Fred Destin

Dustin Dolginow for President !

He's young, he's hungry, he's lean.  Here is the all new 2012 model of the Atlas Venture tech principal: Dustin "Double D" Doooolginow.

Dustin joined us almost two years ago.  It's not that we care much about titles, but when entrepreneurs reliably come in and tell you about how great the guy is, how they seek him out for advice and how they trust his judgement, you know there is something good going on.  Promoting Dustin to principal is simply reflecting what entrepreneurs think of him and recognizing what he brings to the team.

Proof that Midwesterners do it better, Kansas City's very own Dustin tried his hand at starting a company in the social payments space called SocialSwipe down in New York before joining us up here in Boston almost two years ago.  In that period, he's helped all of us think about investments in a smarter way, sourced investments and carried our brand with style.  He's thoughtful, rigorous and super entrepreneur friendly.  Real empathy + intent + business savvy.  A winning combination with sizzle.  Oh, and the guy is a yogi.

Right now he's involved with a number of our companies including fundraise.com, ObjectiveLogistics, PowerInbox, Kinvey and Adsafe Media.  Some of these he sourced and guided through to investment.  All of these he champions.

Dustin is also the inspiration behind our blossoming partnership with the JS and HTML5 stalwarts at Bocoup and our friend Boaz Sender, yielding a lot of knowledge and two new investment / projects currently in stealth mode.  Moving the needle.

Please join me in congratulating Dustin on this well deserved promotion.  You can follow the man himself on @dolginow, read him (sometimes) on dolginow.org.

For me personally it's a pleasure to work with someone who pushes the envelope, shares my love for design and helps me getter sharper at understanding the future of the web.  I consider myself very fortunate that D-Man is part of our team.

For all ye entrepeneurs, think of Dustin as open source VC with a better UX.  Your kind of guy.

Startup Lifecycle - Lean to Fat, Launch to Scale - Video

The video and accompanying presentation gather much of the current thinking around building startups from scratch to scale.

This was my annual contribution to Seedcamp, in the form of a new Prezi and accompanying commentary on Startup Lifecycle, which I presented at Seedcamp Ljubljana.

An awesome editing job was done by Lecture Hub using flowplayer and you can now enjoy the synchronized presentation and slides on their site.

A lot of credit to God (SG Blank), Jesus (Eric Ries) and Mary (Alex Osterwalder, sorry Alex) as well as Tom Eisenmann for references and structure, David Skok for his awesome visuals and sense of economy and DaveMcClure for the Startup Metrics FTW.    We're also trying to get beyond just Lean you can also dig into Scaling (e.g. see my answer on Quora).

And since I'm still having a bit of trouble typing, I borrowed the blog post of a super Seedcamp startup (that I voted for hard but you cannot win them all) called Blossom.io to give you a sense of what's covered.  I trust Thomas won't send me a cease and desist.  If you are looking for Lean Project Management, check them out.

I look forward to any comments -- ping me over mail, this blog will migrate soon and not sure I can (be bothered to) migrate the comments over with me.

Start

• Pick the right co-founder
• Do reverse vesting — It’s founder friendly
• Borrow & steal — minimize cost, more time for product/market fit

Launch

• Be Lean — The Lean Startup, Running Lean, Business Model Canvas
• Focus on providing value to your customer
• Use validated learning, pivots & iterations to achieve product/market-fit ASAP

Build

• You can’t manage what you can’t measure
• Initially focus on activation and retention (funnels, KISSmetrics, …)
• Be data informed, not data driven. Brush up on your statistics skills
• Use your intuition for important decisions (see the big picture), use analytics to optimize

Chasm

• Aggressive investment before product/market-fit can be dangerous
• To grow you need to cross the chasm from early adopters to the early majority
• Read Crossing the Chasm and/or Inside the Tornado by Geoffrey A. Moore

Scale

• Build a repeatable customer process
• Build a solid infrastructure for billing & deployments
• Fight organizational creep and automate stuff
• Grow the team and company culture

Secret Escapes – creating unfair advantages in building local champions

My most recent seed investment is in UK company Secret Escapes.  Whilst there's nothing original about the model (think Voyage-Prive for Brits), there is a definite difference is the method behind building a business that's sustainable over time and aiming for leadership versus simply cloning. 

Clones

Clones have been widely derided as pale copies of their original models, and often rightly so.  It's hard not to be amused when Groupon spawns as many as 20 copycats per European country, including (a) from the get rich quick crew and (b) from folks who seem to have woken up to the news that the Interweb was huge only recently.

The Master Cloners are of course the Samwers of Germany, who have built a factory around their Berlin homebase to capture every single trend that comes out of the US.  A perfect case study of the technique was MyVideo, started late, perfect YouTube copy, pumped with a EUR1m of marketing and quickly funded and flipped.  Stable management team not included in the price.

The Samwers have turned cloning into an art form (and since moved past that stage into helping US companies win in Germany -- see here).  You may not like what they do, but they do it with extreme efficiency, the "Cloning Mannschaft" I suppose.  Heck, they even cloned a set of my slides once.  The same cannot be said of most clones, which I would define as average companies hastily set up to mirror the latest runaway innovation.  

Local Champions

Clones are inferior copies, but there is a time honored tradition of taking stuff that works and building it properly, or even better.  After all, that's how Toyota was born (copying the Chevy straight six engine at the time). 

There is in any event a perfectly valid investment strategy in Europe around building local champions, and I have certainly done my share of those.  If you nail a large category in a local market, you can certainly build a company worth $300M or more.  None of them has ever felt like a clone though, because we build them differently and weren't looking to flip but rather to build sustainable businesses.

PriceMinister of France, which was sold to Rakuten last year, is an eBay like marketplace but innovated around some key concepts.  It was item centric rather than listing centric (allowing it to do price comparison and product search as well as listings) and acted as a third-party guarantor to every transaction.

Zoopla of the UK was started on the strong belief of the founders, Alex Chesterman and Simon Kain, that the UK market needed a better listings solution.  It was in part driven by Alex's frustration and amazement with the quality of the existing solutions and in part by the profitability of Rightmove, a company that needs a serious competitor !  Zillow and Trulia may have provided some inspiration, but the UK market lent itself beautifully to leveraging Land Registry data and user provided data (which only Zoopla does) to enhance its property valuation engine.

DailyMotion started at the same time as YouTube (and both later than Metacafe in any event)  and whilst both companies borrowed a few things from each other, neither is a clone of anything.  They just happened at the same time for different reasons.

 

Secret Escapes: creating unfair advantage for local leadership

My latest investment on European soil is in a company that is of the same ilk called Secret Escapes.

Secret Escapes is private sales for travel.  Private sales as everyone knows well was pioneered by Vente-Privee of France as a way to get around sales regulations and struck a nerve with internet shoppers, driven by the "blink and you'll miss it" dynamics and the constant stream of attractive offers (most of which you don't need or never thought about buying, but never mind, at that price, load the credit card).  There are successful companies in this field already, such as Voyage-Prive which has impressive metrics. 

If you're going to launch a new entrant in a market that is clearly on everyone's expansion roadmap (the UK), you better make sure you have some assets that will give you more than a fighting chance.  In this case:

• Insider founders: The founders (Alex Saint, Troy Collins and Andrew Bredon) were behind Dealchecker.co.uk, which they bootstrapped to a successful exit to EasyVoyages.  They know about travel, and they know about scaling startups in a lean way. See Tnooz.
• Insider execs: The team currently running the business is made of up dedicated internet veterans such as Tom Valentine who ran product at Seatwave and was at eBay, Daniel Evans who has extensive experience sourcing hotel deals, notably at Lastminute or Tomas Lin for example who is a senior lead dev and ecomm vet.
• Insider investors: OK, ok we all know investors about as much value as Gordon Brown did to the UK economy, but at least the list of companies we collectively backed looks good on paper.  William Reeve of LoveFilm fame represents the money men on the board.
• Users from the outset: SecretEscapes start with a large database of active users, solving the chicken and egg problem that typically plagues these types of initiatives by giving us a large active user base, which means hotels and other suppliers should see immediate results on the inventory that they provide.
• A real desire to make it happen: maybe most important, these guys are not that interested in getting an early call from say Jetsetter.  They'd rather show they can make it happen and go long.  Because they've built a decent success before, they want to take it to the next stage with this opportunity and really nail it.

Don't get me wrong, we'll need all of this goodness to become #1 in the UK and put some clearwater between us and the rest of the pack.  This segment's busier than Paul Carr's favourite pub on a Friday. Just looking at the obvious contenders: 

• Voyage Prive, focussing on mid-market travel. Successful on the continent but haven't caught the consumer imagination in the UK
• Travesse, small operation launched out of a travel blog, not getting too much traction as far as we can see 
• Groupon, Living Social, doing occasional, successful, travel deals, generally with broad appeal (Mediterranean packages and UK spa)
• Big US players planning  to launch, including Jetsetter & Living Social Escapes

I've been there before; when we financed DailyMotion there were over 100 video sharing websites.  Normally I like to have a distinct product advantage and with this one it's really all about great supply, but we think we've got the best domestic team to make this happen.  So bring it on boys, we're ready :-) 

What's in a (venture capital) website ?

Late on Friday we launched the new website of Atlas Venture.  The launch prompted me to tour our VC brethren in the Boston area and was surprised at how many have been redesigned recently: NorthBridge, General Catalyst, Charles River or Longworth.   Since I am new to the Boston scene, I thought it would be fun to take a designer’s viewpoint on what VC’s are really trying to do with their online presence and how they’re faring.

 

The death of traditional copy and the vexing issue of differentiation

One of the challenges that all venture capitalists are dealing with is that we are all peddling essentially the same product.  Funding “disruptive innovation” ?  Check.  Backing “world class entrepreneurs” ? Check.  Building “World class companies” ? Check.  Bizarrely no one wants to back dimwits with no ambition.  To make the copy less obvious, some firms like Flybridge tone the style down and talk about working with “great entrepreneurs to build innovative companies”.  At Atlas we went down the same route and talk about “partnering to solve difficult problems”.  And since “disruptive” is the most overused word in the history of innovation, we got cute and talk of “non-linear innovation”.  After all, I do sport a fractal on my blog, so why not…

Another piece of trivia found on VC website that has to make you smile is the entrepreneur testimonial.  I am sure one could build a quote generator here with a very simple algorithm; “VC X has been [invaluable] [transformational] [momentously influential] [godlike in this abilities] and helped us transform our business from a dead end no hoper to a dominant world class player thanks to [an endless stream of incredibly valuable intros] [a relentless commitment to our success] [deep strategic insights delivered in an incredibly subtle and non patronizing manner].”  And so on.  Atlas’ previous site was a particularly bad offender in the mind-numbingly boring quote department and I always felt deeply for the poor company CEO’s who had to come up with these and try to make them sound vaguely different.

The bottom line is we all sound pretty much the same, so what is a venture capitalist to do ?  How do VC’s, a population steeped in mythology and often deluded about their own influence on outcomes, adapt to the brave new world of the chastised venture capitalist, the SuperAngel meme, the new transparency ?  Let’s look at how folks are trying to stand out in the world of venture 2.0 through the lens of their web presence.  To make it a bit more fun I am declaring myself judge and jury and giving out awards.  What is your view ?

 

Straight Talking Award: Kepha

If you’re a new shop and you don’t have an Apple or a Google to boast about, why not go with a low tech, plain talking approach.  Jo Tango and Eric Hjerpe at Kepha Partners have done a great job of differentiating with an honest, simple style centered around a “back-to-basics” approach.  The design sucks, but with this level of un-design that’s certainly on purpose (right guys ?).  Mission, operating principles explained in jargon-free, direct manner, with a focus on entrepreneur SLA’s.  They lost me a bit with the search for perfect haiku (“Presume Trust, Seek The Truth, Be At Cause”) but overall I give them 5 stars for pragmatism.

 

“Back to Me” Approach: Founder Collective

Founder Collective does a better job than anyone else at making you feel a personal connection with each of the members of the Collective.  I love the way you can feel them reaching across the page to grab you and tell you their story.  Eric says “It was painful at times, but I learned a ton about building lean businesses, because we were undercapitalized and sweating to make payroll".  David says “our early forays into Internet enabled media & healthcare taught me poignantly that we are always better served betting on great people than themes and momentum.”  Each of them tells a story with passion and humility.  Like it !

 

Fresh design award: Longworth

There is really nothing that special about the Longworth site, but that’s partly the point.  I liked the lean style, rounded edges, soft fonts, fresh and clean feel and in particular the very neat visualisation of Longworth by the Numbers.  Here is your FAQ for the firm in one simple image.  Economy of means is a beautiful thing.  Well done.

Big Balls of Steel Award: Spark Capital

Spark’s randomized navigation site has been out for a while, and it can be frustrating to actually get to the information you need, but I have to give it to these guys: as a differentiated experience, it works.  But what is most striking is the choice of words and sheer level of aggression and ambition that it is designed to convey: screw disruption, we’re gunning for “Blowups” and “Juggernauts”.  The navigation serves the purpose and the message is implicit: you want to build big companies, you have to deal with uncertainty (as in the random navigation), messiness (as in you cannot easily find stuff) and have huge hairy goals (red and black, in your face, naked ambition).  Overall, I like it and it can’t really be copied by anyone.

 

  

Best Overall Design Award: Matrix

You can take issue with the small fonts and the relatively classic feel of this website, but as a piece of VC web design the Matrix Partners effort does its job wonderfully well.  Lead with entrepreneurs, clear navigation bar underneath, direct access to subsections from the navigation bar, clean and clear interface etc.  It’s rich and deep and easy to navigate.  They even manage to make some of their quotes work, because they keep the endorsement implicit.   See Marc Fleury’s: “everybody told me JBoss would never succeed”.  Nice touch.

 

#fails

I am only going to pick on people who I presume have better track records than we do, but here are a couple that puzzled me.

I will start with Bain Capital Ventures.  Apparently, these guys are very good!; with my ass now covered, let me nitpick over their positioning.  They have a section of how their approach is differentiated because a/ they have more people per $100m managed and b/ they contribute 15% of capital.  I am naively reading that as a/ we employ a ton of junior folks and b/ we are very rich.  Clicking on team I am counting no fewer than 35 “senior investment professionals”.  The third leg of the differentiation pitch is on that famously elusive concept of “value-add” which lists “providing strategy counsel, recruiting additional managers, raising equity etc”.   I bet every VC would write the same list.  For my money the exercise is an own goal, or it may just highlight the difficulty in defining a messaging and positioning that works both at the early stages and in buyouts.

 

I also got slightly puzzled by General Catalyst’s new effort.  Their refreshed website is pretty cool and very, very rich in content but one of those “could have been great but tries a little too hard”.  Besides the little Sequoia induced smile of  the tagline (“Entrepreneurs Investing in Entrepreneurs”) the navigation is where this one struggles.  I am a sucker for good old analog interfaces that change when I decide they do and have big fat buttons.  This one is full of movement with swishing lists and a confusing moving wall of pictures on a home page that mixes two fixed widths sections.  Urgh.  The team page can be filtered by company or by entrepreneur, which I bet is never used except by visitors like me who are compelled to understand why the many is used as a filter for the few. 

 

The new Atlas site

We (shoutout to Dustin) got going with a 99Designs competition to get mockups of the layout done and then turned to the excellent Fresh Tilled Soil here in Boston to get the ergonomics and the code just right.  I am a big fan of the architecture of John Pawson and Peter Zummthor and we were trying to get an incredibly streamlined website that would still make you feel at home and make us feel approachable.  We like the Founder Collective or Google Ventures designs too which provided some inspiration.  As an organization that’s gone through its share of changes, recently regrouped in Cambridge in our spanking new offices, the website is meant to be the visible piece of the evolution at Atlas.  We’ll be adding some content, such as a few success stories (we’re struggling with how to fit the whole history of Atlas in there without hurting functionality and usability), but not much. 

But, wait a second, there’s zero attempt at being social, engaging, connected, you say ?  True !  And on purpose, too.  Between blogs, twitter, plancast and facebook, there’s really no need to duplicate and we decided not to bring all that back to the site, to keep it completely clutter free. 

It’s designed for you to get to the people you want to get to, fast.  We have a simple FAQ on the site, but we’ll be using Quora or our blogs for more detailed policy questions (such as my view on high velocity seed investing).  Another important consideration: we can maintain it easily through the Wordpress CMS, and it’s content light.

And now walk the walk…

The death of traditional copy (“disruptive”!), the influence of app-style design and the consumerization of everything, the famous Sequoia search box and other factors have all led to VC’s sprucing up their online image to align with the times.  Now let’s see us how many of us have also changed our ways meaningfully, and overcome the arrogance that has come to define our group in the mind of entrepreneurs.  Let’s see who really walks the walk and matches behavior to their newfound online coolness.

Learnboost: making data useful for kids

I am not sure much additional commentary is necessary on the drosophilae versus dinosaur debate but for a laugh and some perspective, I thought I would highlight one entrepreneur who turned the debate on its head and decided to treat VC funds like super angels, proving that they, too, sometimes hunt in packs.

So a quick word on why we (and some other folks you might know) funded LearnBoost and the team composed of Rafael Corrales, Guillermo Rauch and Thianh Lu et. al..  Students generate a ton of useful data points over their academic career, all through K-12 education.  But between paper, proprietary databses and desktop software, it usually gets lost.  Learnboost is quite simply an Open Source gradebook.  Folks like Pearson (makers of the ingrained PowerSchool system) seem to have stopped innovating, and this industry really feels ripe for change.

We recently put some money into Grockit where my partner Jeff Fagnan joined the board.  Grockit focuses on the top of the pyramid: the actual learning.  You could imagine data provided by Learnboost being used to help students optimise their coursework on Grockit, with a level of granularity and relevance that is hard to achieve today.

The trends here are simple:

• Data leverage: we collect a ton of data points but have no useful way of leveraging them intelligently and in context
• Empowerment: if you refuse the notion of illiteracy in any subject, the best way to fight this is at a granular, data-driven level where the student or his parents gain visibility and a better understanding of academic performance
• Personalisation: just as in healthcare, the purpose of companies like Grockit and Learnboost is to help developed personalised learning solutions

As my friend Sean Park keeps saying, we live in the age of markets and platforms.  We need data providers like Learnbook to enable application and marketplace providers like Grockit to help kids get better, targeted education.  If I wanted to sound like a marsupial, I would say we're slowly Hacking Education.  That may sound passe in a few years though :-)

Further reading:

ReadWriteWeb: Tracking what 21st century Schools should read

Learnboost Blog: Rafael takes a swipe at Kaplan Ventures (and might be doing some SEO as well :-))

Success for our friends at VentureHacks and their Angellist

Xconomy's usual high quality editorial

Follow @Learnboost

Trends in online display (or why I invested in AdSafe Media)

This week was a fairly big week for me.  On July 4th I officially emigrated to the US, a date I am not likely to forget.  Wednesday, we announced our new investment (my first in the US), leading a $7.5M round in adtech company AdSafe Media.  Previous investors include Founders Collective and a serious group of ad tech insiders (chek out the advisors), some of which are reinvesting in the round.

Rather than wax lyrical about my new company (PR here), I wanted to take a look at some of the major trends in online display as I see them:

• Brands advertisers have yet to significantly migrate.  In 2009, P&G still open spent 4% of its advertising budget online; I think l'Oreal was only 1%.  We know the web has created the users and the engagement, but that ad spend is still badly trailing the level of engagement achieved.  To bring that wall of cash into the market, which the industry so badly needs, we need to give brand advertisers an environment they feel comfortable in, so they can ensure the proper stewardship of the products that they promote.
• Advertisers buy audience, not media.  This may not be music to the ears of the publishers who so carefully built their rate card and their USPs with brands and agencies, but the reality is clearly that we are moving away from allocating that working media to the top names in a given category to a much more distributed audience-centric media buy, which makes the media plan more extensive and complex. 
• Content also goes real time and complexity ensues.  Have a look at the Guardian which is at the forefront of content syndication and is now experimenting with automated news generation.  Content is increasingly real-time, free of tight editorial guidelines, repurposed and redistributed continuously.  A New-York based entrepreneur told me this week that fully 80% of traffic on news sites was driven by the fresh content, with archives only representing about 20%.  If you bring all this together with social media, it's clear that keeping track of the content inventory is tough, whether you are an ad network, a blog network or an advertiser trying to buy across media types.
• Brand exposure is coming back into focus.  For a while, display ads were derided ("people just don't click on them").  But as the web matures, the online advertisers are coming to appreciate what their analog forefathers already knew; you cannot simplify media planning to the last click.  You need to measure the entire exposure path and track across channels from first exposure to conversion / repeat conversion.  So yes it probably means you keep buying back your own traffic and you don't really know anymore which part of the your ad budget is wasted, but the reality remains that brand exposure matters ... and that it can be done well online.
• Media planning goes algorithmic: media planning used to be a game of allocation of working media according to relatively stable and planned grids; the job of campaign planning being quite manual and artful.  Now the level of complexity, whether we are talking about real-time bidding or not, is quite staggering.  It's the domain of technology-enabled solutions, of maths and data science.  I have repasted my Prezi on this topic (which was only an intro to a fireside chat with Dataxu CEO Mike Baker but hopefully interesting).

Let' rehash: we have moved from classic, publisher centric media planning to a complex world of fragmented audience targeting, ever-evolving and fluid publishing environments, and the advent of real-time media buying.

To serve this new world well, we need standards, we need tools, we need tech.  Welcome to the age of display ad platforms.

Atlas Venture had recently invested in Dataxu, which is a leader in the demand-side platforms space and can best be thought off as the very powerful brain behind automated, real-time campaign execution across multiple supports.  

Now we are adding AdSafe Media to the portfolio, a company essentially focused on making sure that brand advertisers feels comfortable with going online (how's that for plain English, I was told by my mum that my blog was too wordy).  If you want to learn more, there is a good writeup on paidcontent or adexchanger.  Beside the self-congratulatory (yes it's really a fab team and yes the industry traction is very impressive), the thesis here is that brand advertisers and publishers alike need:

• What I call "Trust Metrics": standards of content quality they can agree on to help them maximize campaign effectiveness and inventory monetization.  Right what tends to happen is publisher bashing when brand guidelines are not respected which is not helpful to anyone.
• Pre-emptive action: if you are not supposed to advertise a diabetes drug to a specific set of users, it's limited use to be told after the fact.  AdSafe can function in so called "firewall mode" to act in real-time (and hopefully still allow the publisher to monetize the impression).
• A holistic solution: ad agencies and demand-side platforms want peace of mind that their campaign guidelines are being respected, publisher and publisher networks want to understand when and why they screw up, yield optimizers want to be able to serve their clients well and maximize the yield lift and so on.  You cannot solve this problem without getting the ecosystem to collaborate around the issue as a whole.

Whilst I am somewhat concerned about the big boys commoditizing most forms of adtech to zero, I am very excited to be part of this company given its ecosystem friendly approach, the great buy-in and commercial momentum it is demonstrating, and the very clear customer need it is solving.  I am frankly also grateful to Helene and her team, as well as Eric Paley and the other members of our board and team to trust a newcomer to the scene with this exciting company.

Stay tuned and let's see how far out of the ballpark we can hit this one (see, Red Sox analogies already).

Real-time advertising trends on Prezi

PriceMinister: a beautiful startup story and a great exit

Last Wednesday, PriceMinister, one of the companies in my portfolio announced its sale to Rakuten, the $3bn retail giant that has Amazon and eBay taking notice after its second major e-commerce acquisition in the "West", following buy.com last month.  At €200M it's a super exit, but it's also a great tale of entrepreneurship.

First a few words on the deal:

• Speed to exit: €200M in consideration for a company created in 2001 that went through two downturns, not bad IMO.  Numbers floated include €40M in net revenues and €7M EBIT in 2009.  With the strong operating leverage kicking, the acquiror paid a reasonable EBIT multiple in line with a promising and growing marketplace.  The site also boasts 12M monthly uniques and a very strong "standalone" brand for an e-commerce property.
• Capital efficiency: all-in the company raised under $15M (though that excludes dilution through acquisitions) making it highly cash efficient, thanks in no small part to the work of a thrifty CTO and a smart viral marketer.
• Continuous struggle to access cash: Initial funding came from friends and family (and then some) and then from Technocap (2001),  more friends and family (2003) and finally 3i and Quilvest (2005).  Is it that companies that have been through the testing times of capital constraints just become so much better r?
• AV in the deal: Atlas came in through an acquisition / merger with our listings company Mixad (2007) which I negotiated and pushed through with Pierre and Jean-David at 3i with the founder of Mixad.  By the time of the exit and post the sale of the 3i shares, AV was the largest institutional shareholder.

What's nice about this one:

• Case study in teamwork: Same team of founders, since the outset: Pierre Kosciusko-Morizet (primus inter pari), Pierre Krings (ops), Olivier Mathiot (marketing), Justin Ziegler (tech) stuck together and got better together, managed each other hard but well and kept it real.  The third original founder was Nathalie Gaveau, who led the commercial efforts for the first few years and left when her family moved to Asia.  The beauty of a cohesive and strong initial team.  Maybe it's the unique values of rugby that have filtered through here.  Maybe the French "laughing stock of the world" football team would do well to get trained by these guys.
• High management ownership: by being capital efficient, borrowing when necessary and taking calculated risks, these founders kept their ownership high and reaped greater rewards.
• Continuity and upside: Rakuten views this team as an asset they want to nurture and enable, as a growth platform.  They were very smart in engaging the team and investors in the right way and building a long-term project together with management.  Net-net this may be an exit for me (in what is a very clean deal) but it's a new and improved project for the entrepreneurs.  Nice.  Interview on Eco89 in French here.

Thank you's:

• Some teams just execute.  A big thank you to Pierre & Pierre, Olivier, Justin and CFO Philippe Favrot and all at PM who made this happen.  I would be lying if I told I added much value on this one besides being a not too painful board member; this was a tight and well-managed company that reacted fast to changes in market conditions and any hint of underperformance.
• Jean-David Chamboredon ex 3i.  For my money, best venture investor in France (and beyond).  Voila, I said it !  JDC as he is know has now launched a seed fund in France, ISAI.

And now my friends, Rakuten Ichiba !  Let's watch these guys "create a global platform where consumers can enjoy shopping no matter where they are located, and to help merchants grow their online business".

<-- Pierre, Olivier, Pierre, Justin

My latest investment: InspirationalStores lands €10M for high-end e-commerce

I am delighted to announce the closing of my latest investment, in the form of a €10M round of funding (along with existing investor OTC Asset Management) into an exciting e-commerce business by the name of InspirationalStores.  I am very bullish about this new addition to my online portfolio (which today includes DailyMotion, PriceMinister, Seatwave, Sporever or Zoopla).

For clients such as Laduree, Delvaux or Caviar Kaspia, Inspirational Stores offers a complete turnkey offering covering every aspect of e-commerce, together with a consumer experience that completely reflects and respects the brand ethos and universe. To date the company has announced no less than 12 customers and established itself as leader in this next wave of luxury and niche e-commerce. It is about to launch its UK operation to accompany the local development of Laduree, which has recently opened a spectacular new Tea Room at Harrods designed by Roxane Rodriguez, as an homage to the French “Art de vivre”  (yes, I am borrowing from the press release but, hey, I wrote it :-)).

Why do I find this attractive:

• IS really designed itself from the outset as the long-term strategic partner to its brand partners.  The partners can focus on what they are the best at (great products, great brands) whilst IS can focus on optimised online marketing, CRM, operations, logisitics etc.  Online complexity is increasing, particularly on the marketing side; it take specific expertise and talent which is getting harder to find in the market. 
• This is a good example of touchless e-commerce.  Hence the operating leverage remains attractive.  Low cost of customer acquisition (partly because the brands are known), low returns (because the consumers know the products they are buying already), but high average baskets and reasonable margins all make for a sound business model.
• The team are veterans / pioneers in their field.  Michel de Guilhermier and Martin Genot were the founders of Photoways, the leader in online photo finishing (led today by the reportedly brilliant Stan Laurent.  Martin and Michel are true entrepreneurs who can knock down doors like no-one else and are masters of their trade (business and commercial development, back-end and logistics).  But these guys also knew their shortcomings and how to build a better team, so they brought on Erik-Marie Bion (one of the best known online marketers in France and a great people manager, as in his last role as MD at HiMedia) and Bruno Emsellem (CTO of GridXpert, IndustrySuppliers etc) to put together a kickass team with a very broad talent set.
• We just, you know, got along.  It's all about the social contract !

 

<--- Erik-Marie Bion with the "I got Flair" French look on him

Anyone who knows e-commerce will tell you it's all about execution, execution and execution.  With this team behind the wheel I am very confident that we have the right kind of obsessive, ambitious, high-impact people to build a really exciting property.  I don't like my entrepreneurs to be wilting lilies and these guys certainly qualify as true proponents of the unique "suspension of disbelief" required to make these project fly.

As a quick aside I am also glad to be finally doing a deal with my friend Greg Revenu at Bryan Garnier.  An added bonus.

Real all about it too on Michel de Guilhermier's Blog who added some nice quotes from some of the company's CEOs (and could not help post before TC got their hands on the story :-)).

<--- A high end umbrella from Alexandra Sojfer epitomises the kind of brands Inspirational Stores want to work with: great, best of breed niche products

Now on Techcrunch too courtesy of Ouriel (about 10 minutes from communication to post -- wow !!) here

DailyMotion partners with Warner

Midem is known as a place to do business.  Our guys at DailyMotion proved that by closing a global agreement with Warner Music for the delivery of music videos on our site.  It's nice that our team closed their first deal with a major on sensible terms.

Call me high brow, but I have a vision of the very long tail for DailyMotion, with the incredible animation of Jiri Trnka alongside some unedited interview of Banksy.

So well done on the Warner deal to our boys and girls, and let's continue on the road to short-form content on demand, whatever it may be.

technorati tags:dailymotion, warner

Isilon goes public at nearly $800M market cap

 

Last  night saw the pricing of the Isilon IPO at $13 per share, also per Reuters. The company initially filed a rangebefore the roadshow, of $8.50  to $9.50 and refiled on Tuesday a new range of $11 to $12. Based on a strong oversubscription with many high quality buyers, we went to the  lucky $13 price. The IPO will raise $108 to $117 million in cash for the company  depending on how much of the green shoe is sold.  Atlas Venture's share will be  worth $191 million at the IPO price; we are the largest shareholder. The market will decide today where we go  from here when ISLN starts trading.

I wrote about Isilon before, which provides clustered storage systems designed for rich-media.  The best arms merchant to the digital revolution !

Technorati Tags: isilon, ipo, atlasventure

UMG sues MySpace and EMI agrees deal with Gotuit

We have two viewer-facing video initiatives here at Atlas, one being Gotuit Media and its portal Gotuit.com and the other being DailyMotion.  Good news landed on the public pages on Thursday with the announcement of the EMI - Gotuit licensing agreement.

Strikingly UMG announced a lawsuit against MySpace the next day.  The debate around MySpace seems to be that MySpace has been monetising a ton of pages that have historically contained copyrighted content.  I have looked at the DMCA in detail; the law is ambiguous and was not designed with UGC in mind, so this is not an easy one to predict.  I will be watching the outcome with interest !

Gotuit offers a nicely branded and protected experience to media owners because (a) its quality is very high and (b) there is no opportunity for the content to escape the site.  So whilst there is a definite downside in terms of viral spread and community leverage, Gotuit is in the business of building an alternative to television where copyrighted content feels safe.

You can read Techcrunch here.  Good things don't come to those who wait on Gotuit:

• Video access is very very fast
• You can browse the site whilst you watch the video
  
• Deep tagging features mean you can navigate straight to the right sequence

Some good reviews from TechnoBabble and Read/Write Web as well.

technorati tags:gotuit, dailymotion, emi, myspace, youtube, jeffandrews

Mascoma: Atlas Venture joins General Catalyst in cellulosic ethanol

Hemant has led the recent $30M round in Mascoma, a cellulosic ethanol developer.  PR here. My colleague Juergen Habichler has written a good post on this.  Hemant is an up-and-coming "young gun" in the Boston market (as per this Mass HighTech article); he is also involved with Advanced Electron Beams, one of our companies, alongside Jeff Fagnan.

technorati tags:mascoma, hemanttaneja, jefffagnan

Datapower: some acquisitions become great acquisitions

Short of an IPO, the best token of a success for a VC is an acquisition that becomes a great product line for the acquirer.  Whilst the pitfalls of acquiring startups are well known, it is a great source of satisfaction for the entrepreneurs and their backers to know that they have built a product and organisation that has legs and really helps the acquirer expand its business.  Whether customers keep buying is the real acid test, regardless of how hyped the market was and of the valuation achieved.

So my partner Jeff Fagnan was quite chuffed to see this article come out:

IBM: SOA appliances selling like 'gangbusters'

In October 2005 IBM acquired our portfolio company DataPower.  It looks like they made a wise move.  They made us happy but obviously bought well and are building further value.

Not all acquisitions in the computer industry work as well as the buyers and sellers hope, but IBM's purchase of DataPower's XML hardware accelerators, now re-branded as WebSphere DataPower SOA Appliances, seems to have justified last year's hype, scoring 40 new customer wins in the year's third fiscal quarter.

Jeff and Ron Schreiber, then at Seed Capital Partners, led the first round of fuding and backed Datapower's Eugene Kuznetsov.  After Jeff joined Atlas, he convinced us to re-invest in the company as lead on the Series C, and a good thing we did too !

For your mild amusement of the day, here is the old profile of Eugene on O'Reilly's XML.com:

Eugene Kuznetsov is the founder of DataPower Technology, a stealth-mode startup providing next-generation XML acceleration solutions. He was previously involved in three different optimized Java VM implementations, and led the Java JIT Compiler effort for the Macintosh version of the Microsoft Internet Explorer 4.0. It is not known what he does to relax.

technorati tags:datapower, jefffagnan, eugenekuznetsov, ibm

Miasole - our third cleantech deal

Jeff Andrews (pictured) and Peter Shannon have just completed an investment in a thin film solar cell manufacturer called MiaSolé in what constitutes our third investment in cleantech, after Liliputian (fuel cells) and AEB (electron beams). MiaSolé is a later stage play that brings a disruption in the cost base of manufacturing photovoltaic (PV) panels.  Atlas joins previous backers Kleiner Perkins and VantagePoint Venture Partners.

For context go back to my previous post on the evolution of the venture market; this is "brand extension" for us at Altas Venture.  We have been actively looking and investing in this space for a few years now and seeing more and more opportunities.  And often, the challenges of innovation in solar manufacturing do not look that different from semi's and systems !

Huge Market

In 2005, 1,600 MW of PV modules were produced, at market value of $6.5B.   Another way to look at size: crystalline Silicon (cSi) use for photovoltaics for the first time exceeded use for semiconductor electronics manufacturing.  It's growing fast: the module market is projected to reach $13B with 4,300MW of modules sold by 2010.  This analysis does not account for disruptive breakthroughs in cost which would likely drive additional demand growth, this market being very price elastic.

 
Fantastic team

MiaSolé’s management team comes to the PV industry with roots in thin film manufacturing from the disk drive and optical components industries. The team is led by David Pearce, who has been in the business for 35 years, of which 20 as President or CEO, and was involved in two IPO's (Domain and Miniscribe).  He is working with Chief Scientist Dr Dennis Hollars, a PhD in AstroPhysics with 30 years of experience in thin-film manufacturing  and other strong profiles.

 
Disruptive approach

Current solar technology has respective module cost points of $3.00/W and $2.50/W. Whilst I cannot reveal much about the processes (Jeff has some Irish ancestors who are good are kneebreaking), let's just say that Miasole will come in significantly below these price levels, thanks to the cost advantage created by its low capital equipment cost per unit of product. The cost advantage stems from the use of high volume, high yield, low cost manufacturing processes which the founding team brings from their 20+ years in the disk drive industry.

We will be announcing more investments in the segment soon.
 

 

Atlas exits eDreams for $190M

We are delighted for Javier and the team at eDreams on their very succesful LBO with TA Associates.  This team really came through for us, delivered a good return, and can continue building eDreams into an even bigger success !

technorati tags:edreams, taassociates

3V newest from Atlas and Benchmark

We announced the closing of 3V with our friends at Benchmark.  Christopher Spray and Barry Maloney are the board members for this online payments initiative.

We are backing Kieron Guilfoyle and his team with what is essentially the online payments equivalent of a mobile phone top-up.  Anyone who has done pre-paid top-up should get the concept and will receive a prepaid voucher with a normal VISA number that can be used to purchase online.  It's very simple but also very patented :-).  We have a great network of partners around to enable this product: PermanentTSB, VISA, Alphyra.

Valerie gave us some nice coverage, so she gets juice :-)

technorati tags:3v, benchmark, kieronguilfoyle

Songbird: time to leave the iTunes nest

Rob Lord, Babak Nivi and friends (Pioneers of the Inevitable, dude) hatched next gen music player SongBird.  If you did not feel like downloading the nightly builds, the latest developer version is pretty usable by non XUL Runners ... like me. Try it now.

Songbird is cool because it plays the web as well as your music.  If you like Firefox and Flock and all the openness we have come to expect from the web, you should love SongBird.

<--  Songbird now does open source too

We funded a while ago (discretely) but it somehow came out on VentureBeat today.  Notice how no one does boring PR releases with a dull quote from each venture principal anymore !  Now that's a relief... 

In a world rife with venture capital, funding on its own is not so newsworthy anymore.  In venture capital too, context matters.

 

technorati tags:songbird, jefffagnan, atlasventure, sequoiacapital, nivi

Atlas Venture's Isilon seeks $86M in IPO to reshape storage

Isilon Systems, of which Atlas Venture are the largest shareholder, filed to go public on Friday under the joint tutelage of Morgan Stanley and Merril Lynch. 

Isilon provides clustered storage systems optimised for rich media content.  As arms merchants go it is hard to get better market timing given what is happening in the world of video right now...  MySpace is a customer for example; so is Kodak, to mix the new and the old.

Sujal Patel was "the man with a plan" in this case after his time as Chief Architect of RealNetworks (who owe him SureStream).  He then patented the distributed file system that enables Isilon clustered rich media architecture.  He is a nice and approachable guy who, as one might anticipate, seems scarily smart (I didn't defy him at chess so I cannot confirm the rumours).  In other words, he deserves everything that is happening to him right now !

Atlas Venture led the first $8M round and was joined by Madrona Venture Group, with Greg McAdoo of Sequoia Capital coming in on the second $15M round.  Lehman and Focus Ventures led rounds 3 and 4 (for $15M and $20M respectively).   A further $10M  round was announced recently, meaning that the company has raised just under $70M to date..

[Note: I will post further as the process continues but strictly stale news of course (that's commentary to you) given our involvement in the process.  I recommend this man for some real news.  And please don't ask me any questions, respected members of the press, but rather talk to Jay Wampold, Sr. Director of Marketing Communications, at Isilon.]

technorati tags:atlasventure, isilon, sequoiacapital, sujalpatel