The Dreaded Call

Be Happy

Last night I called one of my favorite entrepreneurs.

And about ten seconds into the call, I could hear him crying.

At that point, I knew the Company we had invested in, that had pivoted with hopes of rising like a phoenix from the ashes, was actually much more likely to crash and burn.

Although we had spent the last six months trying to recapitalize and refocus the business after losing the co-founder, it became clear it wasn’t going to work.   It was now time to switch from being an investor to being his friend.

Money comes and goes, but the relationships with my entrepreneurs should last a lifetime.

So I immediately realized what he really needed was support, not beratement. He already felt horrible for failing and losing people’s money.

And I am a VC. We expect to lose money trying to innovate and build great companies.

Thus, we…

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The Dreaded Call

Benchmarking Atlassian’s S-1 – How 7 Key SaaS Metrics Stack Up

Be Happy

Tomasz Tunguz wrote a great post recently about the Australian software maker, Atlassian. It is a fantastic example of an Australian flywheel SaaS company that has experienced tremendous growth, as seen from its S-1.

Tomasz’ post can be viewed in its original form here.

Founded in 2002, the Australian software maker Atlassian is an exceptional company in many regards. But foremost, Atlassian is one of the best examples of flywheel SaaS companies yet. Atlassian counts 1600 employees and sells five products JIRA (bug tracking software), Confluence (project management), HipChat (internal chat/collaboration), BitBucket (code repository) and JIRA Service Desk (help desk software. Yesterday, Atlassian filed their F-1, a document preceding their IPO, and revealed how efficient a software company they have built. In 2015, the company will generate $320M in revenue.

The chart above details the revenue growth of the business compared to the median of the 50+ publicly traded SaaS…

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Benchmarking Atlassian’s S-1 – How 7 Key SaaS Metrics Stack Up

The Ugly Unicorn: Greed

Be Happy

There has been much discussion these days about the changing landscape of early stage investing and how it impacts valuations and exits, so I wanted to share a brief story I heard yesterday from an investment banker.

As a pre-cursor to the story, I want to re-iterate my own thoughts on generating returns for LPs.  As we all know, the early stage asset class is defined by making a series of investments, seeing most of those investments fail, and then having one or two exceptional companies generate most, if not all of the returns.

At Scout, we’ve realized a few things that help us outperform the industry:

(1) The fewer complete failures we have, the better the overall performance of our fund.  This means that when our companies experience challenges or fail to deliver the product or revenue to become a great company, we try to figure out how to find…

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The Ugly Unicorn: Greed

Will This Female Founder Be The Next Disney?

This article was written by Kelly Hoey via Inc. It can be viewed in its original form here

Stories Matter: Beyond a purple female panda as the lead character, Pan the Fearless Beribolt is not like most kids’ stories. It was created by serial entrepreneur, Suzanne Xie, an immigrant from China who spent the first years of her life searching for her parents. She found them at age four, when they could finally afford to bring her to America.

Suzanne Xie sits at the dream intersection of creativity and technology. Suzanne is the founder of Hullabalu, a children’s media company reinventing storytelling. Hullabalu launched in 2013, and created “The Adventures of Pan,” the only original, episodic, interactive story series made especially for iPad. The newest book in the Pan Adventure Series (Book 5 The Shadow Stone) continues the perilous adventure for Pan, Chase and Locke as they must find a way to break out of prison, prevent an ancient evil from coming back to power, and locate Pan’s parents, all while avoiding the watchful eye of the villainous General Garin….

But let’s not get head of where our hero entrepreneur’s story began. Art is more than imitating life in each installment of Hullabalu’s “The Adventures of Pan”–and our digital hero’s journey is very much the startup founder’s life. Pan, the lead character is after all, Suzanne.

I know Suzanne having met her in the summer of 2012 when she pitched me the original idea for Hullabalu (more offline characters less immersive tech). It was Suzanne’s story, vision and experience as a startup founder which caught my eye (and angel investment). Suzanne’s personal story is very much the American Dream (immigrant, serial founder and a female founder) infuses each episode of Pan. More importantly for the storyline, it is the driving force behind Hullabalu’s big storytelling vision. Suzanne was born in 1984 in China (Jiangxi Province). When she was just over a year old, her parents immigrated to the United States. Suzanne remained behind in China with her grandparents who raised her until she was almost 5 years-old–the age when her parents could finally afford to bring her to America to live with them. The incredible sacrifices her parents made to create a better life for her is part of Suzanne’s entrepreneur DNA. She frequently reflects on their bravery, sacrifice, and incredible work ethic as she builds Hullabalu (her third startup) and carefully crafts each storyline. Every episode of Pan’s epic adventures distills the core values of leading with integrity into a fantastical and enriching story that aims to guide kids toward a high-achieving life path.

“Pan isn’t perfect. She makes mistakes, sometimes really silly ones, and learns from them. All the trouble Pan causes make her a stronger character in the end. Stories and parables have been used for centuries to entertain and educate kids and adults alike, and Pan is here to remind us that learning is a life-long process best experienced through trial and error, and action.”–Suzanne Xie

Redefining The Hero Of The Hero’s Journey

Every generation has been defined by a new medium. Every new medium has been defined by a storyteller. Today’s medium is mobile and Suzanne is determined not only to be that next leader on tablet–but she’s determined to have a strong female character at the center of the story. Pan is the only female heroine on tablet leading a team of both male and female characters. When developing the Pan series, Suzanne only found sparse examples of female heroines in stories for children, and those heroines were girls leading girls (Powerpuff Girls, My Little Pony) or lone female heroines (Dora, Olivia, etc.). Why couldn’t a girl (who happens to be a purple panda) lead an adventure through a magical world, plus cross cultural lines to make friends with warrior bunnies and find her inner courage along the way?

Suzanne further infuses each storyline with timeless lessons (courage, perseverance, and integrity) drawn from leadership institutions she admires, such as Harvard Business School, Boy & Girl Scouts and the U.S. Army.

Stories Powered by Technology…and Touch

Great storytelling may set you apart, but great technology gets you ahead. Suzanne and her team at Hullabalu are not just focused on the storyline: they are creating an entirely new genre of immersive, responsive media for a digital-first generation born into a world of tablets versus Saturday morning cartoons. Suzanne firmly believes it is the future of stories.

“We started Hullabalu to create the most engaging and enriching stories in the world. It was important to us to have strong heroes that kids could learn from, as stories shape children from an early age. With this in mind, we set out to create an entirely new genre of immersive, responsive media for a generation born into a digital world. The burgeoning medium of interactive stories is important. It’s the first step to inspiring kids to explore the world around them and learn about themselves along the way.”–Suzanne Xie

So Hullabalu is at its core, a technology company. The startup’s ability to create engaging stories depends as equally on its own proprietary technology as it does on the imagination behind Pan’s animated world. Suzanne and her team have built an animation infrastructure called Pegasus, which lets them build each new story in a fraction of the time it would take traditional animation studios (Disney himself would swoon). Layered on top of Pegasus is a data engine that makes Hullabalu’s content more engaging over time.

Developing Leadership is a Life-long Process

Suzanne learned at a young age the meaning of the American dream. Now with her third startup venture, she’s on a quest to translate those leadership values into each mobile adventure she creates. While achievement for Pan is a necessity for survival, Suzanne’s goal is for each story to inspire kids to reach for success and to do so with integrity.

Will a purple panda change the world? Suzanne hopes so. Pan is imperfect and courageous. She’s a flawed, growing leader who is intent on self-improvement and determined to succeed (spoiler alert: Pan’s challenges make her a stronger character). Throughout Pan’s journey, Suzanne and her creative team remind us that learning is a life-long process best experienced through trial and error, and interactive technology. As Pan’s popularity grows globally (Hullabalu’s first stories in the iTunes store have hit #1 in books in 38 countries including the United States, China, India and Saudi Arabia, and all those downloads equate to children all over the world have spending over 70 years engaging with Pan and her adventures), Suzanne and her team at Hullabalu teach the startup community another very valuable lesson: female founders can be successful startup leaders too.

Will This Female Founder Be The Next Disney?

Voyat, The CRM Loyalty Platform For Hotels, Sees 500K New Guest Profiles Per Month (via TechCrunch)

This article is was originally posted on TechCrunch and can be viewed here.

Voyat, the hotel CRM tool revealed by Ben Habbel in July of last year, is now seeing more than 500,000 new guest profiles each month, with operations in 10 different countries across the globe.

The company provides a software tool that hooks into reservation systems and gives hotels insight into individual guests.

For example, Voyat’s V-CRM product would be able to tell the hotel a number of details about an arriving guest, like the number of times they’ve stayed there and past social mentions (both good and bad) about that hotel. Voyat Direct, the company’s other product, would let the hotel offer that guest various perks or discounts.

The idea behind it comes from Habbel’s own frustration as a frequent traveler, often visiting the same hotels repeatedly only to be asked if this was his first visit at check-in. Meanwhile, the hotel industry remains in flux with heavy competition from Airbnb and high commission costs from online travel agencies like Orbitz, Expedia and Priceline.

Hotels have tried to fight back against online travel agencies through the development of their own apps, offering customers perks and various new controls over their visit.

But Habbel says Voyat’s software is giving hotel’s 2.3x the conversion rate for bookings through their own web sites as they were before using the software.

voyat2

Voyat V-CRM, which lets guests sign up with their own profiles (linked to social networks) to receive loyalty rewards, is seeing 500,000 new sign-ups each month.

Voyat came out of stealth last summer with $1.8 million in seed funding.

 

Voyat, The CRM Loyalty Platform For Hotels, Sees 500K New Guest Profiles Per Month (via TechCrunch)

With Epoch, Adcade Makes It Easy For Designers And Developers To Build Cross-Platform, HTML5 Ads (Via TechCrunch)

This post was originally posted on TechCrunch here.

adcade

People have been talking about the death for Flash for years and years, and now it seems like the nails are finally being driven into the coffin, particularly in the online ad industry.

But Rob Cromer, co-founder and CEO of New York City startup Adcade, said the shift to the HTML5 format won’t be easy for everyone. There are teams of designers and developers who’ve spent years working with Flash products and workflows, and you can’t expect all of them to become proficient in HTML5 immediately.

That’s why Adcade is launching a new version of its Epoch ad builder, which is supposed to allow designers and developers to create HTML5 ads using familiar tools.

We’ve written previously about Adcade’s Adscript framework for building HTML5 ads. Adcade has been using Adscript to create ads for its clients, but with Epoch, the startup is moving toward a self-serve model, combining a straightforward framework for developers with an interface for designers to create ads without any coding at all.

“We said, all right, we’ve got this amazing tech, so how can we create an interface to turn this into a self-service model and take the political complications of the ad industry out of it?” Cromer said.

As far as “political complications” go, there are other WYSIWYG ad builders, including Celtra and Flite, but Cromer noted that they’re usually tied to a specific company’s ad server. Adcade, on the other hand, is focused entirely on the ad builder, resulting in ads that can run on any ad platform, including DoubleClick, Sizmek and Atlas.

Cromer and his co-founder/CTO Buzz Wiggins demonstrated Epoch for me, taking digital storyboard from Photoshop and turning it into ad in just a couple of minutes. Since Adcade’s LightSpeed technology exports a file from Photoshop with working layers, they pretty much had a functional ad from the start. However, they also quickly added animation effects in both the drag-and-drop view, and then in the code view. And a live preview showed them how their ad would look on multiple devices as they made their changes.

I don’t build a ton of ads myself, but the demo seemed to live up to Cromer’s claims of simplicity. Still, it felt a little old-fashion to be talking so much about display and banner ads, particularly given the current excitement about native ads and the worries about ad blocking.

“A massive, multi-billion dollar industry not going to collapse overnight because of ad blockers,” Cromer said. Instead, it’s going to “force us to ask the questions we should be asking anyway,” like figuring out the kinds of ads that consumers won’t mind seeing. Epoch can be a part of that solution, he said, because it offers an “extensible platform” that ad agencies that experiment with.

“I think traditional banner advertising is always going to have a have a place,” he added. “It’s a fast way for people to get their message across at scale.”

Epoch is available for $99 per user per month. Cromer said Adcade intentionally set the price point low so that it becomes a tool that’s used across the industry: “We want the entire ecosystem to come into it.”

TechCrunch readers who sign up for Epoch with the promo code “TECHCRUNCH” will get 25 percent off their first month.

With Epoch, Adcade Makes It Easy For Designers And Developers To Build Cross-Platform, HTML5 Ads (Via TechCrunch)

WHAT I’VE LEARNED FROM BEING THERE FOR MY ENTREPRENEURS

This post was written by Brad Harrison

Last night, I had two great meetings scheduled back-to-back.

The first meeting was set up by an entrepreneur who I’ve known for about seven years.  I’ve been actively mentoring him to include recommending jobs that I thought would further develop his potential.  He asked me to meet with another entrepreneur whom he thought might be a perfect fit for one of our portfolio companies.  As he suspected, she is awesome, smart, articulate and happens to be extremely passionate about one area where we have both an investment and the potential opportunity for her to play a major role.

The second meeting was with a CEO of one of our portfolio companies where I am also on the board. Because I am involved in multiple ways, we spend a lot of time evaluating different strategic initiatives to grow the business. The reason for this meeting was to discuss an initiative that we both thought would be great for the business, but we had a disagreement on the execution strategy. I was upset because I thought he had initially cut me out of the process and was now asking me and my team to help him on certain things. These are things that would have never been an issue if we had executed the plan more inline with my original thinking. Turns out, there was a breakdown in communication and if we had simply had another conversation about the issue, we probably could have found a solution that worked better for both of us. I still love him, but it’s always good to have open and frank conversations to clear the air.

What I didn’t expect was the overlap between these two entrepreneurs last night. It provided an interesting environment where the entrepreneurs were talking about the value that we create as investors, but in very different contexts. Being in this position and industry, I have seen just about every roadblock that start-ups and growing companies encounter and most importantly, how to get past them. There were a couple of thoughts and insights that I wanted to share with you:

(1) If someone isn’t a fit either with work ethic or company culture, you need to make a change as soon as possible.  Most entrepreneurs really struggle when filling key positions early in their company’s evolution- as they should.  So the thought of spending six months to recruit a VP of Engineering, COO or Head of Marketing, and then realizing two weeks into the relationship that you made a mistake, is very emotionally taxing and terrible for morale. But that’s where we come in – our CEO said that pushing him and his co-founder to fire someone had totally changed the morale and company culture for the better and removed a huge weight from the founders already stressful lives.

(2) We all make mistakes, so make sure you discuss your mistakes to ensure they doesn’t happen again.  Being an entrepreneur often requires you to make decisions about things where you may have little or no experience. While we try and always make ourselves available as a sounding board for our entrepreneurs, inevitably they are going to make some decisions without any input. And in some cases, these decisions might not be the right decision for the business. Don’t linger on the mistake, move on and focus on being better next time.

(3) Building an awesome company should be fun. As we’ve discussed in the past, the level of stress that most entrepreneurs feel can be overwhelming, especially when you’ve raised money from friends and family. But it’s important to remember that you can’t perform at your best if you are constantly stressed, yelling at your team, or trying to do everything by yourself. Great companies are born out of great leaders – so spend time developing a positive and healthy company culture with regular team activities outside of the office.

As always, I hope this helps.

WHAT I’VE LEARNED FROM BEING THERE FOR MY ENTREPRENEURS