traded through the firm to see if they were interested in buying Groupon shares in the IPO.

SecondMarket will be working with Morgan Stanley, one of the top underwriters on the Groupon IPO, as a member of the selling group for the offering, the email said.

SecondMarket declined to comment, while Morgan Stanley and Groupon did not respond to requests for a comment.

SecondMarket, started by Chief Executive Barry Silbert, is an online platform that brings together buyers and sellers of illiquid assets including stock of private companies.

SecondMarket has thrived by helping private companies sell stock without having to go public. The transactions often help former and current employees sell equity, while letting investors buy into private companies before an IPO.

SecondMarket often presents itself as an alternative or competitor to traditional Wall Street investment banks. In an interview with the Wall Street Journal on Saturday titled “So Who Needs Wall Street?” Silbert said SecondMarket aims to “essentially disintermediate anyone on Wall Street that does not add value.”

Participating in Groupon’s IPO may be a departure from SecondMarket’s original approach.

Thomas’ Friday email said potential investors in the offering would be asked to complete a “suitability questionnaire” and to speak to one of SecondMarket’s market specialists.

Potential investors would also have to fill out an “indication of interest” questionnaire, telling SecondMarket how many Groupon shares they would like to buy in the IPO, according to the email.
“At this time, we do not have information regarding the allocation of securities to SecondMarket, and cannot provide any assurance that even if we were to determine that an IPO is an appropriate investment for you, you would be allocated securities,” Thomas wrote in the email.

SecondMarket also warned in the email that an IPO is “risky and speculative” and may not be appropriate for many investors.

(Reporting by Alistair Barr; Editing by Tim Dobbyn)


ABS Capital Raises $500M for Fund VII, Above Target

ABS Capital announced today that it has raised $500 million for its latest growth equity fund, ABS Capital Partners VII, which closed $100 million above target.

The 21-year-old firm, which has offices in Baltimore and San Francisco, raised $420 million for its previous fund, which closed in 2009.

Managing General Partner Phil Clough told me last week that the firm added new LPs, which helped to make the fund size larger than before. New LPs included Top Tier Capital and The Wellcome Trust while returning LPs consisted of Abbott Capital, Johns Hopkins University and WP Global.

Clough wouldn’t disclose returns of the previous funds, but he said, “We talk with our LPs about being north of 2x and that’s where we’ve been.”

ABS, which makes late stage bets in business and education services, health care, media and communications and technology sectors, last saw one of its copanies go public in April 2009 when Rosetta Stone in a $115 million IPO. Meanwhile, recent sales of the firm’s portfolio companies include Innovation Interactive (bought by Dentsu Inc. of Japan in January 2010 for an undisclosed amount), Cobalt Group (sold to Automatic Data Processing Inc. doe $400 million in mid-2010), Metastorm (acquired by OpenText Corp. for $182 million in February 2011) and Restaurant Technologies, Inc. (purchased by EQT Infrastructure Fund in April 2011 for an undisclosed amount).

No partnership changes have come with the latest fund close. With Fund VII, Clough said that the firm has now been together for four funds, or 11 years.

(Photo by Jim Barber/Shutterstock)


Seven Terrible Startup Names, and One Really Great New One

Last week, brand-naming expert David Placek – who has come up with Blackberry, Powerbook, and Scion, among other powerful brands – told peHUB readers that the key to a good brand is its ability to capture the right sounds, the right story, and the right associations, often in a single word.

You know when a company has gotten it right, too. Take Cherry, a months-old San Francisco-based company with a slick app that lets users order a car wash, wherever their car happens to be parked, for about $30. What do you associate with the word cherry? Shiny. New. Car. It’s joyful, too. It’s a perfect word to communicate the story they want to tell.

Most companies don’t quite nail it, though, especially those in crowded market segments, where descriptive names get snapped up first, followed by cleverly evocative names, after which anything goes.

Consider what happened in social networking. First came Friendster in 2002, a descriptive brand that people immediate understood. MySpace, which emerged in 2003, was equally descriptive. Facebook, founded in 2004, continued on the same path, taking its name straight from the student directories that some schools produce. Then 2005 rolled around, and Bebo hit the scene, and, well, you kind of knew the world had one social networking platform too many.

Of course, in 2008, Bebo was acquired by AOL for $850 million in cash, while Friendster sold in 2009 to a Malaysian e-commerce company for an amount rumored to be $100 million. Which suggests that while brands can be powerful, they don’t exactly make or break a company. Indeed, following are a list of seven other startups whose brands Placek would probably torpedo in two seconds but that will likely be just fine.

[slideshow]

[slide title="Blekko"]

What it does: Blekko is a search engine company whose technology incorporates integrated social data, including Facebook comments, into its results. It also bans links to materials produced by renowned content farms with the help of humans (mostly volunteers).

Funding: Blekko has raised $55 million, including a $30 million round led by the Russian firm Yandex late last month.

Associations: gecko; blech; bleck (it means to blacken; also, to defile).

Assessment: Blekko’s got short going for it. But naming experts say pleasant sounds play a role in a great brand name, and Blekko sounds like a violent sneeze.

I think the founders did better on the branding front with their last startup, Topix, a news community. But better search results, which Blekko often offers, definitely trump a gnarly sounding brand.

[slide title="Aprius"]

What it does: Aprius develops top-of-rack I/O Gateway systems.

Funding: The company has raised $22 million since 2006, including from Lightspeed Venture Partners, New Enterprise Associates, and Menlo Ventures.

Associations: sleep apnea, the Toyota Prius, apricots.

Assessment: It’s euphonious, but I sort of think this brand belongs on a drugstore shelf, next to the skin creams.

[slide title="Datahug"]

What it does: Datahug is a 20-month-old business networking software startup.

Funding: $1.5 million, including from Ireland-based Oyster Technology Investments and investor Ron Conway

Associations: data, hugs, flow charts, teddy bears

Assessment: This brand would work if the company sold software to preschools, but its enterprise software instead crawls through employee contacts, looking for sales leads. Mmm, not so cuddly. I put this one in the category of trying too hard.

[slide title="Faqme"]

What it does: Faqme is a site that allows users to create a Frequently Asked Questions (FAQ) stream

Funding: N/A

Associations: I doubt I’m allowed to say here.

Assessment: This brand is intentionally audacious. (It’s one of the many projects of serial entrepreneur Philip Kaplan, who’s known for his lurid sense of humor.)  I kind of love it — it’s definitely memorable! — but a branding expert might feel otherwise.

[slide title="Tynt"]

What it does: Tynt works with online publishers and websites to track and analyze data about their users’ sharing activity.

Funding: It’s raised $11.9 million since 2009, including from Panorama Capital, Greycroft Partners, and iNovia Capital

Associations: tint, taint.

Assessment: I would definitely vote this one down in a focus group, but the brand doesn’t seem to be impacting the company’s ability to lock on with publishers.

[slide title="Floop"]

What it does: Floop is a newly released mobile app that allows users to poll their friends in real time to gauge their opinions on any topic.

Funding: The company has raised $475,000 since March of this year, including from Ironwood Capital and Advantage Capital Partners

Associations: flop; whoops, the failed e-currency company Flooz.com

Assessment: Sounds like an interesting idea for an app. My advice: Ditch the brand while you still can.

[slide title="Phrot"]

What it does: Phrot is a social blogging community that invites people to read and post blogs, then discuss and vote on them.

Funding: N/A

Associations: rot, fraught, Halloween

Assessment: There’s really nothing good to say about this particular brand, unless it’s targeting the goth scene. In that case, it’s pretty brilliant.

[/slideshow]


peHUB Second Opinion 10.28 (Halloween Edition)

This weekend, hundreds of thousands of American will dress up, some in costumes with Wall Street themes if Dealbook has its way. Check out its spooktacular ideas here.

A lot less funny: Murder by text.

The renowned Chicago businessman and philanthropist Robert Pritzker died today at age 85.

Target announces it will open at midnight on Black Friday. (That one fatal stampede at Walmart in 2008? Totally overblown.)

If you’ve had your Facebook account hacked, you have company. Spammers break into Facebook seven times per second.

Remember that job-creating new tech campus Mayor Bloomberg wants to see built in New York? Columbia’s still in the game, too.

More on the unfortunate Tim Tebow meme.

The frightening truth? Halloween is now a $6 billion business.


The Man Behind Blackberry, Swiffer and Scion on How to Do Branding Right

In the brand-naming world, Sausalito, Calif.-based Lexicon has become legendary for its work over the last 30 years, and no wonder. It named the Pentium chip for Intel, the PowerBook for Apple, the Swiffer for Procter & Gamble, and Dasani for Coca Cola. As a recent New Yorker piece about the firm observed, Lexicon also managed to transform Research in Motion’s bland, corporate, painstakingly matter-of-fact smart phones into caressable little devices, all with the word Blackberry.

It’s not an easy trick to pull off, says Lexicon founder David Placek, who believes a good brand has to blend numerous variables, including resonance, pluck and the ability to tell a service or product’s story, often in just a few characters.

Following Netflix’s now-famous Qwikster debacle, I called Placek to learn more about his job, and how both big and small companies might do a better job of selecting brands for themselves. Our conversation has been edited for length.

Q: Let’s start with a really annoying question. Why can’t you just tell a client, ‘I’m going to give you 25 great names, and you’re going to love one of them.’ That tactic seems to work just fine for Don Draper.

A: Ha. I think a number of clients might think like that. For us the role of a name is to help someone tell a story, to break [consumers’] habits, to convey something new — all in a world with trademark protection and the need to work fairly well across a number of languages. That’s saying nothing of needing an available URL.

In our work sessions, we might show our clients 25 names, but it’s really treasure hunting, a way for us to go back and forth and see what will get attention and general interest and get something new into the market. Most people don’t appreciate how hard this is, and how valuable this word, their brand, will be to them in the future.

Q: What do you say to the Columbia Business School professor in the New Yorker piece, who argues that a brand is just a starting point for a brand, and that Amazon would have been just as successful if it had been called Nile?

A: He’s an academic, and he’s absolutely wrong.  First, Amazon takes the claim of the world’s largest river. It’s also the assembly of those letters — the sound of it, the ‘z’ in there. And Jeff Bezos connected the name so beautifully to the world’s largest bookstore. Think about it. The idea of a bookstore is kind of boring, but Amazon is a place where there’s a lot going on and a lot of interest.

What brand names do very well is establish an idea as quickly and as efficiently as possible, and Amazon, as a brand, was much more effective in establishing this new force in the marketplace than Nile could ever have been. Nile is smaller in sound, it’s technically a shorter river, and it’s frankly boring — nothing against the Egyptians.

Q: What other brands have really knocked it out of the park, in your view?

A: I think Zynga is just a really good name for a company that’s about wanting to give the world permission to play. It’s saying something new and telling a story. It’s efficient and punchy and unique without seeming to try too hard.

I really like Groupon, which is very practical and just took idea of coupon but found a way to convey that it’s something new. I love iPhone, which tells you without trying too hard that this isn’t just a phone. Another brand that I like is Raystream, which is a video compression service whose name projects sun and streaming. The company was formerly called Interdom, a slow-moving name that sounded like someone was calling from downstairs. But the company bought Raystream and smartly adopted its name.

Q: And names you don’t like?

A: I’m sure there are a lot of them. The hotel chain Extended Stay is about as flat as it comes. There’s no color to it, no hope of comfort. If you’re going to stay at a hotel for two or three weeks to do an audit of a company, could anything sound more bleak than heading to the Extended Stay? It’s right out of the old Soviet Union.

Q: What do you make of startups that use non-U.S. domains to create a brand, like dlvr.it?

A: We’re certainly looking at these names. I think it works in cases where it’s not forced. Bit.ly is fortuitous, for example.

There’s such a scramble to get a .com., .net [or] .biz, and people are understandably trying to avoid paying hundreds of thousands of dollars or getting into a dispute over a URL. My best advice here is to find a natural break in the word, like bit-ly. The mind will [remember that]. If you make something awkward or hard to spell or it’s overly clever, it won’t work and you’ll only be doing your competitors a favor. You want them to be jealous of your brand name, not to think: ‘We can beat that.’

Q: Do startups face any challenges that are distinct from big companies that are choosing a new brand?

A: Larger companies have more money and that may help when it comes to launching and sustaining a new brand. But after that, it’s all the same. It’s the challenge of: What’s the strategy? What’s the story? Whether you’re a three-person startup or an organization with 10,000 employees, it’s really the same process, which is nice in that the playing field is pretty even.

Q: Do you think the name Qwikster would have been given less grief it it hadn’t come out of Netflix?

A: My own opinion — and Netflix isn’t a client — is that they underestimated the value of the Netflix brand and the equity that brand has. So they made a change in business strategy and a change in name. If it had been maybe leaked out that ‘we’re thinking about this service, like Netflix Q or Netflix Quick’ — that [might have been less disastrous]. But all of a sudden, it was, ‘We’re doing this,’ and people thought, ‘Wait a minute. Are they pulling a fast one on us?’

Q: Interesting that you suggest Netflix Q. Should a big brand spinoff ideally reference the parent brand?

A: No, I don’t think there was anything inherently wrong with Qwikster. The brands don’t have to connect through. Just look at Procter & Gamble: They have dozens of brands. With Netflix, it was just a question of how it was managed. Of course, there was also debate about whether it was the right thing to do in the first place.

Q: You’ve talked about boiling a company’s story down to one name. Is it insanely broad to ask how you do that?

A: It’s block and tackle stuff. What are you doing? What’s the benefit? What’s the competition out there? If everyone is descriptive and highly suggestive, then you don’t want to be there. So you take out a territory; ‘We’re not going to describe this’ service or product.

Then it evolves around: What’s our personality? How do people feel when they use this service or when they are wearing this product? And you start to get qualities or sounds. When we created Swiffer, we thought: What does this product sound like? You’re swiping, you’re wiping. It’s easy and swift and — boom — Swiffer. But that wouldn’t have come out of an objective where people said, ‘It’s a more effective cleaner and saves people time.’

The same was true with Blackberry. People’s blood pressure goes up when you talk about email, so we went for simplicity and usefulness and a little bit of joy.

Q: It used to be that products were very descriptive, like Mr. Coffee. Do you think they’ll go retro again, sort of as children’s names have?

A: I think that’s possible. As tech moves along and we make a leap from one technology into another, there’s an opportunity to be descriptive in nature. Then it fades away, and people again have to create Zyngas and Pentiums. Think about the earlier search engines. You had InfoSeek and WebFinder. Then we got so much clutter that people couldn’t sort it out. It’s then that you began seeing Google and, more recently, Bing. I’m sure we’ll have some new, ultra-intelligent search technology, and the cycle will start anew.

Q: Any thoughts on uniformly lowercase names, or names that input a capital letter mid-word?

A: As for inputting a capital letter, we did that with PowerBook, to sort of add emphasis and strength to it. I know from a reporter’s standpoint, it’s probably a little bit of a hassle. That’s true on the client side, too. But in fact, we tell them to try and police it, to remind people — and reporters — that PowerBook has an inner cap ‘B,’ for example. You can train people to respect a design mark.

On lowercase names, I don’t know that it materially affects anything. I’m not a designer, and I suspect [lowercase letters] have a tendency to weaken the overall impression of a name. But generally speaking, it probably doesn’t have any real effect on what the name communicates. I think in most situations, [lowercase names] are trying to communicate gentleness and calmness. I also think that it’s designers trying to be designers.


VCJ Report: NewMe Accelerator, MC Hammer and Magic Johnson Helping Drive Black Innovation: UPDATED

African Americans have long been under-represented in Silicon Valley and most other tech communities. But thanks to several new programs and fresh attitudes, that’s finally starting to change.

One promising program is the NewMe Accelerator, which recently wrapped up its inaugural nine-week program. A group of mostly black entrepreneurs from eight startups lived and worked in a rented house in Mountain View, Calif., sharing ideas, sharpening their technology and honing their pitch to investors.

Over the nine weeks, NewMe invited various members of the tech universe—including Tristan Walker of Foursquare; Greg Tseng, co-founder and CEO of Tagged; and MC Hammer, the onetime rapper-turned businessman—to visit the house and mentor the startups.

The whole idea behind NewMe is to act as entry point for black entrepreneurs into the Silicon Valley ecosystem, says NewMe founder Angela Benton.

“Black entrepreneurs feel disconnected from Silicon Valley and that has hindered their ability to grow and to even gain mentorship,” Benton (pictured) told VCJ contributor Tom Stein. “Another big impediment is that minority founders don’t even have access to that first round from friends and family to get off the ground.”

There is no venture fund currently attached to the NewMe Accelerator, but Benton says such a vehicle is in the works. NewMe is currently in talks with supporters to create a “pre-seed” fund that can invest anywhere from $25,000 to $50,000 in participating startups.

One new fund that is already at work making sure that black entrepreneurs have access to capital is the 1-year-old Detroit Venture Partners (DVP). Although the fund was founded by three rich Jewish guys—including Dan Gilbert, majority owner of the NBA’s Cleveland Cavaliers—the idea is to DVP was started by Josh Linkner, founder and chairman of ePrize; Dan Gilbert, founder and chairman of Quicken Loans and majority owner of the Cleveland Cavaliers; and Brian Hermelin, founder and chairman of Rockbridge Growth Equity. DVP aims to fund digital technology businesses that are based in Detroit and that can bring jobs back to the ravaged city. (UPDATE: In the preceding paragraph, we deleted a remark that made reference to religious affiliation, which isn’t relevant to the story. We apologize to anyone offended by the remark. –Ed.)

The firm recently added NBA legend Ervin “Magic” Johnson as a partner.

“We saw an opportunity here in Detroit to rebuild our troubled region through high-tech entrepreneurship,” says Josh Linkner, DVP partner. “If we can help early stage companies scale dramatically, then we could really make an impact on our region and our city.”

VCJ subscribers can read the full story here.

Not a VCJ subscriber? Click here for a free trial.

If you want to talk more about VCs investing in black entrepreneurs or other investment trends, send an email to VCJ editor Alastair Goldfisher at alastair.goldfisher@thomsonreuters.com or contact him on Twitter at @agoldfisher.


Small Pieces Loosely Joined

Wow, even more true 10 years later:
What the Web has done to documents it is doing to just about every institution it touches. The Web isn’t primarily about replacing atoms with bits so that we can, for example, shop on line or make our supply chains more efficient. The Web isn’t even simply empowering groups, such as consumers, that have traditionally had the short end of the stick. Rather, the Web is changing our understanding of what puts things together in the first place. We live in a world that works well if the pieces are stable and have predictable effects on one another. We think of complex institutions and organizations as being like well-oiled machines that work reliably and almost serenely so long as their subordinate pieces perform their designated tasks. Then we go on the Web, and the pieces are so loosely joined that frequently the links don’t work; all too often we get the message (to put it palindromically) “404! Page gap! 404!” But, that’s ok because the Web gets its value not from the smoothness of its overall operation but from its abundance of small nuggets that point to more small nuggets. And, most important, the Web is binding not just pages but us human beings in new ways. We are the true “small pieces” of the Web, and we are loosely joining ourselves in ways that we’re still inventing.

From the Preface to Small Pieces Loosely Joined, David Weinberger, 2002.

peHUB Second Opinion 10.26

Want to know why the SEC keeps pursuing low-level bankers? Read this.

Prosecuting Rajat Gupta for insider trading will not be in a walk in the park.

The Olympus saga continues, as Tsuyoshi Kikukawa steps down from his posts as chairman, CEO and president.

The best Steve Jobs’ quotes from Walter Isaacson’s new biography of him.

Maureen Dowd on the limits of Jobs’ “magical thinking.”

How to schmooze your way into a raise.

Why Amazon is happy to burn money on the Kindle Fire.

Can you say political dynasty? Chelsea Clinton, who recently landed her first directorship at IAC/InterActiveCorp, is now said to be “actively considering” a Congressional run from New York State in 2012.

Sweet rolls! Celebrity chef and healthy-living-antagonist Paula Deen is raking in a lot of dough.

New York Giants quarterback Eli Manning announces that second downs are his favorite downs.


peHUB First Read

Peter Thiel: Is launching Breakout Labs to back cutting edge tech ideas.

Here Comes the Sun: Apple is planning a solar farm to help power its data center.

Relevant Number: The Internet is responsible for 2% of global energy use.

Scandal: Olympus chairman and president has stepped down.

More than Good Listeners: Why women make excellent entrepreneurs.

Losing Money: What’s the key difference between Apple and Amazon next quarter. And, Amazon’s Apple war cost investors $20 billion.

Guy Fawkes Day: Anonymous is planning a 3-prong attack on Nov. 5.


peHUB Second Opinion 10.25

Titanic news! Leonardo DiCaprio is now investing in and advising start-ups.

Groupon loves satire. Except when it’s about its IPO.

KKR may be looking to raise as much as $6 billion for its second Asia buyout fund.

IBM has a new CEO.

Want to know how to fix AOL Time Warner? Steve Jobs mapped it out in 2003.

The neuroses of New Yorkers.

Nigeria, long associated with email spam (”Mrs. Mohamed urgently and confidentially needs your assistance!”), garners attention for its legitimate financial opportunities.

Evidently, buyout multiples in the UK are on the rise, as more PE shops chase “top quality” tech opportunities.

Forbes has compiled a list of the highest-earning dead celebs. (Macabre, yes. Then again, wow: Michael Jackson’s estate has hauled in $170 million over the last 12 months.)

Morgan Stanley stock is down 50 percent since February. Is it time to buy?

And last, for parents: Why boys should receive the HPV vaccine.


Halsey Minor: What Steve Jobs Taught Me

In 1998 I was asked to speak at Mac World.  It marked the first time Steve Jobs had returned to his company and would speak at the famous Mac World event.

What I didn’t know when invited was that I was scheduled to speak immediately after Mr. Jobs. I, like everyone else in the audience, sat mesmerized as he stepped comfortably back into his old shoes and articulated a simple plan for reforming Apple Computer.  Things were so bad at the company at that moment Michael Dell famously quipped ‘Steve should shut down the company and give the money back to stock holders.’ Michael later regretted the statement when Apple’s market value sky rocketed past his own company’s.

Nobody really believed Apple could be saved, and even though I was speaking at Mac World I was not so sure myself.  As I sat in the audience watching Steve while he gave a presentation that had just 10 slides and just 10 words, 1 per slide.  There were slides like “Product” and “Marketing”. Here was a hairball of a company going out of business and Steve reduced the plan and message to words that anyone and everyone who sat in that audience understood. When he finished he asked the audience if they would like to see the new ad campaign which turned out to be his wonderful “Think Different” campaign featuring Mother Theresa, Albert Einstein, Mahatma Gandhi, Martin Luther King Jr, and so many other great men and women who have contributed to and shaped the world we live in today. The audience rose to their feet and cheered, myself included.  Apple was alive again. Then it was my turn to speak. All I can say is being invited to follow a Steve Job’s speech, particularly his return speech, is as close as you can get to being psychologically stoned by a crowd.

Steve gave me chill bumps as he spoke, and most importantly the focused nature of his message and the sincerity of the whole experience was overwhelming.  This man wasn’t back running Apple, this man loved Apple.  I bring this up because to friends I recently described America as “a house I love, but I just don’t like what “they” have done with the place.”  America today in simple terms is Apple without Jobs.  I don’t care if you are a Republican or Democrat, vision is vision and leadership is leadership and a hairball is a hairball.  I can say that because I happen to be on both sides, or rather neither side, and have the voting and sometimes non-voting record to prove it. America is a place with a great former brand name, but inside its shell there is no institutional memory of what made us America in the first place.  The founding fathers and their lessons are so far removed and are often used more for political advantage than historical awareness. Political innovation in America has stopped and has been replaced by bureaucratic politics.  Our founding fathers threw mud with the best of them, a common misperception, but they were also moving forward, advancing the political dialogue on the rights of people and their relationship to the state, and even though the Bill of Rights would follow the Constitution there was always some subliminal notion of driving towards the sanctity of the rights of the individual in everything that was debated.

I was in New York several weeks ago and the march Occupy Wall Street passed me by and my 13-year-old son literally had to hold me back from joining in.  My battles with the banks are now famous or notorious depending on who you are. I am glad I didn’t join because I got to see all the different groups marching by.  Some were mad at the banks.  Others were mad at the rich, people like Steve Jobs who in my opinion deserved all society gave him and we are still further indebted to him.  Every 200 people or so brought some new message. I realized that this was not a movement likely to have any effect, but a cathartic outpouring of national emotion, anger and frustration. It was a sort of national temper tantrum.  What a waste of so much power and energy.

I have been building businesses on the Internet for over 20 years and when people talk about the excitement of leaderless movements mixed with social media I am not quite sure they understand the connections or the implications.  No change comes about without a well-defined purpose.  No well-defined purpose happens without charismatic leadership.  Social media has allowed lots of people to coalesce but without any agreement as to why they are REALLY there.

From my own experiences over the last 3 years I believe we as a nation have given up on the sanctity of individual rights and the belief in the individual over the institution.  The FDIC truly believes that preserving the well being of American banks is now its mission because that helps society at large, even if some individuals get sacrificed in order for the larger good of national bank solvency.  I will not bore anyone with a history lesson on the subject, but Franklin Delano Roosevelt was incredibly afraid of the moral hazard created by an FDIC, and opposed its formation for quite some time, but its sole purpose when created was to give money back to THE INDIVIDUALS who had lost it as a result of bank failures, which themselves were caused by too much speculation and risk…. sound familiar?  The FDIC has actually flipped its purpose 180 degrees just as FDR feared to believe it is about saving banks and not people.

In my Huffington Post Article, “Why I Fight”, I wrote The Founding Father who envisioned a republic built on the unalienable rights of “life, liberty and the pursuit of happiness” would be sickened at how the very institutions built to protect average citizens from repression have instead become weapons of the rich, the powerful, and mostly the corporate.”  I also wrote later in the article, “Americans are rightly suspicious of money men, and not just in the last few years. Jefferson himself once said “that banking institutions are more dangerous to our liberties than standing armies.” When it exists to support businesses and create jobs and fund innovation, finance is integral to a modern economy. But when finance becomes an end in itself and morphs from tool to master, it’s easy to imagine Jefferson’s fear realized in a system that deprives “the people of all property until their children wake up homeless on the continent their fathers conquered.”

You see we are not fighting either a new battle or a battle that our forefather Thomas Jefferson did not already see as a major threat. The problem is today we are falsely seduced by the notion of battles fought by egalitarian causes defined by lack of leadership.  Some of the greatest leaders this planet has ever known created the most egalitarian nation this planet has ever known.  Today nobody has the 10 slides with one word on each slide to deliver to the American people so that they can see what the future can and should look like. Protest is great because it expresses a right we mostly still have, but without clarity it is just a cacophony of sounds and nobody can hear A MESSAGE because there isn’t one to be heard, there are hundreds.

It my experience it is no shock that every major bank in the world sets up head quarters in New York City.  As a former CEO of a NASDAQ 100 company I founded I can promise you banks didn’t all throw a dart at the American map and happen to hit the same bulls eye, New York City.  Businesses follow where the laws and the judges give them preferential treatment over the individual.  That is a simple truth of American business today.  Where the inequality is greatest is also where one would expect the protest to be loudest which is why the seeds of a major movement, if it can give up the notion of chaos as leadership, and chaos as a goal began in New York and has a chance of growing and rebuilding a truly battered nation.

I am tired of a system that has forgotten the most basic reason we all want to live here, for “Life, Liberty and the Pursuit of Happiness.”  In my opinion there should be only one slide to this movement and it should be about restoring individual rights and freedoms.  Rights to sue big companies and not have them grind you into the ground with millions of dollars in legal fees nobody can pay.  Some companies have policies that they fight every lawsuit and appeal every case no matter the merits.  They just want to send a message that you cannot afford due process as a person. We need right to control the amount of money given by corporations to PAC’s.  We need limits on spending on lobbyists.  We need to take away the right of a businesses to bond on legal appeal while the individual, if a loser, has to come up with cash because he or she is not a business and does not have that option.

I could name 25 other ways small and large that the system prejudices you against corporations who are growing larger, and more and more resemble nation states, rather than members of our communities, and our own government whose powers increase almost daily.  One of the scariest trends of all is the government has almost rendered the Freedom of Information Act worthless, just ask any reporter who has had to sue for information they have a legal right to get by asking.

If you plan to keep marching please don’t be seduced by the voguish idea of not having a leader and simply using social media as your form of expression.  Social Media is only a form of COMMUNICATION.  You must define sharply and clearly what you want if you hope to turn the growing energy of your movement into an arrow into the heart of inequity and not just a cacophony of competing voices.

If there is but one lesson this movement should take away from the extraordinary life of Steve Jobs, it is that one man or woman with passion and sincerity in their heart can lead any organization from the near convulsions of death to the very upper reaches of what is truly possible, sometimes to places unimagined.

My regret is that all those well meaning marchers never had to suffer the indignity of following a Steve Jobs speech so they did learn that it is clarity of purpose that is the path to success to Occupy Wall Street and not Broadway.


Tough Love from Karen: Etiquette Matters Too

Those of you who have worked with me over the last few years probably know my assistant, Karen Saunders, pretty well. She is the greatest. Best. Assistant. Ever. Simply putting up with me is enough for a medal of honor. But it’s much more. The following lecture she gave me yesterday will give you a little flavor: “So I read your post on Culture the other day. It was OK. But you know what? Etiquette is part of your culture too. Last week you missed two calls and didn’t tell them and didn’t tell me. That kind of sh*t pisses people off, y’know? You’re bad with this stuff sometimes. You wanna have a good culture, you can’t do that anymore. Ever. Got it?” “Yes. You are right. 100% right. I will try harder. I really will.” “No. You’re not going to ‘try.’ You’re just going to stop doing that. Period. Yeah, things come up and you’ll have to reschedule things, but you’ve got to let them know, and the earlier the better. Got it?” “Yes. Got it. Never again.” I left, tail between my legs. But you know what? I am not going to forget that conversation. Sometimes tough love is the best thing you can give someone — and the blunter the better. And Karen’s message is a great one for me and for lots and lots of people in our business. We all are super busy, over schedule ourselves, have things changed on us multiple times per day, and generally are multi-tasking ADD types who actually prefer things this way. But, given all this, there should be some rules of engagement. Manners do matter. And they matter whether the person on the other end is critically important to us or not important at all. The whole point is treating others with respect. All the time. As a basic rule for how to conduct ourselves. I am pretty cruddy at this sometimes. The last thing in the world I mean is to be disrespectful, I just get wrapped up in my own little whirlwind of stuff. But what Karen’s tough talk reminded me is this: whatever the reason, and whatever the intent, there is a way to handle the inevitable calendar challenges we face in a way that is respectful to others, and anything short of this is disrespectful. And it is never OK to be disrespectful. So I am here to announce Culture Rule#1 for Resolute.vc: Zero Tolerance for Disrespect. And if any of you catch me violating it, call me out on it. Tough love works.

H-P Scales Back Investment Activity Amid Quarter-end Shakeup

Listed, Calif.-based Hewlett-Packard has scaled back or eliminated several parts of its corporate venture capital investment structure, said multiple sources who spoke with peHUB.

Further, our sources said, the company is likely to make an announcement within the next two weeks regarding potential M&A plans and other organizational shifts for H-P as the company tries to re-establish itself in the wake of a number of huge transactions and the replacement of its CEO.

“Until the H-P board feels like the company has developed a new plan of action, I would not expect to see them backing very many startups,” said one source.

That is a stark contrast to H-P’s prior investment activity. The tech titan’s multi-faceted investment capacity had it putting more than $600 million to use via direct equity and LP investments with traditional VCs over the last decade-plus. H-P’s investments in companies had, according to an interview with Sanjiv Parikh, a managing director with its corporate VC arm, numbered 65 as of 2008; he said the company provided investments ranging from seed-stage to growth backing. More up-to-date figures on H-P’s investment totals were not available.

H-P is said to have provided support to startups including Fusion I/O, Mimeo and Verdiem in their early stages.

Earlier this year, H-P entered into a partnership with the Angel Capital Association to provide an unspecified amount of funding to startups and angel networks.

As the company’s shares plummeted over the last six months by approximately 40%, shareholders in H-P have watched with increasing concern as newly-installed CEO Meg Whitman attempts to right its fortunes. Shortly after Whitman’s hire, H-P reportedly hired Goldman Sachs to help defend it from activists. For the last six months, shares of H-P have lagged well behind the pace of tech market benchmarks including Apple, Dell, and IBM, each of which have posted gains over that same timeframe. H-P has suffered in the wake of the 2010 acquisition of handset maker Palm, along with the failure of consumer products like its TouchPad, that may force the company to divest consumer-facing products.

The first signs of a quarter-ending shakeup with H-P emerged early Friday morning, with the announcement that chief strategy and technology officer Shane Robison would retire. H-P did not respond to a request for comment.


peHUB Second Opinion 10.21

California, Nevada: The 14 most unemployed states in the U.S.

More From The Bio: Steve Jobs kinda sorta hated Eric Schmidt, Google’s chairman, because of the Android. And, Jobs told Obama he was headed to be a “one-term” president.

Next Up to Be Cut: S&P says it will likely downgrade France, Spain, Italy, Ireland and Portugal if the euro zone goes into a recession.

Clarity: Mobile phones don’t cause cancer, according to a  new study. This is good since about 6% of two to five year olds have their own smart phones.

Not Worth $30 Bln: Felix Salmon “likes” the Groupon IPO a little more after seeing some roadshow documents.

150 Characters: Here’s Michelle Obama’s first tweet which calls on Americans to support military families.


Groupon: From Nada to $11 Billion in 2 Years

Bloomberg News

Yes, Groupon’s planned valuation of up to $11.4 billion might be a disappointment for investors who had visions of $30 billion dancing in their heads.

But let’s put Groupon’s potential stock-market value in perspective. If Groupon manages to fulfill its IPO plans — and the company’s bankers are skilled in cramming IPO stock down investors’ throats– Groupon in 18 months has transformed from a financial non-entity to a company potentially worth as much as department store chain Nordstrom or Blackberry-maker Research in Motion.

Here is a look at how Groupon’s valuation has soared in less than two years:

  • IPO, expected Nov. 4:

Valuation: $10.1 billion to $11.4 billion, based on expected price of IPO stock

  • Private fundraising round, December 2010/January 2011:

Implied valuation: $4.7 billion

Investors included: Fidelity, T. Rowe Price, Capital Research & Management, Morgan Stanley Investment Management; Kleiner Perkins Caufield & Byers, Greylock Partners, Andreessen Horowitz, Technology Crossover Ventures, Silver Lake

Total money raised: $946 million (most went to cash out existing investors)

  • Private fundraising round, April 2010:

Implied Valuation: $1.35 billion

Investors included: DST, Battery Ventures

Total money raised: $135 million

Implied Valuation: $250 million

Investors included: Accel Partners, New Enterprise Associates

Total money raised: $30 million

Question of the Week RESULTS: Groupon Is a Stinker

Groupon has reduced the size of its IPO, the company disclosed today in its latest regulatory filing, and it might be a good thing, based on peHUB readers’ response to our Question of the Week: Nearly two thirds of you said this stock is going to be a stinker.

Another three in 10 thought a $10 billion valuation was overdoing it, although the company might have a future. Only 6.1% bought into the $10 billion figure.

If the stock prices at $17, the midpoint of its range, the company would be valued at $10.8 million when the shares hit the Nasdaq next Friday.

One well-known cult leader predicts a first day spike but “lackluster long term” outlook.

By this time next week, we’ll begin to learn the truth.

Steve Bills is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @Steve_Bills. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at greg.winterton@thomsonreuters.com.


Reduced Groupon IPO to Price Nov. 3, Trade the Next Day

Groupon is expected to price its IPO on Nov. 3 and trade the next day, a source says.

The Chicago-based daily deals could raise as much as $540 million, according to its latest SEC filing. Groupon said it planned to sell 30 million shares at $16 to $18 each via joint bookrunners Morgan Stanley, Goldman Sachs and Credit Suisse. The eleven other underwriters on the deal include Allen & Co., BofA Merrill Lynch and Barclays Capital. The underwriters have the option to buy an additional 4.5 million class A shares, the Oct. 21 SEC filing said.

Groupon is expected to trade on the Nasdaq under the ticker GRPN, according to the SEC filing. The company’s roadshow seen launching next week, according to Thomson Reuters.

At $540 million, the deal represents a 28% reduction from Groupon’s initial target of $750 million, which it filed to raise in June. The Groupon IPO, one of the most closely watched this year, has been dogged by bad press and accounting issues. Market volatility and European debt issues have also put the IPO market on standstill. The Groupon offering will likely set the tone for other companies looking to go public.

Andrew Mason, Groupon’s CEO, doesn’t appear to be selling shares and owns 7.7% of Class A stock and 41.7% of Class B stock before the IPO. After the deal, his total voting power will fall to 19.8% from 20.4%, according to the filing.

Groupon backers include New Enterprise Associates (14.6% of Class A stake), Accel Partners (5.5% of Class A), Kleiner Perkins Caufield & Byers, Greylock Partners, Battery Ventures, Maverick Capital, Maveron, Silver Lake Partners and Technology Crossover Ventures, according to SEC filings.