Google Wants to Simplify Things

Story first appeared on Marketwatch.

We’ve all heard this nonsense before from multi-billion dollar companies. They are suddenly going to act like start-ups.

Why do companies do this? Why would they want to act like a start-up? Is it romantic? Sentimental? It is downright foolish.

What company wants to act like a start-up unless they are a start-up?

So how would Google actually go about acting like a start up.? First, make a lot of dumb decisions and work 16 hours a day trying to correct them. That would be one way.

Here’s another: Google needs to also close all the free restaurants they have on campus. Close them. Start-ups don’t have that sort of free food. Maybe some bananas and juices. Employees can bring their own food and store it in a cheap refrigerator. Now you are talking start up.

Note to Larry: Get rid of the jets you guys now own. What start-up in history has a jet fleet? To act like a start-up you are going to have to dump the jets.

Let’s face it. This whole act like a start-up business is insincere rubbish. You cannot act like a start up any way because you are a mature company.

When some chief executive says that he wants his company to act like a start-up, what he is really saying is that he thinks that his employees are lazy and they should work more hours. That’s probably the only part of the start-up ethos he is interested in, or he’d sell the jets and close food services. If you think a division is not pulling its weight, say so. Find the managers and fire them, or at the very least, lecture them.

There is not one person I have seen go to work for Google who has not put on a lot of pounds from all the free food.

And insofar as free food is concerned, we're not talking about a few snack rooms or a normal cafeteria where you’d pay some modest fee for a salad and sandwich. We're talking about multiple massive food courts producing some of the finest corporate food one has ever seen — all you can eat every day, for free.

And there are weird amenities. For example all the syrups in all the soda pop stations — brand names — have been specially formulated for Google so there is no high-fructose corn syrup in any of the sodas.

These are food palaces serving every sort of cuisine. All that is missing are carafes of Bordeaux wine served by slave girls.

So let’s get this act like a start-up idea off the table and do what needs to be done at Google. What needs to be done is for the company to get people enthused about the outstanding ancillary products. And by this, we do not mean the Google+ Facebook competitor.

We're referring to its navigation system, for starters. The Google turn-by-turn navigation system combined with its street-level photos has no peer. If this was sold as a stand-alone product to compete with Tom-Tom, Garmin and Magellan it would probably ruin those companies overnight.

Why someone doesn’t take this software and put it on a 7-inch tablet? It should be sold as a navigation system, because Google is promoting it poorly.

And the thing can navigate a walking tour, a bicycle route and easily re-adjust for detours. If you want to take a scenic route, the device is not constantly telling you to take a U-turn. It assumes you, the driver, know what you are doing. Drive five miles off course? No problem.

Google has a lot of initiatives that would be great little stand-alone operations. If Larry Page wants to think start-up, then perhaps he should spin some of these operations off and into their own facilities. Then these divisions would be acting like real start-ups.

But then again, there goes the free food.


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More Than One Mark Zuckerburg?

First appeared on Mashable

Facebook has threatened to sue Mark Zuckerberg, an Israeli entrepreneur who recently took the social network founder’s name. The new Zuckerberg, born Rotem Guez, legally changed his name Dec. 7.

Zuckerberg II’s website, MarkZuckerbergOfficial.com, states that he first filed a lawsuit against Facebook in January, after the social network refused to give him access to his profile, which it had shut down.

Zuckerberg (all further mentions refer to the Israeli entrepreneur) co-founded Like Store, a social marketing company, which sells companies Likes for their brand pages. The site states (translated), “Are you sad no one’s visiting your Facebook Page? We have a solution! Need 1,000 Likes? We’ll get them for you. Need 5,000 Likes? We’ll get them for you. Need 10,000 Likes? We’ll get them for you.”

In September, Facebook’s law firm Perkins Coie threatened to sue against Zuckerberg, claiming the Like Store violated the social network’s Terms of Service, by selling brands fans. The threat instructed Zuckerberg to shut his company and never return to the social network for any reason.

Zuckerberg officially changed his name Dec. 7. In the below video of his trip to the Interior Ministry to make the switch official, he says he plans to change his family’s names as well. One week later, Facebook again threatened a lawsuit against Zuckerberg’s still existing Like Store. Little did they know, they were threatening someone with the name of their own founder.

Though legally Facebook can, of course, sue someone named Mark Zuckerberg, it makes for quite the funny tale.

Perhaps anticipating the media attention he would receive, Zuckerberg has set up an Internet campaign for his new persona, including a Facebook Page and Twitter account, @iMarkZuckerberg, suggesting that he’s ready to make a splash with his new identity. His Facebook Page includes photos of his new identification card and passport.

Web Start-Up Values Soar

The Wall Street Journal

Investors Bid Up Internet Firms to Levels Reminiscent of the Last Dot-Com Boom 

The technology-heavy Nasdaq Composite Index is relatively flat this year. Yet tech company valuations are rapidly rising in one area: closely held consumer Web firms.

Venture-capital investors and others have been bidding up the valuations of consumer Web start-ups this year, particularly of the firms that show the most user traction. In an echo of the 1990s dot-com boom, some investors also are giving lofty valuations to Web firms that have no revenue and that barely have a product out.

Among them: question-and-answer website Quora Inc. in March raised around $14 million in a financing round that inputs a value for the whole company of about $87.5 million, people familiar with the matter have said. The Palo Alto, Calif., firm didn't publicly launch its service until June and hasn't said how it will make money.

Another company, Blippy Inc., which allows people to share and discuss their purchases online with friends, raised $11 million in a deal valuing the whole company at $46 million earlier this year. In June, mobile-technology firm Foursquare raised $20 million in funding at a company valuation of $95 million, up from a $6 million valuation less than a year earlier, a person familiar with the matter said.

Valuations for closely held companies are typically guesswork. But the strong numbers for consumer Web companies indicate how parts of Silicon Valley's start-up market are bouncing back following the recession. The recovery already started showing up last year, when Twitter Inc. was valued at $1 billion during a round of funding, up from $95 million in mid-2008 when it raised a previous round of funding, according to research firm VentureSource, a unit of Wall Street Journal owner News Corp.

Some investors worry the lofty numbers signal that froth has returned to the Web sector. That can create false hopes for a company's performance, pressuring entrepreneurs and investors to gamble to live up to such expectations. Many investors won't recoup their investments, especially with the stock market having been relatively unreceptive to initial public offerings in recent years.

"Anytime you take an increase in valuation, then you're making an implicit promise that you have to meet and that's what's challenging," said Matt MacInnis, chief executive of Inkling, a San Francisco interactive textbook start-up. Last month, Inkling announced a funding round led by venture firm Sequoia Capital that included a bump-up in valuation to the tens of millions of dollars, said Mr. MacInnis. "Now the onus is on the entrepreneur to knock it out of the park or fail," he said.

The escalating valuations for consumer Web start-ups are reflected in the secondary market, where investors buy and sell the shares of closely held companies such as social-networking company Facebook Inc. On SecondMarket, which operates an exchange where investors can trade the stocks of closely held start-ups, the share prices of six actively traded private companies—including four consumer Web start-ups—rose an average of 39% between January and August, according to the company.

In contrast, the Nasdaq—which includes publicly traded tech behemoths such as Apple Inc. and Intel Corp.—is up just 3% so far this year through Tuesday. "There's a big disconnect between the public market and the private market," said Saar Gur, a venture capitalist at Charles River Ventures and an investor in Blippy.

While hot Web companies garnering high valuations aren't new, the speed with which valuations are jumping has quickened, said Silicon Valley start-up investors. Driven by the Internet's growing scale, Web companies can take off more quickly than before if they gain a toehold with consumers. That leads to valuations soaring more rapidly than in the past as venture capitalists and other investors fight for a piece of the momentum.

Deal-of-the-day site Groupon Inc., for instance, was founded in 2008 and quickly brought in consumers eager to tap its discounts. By April when it received a $135 million investment from Russian investment firm Digital Sky Technologies Ltd. and venture firm Battery Ventures, Groupon was valued at about $1.35 billion.

"Before, people didn't expect growth trajectories to be as fast," said venture capitalist Patricia Nakache of Trinity Ventures. "A lot of consumer Web companies are going from a seed investment and leapfrogging" in valuations.

Some Web entrepreneurs said they now have more power to drive high valuations than in the past. Since Internet firms are relatively cheap to build—all that's needed is several staffers and some computers—many entrepreneurs don't need lots of cash when investors call, said Philip Kaplan, a Blippy founder.

As a result, entrepreneurs may turn down funding until "investors say 'What do we need to do to make this happen,' " he said. "The ball is in our court."

Apple Steps up Startup Pace in Race with Google

Bloomberg

Apple Inc. Chief Executive Officer Steve Jobs is accelerating the rate of acquisitions as his company vies with Google Inc. for mobile technologies and talent.

Apple said it bought two closely held companies last week, mobile-application startup Siri Inc. and semiconductor designer Intrinsity. Those deals came after January’s takeover of mobile- ad network Quattro Wireless and the December buyout of online music service LaLa Inc. Terms weren’t disclosed.

The timing of those purchases suggests Apple may be feeling pressure from Google, which has announced nine takeovers this year as it moves into new markets including mobile devices and the software and advertising that run on them. Apple got a new rival in the growing smartphone market last week when Hewlett- Packard Co. struck a deal to buy Palm Inc. for $1.2 billion.

“The pace has really picked up, there seems to be a strategic shift,” said Charlie Wolf, an analyst with Needham & Co. in New York. “It looks like there’s an acquisition frenzy going on between Google and Apple in the sense that there’s an increasing urgency on Apple’s part to stay even if not ahead of Google in the phone space and apps space.”

Apple, the maker of the iPhone, now counts Google and its Android operating system for smartphones as a rival in the rapidly growing market for mobile devices, software and ads. Worldwide smartphone shipments will jump 36 percent to 247 million units this year, researcher ISuppli Corp. estimates. The U.S. market leader is BlackBerry maker Research In Motion Ltd. with a 42 percent share, according to ComScore Inc.

Decide Now
With more than $23.1 billion in cash, Apple has plenty of money to keep purchasing small startups. To avoid publicity and possible rival bids, Apple in some cases has offered a target only a three-hour period in which to accept the terms of a sale, according to one executive with knowledge of the situation.      Patent filings may provide clues to potential targets, said Will Stofega, program manager at researcher IDC in Framingham, Massachusetts. Apple recently sought patent protection for mobile purchasing and touch-screen technology, he said.     A would-be acquisition in wireless payments is Vivotech Inc., a Santa Clara, California-based maker of technology that lets users wave their phone by a cash register to pay for items, Stofega said. Apple rival Nokia Oyj is an investor in a payment service called Obopay Inc. Vivotech CEO Michael Mullagh didn’t immediately respond to a request for comment.

‘Smaller’ Targets

Apple declined to comment on potential targets or its acquisition strategy, said Steve Dowling, a spokesman for the Cupertino, California-based company.

“Apple buys smaller technology companies from time to time, and we generally do not comment on our purpose or plans,” he said. Since returning to Apple as CEO in 1997, Jobs has made 13 acquisitions, according to Bloomberg data. Of those, five happened in the past seven months alone.

Apple rose $5.26 to $266.35 at 4 p.m. in Nasdaq Stock Market trading. The shares have jumped 26 percent this year. Google gained $4.91 to $530.60 and has declined 14 percent this year.

Another reason behind Apple’s spending spree may be that it wants to keep certain startups out of Google’s hands, Needham’s Wolf said, recalling that Apple and Google’s sparred last year over mobile-ad market leader AdMob Inc.

Jobs, speaking at a company event last month, said Apple tried to buy AdMob before Google came in and “snatched them up because they didn’t want us to have them.” Google’s $750 million takeover of AdMob is pending government approval.

‘Land Grab’

“They learned a good lesson with AdMob” because they had to settle for “second-fiddle Quattro,” said Brian Marshall, an analyst with Broadpoint AmTech in San Francisco. “They’ve got the resources. They have the team to do acquisitions now. It’s a technology land grab right now.”

Google, owner of the world’s most popular search engine, also is more acquisitive after pulling back during the financial crisis last year. Last week, the Mountain View, California-based company agreed to buy LabPixies, an Israeli developer of mini- applications such as games and calendars that Internet users can post on their personal pages. Over the weekend, Google announced the purchase of Bump Technologies Inc., a maker of 3-D software.

As for competing with Apple, Google won’t discuss other companies’ acquisition strategies, spokesman Andrew Pederson said in an e-mailed statement.

Last year, Apple hired a Goldman Sachs Group Inc. investment banker, Adrian Perica, to help the company develop deals, people close to the company said earlier this year. They say they believe Perica is the first dedicated M&A specialist on Jobs’s staff.

Risk Aversion

Even with the new attention to M&A, Jobs, 55, likely will maintain his strategy of focusing on smaller companies rather than taking on the risks of integrating large ones into Apple’s culture, Wolf said.

Counting long-term investments that the company can “liquidate in a day,” Apple had $41.7 billion in cash at the end of the last quarter, Broadpoint’s Marshall said. In comparison, Google had about $26.5 billion, he said.

Apple finance chief Peter Oppenheimer, speaking this month on a call with analysts, said the company’s investment priority continues to be “preservation of capital, which has served us well in the current environment.”

Investors said they’re happy to see Apple put some of its cash to use.

“I want them to reinvest their cash in the business,” said Michael Obuchowski, managing director at First Empire Asset Management Inc. in Hauppauge, New York, which oversees $3.8 billion in assets including Apple shares. “They are sitting on more than $30 billion in cash that is earning close to nothing.”

Google's Angels Tweet and Dine on Tofu Wraps as They Bankroll 200 Startups
Bloomberg News

During the holidays last year, Aydin Senkut [Photo Right] and Elad Gil gathered 50 of their friends at a health- food restaurant in Palo Alto, California. Over turkey burgers and tofu wraps, they talked about technology trends and how to get rich. Or, more precisely, how to get richer.

Senkut, Gil and their dining circle are alumni of Google Inc. Since going public six years ago, Mountain View, California-based Google has generated more than $170 billion for its employees and investors. Many of the millionaires the company has produced are active angel investors, attempting to add another zero to their bank accounts and another company to their list of accomplishments, Bloomberg BusinessWeek reports in the March 8 issue. “I feel like we have such a strong network, it’s almost like we’ve recreated Google outside of the Google walls,” says Andrea Zurek, a 39-year-old backer of 26 startups and, until 2007, regional sales manager at Google.

More than 40 ex-Googlers have invested in about 200 fledgling companies since 2005, according to the research firm YouNoodle Inc. and reporting by Bloomberg BusinessWeek. At least a half-dozen current Google executives, including Chief Executive Officer Eric Schmidt and co-founders Larry Page and Sergey Brin, are also financing young companies. YouNoodle defines people as Google angels if they’re investing their own money, investing out of a firm that uses only their money, or investing out of a firm in which a majority of partners are ex- Googlers.

‘Very Risky Deals’

Numerous angel-watchers say the Google group has more in common than just pedigree. The alumni are getting into “very risky deals that can be extremely rewarding,” says Jeff Clavier, a venture capitalist who founded Palo Alto-based SoftTech VC in 2004. “They have been very active as a group over the past two to three years.”

Companies backed by Googlers include Twitter Inc., Tesla Motors Inc., and gamemaker Tapulous Inc. “As Google matures, its alums are continuing to have a huge impact on Silicon Valley and the tech industry,” says Ron Conway, one of the Valley’s most active angel investors, who has backed 190 companies, including Google, Facebook Inc. and Twitter.

One reason for the Google angels’ success, say entrepreneurs, is that they have more to offer startups than just money. Bart Decrem, a 42-year-old Stanford University law grad, says he turned to the Google network when he was starting Palo Alto-based Tapulous in 2008. The company’s Tap Tap Revenge game requires players to tap on-screen balls to the beat of a song -- not exactly a sure thing of an idea.

Tap Tap

Decrem says he thought the game might become a substantial business by selling it on Apple Inc.’s iPhone. He says he raised $500,000 from a dozen angels, including Senkut and Zurek, who advised on strategy, connected the company with new partners in Asia, and helped it explore platforms for mobile phones that use Google’s Android software. Today, Tap Tap games have been downloaded more than 25 million times and Tapulous is profitable, says Decrem, without providing specifics about the company’s finances.

Google’s angels dabble in a wide variety of businesses. Zurek says she has money in a premium vodka maker and a South Korean frozen yogurt emporium. Yet the angels tend to concentrate their cash in what they know -- search technology, mobile computing and the consumer Internet. Twitter, backed by former Google executive Chris Sacca, is pioneering a new field of real-time communications. The online personal-finance service Mint.com, with money from Senkut, was bought by Intuit Inc. last year for $170 million. Search provider Powerset, backed by Senkut, was acquired by Microsoft Corp. in 2008, and its technology became a part of the Bing search engine, according to a post on a Microsoft blog.

Lamborghini

Senkut, a 40-year-old native of Turkey, has made investments of between $25,000 and $150,000 in 65 startups, by YouNoodle’s reckoning. Senkut joined the company in 1999 as a product manager. He left in 2005 and promptly took his mother to Paris for her 60th birthday -- and treated himself to a Lamborghini.

With that out of his system, he set about becoming a full- time angel. Eleven of the companies he has invested in have been acquired by Google, AT&T Inc. and Microsoft, according to his Web site.

Senkut also organizes two regular networking events for fellow alums, one for angels and entrepreneurs, and another for all ex-employees, at spots such as the Calafia Café in Palo Alto, owned by Google’s first in-house chef.

Twitter

Senkut is raising money for his firm, Felicis Ventures LLC, according to two angel investors, and declined to comment on his investments for this story. (Securities laws prevent the public solicitation of funds.) In an interview last October, after he had sold seven of his companies, Senkut said his investments had produced double-digit annualized returns and that he was being pitched new business ideas several times a day.

If Senkut is the established star among the Google angels, Chris Sacca is the up-and-comer. The 34-year-old Georgetown University law grad joined Google in 2003 and left in 2007. Of the 31 startups he says he’s backed, his biggest hit is Twitter, in which he invested $50,000 just as it was getting started in 2007. Sean Garrett, a Twitter spokesman, declined to comment on the company’s finances.

Working out of a 3,000-square-foot home in Truckee, California, a ski town near Lake Tahoe, Sacca hikes and snowshoes most mornings before breakfast and commutes to San Francisco for three days every two weeks. It’s an unconventional way to supervise investments -- Sacca has an unconventional approach to investing, period.

‘No-Brainer’

One Friday night in December 2008, he posted a message on Twitter asking if any startups were working late.

“We tweeted back, ‘We’re FanBridge and we work hard every Friday night,’” says Spencer Richardson, its 25-year-old co- founder. New York-based FanBridge makes software that helps musicians manage marketing and relationships with their fans.

A few weeks later, Sacca flew to New York and met with the company’s founders. “They had day jobs and built this site that had 20 million users, adding 100,000 users a day,” says Sacca. “It was a no-brainer.”

Sacca invested $50,000 and pulled in several hundred thousand dollars from other angels. Last year, FanBridge’s founders say they considered offering their products to authors, comedians and other artists; Sacca advised them to stay focused on the music industry. Today, FanBridge is profitable and used by 55 million music fans, according to the company. “The feedback from him was, ‘Start by being the best at something, then branch out,’” says Richardson.

Breakout Companies

The Google angels may have several more breakout companies developing in their portfolios. Sacca has invested in San Francisco-based Lookout, a developer of security software for mobile phones. According to YouNoodle, several ex-Googlers and current Vice President Marissa Mayer are behind San Francisco- based Square Inc., which aims to displace credit-card swiping machines with a cheaper payment system that works through smartphones. And current Google engineer Joshua Schachter helped finance Foursquare, a New York-based mobile-phone service that lets friends share tips on local hotspots and is being used more than a million times a week, according to YouNoodle.

“There is an ecosystem for capital in the Valley, and Google is a part of it,” says Schachter.

Paul Graham, who co-founded the Mountain View-based startup incubator Y Combinator, says the tech industry has just begun to appreciate that Google’s wealthy ex-employees may have not just a single innovative second act, but potentially hundreds of them. “When people write the history of Silicon Valley 20 years from now,” says Graham, “the true impact of Google could come more from all the things that Google people go on to do after they leave Google.”