Last month, Kara Swisher reported that Schultz and Accel Partners’ Kevin Efrusy were suddenly stepping down from the Groupon board.

Schultz’s departure was effective immediately, while Efrusy will not be standing for reelection at the company’s annual meeting in June.

In the interview on CNBC, Schultz said, “I only committed to one year. It just so happens that my exit was timed with the problem they had last quarter, and no one should read anything into that.”

When asked whether the company has enough adult supervision, he added: “I have confidence in the board and Andrew, and that’s all I have to say at this time.”

Groupon’s stock has continued a downward spiral after it revised its fourth-quarter results to account for higher than expected returns during the holiday period. Today, the stock is down 1.3 percent, or 13 cents, to trade at $9.94 a share.

At that price, it is worth half as much as at the time of its initial public offering.

On the same day that Schultz and Efrusy announced their departures, Groupon said it planned to appoint both Daniel Henry, CFO of American Express, and Deloitte Vice Chairman Robert Bass. Henry joins immediately, in Schultz’s place.

Large private equity firm Silver Lake is buying a large stake in powerful Hollywood talent agency William Morris Endeavor Entertainment, which is being described as a way to turbocharge its digital efforts.

While the pair would not disclose any financial details of the deal, which they are calling a “strategic partnership,” sources said Silver Lake is acquiring 31 percent of WME.

“Over the years, we have been brick-building, as we have been doing more and more digitally,” said Patrick Whitesell, co-CEO of WME with Ari Emanuel, in an interview today. “But the opportunities are so vast, there is a need for more capital to do more.”

Whitesell and Emanuel said they had been considering a range of investors, especially among media entities, but that they wanted to work with Silver Lake since it had more digital experience as an active investor in technology.

Skype, for example, was the driver of the sale of Internet telephony giant Skype to Microsoft for $8.5 billion, while WME reps stars such as Matt Damon and Hugh Jackman, among others.

“In addition to capital, we really wanted a partner that to help us build it out that had more technology expertise,” said Emanuel. “We are good with brands and creative and talent, but there are many more Silicon Valley opportunities.”

In fact, WME has long tried to up its digital portfolio to respond to the needs of its clients and the changing nature of entertainment distribution as consumer Internet use has exploded. That’s included a digital advertising effort, as well as one in online gaming.

Silver Lake, which has most recently looked at investing in Yahoo, it was a chance to get closer to a trove of premium entertainment content.

“You have two forces at play, ubiquitous distribution and four billion people connected,” said Silver Lake’s Egon Durban. “As that distribution has been commoditized, the only way to differentiate is through A-plus content.”

Along with the core investment, WME and Silver Lake said they will also be considering other possible deals together as they move forward.

“There is nothing we like more than handing our best partners more money,” said Durban, who will join WME executive committee and also help create a technology advisory counsel at the firm.

Calling Marc Andreessen! Actually, in an interesting factoid, it was the well-known tech investor and entrepreneur who introduced Durban to Emanuel.

But this movie has been shown before and is not the first Hollywood-tech hookup to happen. A variety of efforts have waxed and waned over the years — most of which have largely been underwhelming.

Last year, for example, Accel Partners invested $40 million in Legendary Pictures and, back in 2008, Accel, the then William Morris Agency and AT&T formed an investment consortium to focus on Southern California start-ups.

Most closely related was the 2010 deal, in which TPG Capital took a 35 percent stake in Creative Artists Agency.

Here is the official press release on the Silver Lake-WME deal:

WME Press Release_5 02 12_FINAL

Spencer Platt | Getty Images News

According to sources close to the situation, Starbucks Chairman and CEO Howard Schultz and Accel Partners’ Kevin Efrusy will be stepping down from the board of Groupon.

Schultz’s departure will be effective today, but Efrusy — who was critical to the initial funding around the Chicago-based daily deals site — will not be standing for re-election at the company’s annual meeting in June.

The departures are voluntary, but sources said the pair will be replaced by two new directors with significantly more fiscal oversight experience, whom one source characterized as “accounting types.”

(Update: Groupon just posted a press release noting the board departures, with the names of the new board pencil pushers: Daniel Henry, CFO of American Express, and Deloitte Vice Chairman Robert Bass. Henry joins immediately in Schultz’s place. Full press release below.)

It is a move that is critical, given Groupon’s recent series of missteps around its financial reporting that have hurt both its reputation and, more importantly, its stock.

Interestingly, several sources noted that Schultz almost left the board right before Groupon’s public offering last fall, after several ongoing disputes with its management, but stayed on so as not to scuttle its IPO.

The board of the company has not involved itself as prominently in the accounting messes at the company, but it appears as if they will begin to now.

It must, given Groupon shares have been trading at a low of $11. Its stock has dipped to $10.98 today.

As Tricia Duryee wrote recently about the fall:

At that price, it is now worth just over $7 billion, down 57 percent since the company went public last November and well off the more than $10 billion it was valued at as tech’s hottest start-up of 2011.

Ironically, Groupon’s current market valuation is actually not much more than the $6 billion offered for it by search giant Google in late 2010.

The fall of Groupon has been swift, from the honorific of being the fastest-growing company ever to one that cannot keep control of that runaway growth.

That’s perhaps no surprise.

Perhaps most significantly, Groupon went public in just four years, delivering the biggest tech IPO since Google.

The quicksilver move was typical for it. In just two years’ time, the company ballooned from 37 employees to 9,625 and from serving five markets in the U.S. to 175 in North America alone. And that’s leaving out massive expansion abroad. In the past year, Groupon has acquired roughly 17 companies, including many international copycats.

The company also has entered many new segments, expanding from selling lower-priced and simpler deals on restaurants and spas to more complex and pricey arenas, including travel, physical goods and luxury items.

But Groupon is now learning that its original business does not work across just any segment, especially to more discerning customers of its higher-level and more expensive offerings.

In fact, it was those newer and potentially more lucrative markets that forced the company recently to revise the company’s fourth-quarter report after returns skyrocketed on luxury items, such as Lasik eye surgery.

The problems forced Groupon to lower revenue in the period by $14.3 million and net income by $22.6 million. It is now reporting a wider net loss of $64.9 million on revenue of $492 million, pushing it further away from its goal of profitability.

The company also disclosed at the time that independent auditors had noted “material weakness” in its financial controls. In addition, The Wall Street Journal reported that the Securities and Exchange Commission was examining Groupon’s revision. 

With many companies, investors might have shrugged off such accounting issues, but the impact on the stock has been greater since they are only the latest in a string of similar mistakes at Groupon.

In its pre-IPO period, for example, Groupon was forced to restate revenues after counting both its portion of the revenue and the revenue that goes to the merchant together. It also had to dump a controversial accounting metric that made the company look more profitable than it was, because it did not include important costs, such as critical online marketing expenses to attract new customers.

Those came after the company retracted a statement by Eric Lefkofsky, Groupon’s co-founder and executive chairman, who told Bloomberg in an interview that Groupon would be “wildly profitable.”

At least the wild part was accurate.

Much of the blame for these missteps by Wall Street is being aimed at CEO and co-founder Andrew Mason, the iconoclastic 31-year-old entrepreneur who is largely responsible for defining the company’s culture, as well as Jason Child and Joe Del Preto, the chief financial and accounting officers, respectively.

Child joined the company in December 2010, coming from Amazon, where he held several roles over a 10-year period — including VP of finance, international, and director of investors relations. Prior to joining Amazon, he worked at Arthur Andersen as a certified public accountant.

Del Preto has been Groupon’s chief accounting officer for the past year and, before that, he was the company’s global controller for three months. Before Groupon, he was controller and VP of finance at Echo Global Logistics and also served as controller at InnerWorkings, the same company where Mason was a computer programmer in his early career.

Mason, of course, is the best known and the person most responsible for establishing the company’s whimsical culture and managing — or mismanaging, depending on how you look at it — Groupon’s hard-charging growth.

It will also be up to him to turn it all around, as the company sinks in both value and investor regard. Since the restatement, Mason has said little about how he intends to do that. In February, when Mason concluded Groupon’s first-ever earnings call, he said: “Thanks, guys, this was a lot of fun, and I look forward to many more of these.”

It’s not clear fun will be on the agenda at his next outing on Groupon’s first-quarter call in mid-May.

Here is the official press release from Groupon on the board changes:

Groupon Appoints Two Directors to Board Daniel Henry, CFO of American Express, and Robert Bass, Vice Chair of Deloitte

CHICAGO — (BUSINESS WIRE) — Groupon, Inc (http://www.groupon.com) (NASDAQ:GRPN) today announced that Daniel Henry, the chief financial officer of American Express Company and Robert Bass, a vice chairman of Deloitte LLP will join its Board of Directors. Both will serve on the Audit Committee with Audit Chair, Ted Leonsis. Daniel Henry was appointed to the Board on April 26, replacing Howard Schultz, who has stepped down from the Board. Robert Bass will stand for election at the annual stockholder meeting to be held on June 19 following his retirement from Deloitte, replacing Kevin Efrusy, who will not stand for reelection at that time. “With their deep financial, accounting and operational experience, Dan and Bob will provide invaluable expertise to the Board going forward,” said Eric Lefkofsky, Groupon Chairman.

Daniel Henry, 62, has been the Chief Financial Officer of American Express Company since October 2007. Henry is responsible for leading American Express Company’s finance organization and representing American Express to investors, lenders and rating agencies. He has also served as Executive Vice President and Chief Financial Officer of U.S. Consumer, Small Business and Merchant Services and joined American Express as Comptroller in 1990. Prior to joining American Express, Henry was a partner with Ernst & Young.

Robert Bass, 62, has been a vice chairman of Deloitte LLP since 2006, and a partner in Deloitte since 1982. He will retire from Deloitte on June 2, 2012. Bass has specialized in e-commerce, mergers and acquisitions and SEC filings. At Deloitte, Bass is responsible for all services provided to Forstmann Little and its portfolio companies and is the advisory partner for Blackstone, DIRECTV, McKesson, IMG and CSC. He has also previously been the advisory partner for priceline.com, RR Donnelley, Automatic Data Processing, Community Health Systems and Avis Budget. He is a member of the American Institute of Certified Public Accountants and the New York and Connecticut State Societies of Certified Public Accountants.

“I’m thrilled to have been a part of Groupon’s development,” said Kevin Efrusy. “The Company is well on its way to becoming the operating system for all local commerce.”

“Howard and Kevin helped guide us on our journey to becoming a public company and I want to thank them and acknowledge their contributions,” said Groupon CEO Andrew Mason.

“During my tenure on the Board, I was impressed by the game-changing opportunities that Groupon has delivered for both merchants and customers on a global scale,” said Howard Schultz. “Groupon has a strong sense of mission and purpose, and as I move on to focus on my other time commitments, I wish them the very best.”

There’s an interesting new fundamental thought emerging among computer security companies. The logic goes like this: First, your digital assets are going to be attacked. Second, no matter what preparations you make to defend those assets, a determined attacker is going to find a hole or a method of penetrating your defenses that you didn’t think of.

Most attacks are relatively cheap to carry out, because they’re not that sophisticated. More often than not, attackers copy the methods they use from each other. Attacks are inexpensive, and most attackers have the luxury of limitless time.

The exception is attacks using so-called “zero day” vulnerabilities, where a previously unknown vulnerability, usually in the operating system, is used to gain access to a system. Most — but not all — of the time, once a zero-day vulnerability is seen and documented, the weaknesses it reveals are patched, making it the type of weapon that can be used only once.

As such, zero-day vulnerabilities are often traded on the black market and sold at a high price. For example, when the Stuxnet worm — the malware that was used to attack and sabotage the Iranian nuclear program — was first discovered, security researchers were impressed that it used no fewer than four distinct zero-day vulnerabilities in Microsoft Windows. So many used at once indicated that the cost to carry out the attack was high, leading to the conclusion that only a state-sponsored attacker would have the funds to carry it out. This led to the logical conclusion that either the U.S. or Israel had been behind Stuxnet.

I bring it up because Stuxnet is an example of the conclusion of this new fundamental thought I mentioned at the start. Why not make attacks expensive for the attackers? The early estimates on Stuxnet put its cost at $3 million, and it is believed that it required a team of 10 skilled programmers and as long as six months to develop. It was not a cheap attack. It was expensive.

That’s the idea behind Shape Security, which today announced that it has landed a $6 million Series A round of venture capital funding led by Kleiner Perkins Caufield & Byers and TomorrowVentures, the fund led by Google Chairman Eric Schmidt.

Peter Wagner, a former partner at Accel Partners, as well as executives from LinkedIn, Twitter, and Facebook, will also join the round. Ted Schlein, managing partner at Kleiner Perkins, has joined the board of directors, along with Gaurav Garg, a limited partner at Sequoia Capital and personal investor in the round.

We don’t as yet know a great deal about Shape Security or its intentions. But we do know who’s running it: According to this filing with the U.S. Securities and Exchange Commission, its CEO is Derek W. Smith. Another key exec and director is Sumit Agarwal, the former head of Google’s mobile product management, who in 2010 took a post in the Department of Defense as senior adviser for Cyber Innovation.

Another key exec is Troy Tribe, who appears to be the same person who used to be VP for business development at Solera Networks, which specializes in network-security analytics and forensics.

This is the second time in as many weeks that I’ve noticed a security company talking about changing the economics for attackers. The first was Crowdstrike, which announced that it had hired Shawn Henry from the FBI and landed a $26 million investment from Warburg Pincus. Neither has said yet exactly what you do to make launching a computer attack more expensive. I’m certainly eager to know more.

The partnership and funding is a huge vote of confidence for the brand, which up until today only existed on the Internet.

If you haven’t seen the ads and don’t already know, Bonobos is known for “better-fitting” men’s pants, and while I’ve heard many men say it’s true, it’s apparently hard to explain why — sort of like why the company is named after a kind of over-sexed chimpanzee. Wait, maybe it’s not that difficult to understand. Ahem.

To be sure, the company has a large selection of nice pants.

Bonobos said the round of funding was led by Nordstrom, along with full participation from existing investors, such as Accel Partners and Lightspeed Venture Partners.

In a statement, Andy Dunn, founder and CEO of Bonobos, said “We understand there are people who still want to touch and feel clothing before they purchase. We realized we needed help expanding beyond our web-only roots.”

Since launching in 2007, Bonobos has expanded to offer a full clothing line for men. Beginning in April, Nordstrom will carry the top two product lines of Bonobos, including chinos and cotton trousers. The brand will launch at 20 of Nordstrom’s stores and within the Men’s Shop on Nordstrom.com.

“Our investment with Bonobos will enable Nordstrom to participate in the young company’s phenomenal growth, and we look forward to what we can learn from each other as we build the business together,” said Jamie Nordstrom, president of Nordstrom Direct.

Last March, Nordstrom acquired HauteLook, an online retailer that offers flash sales.

Like Bonobos, several venture-backed companies have cropped up over the past couple of years that encourage men to shop more online, such as Indochino, J. Hilburn and TrunkClub. In December 2010, Bonobos raised $18.5 million.

The company, which specializes in developing card and casino games for Android and Facebook, said the investment will be used for building more games, expanding to other platforms — like Apple’s iOS — and possible acquisitions.

Dragonplay says it is best known for Live Holdem Poker Pro on Android, which has more than 12 million installs and two million monthly active players.

To date, the casino category has been very successful on social networks, with Zynga’s Poker game dominating at the top of the charts. More recently, the attention has been turning toward real-money gaming as restrictions begin to relax in the U.S.

Accel’s Adam Valkin, who is joining the company’s board, said the company is currently focused on free-to-play social gaming, but Dragonplay will pursue other opportunities as they emerge.

Zynga and other companies, such as Double Down Interactive, which was acquired by a video poker company, and Caesars Entertainment, which went public, have been among the most vocal about going after the opportunity.

Dragonplay, which was founded in 2010 by Sharon Tal, previously raised seed capital from Entrée Capital.

It’s something that IBM does a lot of, and does well, and it’s something that Hewlett-Packard is starting to talk about with increasing regularity, especially in the wake of its acquisition last year of Autonomy, while outfits like Splunk and open source efforts like Hadoop make it easier to do the crunching. And there are lots of start-ups working at finding ways to bring new levels of analysis to stale old business data that used to sit collecting virtual dust, unloved and unused on hard drives.

Generally speaking, the businesses that use analytics are, by definition, pretty big. They have large retail footprints, or big supply chains or something else about their business that makes them big. Being big is, intuition tells us, sort of a prerequisite to yielding the large volumes of data that just beg to be analyzed. You had to buy hardware and software and hire a lot of really smart people to get the job done.

Intuition can be wrong. In the age of cloud computing, where companies don’t bother to buy their own servers but rather rent space on servers from cloud outfits like Amazon Web services or IBM or Rackspace, why couldn’t you do the same thing with analytics? It turns out you can.

A Seattle-based company called Medio does precisely this, and today it launched something called the InGenius Suite. It’s essentially a big data analytics engine that’s designed to do exactly what big companies all want when they call Big Blue or HP or someone else: Show them where they can make more money. And? It all runs in the cloud.

Think you’re missing an opportunity to make incremental sales, but don’t have the data to prove it? Medio is aimed at industries like retail, finance and entertainment, and it brings the same kind of predictive analytics to bear that the big companies get. It’s also been around for a while: Medio has been selling its predictive analytics technology for years in two prior generations, but this is the first time it has been available in a cloud-based offering.

Its speciality is in the mobile space, and its platform supports 10,000 different devices, sees more than 105 million unique users in 220 geographies and captures 550 million events every day. The analytics have turned out 15 billion different personal recommendations.

“Our mission in life is to help companies to understand what their consumers are doing, to engage them better, and to help them make more money as appropriate,” says Rob Lilleness, Medio’s CEO. Customers range from Rovio, the Finnish outfit behind the addictive Angry Birds mobile game franchise, to mobile carriers like T-Mobile and Verizon.

The company is backed by investments from Accel Partners, Trilogy Equity Partners, Frazier Technology Ventures and Mohr Davidow Ventures, with total capital raised of about $30 million.

Lilleness said Medio has been at it for seven years. One of its co-founders is Brian Lent, who’s also chairman and CTO. He founded an outfit called Junglee that Amazon bought some years back. When Amazon tells you after buying something that you might also like something else, that’s the Junglee technology at work. Amazon boosted the percentage of sales coming from recommendations from 3 percent to 30 percent since acquiring Junglee, so the effect of having an analytics engine that can help you make recommendations isn’t exactly trivial.

Medio’s InGenius Suite is built around getting the same kind of understanding that big companies do, but in a manner that’s within reach to smaller companies. “We want to democratize the ability for companies to get up and running easily with big data,” Lilleness told me. “We can service the big companies, and we have for many years. But whether you’re a large company or a smaller, the key thing you have to know about big data is that data itself is the oil of the 21st century. Those who don’t understand it and what they need to do with it risk being left behind.”

I made the case myself last year about why Cisco might kill or sell WebEx, only to be told in no uncertain terms that Cisco didn’t see it that way. Collaboration is still a big part of Cisco’s strategy, because it fits with enterprise video.

And yet the rumors about WebEx being shopped around persist. So today, a bold offer emerged from a start-up called SalesCrunch to buy WebEx for $1 and 15 percent of the equity in the company. The plan is to transition WebEx’s entire customer base to a new platform, kill off the old one, and move on.

It may seem a trivial offer, but it’s not, though there’s a good argument to be made that it’s a publicity stunt meant to get a lot of attention. SalesCrunch is backed by Accel Partners, First Round Capital, NextView Ventures and AOL Ventures. It’s essentially a new, more flexible, fully thought-out competitor to WebEx, one that poses a fair competitive threat. SalesCrunch is more social than WebEx, and tells you more about how engaged the parties attending a meeting actually are, or whether they’re zoning out and checking their email.

But why offer to buy it? SalesCrunch CEO Sean Black told me that the plan is to grab Cisco’s WebEx assets, including its engineering teams, and put them to work on building out SalesCrunch.

WebEx isn’t a core business to Cisco, Black says, and is in many ways comparable to the Flip camera business that Cisco infamously killed last year. “Cisco admitted that it’s in a lot of businesses that it shouldn’t be in. There’s been a lot of outcry from shareholders that it should stick to the business of selling routers and switches,” he told me. “WebEx is really the first online meeting application. It is literally as old as the Internet itself. And the team that put it in place is there to wring every efficiency they can out of the business, so they’re good at efficiency, and not at innovation.”

Cisco’s WebEx team, Black argues, is too busy running the business and maintaining its large user base to build the next great online meeting platform.

The idea for offering to buy WebEx came up in a management meeting as sort of a jokey, offhand comment. “But the more we thought about it, the more it made sense,” Black told me. “Why shouldn’t it be us? We’ve heard it’s been shopped around for eight months, with no takers.” Without a buyer, it might suffer the same fate as the Flip camera, and simply be shut down, he says.

Cisco hasn’t commented yet, but it probably will. I’m no expert on these things, but I wonder if this constitutes the kind of legal offer that will require Cisco’s board of directors to consider the offer seriously. We’ll see.

Today, Atlassian will announce that it has acquired HipChat, a maker of a specialized private instant messaging and chat platform aimed at companies. Financial terms are not being disclosed. But it’s pretty apparent the two were made for each other. HipChat has some 1,200 customers, including Groupon, HubSpot and Wired. The plan is pretty simple: Atlassian will incorporate HipChat into its own software. There’s probably a good bit of overlap between them.

HipChat’s three founders — Pete Curley, Garret Heaton and Chris Rivers — are all joining Atlassian. Their history, as described on their Web site, is pretty basic: “We created HipCal. Plaxo liked it so we went to work for them. We created Plaxo Pulse. Comcast liked it, so we went to work for them. HipChat is our current baby.” Now add: “Atlassian liked it, so we went to work for them.”

I talked briefly with Atlassian president Jay Simon yesterday. “None of our tools has a real-time component,” he told me. “They’re all asynchronous. HipChat is going to give us that.”

People often flock to the basic tools, like AOL Instant Messenger or Google Talk, when they need something instant. HipChat does the instant messaging part, but it also has features like chat rooms that remain persistent, which means they don’t blink out of existence when people using them leave. Files can be shared easily, and APIs from other platforms are supported. It’s also secure.

Consider Atlassian a variant on the social enterprise and collaboration trend that’s been rocking the enterprise in recent years, with the appearance of companies like Jive Software, Yammer, Saleforce.com’s Chatter and VMWare’s Socialcast, to name a few. Atlassian’s tools (its main one is called Jira) allow teams of software developers to work together, keep track of what each member of a team is doing, squash bugs and do whatever else it is they need to do. And among its 20,000-odd customers are the kind of companies you’d want to be doing business with: Facebook, Twitter, Zynga, Adobe, LinkedIn and Cisco Systems. Pay attention now, because someone is going to buy this company.

After several years in business, his mobile game company had yet to produce a hit. Rovio’s chief backer, Hed’s father, Kaj, was struggling to figure out how to keep the company going.

“He told me that he wanted to mortgage my grandparents’ flat so he could put some more money in the company to keep it afloat,” Mikael Hed said in an interview. “That was pretty tough. I certainly did not want to be the person responsible for putting my grandparents on the street.”

Angry Birds was in development and Hed thought he might have a winner on his hands. But at the same time, the company had made dozens of games already without striking it rich, and even the best iPhone games weren’t making that much money.

“Just looking at the odds, we shouldn’t take that kind of a risk,” Hed recalls thinking. But his father went ahead anyway.

“I’m glad he did,” Hed said, noting his grandparents still have their home. “Now I am glad he did, but it was a big gamble.”

The move has clearly paid off. According to figures made public and noted this week by a Finnish newspaper, Kaj Hed owns nearly 70 percent of the company, worth by some estimates between $6 billion and $9 billion.

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]]> http://allthingsd.com/20120223/how-the-angry-birds-almost-died-before-the-first-level/feed/ 0 http://allthingsd.com/20120201/facebooks-ipo-filing-who-owns-what-who-makes-what/ http://allthingsd.com/20120201/facebooks-ipo-filing-who-owns-what-who-makes-what/#comments Wed, 01 Feb 2012 23:22:07 +0000 Arik Hesseldahl http://allthingsd.com/?p=170361

In what is probably the most anticipated document ever received by the U.S. Securities and Exchange Commission, Facebook has filed to take its company public in a $5 billion initial public offering later this year.

Having endured lots of speculation around who owns exactly how much, there are now some hard numbers from the S-1 filing that hit the SEC Web site today.

Here are some details of the cap table, which is made up of both Class A and Class B shares, which carry different voting powers. Class B are the common shares.

Not surprisingly, co-founder and CEO Mark Zuckerberg owns the most equity of any single person. His 1.1 billion Class B shares give him almost a 57 percent stake — about half of which he owns and half of which are owned by others but over which he exercises proxy voting authority.

The 27-year-old entrepreneur also holds 42.2 million Class A shares, which represents a 36.1 percent stake of that group.

Facebook’s filing said he will sell some shares in the IPO, although it doesn’t specify how many. However, it noted that most of the proceeds from the sale will go toward paying taxes on his purchase of 120 million options of Class B common stock he also has.

Peter Thiel, the PayPal founder and CEO who sold that company to eBay, owns a 2.5 percent stake, which has decreased over time from the more than 10 percent he owned as Facebook’s first angel investor. Not bad for a $500,000 investment made in 2004.

Jim Breyer of Accel Partners controls more than 201 million Class B shares, amounting to a little more than 11 percent of Facebook’s equity, having led Accel’s participation in Facebook’s $25 million Series A way back in 2006. Breyer is also a personal investor; 11.7 million shares are his, and about 190 million shares are Accel’s.

Digital Sky Technologies, the Russian investment firm, has 5.4 percent of the Class B equity, or 94.6 million shares, owing to its $200 million investment in 2009, plus an additional $500 million in 2011. DST has also been buying Facebook shares from existing shareholders, allowing some to cash out their equity. It also has 36.7 million Class A shares, or 31.4 percent.

Goldman Sachs has a sizable 66-million share slice of Class A shares, or 56.3 percent. Last year, it was involved in the $1.5 billion round that included DST.

There’s also a batch of individuals with single-digit stakes and smaller ones of note.

Dustin Moskovitz: The Facebook co-founder owns 7.6 percent of the company or 133.8 million Class B shares.

Zuckerberg’s father, Edward Zuckerberg, a dentist, was rewarded with two million Class B shares in consideration for his providing early start-up capital to his son in 2004 and 2005. He was given an option to purchase the shares, but the option expired a year after it was given to him, without his exercising it. The board of directors — minus Mark Zuckerberg — issued the 2 million shares to Glate LLC, a company controlled by the elder Zuckerberg.

There are also a few names of note who don’t appear in the filing:

Microsoft had bought a stake amounting to 1.6 percent, stemming from its $240 million investment in 2007, which included a strategic alliance for advertising. Its stake, now likely less, is not mentioned in the filing.

Eduardo Saverin, the Brazilian co-founder, also has a stake worth a few points, but he is not mentioned in its cap tables.

And other VC investors, Greylock Partners and Meritech Capital Partners, are barely mentioned as well. T. Rowe Price owns 6 million Class A shares, or 5.2 percent, as well as 12.1 million Class B shares.

The filing shows that the top five highest compensated employees are:

Mark Zuckerberg’s base salary is $500,000 a year. Effective January 1, 2013, his salary will be reduced to $1 per year. He has options to buy 120 million additional shares of the class B common stock at a strike price of six cents a share, which expires in November of 2015.

COO Sheryl Sandberg made $382,000 in salary and bonuses in 2011 and received $30.5 million in stock awards. She has options to buy 4.7 million shares, of which 3.5 million have a strike price of $10.39, and 1.2 million a strike price of $15. Sandberg already holds 1.9 million shares of Class B common shares and holds 39.3 million restricted stock units, too.

David Ebersman, the quiet CFO whom AllThingsD profiled yesterday, made $382,000 in salary and bonuses and has 2.2 million Class B shares and 7.5 million RSUs.

Mike Schroepfer, vice president of engineering, made $334,000 in salary and bonuses last year. He holds 2.1 million in Class B shares and 6.1 million RSUs.

VP and general counsel Theodore W. Ullyot also makes $275,000 per year and is eligible for a $400,000 annual retention bonus during the first five years of his employment, through 2013. He has about 1.9 million shares and exercisable options and holds 3.8 million RSUs.

Then, there are Facebook’s outside directors: Venture capitalist Marc Andreessen; Erskine Bowles, the former White House Chief of Staff under Bill Clinton; Breyer; Washington Post CEO Don Graham; Netflix CEO Reed Hastings; and Thiel. Each were paid $16,700 in fees for sitting on the board. Bowles got 601,400 shares, while Hastings got 593,400 shares.

Andreessen also has 5.3 millon RSUs that vest over four years. Graham has one million RSUs. Bowles and Hastings also each have 20,000 RSUs.

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]]> http://allthingsd.com/20120201/facebooks-ipo-filing-who-owns-what-who-makes-what/feed/ 0 http://allthingsd.com/20120117/code-42-the-company-behind-crashplan-lands-52m-funding-round/ http://allthingsd.com/20120117/code-42-the-company-behind-crashplan-lands-52m-funding-round/#comments Wed, 18 Jan 2012 05:00:14 +0000 Arik Hesseldahl http://allthingsd.com/?p=164541 Code 42, the Minnesota-based start-up behind the popular PC-backup service CrashPlan, has just landed a $52.5 million growth capital investment round led by Accel Partners, with Split Rock Partners also participating.

The company has been doing CrashPlan since 2007. The point then was to rethink the whole mind-numbing notion of backing up data from a Mac or PC, aimed at consumers. The next year, following some prodding from companies, it made an enterprise version of CrashPlan that is focused on backing up the data on corporate notebooks and desktops.

Code 42 now manages nearly 100 petabytes of data in the cloud for some 4,000 customers around the world, including at companies like Adobe, Google, Groupon, Hewlett-Packard, LinkedIn, and NASA. Last year, it launched a version aimed at small and medium-sized businesses.

Co-founder and CEO Matthew Dornquast told me the picture has always been bigger than just about data backup. “The funny thing about backup is that when you have a continuous protection engine that knows within seconds what new unique information is being created on every desktop within your enterprise, there’s a lot you can do with that information,” he says. Companies now use it not just for backup but also for discovery when lawsuits happen, and as a recovery service. “Companies also like that they can quickly change their policies for backup and retention across the enterprise very quickly,” Dorncast says. “We can change a policy for the entire enterprise in seconds.”

It’s that policy-management part that makes sense to Ping Li of Accel, who’s leading Accel’s investment in Code 42. “The proliferation of devices in the enterprise — phones and tablets — makes the whole data management problem a lot more complex,” he says. “Having a central policy for managing all your information across all the places where employees touch it is more important than ever before,” Li told me.

Li said it’s not a typical VC investment. Code 42 has been profitable since launch, but it could use some cash to expand its sales and marketing efforts and to build some extensions on top of the original product.

As it happens, this is the first investment by Accel’s Big Data fund announced in November.

]]> http://allthingsd.com/20120117/code-42-the-company-behind-crashplan-lands-52m-funding-round/feed/ 0 http://allthingsd.com/20120116/sarah-lacy-debuts-new-tech-site-pandodaily-and-guess-whos-working-for-her-video/ http://allthingsd.com/20120116/sarah-lacy-debuts-new-tech-site-pandodaily-and-guess-whos-working-for-her-video/#comments Mon, 16 Jan 2012 17:00:28 +0000 Kara Swisher http://allthingsd.com/?p=163938

As has been widely reported, well-known TechCrunch columnist and Silicon Valley journalist Sarah Lacy has a new gig: Running her own new tech news site, which debuts today.

(She’s pictured here with another recent adorable start-up of hers, named Eli.)

Not so widely reported? The site, called PandoDaily.com, will feature three of TechCrunch’s most high-profile former bloggers: Michael Arrington, M.G. Siegler and Paul Carr.

That’s right, Lacy is Arrington’s boss this time around — even though his CrunchFund venture firm will also be an investor, in a funding round of more than $2 million for PandoDaily.

Other investors — whom Lacy described as “people I like and respect” — include a panoply of tech movers and shakers, including personal investments from Marc Andreessen, Peter Thiel, Matt Cohler, Jeff Jordan, Josh Kopelman, Zach Nelson, Andrew Anker, Saul Klein, Tony Hsieh and Chris Dixon, as well as seed investments from Greylock Partners, SV Angel, Lerer Ventures, Accel Partners and Menlo Ventures.

There will certainly be questions about all these funders who are also topics of PandoDaily’s posts, which Lacy acknowledged. She said the large number of funders was calculated so that none had undue influence.

Of course, many in Silicon Valley will be watching her carefully for any conflicts of interest or punches pulled. Lacy insisted that there will not be a problem and joked that she will definitely not become a VC, referring to the controversy around Arrington becoming one while at TechCrunch.

That issue blew up like a Roman candle, of course, leaving everyone with powder burns — I called the incident a “giant, greedy, Silicon Valley pig pile.”

Interestingly, Lacy did manage to stay out of the spotlight (she was, in fact, having her baby during the worst of the controversy, which was likely more painful).

Ignoring the delicious epic revenge part of this on AOL — which bought TechCrunch and then promptly presided over a tech version of the War of the Roses (and is, ironically, an investor via CrunchFund) — PandoDaily will focus on start-ups in Silicon Valley and everywhere else that homegrown spirit of innovations reaches.

Here’s a screenshot of the cleanly designed and handsome site:

In an inaugural post, titled ““Why I Started PandoDaily,” Lacy compared the site to a colony of trees in Utah, saying, “We have one goal here at PandoDaily: To be the site-of-record for that startup root-system and everything that springs up from it, cycle-after-cycle.”

Which is kind of like TechCrunch, which she left earlier this year.

“This is not TechCrunch 2.0,” Lacy said to me in an interview last week. “But, of course, we will be compared to TechCrunch.”

Of course, especially because of the presence of its star lineup on PandoDaily — who will write regularly, along with an initially small staff of other writers — and also its plans for conferences and other gatherings.

(An AOL source, by the way, said there were no contractual noncompete issues for PandoDaily to worry about.)

Here’s a longish interview I did about PandoDaily with Lacy, who has written two books focused on entrepreneurs, worked at Businessweek and was founding co-host of Yahoo Finance’s daily show “TechTicker.”

She talks about the site’s unusual name, her wrangling over leaving TechCrunch, and the prospect of now running her own show.

Welcome back, Sarah (and call me if you need help with those dudes, as we have wrangled before).

Here’s the video:

]]> http://allthingsd.com/20120116/sarah-lacy-debuts-new-tech-site-pandodaily-and-guess-whos-working-for-her-video/feed/ 0 http://allthingsd.com/20111214/la-gets-another-start-up-accelerator-this-one-with-strong-entertainment-ties/ http://allthingsd.com/20111214/la-gets-another-start-up-accelerator-this-one-with-strong-entertainment-ties/#comments Wed, 14 Dec 2011 14:00:43 +0000 Liz Gannes http://allthingsd.com/?p=153588 Until very recently, Los Angeles had what some people said was a stunning lack of early stage start-up accelerator programs, especially compared to other places in the world, like Silicon Valley and New York. It doesn’t have that problem anymore.

Today, Amplify, which is to be based in a large, historic Venice Beach building, is announcing its plans to incubate and accelerate L.A. tech talent.

Amplify’s investors include Mark Burnett (“The Apprentice” and “Survivor”), Brian Grazer (“J. Edgar” and “24″) and Jarl Mohn (E! Entertainment and MTV); plus, lots of more traditional tech investor types like Accel Partners, BV Capital, Greycroft Partners, Rustic Canyon and Tomorrow Ventures have added to a total of $4.5 million to invest in new companies.

Amplify founder and leader Paul Bricault said he actually tried to start something similar way back in 1999, when he was at William Morris. More than a decade later, he’s finally making it happen, having spent part of the last year visiting other start-up accelerators and learning from what they’re doing.

“L.A. is so dramatically underserved,” Bricault said.

Well, it used to be quite underserved. Today, other newish L.A. accelerators include MuckerLab, Start Engine, UpStart.LA, Science and Launchpad LA.

Bricault said he plans to collaborate with others in the local start-up scene. Plus, he counted 18 start-up accelerators in New York City alone.

Amplify is taking less of a strict class-and-curriculum approach than some other accelerators, instead accepting new companies on a rolling basis. Perks for participants include as much as $50,000 in funding and a three-year hiatus on city taxes.

]]> http://allthingsd.com/20111214/la-gets-another-start-up-accelerator-this-one-with-strong-entertainment-ties/feed/ 0 http://allthingsd.com/20111206/brazilian-social-games-company-pays-zynga-to-settle-copyright-issues/ http://allthingsd.com/20111206/brazilian-social-games-company-pays-zynga-to-settle-copyright-issues/#comments Tue, 06 Dec 2011 17:29:12 +0000 Tricia Duryee http://allthingsd.com/?p=150814 San Francisco-based Zynga, which is on track to go public next week, has settled a lawsuit against Vostu, a social-game maker in Brazil that Zynga accused of copyright infringement. In a joint statement, the two said: “As part of the settlement, Vostu made a monetary payment to Zynga and made some changes to four of its games.” Terms were not disclosed. Vostu claims to be the largest social game company in Brazil and is backed by Accel Partners, Tiger Technology Global Management, Intel Capital and General Catalyst Partners.

]]> http://allthingsd.com/20111206/brazilian-social-games-company-pays-zynga-to-settle-copyright-issues/feed/ 0 http://allthingsd.com/20111115/sean-parker-and-jim-breyer-slam-silicon-valley-angel-investing/ http://allthingsd.com/20111115/sean-parker-and-jim-breyer-slam-silicon-valley-angel-investing/#comments Tue, 15 Nov 2011 20:53:40 +0000 Liz Gannes http://allthingsd.com/?p=144393 Early Facebook exec Sean Parker and Accel partner Jim Breyer today criticized the surplus of early-stage funding in Silicon Valley, saying that freely available money spreads talent too thinly among too many Internet start-ups and makes it less likely for new companies to have a major industry impact.

Sean Parker and Jim Breyer with Techonomy host David Kirkpatrick

“A lot of those early-stage investors, they’ll fund literally anything” Parker said, calling the phenomenon “the assembly line approach to investing,” where an idea comes in and an investment comes out. Meanwhile, later-stage investors are themselves funding early-stage investors to access their deal flow.

Breyer, who is a Facebook board member and an investor in Parker’s pre-launch start-up Airtime, agreed with Parker and said the early-stage frenzy “will end badly.”

Breyer noted that the “spray-and-pray” mentality is especially prevalent in Silicon Valley and somewhat present in New York City and Beijing, but thankfully not in the rest of the world.

The two men’s comments came as part of a discussion about jobs and the social impact of technology at the Techonomy conference in Tucson, Ariz.

Parker admitted that the icon of rapid-fire angel investing, Ron Conway of SV Angel, is a close friend and an investor in every company he’s started.

But that doesn’t mean the world needs more Ron Conways, Parker said. “It’s fine if there’s a few guys doing this, but there’s so much capital now in the early stage.”

Parker contended that the Internet is becoming a mature business, where power consolidates among big players like Facebook, Google and Apple — making it harder for young companies to knock them off. “For young entrepreneurs, it’s really not helpful for some guy to come along and write you a check,” he said.

Photo credit: Bill Gross

]]> http://allthingsd.com/20111115/sean-parker-and-jim-breyer-slam-silicon-valley-angel-investing/feed/ 0 http://allthingsd.com/20111108/cloudera-lands-40-million-from-ignition-accel-launches-100-million-big-data-fund/ http://allthingsd.com/20111108/cloudera-lands-40-million-from-ignition-accel-launches-100-million-big-data-fund/#comments Tue, 08 Nov 2011 13:03:39 +0000 Arik Hesseldahl http://allthingsd.com/?p=141663 Elephants, it seems, are attracting money. As Hadoop World gets underway in New York today, Cloudera, the start-up company that is putting on the event, has landed a big new investor.

A day after teaming up with the storage concern NetApp, Cloudera announced today that it has landed a $40 million series D round of venture capital funding from Ignition Partners, in a round led by its partner, Frank Artale. Previous investors include Accel Partners, Greylock Partners, Meritech Capital Partners and In-Q-Tel. Cloudera says it will use the funds to expand its marketing and sales operations. By my count, the round brings Cloudera’s total capital raised so far to $76 million.

Cloudera has been on a roll — it’s the Hadoop outfit that many companies are turning to when they decide to tackle their big-data problems. Among its customers are eBay, AOL, Facebook and Groupon. While Hadoop itself is free for anyone to download and install from the Apache Software Foundation, Cloudera provides support and training, and an enterprise-ready version of Hadoop that has been tweaked for easier deployment in big companies.

And that’s not all the new money sloshing around the world of Hadoop, the open source project with the cute cartoon elephant as its mascot. (Hence the money-origami elephant pictured above.)

Accel Partners, which led Cloudera’s last round, is launching a $100 million “Big Data Fund,” with Cloudera as a partner. The point, Accel partner Ping Li told me, is to fund companies working in what he calls the “big data stack,” whether that’s in infrastructure like storage or security or management, or building applications that run on Hadoop. And the opportunities for that are multiplying, he told me.

“We’re seeing an undercurrent of picks-and-shovels kind of innovation around solving big data problems,” Li told me in an email. The volume of data is exploding at such a rate that it’s breaking traditional data-management technology like relational databases. It’s a problem that touches practically every industry. The fund will be overseen by several Accel partners based in the U.S., Europe, China and India.

]]> http://allthingsd.com/20111108/cloudera-lands-40-million-from-ignition-accel-launches-100-million-big-data-fund/feed/ 0 http://allthingsd.com/20111107/hadoop-startup-cloudera-teams-up-with-storage-player-netapp/ http://allthingsd.com/20111107/hadoop-startup-cloudera-teams-up-with-storage-player-netapp/#comments Mon, 07 Nov 2011 12:59:32 +0000 Arik Hesseldahl http://allthingsd.com/?p=141018 If a company has a batch of data of any reasonable size and wants to do anything useful with it, chances are that at one point or another it’s going to wind up using some version of Hadoop.

Hadoop, whose mascot is a cute cartoon elephant, is open source software based in part on a technique called MapReduce. Initially developed at Google, it makes big jobs involving the processing of large sets of data manageable. And while anyone can go get the open source software for free and put it to use, the number of start-up companies trying to build a business around helping other companies use Hadoop effectively is multiplying. A team of Hadoop engineers recently spun out of Yahoo as a start-up called Hortonworks, and another Hadoop outfit called MapR landed $20 million in venture capital funding in August.

To me, the best-known among the Hadoop start-ups is Cloudera. Backed by $36 million in investments from Accel Partners, Greylock Partners, Meritech Capital Partners and In-Q-Tel, Cloudera has probably got the biggest head start among the Hadoop companies. Its customers include eBay, Groupon and AOL.

Cloudera is also the company behind the Hadoop World conference that begins tomorrow in New York; as such, the eyes of the Hadoop — er, universe — will be paying attention to what goes on here.

The first bit of news is that Cloudera will be teaming up with the storage concern NetApp, which is announcing a turnkey product called the NetApp Open Solution for Hadoop. (One of these days people will dispense with using the word “solution” in this way. Alas, not yet!) Basically, the idea is to make Hadoop and Cloudera’s subscription support service easy to deploy from within NetApp storage hardware. NetApp will become a Cloudera reseller.

One problem companies deploying Hadoop often run into is the need for more storage, says Jeff O’Neal, senior director for data center solutions at NetApp. “When you deploy Hadoop in the traditional way, the ratio between computing power and storage is locked, and here we’re opening that up.”

Why pick Cloudera, when NetApp could have just as easily slapped on a freebie Hadoop installation and sold it alongside its own hardware? Speed. Cloudera, O’Neal says, can help customers get their Hadoop installations up and running faster than they otherwise would. “We can take weeks or even months out of the cycle of getting the infrastructure up and running,” O’Neal says.

The deal will also get Cloudera exposed to some new high-rolling customers where NetApp has some strengths, says Kirk Dunn, Cloudera’s COO. NetApp, for one thing, does a lot of business with federal government customers in the areas of defense and intelligence, and their data needs aren’t getting smaller. “The workloads are big. The velocity of data coming at both the compute and storage racks are significant,” Dunn says. So is the size of the data. Consider, for example how the military and intelligence community are creating more satellite imagery than ever before; then consider that all that data has to be sorted and analyzed in an efficient way. Outside of government, banking and financial institutions want to sift through the increasing stream of information on people and companies to determine risk.

The amount of data that companies are generating is huge. Five or six years ago, the average large corporation had maybe 360 terabytes of data lying around, Dunn says. Cloudera has some customers that are generating about that much new data nearly every day, he says, and it’s not slowing down. “The problems only get more vexing as time goes on. They sure aren’t getting any simpler,” he says. After years of helping those companies and governments store all that data, NetApp is uniquely positioned, Dunn says, to go back to those organizations and sell them on the idea of mining that data for useful information. “For NetApp, this is as basic as motherhood and apple pie.”

]]> http://allthingsd.com/20111107/hadoop-startup-cloudera-teams-up-with-storage-player-netapp/feed/ 0 http://allthingsd.com/20111104/exclusive-lot18-closes-third-round-in-a-year-this-time-for-30-million/ http://allthingsd.com/20111104/exclusive-lot18-closes-third-round-in-a-year-this-time-for-30-million/#comments Fri, 04 Nov 2011 11:45:06 +0000 Tricia Duryee http://allthingsd.com/?p=140480 Lot18, a New York-based, invitation-only site that started off selling wine online just a year ago, has raised $30 million in a third round of capital.

The most recent round was led by Accel Partners. Existing investors New Enterprise Associates and FirstMark Capital also participated.

“That’s pretty huge for us,” Lot18’s founder Philip James said in an interview. “We are a year old. We launched on Nov. 10, and it’s a little bit of a surprise that we raised an A, B and C in such a short period of time.”

James said the funding was justified because Lot18 is growing so quickly.

In the past year, it has expanded to 90 employees, added 600,000 members and sold 500,000 bottles of wine. In addition, the company has added two new product categories, “Gourmet” and “Experience,” which sell food and travel, respectively.

James said it is Lot18’s goal to be the leader in the epicurean space — and to be all about eating and drinking.

On a standalone basis, that makes it similar to Gilt Taste, which is a full-priced online gourmet store owned by e-commerce company Gilt Groupe, which dabbles in everything from discount to full-price fashion and daily deals.

Also in the space is Wine.com, which has been selling wine online since 1998 and has a selection of hundreds of thousands of bottles. It also operates WineShopper, a members-only daily wine deals site.

James said he doesn’t anticipate getting into other categories, such as fashion or home accessories, as many other sites in the category have. He also says international expansion is not on the immediate roadmap, since shipping alcohol faces so many regulations.

Lot18 is a marketplace, so it does not own any inventory or warehouses; its cost structure is a little different from some of the others. Instead, the company’s headcount is a considerable expense, as are its marketing costs to get new members — just like Groupon. In addition, it subsidizes shipping, since wine is so heavy and fragile.

As the company grows, those costs continue, but there’s also a chance they may fall, as volume discounts on postage start to apply.

The company offers between 10 and 20 new products a day, from wines to travel and food. Users sign up to receive a daily email; James said that if people don’t make purchases, or even read the emails, the frequency drops. Its top-tier users have an open rate of more than 50 percent.

“We are blurring the line between content and commerce,” he said. “It’s for people who care about what they eat and drink. Even if they don’t buy it, they like learning about it.”

And unlike other companies, it’s not all about the discounts.

“The value proposition is curation, access and value,” James said. “When I think of flash sales, I think of discounts on products I already know. When something is artisanal, and it comes from a small, family-owned business, it’s about introducing people to brands they don’t already know.”

The $30 million round follows a $10 million second round in May, and a first round of $3 million. Quidsi founders Marc Lore and Vinit Bharara, who sold their company to Amazon, are also investors.

]]> http://allthingsd.com/20111104/exclusive-lot18-closes-third-round-in-a-year-this-time-for-30-million/feed/ 0 http://allthingsd.com/20111026/facebook-funded-sociable-labs-helps-retailers-be-more-friendly/ http://allthingsd.com/20111026/facebook-funded-sociable-labs-helps-retailers-be-more-friendly/#comments Wed, 26 Oct 2011 12:30:07 +0000 Tricia Duryee http://allthingsd.com/?p=136728 Sociable Labs, which is helping retailers to integrate Facebook’s social graph into the shopping experience, has raised $7 million from investors.

The second round of funding was led by Battery Ventures. The company previously raised money from the fbFund, a $10 million seed fund and joint venture run by Facebook, Founders Fund and Accel Partners.

Nisan Gabbay, founder and CEO of Sociable Labs, said Sociable is exploring what social commerce means, and from what he’s determined so far, he doesn’t believe it means people shopping on Facebook.

Rather, he thinks the most value lies in connecting to friends on actual retail sites to share recommendations.

For instance, it would be helpful if people could see which of their friends are registered to run in a 5K when signing up for the race, or if anyone they know has stayed in a particular hotel in Miami before using a travel site to book a room.

Sociable’s beta customers include Active.com, Chegg.com, Backcountry.com, Rue La La, HauteLook and Sole Society.

“Facebook is focused around entertainment, but it’s not about discovery or an immersive experience,” Gabbay said. “I find that the right experience is to offer the feature set where they already shop online, and by adding social features and the graph into that experience.”

Currently, most social commerce experiences are tied to the “like” button.

You can like a product and have it show up in your news feed on Facebook. But that information is not useful to your friends until they are shopping for something similar, at which point it may not be easy to find.

“Not everything can happen on Facebook,” Gabbay said. “Your friends don’t want to see what you are buying until they are making a decision.”

Privacy protections will obviously be key with this sort of integration and long-term cataloging of consumer purchases. But after a quick look at how Sociable is integrated on Active.com, a Web site dedicated to sports events, it doesn’t feel invasive. It’s information that friends would normally share on Facebook, but which would instantly get lost in the stream of news.

Sociable Labs will charge its lowest-paying customer $50,000 a year for services and licenses. The company currently has 25 employees, and plans to use the funding to deploy the software more broadly and market it, now that it is coming out of beta today.

]]> http://allthingsd.com/20111026/facebook-funded-sociable-labs-helps-retailers-be-more-friendly/feed/ 0 http://allthingsd.com/20111019/meet-qwilt-creator-of-smart-video-caching-gear-and-new-member-of-the-flash-madness-club/ http://allthingsd.com/20111019/meet-qwilt-creator-of-smart-video-caching-gear-and-new-member-of-the-flash-madness-club/#comments Thu, 20 Oct 2011 03:59:23 +0000 Arik Hesseldahl http://allthingsd.com/?p=134475 Some interviews go faster than others, especially when I can figure out what a company does before they tell me what they’re about. It was like that with Qwilt, a video network infrastructure start-up that is coming out of stealth mode today.

I was on the phone with its two founders: Alon Maor, CEO; and Dan Sahar, VP of marketing. They had just started telling me about how they plan to sell network appliances that network operators — like, say, Comcast or Time Warner or Verizon — might put on their network in order to help them meet the growing demand for video content. The aim, Maor told me, is to get the most popular content as close as you can to the customer.

The first thing that popped into my mind was creating an appliance that sits on the network; close to, but not in the customer’s house. Maybe in the nearest network hub or central office. It turns out I was right. Then I wondered aloud what Qwilt might be using as storage technology. Could it be, maybe … flash memory? The chips that have so revolutionized the data centers of companies like Facebook and Apple and the banking systems of Credit Suisse, among others, when put to use by the likes of Fusion-io and Violin Technology?

Why yes, it does use flash memory, they told me, making them the latest member of the steadily growing “Flash Madness” club, which gives me yet another excuse to use the image taken from the cover of Flash Comics #1, circa 1940. For reference, the other members are Fusion, Violin Memory and Pure Storage.

Maor and Sahar laughed on the other end of the line at my guesses. “Would you like a job in our engineering department?” Sahar kidded me. I didn’t answer, because I wasn’t done guessing things like how Qwilt does what it does. “You must use some kind of algorithm to figure out what’s popular,” I said. Right again, mostly. The interview hadn’t been going for as much as five minutes, and I hadn’t even asked a single question and pretty much had it all figured out.

Well, not everything. There was the small matter of funding. Qwilt has raised $24 million in two rounds from Accel Partners, Redpoint Ventures and the Crescent Point Group, a fund based in Singapore. Maor is a Cisco veteran who got absorbed into that company following its $200 million acquisition of P-Cube. Before that, he was an engineer at Seabridge, which is now known as Nokia Siemens Networks. Sahar was director of marketing at Crescendo Networks, now part of F5 Networks. Tom Dyal, a Redpoint partner, is on Qwilt’s board.

Video is so popular with consumers that Internet services providers are struggling to get their networks scaled up to meet the demand, Maor says. The traditional way to solve that problem when everyone is watching the same show on Hulu, or the same movie on Netflix, is to just add routers and pray. That’s expensive. What if you could add some extra piece of gear that works with the existing network infrastructure? If you could figure out what was the most popular show in a particular neighborhood, make a copy of it right in that very neighborhood, and deliver it from there rather than all the way back from Hulu’s or Netflix’s data center, you’d lessen the network’s burden.

So that’s exactly what Qwilt does: It has three patents pending on processes for determining what video applications are being used on a network, and for figuring out what content is most popular in a particular area. So if you’re in a neighborhood full of “Jersey Shore” fans, the Qwilt box would figure that fairly quickly, and keep copies of it close at hand so that everyone gets their required daily dose of Snooki.

Also on Qwilt’s board is Rich Wong of Accel; Peter Wagner, an independent board member who has previously worked at Accel; Ohad Finkelstein, a partner at Crescent Point; and Giora Yaron, the former chairman of Mercury Interactive, which is now part of Hewlett-Packard. Also investing is Rob Glaser, the former CEO of RealNetworks.

Got all that? I told you it was an easy interview.

]]> http://allthingsd.com/20111019/meet-qwilt-creator-of-smart-video-caching-gear-and-new-member-of-the-flash-madness-club/feed/ 0 http://allthingsd.com/20111018/dropbox-lands-250-million-funding-round-and-once-spurned-interest-from-steve-jobs/ http://allthingsd.com/20111018/dropbox-lands-250-million-funding-round-and-once-spurned-interest-from-steve-jobs/#comments Tue, 18 Oct 2011 16:53:06 +0000 Arik Hesseldahl http://allthingsd.com/?p=133429 A new anecdote about the late Apple CEO Steve Jobs emerged today: In 2009, he kicked the tires on a possible acquisition of Dropbox, the file-sharing site with 50 million users. Dropbox, Jobs told its founder Drew Houston, is a feature, not a service unto itself. Houston cut him off before he could make an offer.

The anecdote appears in a new profile of Dropbox in the latest issue of Forbes, which also disclosed that the service is on track to hit $240 million in sales this year, even though the vast majority of its users pay nothing to use it.

But the meat of the story comes further in: Dropbox just closed a massive $250 million Series B round of funding, at an implied valuation of $4 billion, from Benchmark Capital, Goldman Sachs, Greylock Partners, Institutional Venture Partners, RIT Capital Partners and Valiant Capital Partners. Early investors Sequoia Capital, Accel Partners, and Hadi and Ali Partovi also participated in the round, bringing Dropbox’s total funding to date to $257.2 million. Houston’s stake, Forbes says, amounts to 15 percent of the equity, which would be worth about $600 million.

Houston may yet live to regret turning Jobs down. The Apple CEO proposed another meeting that never happened, then managed to single out Dropbox for disparagement as part of his iCloud keynote in June. That got the attention of Houston, who quickly fired off a memo to his team that included a list of once-hot companies that later crashed: MySpace, Netscape, Palm and Yahoo. Apple — which once viewed Dropbox as the sort of “strategic asset” for which it keeps its $70 billion war chest stuffed — is now the competition.

]]> http://allthingsd.com/20111018/dropbox-lands-250-million-funding-round-and-once-spurned-interest-from-steve-jobs/feed/ 0 http://allthingsd.com/20110902/crunchfund-unethical-ventures-pigpile-partners-no-matter-what-you-call-it-its-business-as-usual-in-silicon-valley/ http://allthingsd.com/20110902/crunchfund-unethical-ventures-pigpile-partners-no-matter-what-you-call-it-its-business-as-usual-in-silicon-valley/#comments Fri, 02 Sep 2011 13:16:52 +0000 Kara Swisher http://allthingsd.com/?p=116354

Of course I have something to say about the news yesterday that AOL would be a key investor in a new early-stage venture fund being started by TechCrunch’s perpetually petulant editor Michael Arrington — with a big, fat and decidedly greasy assist from a panoply of Silicon Valley’s most powerful VC firms and angel investors.

Arrington has previously called me “chief whiner” — oooh, buuuurn, although fair enough, since I have compared him to an egomaniac turtle named Yertle in the past — about my nagging him over the importance of upholding standards of fairness and ethics in journalism.

So as not to let him down, let me begin the whining.

First, my initial reaction when I first heard about the deal: Ugh. Sigh. Hopelessly corrupt. Now 100 percent more icky! A giant, greedy, Silicon Valley pig pile.

I was upset.

By early evening, after my kids told me to chillax, my dark mood had changed to accept that the transaction — however profoundly distasteful to me — was part and parcel of the insidious log-rolling, back-scratching ecosystem that has happened in every other center of power in the universe since the beginning of time.

And so it goes in Silicon Valley.

In fact, the creation of a $20 million investment kitty that Arrington has dubbed CrunchFund is simply the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog.

That is to say, in which the basic standards of journalism are first warped by calling it newfangled truth-telling and then endlessly corroded by using a wily and unusually aggressive combination of favors and threats to extract, from start-ups and VCs in need of press, both exclusive access and information.

And now, inevitably, money.

This could have been a lot cleaner, of course, by Arrington simply resigning from TechCrunch, becoming a VC and perhaps starting a new blog where his agenda is much clearer, from which he could huff and puff away as he does with much entertaining gusto at real and (mostly) imagined slights.

There is certainly precedent for VCs blogging, including Fred Wilson, Brad Feld and Ben Horowitz. And, despite my criticisms about ethics, it is clear that Arrington is a talented writer whose unique voice would be even stronger if it was truly seen as separate from what has become a news organization.

But because of his obvious need to be the center of attention — requiring the ermine kingmaker mantle and foisting his patented I’m-here-to-tell-it-like-it-is attitude on us all — that appears to be impossible.

(By the way, I await Arrington’s usual inane rant about the fictional conflicts of interest related to my gay Google marriage anytime now in 3 … 2 … 1, always and purposefully leaving out the pertinent facts that I can only wed one person, get no financial benefit and am also a prominent critic of the scary search behemoth, while he can make a badillion questionable and grossly tangled investments.)

Personal annoyances aside, what’s most interesting here is the group of Silicon Valley power players who lined up to bow and scrape and then hand over a small pile of dough to the blogger who would be king.

They include: Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures and Accel Partners, as well as individual investments from partners at Benchmark Capital and Andreessen Horowitz, entrepreneur Kevin Rose and DST Global’s Yuri Milner. And, of course, the inevitable Arrington BFF Ron Conway.

Holy googa mooga, that would be, well, everyone, except Ashton Kutcher and Justin Timberlake (who will surely appear soon enough).

As one person also pointed out to me, I don’t recall this many competing VCs investing in one company, let alone another venture fund.

It goes without saying that the reasons they all decided to jump in this fetid pool with abandon are quite varied, if all entirely compromised.

One investor told me — off the record, naturally — that he thought it would be an interesting experiment to see what happened and so he wanted in, especially since everyone else was doing it.

Another well-known VC said that there is no downside to being financially affiliated, especially in attracting talent to its start-ups, with Arrington and, by extension, TechCrunch.

The well-respected Reid Hoffman of Greylock was the only one brave enough to talk on the record, explaining the reasoning pretty clearly:

“Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you have it: No one can afford to be out of the deal flow in these times, even if it means cutting corners.

While TechCrunch’s owner, AOL, said Arrington will no longer be managing editor, with only writing duties at the site he dominates and with no editorial control, Hoffman’s use of TechCrunch for CrunchFund was accurate, because in the eyes of many they are interchangeable.

That’s due to the fact that Arrington still breaks or is clearly the source for important stories on the site and, more importantly, is the big swinging dude who attracts all the eager entrepreneurs to the party. He is the fulcrum of that site, even as it has grown.

And so it will remain, I am guessing, no matter how much AOL insists it will not be so, because the easy questions pile up quickly:

Will Arrington keep doing what are clearly news stories, for example, even though he protesteth too much — as he did in the New York Times yesterday — that he is not a journalist?

And, if so, is it right for him to do so given his insider status, creating a nonparity of sourcing and crystal clear conflicts of interest?

Most of all, can he resist his palpable love of news-breaking and scoops, even if he gets them in ever more unseemly ways?

As if to make it all pretty, Arrington told reporters yesterday that he has put a clause in his limited partnership agreement so he can report on anything he likes, and in any way, about his investors and their companies, however confidential, except those he invests in.

O joyous day! Freedom of the press is preserved and our sacred First Amendment can breathe a sigh of relief, now that it is enshrined in an unholy blogger-VC LP agreement.

After pausing for a moment so that Thomas Jefferson and Edward R. Murrow can stop spinning in their graves, you can go down this road for many increasingly bumpy miles, which only becomes more twisted and confusing as it continues.

I finally talked to one investor in CrunchFund, who said simply and honestly: “It’s not that much money, so who cares?”

Indeed, who does care anymore about crossing what had long been very bright lines in journalism and, if you want to get all cosmic, in life?

Obviously, most of all, not AOL, or its CEO Tim Armstrong, or its head of content, Arianna Huffington. The pair, for whatever reason, decided to make a startling exception for Arrington from a rule that explicitly bars reporters at its media units from investing in the companies they cover.

That happened after he recently did a complete 180 from a previous decision to stop investing and jumped right back in, leaving Armstrong and Huffington to clean up the ethical mess.

They only made it worse, with their decision to throw journalism under the bus by letting Arrington do as he pleased, while touting how important it was for other content sites at AOL to remain more pure.

In the spirit of full disclosure, these kinds of ethical lapses are endemic these days in journalism. Case in point: The appalling phone-hacking controversy taking place at News Corp.’s News International unit in Britain.

While I cannot speak for Dow Jones, I can say that the behavior in another News Corp. property certainly takes its toll on those who adhere to higher standards at the company, especially when it comes to morale.

Thus, I can imagine how others feel at AOL — including those you-know-who-you-are silent ones at TechCrunch — who can’t and, more to the point, wouldn’t make the deals Arrington has been allowed to get away with.

It is not a good feeling, I can assure you.

And, while I have not spoken to her about it, I’d imagine that Huffington cannot be thrilled to be pushing for better journalism at AOL and trying to burnish her cred by hiring some top reporters, while also having to deal with this.

That’s okay, because Armstrong was perfectly willing to do the awkward pretzel-twist needed to explain away the controversial situation, also in an interview with the Times:

“TechCrunch is a different property and they have different standards. We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it.”

In this case, Tim, I am sorry to inform you that transparency is a complete canard and is more likely to end up covering up a lot more transgressions than it ever will reveal.

And, essentially and lazily sloughing it off by saying, “That’s just Mike being Mike,” is not going to cut it, at least not with me.

Not that any amount of tsk-tsking about it matters, I suppose, as Arrington finally gets his fervent Pinocchio-on-a-star wish to be a real-boy VC, can add yet another tainted buck to the pile of billions his venture pals already have, and just call it another typical day in Silicon Valley.

Still, when you are the designated whiner-in-chief, it is pretty much all one can do.

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