The company announced a short while ago that it had landed a $45 million Series E round of financing led by Janus Capital; the Hillman Company, the investment firm run by Pittsburgh billionaire Henry Hillman; and a third party that was not named. Existing investors Andreessen Horowitz, Greylock Partners, Madrona Venture Group and Shasta Ventures also participated, as did a few accounts managed by investment firm T. Rowe Price. Cisco Systems is also an investor.

The round brings Apptio’s total capital raised to $136 million. Its last reported implied valuation was about $600 million. CEO Sunny Gupta wouldn’t tell me the new valuation, but said it was a “considerable improvement.” You can probably do the math yourself.

When I last checked in with Gupta in mid-2011, Apptio, which is based outside Seattle in Bellevue, Wash., had 60 customers, including Facebook, and was managing about $50 billion in tech investments. Now it has 125 customers, including Boeing, Target and Xerox.

Managing IT costs and investments is all Apptio does. Gupta is a former partner exec with Opsware, the company that venture capitalists Marc Andreessen and Ben Horowitz famously sold to Hewlett-Packard.

He spotted a shift in priorities: CIOs were increasingly focused not on managing technology, but on getting the best bang out of that technology for the dollar, and on keeping costs as low as possible.

Taking a round from institutional investors like Janus is usually a sign that an IPO is coming next. That’s the trajectory that both Facebook and Workday followed. Gupta was a little evasive when I asked him about his IPO plans. There’s nothing imminent, but he didn’t say anything to imply that we shouldn’t be watching for an S-1 filing within the next year or so. I certainly will be.

Airware, a startup that is creating a software platform for commercial drones, said it had raised $10.7 million in a Series A funding round led by Andreessen Horowitz. Google Ventures also participated. As part of the deal, Andreessen Horowitz partner Chris Dixon will join Airware’s board.

The Newport Beach, Calif., company said it would use the money to expand staff for its universal development platform as the market for non-military drones expands.

Airware founder and CEO Jonathan Downey said that uses of drones will be increasing for a wide range of purposes, from checking infrastructure to monitoring mining operations to preventing poaching.

In an interview, Downey said that he expects to compete with a range of ex-military efforts, but that the most successful companies will be those that provide a platform to allow for the widest range of innovations.

“This is going to be about a lot more than we know or can guess,” he said. “The industry is at its very beginnings.”

Dixon agrees. “Hardware is the new software,” he said about the investment in Airware, which he said he discovered after attending conferences about the fast-moving drones business, noting that the overall field of robotics has “overpromised and underdelivered.”

Airware came out of both the Lemnos Labs and Y Combinator incubators and had raised seed financing from First Round Capital, Firelake Capital, RRE Ventures, Shasta Ventures, Promus Ventures and several Y Combinator partners.

Forbes magazine put out its much-watched Midas List today, which is kind of the Oscars for venture capitalists in tech. (Caveat: Think more khakis and dudes than glitz and glamour.)

On the Top 10 list of 100 of the best-performing and most influential tech investors, Jim Breyer of Accel Partners and Marc Andreessen of Andreessen Horowitz led the list at No. 1 and No. 2, as they did last year. And several others in last year’s list remained on it: Peter Fenton of Benchmark Capital, Greylock Partners’ Reid Hoffman, and also David Sze, Peter Thiel and Bessemer Venture Partners’ Jeremy Levine.

Accel scored well on the rest of the list with nine partners named; Sequoia Capital had six VCs on the list; Benchmark, Greylock and New Enterprise Associates got five slots; Bain Capital Ventures, Bessemer, Kleiner Perkins and Meritech Capital Partners had four; and Andreessen Horowitz, Institutional Venture Partners and Venrock each had three.

As usual, there were few women on the list — only three — reflecting the lack of gender equality in the top tier of the VC business, which solidly remains a boy’s club, despite a lot of noise about changing it (see the pictures here and become depressed once again). Those women who did manage to get on the Midas List were Jenny Lee at GGV Capital, who jumped from No. 94 to No. 36; Kleiner Perkins’s Mary Meeker, who dropped from No. 42 to No. 47; and Theresia Gouw of Accel at No. 82, up from No. 92.

One notable part of the massive Forbes package of VCs on parade was the intense and multipart focus on the travails of Kleiner Perkins and its longtime leader and legendary VC John Doerr. Doerr clocks in at No. 26 on the list, dropping from No. 12 last year, a significant fall.

He does address the nagging issues at the storied firm, including ill-conceived investments in clean tech, a late-to-the-game move into social media, and even its big stake in stock-declining online gaming giant Zynga, in a video (below) and in several pieces, one of which is titled ““John Doerr’s Plan To Reclaim the Venture Capital Throne.”

More like “Game of Thrones” from reading it; there is another, more critical article in the New York Times that appeared yesterday. That piece focused on Kleiner’s investment in the troubled green-car startup, Fisker Automotive, and also the firm’s ongoing sex-discrimination lawsuit with former partner Ellen Pao.

“It was a challenging year, one of my more challenging years in the venture business,” said Doerr to Forbes.

Indeed, although Forbes does hand Kleiner a hey-we-have-some-sharpie-young-folks-here-too! gimme with its focus on “new generation” partners Megan Quinn and Mike Abbott in an interesting Q&A, as well as yet another piece on Kleiner supporters — such as Google’s Eric Schmidt — touting the firm as perhaps down but definitely not out in the “mojo” department.

“John always wins eventually, and the reason he always wins eventually is because he has the processing power and human energy,” Schmidt told Forbes. “Whatever the set of challenges, he will drive the change in the firm. They’ll have a crisis meeting and another crisis meeting, but he will do it. It may be messy but he will get them there.”

Presumably, if Doerr and team can get some mileage out of its Twitter investment next year and somehow turn around Zynga’s moribund stock. (Kleiner has held on to a pile of it, which is why Doerr recently joined the board that already had Kleiner’s Bing Gordon on it.)

On problem for Kleiner, and boon to others like Accel and Greylock, was that the firm was not early in Facebook, whose IPO — as rocky as it was — gave many VCs making the top of the Midas List the needed turbocharge in terms of performance. Other key companies to help VCs look good this year, according to the Forbes report: Workday, LinkedIn and Skype.

Here’s Doerr, who is indeed a legend, even if more bruised and battered this year, talking about it all to Forbes’s Connie Guglielmo, in the video interview:

Speaking of media attention, here’s a more provocative video interview by Forbes with Sequoia’s Doug Leone (No. 4, up from No. 18 last year), in which he takes aim at VC firms that do too much self-promotion — three guesses which pioneering browser inventor he is referring to here, and the first two don’t count. He called it an “embarrassment,” although Sequoia did hire an excellent PR person from Google this year — nonetheless making the point that the focus should be on entrepreneurs and not investors.

Except, of course, when it comes to scoring high on the Midas List.

Now 3-D printing marketplace Shapeways has some more money to try to solve at least some of those issues. It has raised $30 million in a Series C round that’s the first venture investment for new Andreessen Horowitz partner Chris Dixon, alongside previous investors Union Square Ventures, Index Ventures and Lux Capital.

The New York City-headquartered site allows product designers to upload 3-D designs and sell them to online customers, who can choose a plastic, ceramic or metal material and sometimes also customize or personalize the product. Then Shapeways prints the object in one of its factories in Long Island City, N.Y., or Eindhoven, Netherlands, and mails it to the customer.

Shapeways isn’t the only company that does this, but it’s the largest and most well-known. Some 10,000 people are selling 1,000,000 designs to 150,000 customers so far. Shapeways tells designers how much it will cost to make their products, and then they can mark them up as much as they want.

Dixon said he thought Shapeways was particularly interesting because it combines three traditionally separate businesses — manufacturing, e-commerce and community.

Dixon — who previously was an angel investor, founded SiteAdvisor and Hunch, and became well-known for his blogging — said he expected to make further investments in what he called “fringe technologies” that help bring the physical world online, including 3-D printing, robots, hardware and “the Internet of things.”

It’s essentially a celebrity VC endorsement for the wearable computing device, which is supposed to be publicly available later this year.

The promise of venture capital investment could serve as validation for a product that, even before launching, seems to be alienating many people who are worried about the privacy, distraction and dorkiness implications of a computer that lives on your face.

The trio founding the collective are: Andreessen Horowitz’s Marc Andreessen — famous for creating the Web browser and now a leading VC — Kleiner Perkins’ John Doerr — investor in Andreessen’s Netscape and Google — and Google Ventures head Bill Maris.

Speaking at a press conference today, Doerr said he was eager for developers to get their hands on Glass. “More than any other platform I’ve seen before, I can’t imagine what they are going to do with this.”

Andreessen added that he thought Glass had much more potential to be a platform than any other wearable computing product on the market, and that it could potentially be as pervasive as the mobile phone is today.

Doerr, Maris and Andreessen said they would “share deal flow” for seed-stage investments in Glass applications, meaning when they see young startups in the space they will clue each other in.

This is not a dedicated fund, like Kleiner Perkins’ iFund for iOS apps, but a sort of united front and commitment to Glass as an interesting platform for development.

Given that Glass is such a strange and potentially controversial — but also potentially really cool — device, Google is going all-out to try to ensure a smooth launch.

So far, the company has hyped the device with skydiving stunts, had models wear prototypes on the fashion runway, promised developers early access and conducted a social media campaign using the hashtag #ifihadglass that made the opportunity to buy a $1,500 device a publicly coveted prize.

People who signed up to to buy the “Explorer Edition” of Glass are supposed to start receiving their own devices later this month, according to product director Steve Lee.

This latest step can be seen as another of these pre-launch strategies, which are actually pretty smart. Getting Google Ventures (the venture capital firm in which Google is the sole investor) and a couple of famous VCs to tempt developers with money is another effort to make Glass cool, and ensure it sticks around for a while.

But Andreessen Horowitz and Kleiner Perkins are already the two firms that most frequently co-invest in startups with Google Ventures, so this is more of a stunt than a stretch.

So what applications are the Glass Collective VCs excited to invest in?

• Andreessen said he’d like to see apps for paramedics, and a live zombie game.
• Google co-founder Sergey Brin said he’d like to use Glass as a viewfinder for his fancy SLR camera, and to stream GoPro action-sports cameras.
• Maris said he’d like scientists in wet labs to be able to conduct hands-free experiments with Glass, and for paralyzed people to be able to more easily text. He also said he enjoyed an early timelapse app that people at Google built.
• Doerr said developers should read David Gelernter’s “Mirror Worlds” to find inspiration, and that he wanted to see Glass used in healthcare and education.
• Asked whether the Glass Collective would be willing to invest in facial recognition applications for Glass, given the privacy issues, Maris didn’t say no.

What I’d like to see is Marla Zuckerberg and Mary Jobs and Joann Bezos.

– Margit Wennmachers of Andreessen Horowitz, talking about the talent war and the firm’s efforts to recruit women

A partnership between the Web app configuring service IFTTT and ESPN will allow people to get emails, push notifications, calls, instant messages and more to alert them to news from their favorite sports teams.

The release comes in time for March Madness and much news around NFL free agents. So, for example, IFTTT can arrange for ESPN to call when the Dallas Mavericks tip off, to save any article about the Duke Blue Devils to the Pocket app, or even to keep a log of Boston Red Sox final scores in a Google Drive spreadsheet.

ESPN approached the young startup IFTTT (say it like “lift” without the “l”) to do something similar around the Olympics last summer. The sports network is IFTTT’s first and only major media partner so far, though CEO Linden Tibbets said more were in the works.

Last time we talked to IFTTT, the company had raised $7 million in a round led by Andreessen Horowitz. Soon, they’ll introduce their own mobile app, Tibbets said.

Here’s something new going up on GitHub: Starting today, the latest version of documents from Series Seed, a basic set of documents for companies working with early-stage investments, will be up on GitHub, too.

No, it’s not software code, but the fact is, said Ted Wang, the Fenwick and West lawyer behind Series Seed, it’s pretty much the first place that companies look when they evaluate people they want to hire. “When my clients are evaluating people, they look at GitHub. It’s sort of replacing the resume,” Wang told me.

Wang, of course, is the well-known lawyer who has guided companies like Twitter, Facebook, and has advised companies that were acquired by Google, Zynga, eBay and others from their earliest days.

Wang created the Series Seed documents in 2010, and since then several major venture capital funds, including Andreessen Horowitz, Kleiner Perkins and Sequoia Capital, among others, have agreed to use them as the basis of their own seed-stage investments.

As the costs to start a company have come down, it no longer made sense to have more than 100 pages of legal documents to sign and review.

Now the documents themselves will be available on GitHub with all that implies. Discussion about changes and tweaks will move to GitHub and off private email chains and comments on the Series Seed blog. But it also means that other people can take the basic version of Series Seed documents, change the bits they don’t like and upload their own.

“I think that would be great,” Wang told me. “All the time, I hear from people who like the documents, but don’t like a few little things they’d like to see changed. Now they can create their own.”

(Update: I made some minor changes above in the description of companies advised by Wang.)

At the point where I wrapped up part one of our conversation from late last year, Levine had been talking about opportunities he saw around data storage in the enterprise. As he sees it, another big space ripe for disruption — and thus investment — is in security. That’s where the conversation picks up below:

AllThingsD: So Andreessen Horowitz has done a bunch of security deals. What kinds of opportunities are you seeing there?

Levine: Data security. Okta puts active directory out in the cloud. All SAAS apps, everything goes out there. That’s access control, which very much is security. Security is also being exacerbated by the number of mobile devices in an environment. If you have BYO devices and you’re using someone else’s SAAS, as a CIO you don’t own either piece of that. So an interesting security problem to solve is how you make corporate data usable in that scenario.

Is anyone coming close?

Sure. There’s one company in our portfolio. Silver Tail (now part of EMC) does behavioral prevention. It can look at the behavior of an endpoint and determine if it’s a human being. If you can detect patterns of illicit behavior, you can shut them down before they do any damage. So that’s interesting. Bromium, which just announced, which builds impenetrable walls around processes that live on mobile devices. The premise of Bromium is that you no longer have to do virus scanning. It assumes that viruses are coming into a system anyway, and they’re going to come by way of something like a browser, and affect a running process. But if that process is wrapped by an impenetrable wrapper, it can’t get onto the system. To kill that virus, all you do is shut down that process. So that’s an interesting investment we’ve made.

How do you go about finding the companies that you invest in?

We are not thematic investors, first of all. And I love that. To me, if you’re a thematic investor you end up being the 40th one to pick a company in a given stack, because you have to be in on a certain kind of company. We really do see nearly 100 percent of all the deals that are occuring at any given point of time. We evaluate every single company on its merits. As soon as we say we need to be in on something like, say, database technology, then all of a sudden I have made a preordained and preconceived decision that this is important. I don’t want to have a bias coming into things, that I throw out something that’s actually interesting, or include something that may be way overinvested. We look at each company as a fresh canvas, but we will look at companies that have great technical co-founders who believe that they are going to go dominate a given market segment. It may not be obvious at all. Most obvious things are obvious to many people. It’s a matter of finding the non-obvious things. There are a lot of things we see, and there are a lot of areas where we haven’t invested.

Is that how do you explain GitHub? That was a huge deal, and no one really understood it at first.

I wasn’t really looking to invest in a collaborative source code control system. Before last year, I didn’t even know it existed, and didn’t internalize the value of what they do. After we met them and realized the power of what they do, and have done, and the potential future for that company, we invested. It’s interesting when you don’t have biases and just let everyone come in and pitch, knowing you really can see things in the eyes of the entreprenuer, which I believe is really critical. As soon as I have opinions, I start to shape the company in my mind’s eye, and that’s really backward, because as a board member you want them forming the vision and to help along the way.

I’m hearing deal flow has been really high. Is that likely to continue for awhile?

It’s good that we’re seeing tons of stuff, and there’s a tremendous amount of innovation occuring. It used to be there was a lot of consumer stuff going on, and maybe only a few things happening in the enterprise. Now the enterprise deal flow is much higher than consumer. But I’ll tell you, it’s so cool to see all that. And we’ll pass on most things. But it’s cool being here, at this firm, but also at this time. The last time there was really a lot of flourishing innovation around the enterprise was in the mid-1990s.

Will you be doing many more deals in 2013?

I’m sure we will. We have a lot of seed investments right now. It’s a lot like dating before you get married, so I’m a big believer right now in what we have going on with our seed portfolio. They’ve come up for A rounds, and we have the opportunity to really work with the company. But I like seeds, because you get to watch a company and watch the execution and the dynamics of the team. One recent deal we did was Convergent-IO, which was a seed that turned into an A round.

What do you like and dislike in a team?

We’re very much pro-technical co-founder or founder. I would say that that is like a fundamental criteria. It is easier to coach a technical co-founder on how to run a business than it is to coach a professional manager on the DNA of what the vision of the company is. We look for someone who has a burning passion to go take on the world. We want entrepreneurs that want to go for the long ball. They want to run the company for the long term, and they want it to be a standalone enterprise, as opposed to building something to get acquired. We also like to make sure the entrepreneur understands how they’re going to use the money they’re raising. We like for them to have an appreciation of the clear understanding of how to get from point A to B.

Pinterest, the popular social scrapbooking site, has completed a massive $200 million funding, which values the company at $2.5 billion, according to sources close to the situation.

There have been reports that the funding was coming, but now it is done, in a round led by Valiant Capital Management. Existing investors, including Andreessen Horowitz, Bessemer Venture Partners and FirstMark Capital also participated.

Update: Pinterest confirmed the funding and released this statement from CEO Ben Silbermann: “Our focus is on helping millions of people discover things they love and get inspiration to go do those things in their life. This investment gives us more resources to help realize that vision.”

Pinterest’s last round was in May of 2012, when it raised $100 million from Japanese e-commerce firm Rakuten.

It’s likely that the San Francisco-based Pinterest will use the money for further product development, as well as to accelerate international expansion, to further expand the scope of its impact and reach.

While it sounds too simple to be so valuable, consumers have flocked to the free site on which they “pin” photos of their interests and share them widely. Usage has exploded and has also become an increasingly key driver of traffic across the Web.

It now has close to 50 million unique monthly users worldwide and has quintupled its employees to 100 in the last year.

Such growth has become invaluable to many doing business across the Web.

As an article in The Wall Street Journal, which had also flagged funding efforts, recently noted:

Businesses said they also have gravitated to Pinterest because “pinned” content has a different life cycle than what is posted on Facebook and Twitter. Brian Madden. executive director of social media for Hearst Corp.’s Hearst Digital Media, said content that Hearst puts onto Pinterest can resurface months later when people continue to discover it. In contrast, posts on Facebook and Twitter tweets produce “a lot of initial interaction” before fading.

“The longevity of content [on Pinterest] is very valuable to us,” said Mr. Madden. He adds that in December, Hearst got more online traffic through Pinterest than Facebook and Twitter combined. Overall, 3% to 5% of traffic to Hearst’s various brands was through Pinterest that month, with about 1.5% from Facebook and 1.5% from Twitter, Hearst said.

I have a call into Pinterest and await confirmation about the funding.

Now that the tech investment buzz cycle has pivoted in an enterprise-friendly direction, I thought it was time to check in with Levine, a partner at venture capital firm Andreessen Horowitz.

I talked to him late last year on the heels of a busy summer. In July, he led AH’s stunning $100 million investment in GitHub, then followed it up with an $11.2 million investment in Meteor, and in October, an investment in Udacity, an education startup.

Perhaps hinting that 2013 will be as busy as 2012, last week he led a $30 million investment in Data Gravity and joined its board of directors.

We had a pretty long conversation. His fundamental argument about why smart enterprise-focused startups make for good investment opportunities comes down to one simple notion: Pretty much everything that’s been running in the corporate IT environment — things on which companies will spend more than $3 trillion this year according to some educated estimates — is ripe for a significant disruption that will make it less costly to own and operatee, more efficient, less prone to failure and simpler to use. That means a lot of large companies who have a lot of skin in the game maintaining the status quo are likely to have their worlds seriously rocked in the coming years.

Sound like fun? It’s exactly what AH hired him for two years ago.

Here are some highlights from the first half of our conversation. I’ll post the second half soon.

AllThingsD: Peter, the thing I keep hearing people say these days is there’s this feeling that the venture community is sort of “waking up” to the enterprise, or that it’s suddenly cool. You, on the other hand, have been all about the enterprise from the start. What do you think about that?

Levine: Yeah, it’s a really good time to be investing in the enterprise. We see so many interesting companies in the space right now. Just for context, it’s interesting that you comment on the idea that people are just waking up to the enterprise, and that’s exactly how I have felt for awhile, that there’s this renaissance in enterprise computing. There’s an awakening up and down the stack for new products that are going to service the enterprise.

Like what?

In my mind there are three categories that are all being disrupted at once. Cloud infrastructure: All the underpinnings of it all — storage, security networking and virtualization — would all fit there. At the next layer there’s software-as-a-service, though now there’s almost anything as a service. That’s transforming all the on-premise applications. At the highest level, mobile is transforming how people are consuming information and data and applications they are using. … In the cloud infrastructure you can see someone like a Cisco as the old guard, or even server vendors to some extent, and the new folks being VMWare, which totally upended the server world. For networking, you might see Nicira and other companies in the software-defined networking space as examples. It’s early days in that. There’s a big shift in software driving new network infrastructure rather than hardware and components driving the network infrastructure. In the same way, a VMWare can turn a server into an infinite number of servers. With SDN, the hardware component, it may even be a server in this case, with software basically creating a virtual network.

I get the point on Software-Defined Networking, though lately Cisco would argue, and not entirely without merit, that it has some of its own SDN chops. But I think your point is bigger about incumbent companies in the enterprise.

Exactly. The point isn’t whether Cisco has the technical chops to go do SDN, and it’s not whether they see this trend or don’t see it. They see it as well as everyone else. The problem is that from a business model standpoint, it’s really hard to go from one side of the pillar to the other. We’re talking about the commoditzation of components that very strongly eat into revenue streams and how revenue is recognized. That may sound like a minor accounting rule. But it is huge. With software, if I have to prorate my revenue for three years over the course of a sales engagement, rather than book it all up front as you do with a hardware sale, it dramatically shifts the sales model, the revenue model, the go-to-market model. It’s not only about the technology. For someone like a Cisco, they may very well have the technology chops, but there it’s about commoditizing the very revenue stream you rely on for your existence.

So I presume there are more examples like this in other parts of the stack?

Of course. There’s software-as-a-service on one side. There’s SAP, which has a long history of running big on-premise apps. And then you go to the other side. The whole transformation began with Salesforce.com. Ten years ago, Salesforce.com was an outlier. It was heresy to even think about putting precious customer data outside your firewall. I think that Salesforce really paved the way for the entire software-as-a-service category. And now every part of that stack — from business intelligence to analytics, to performance management to CIO tools — are all moving from the on-premise equivalent to off-premise, SaaS-based equivalents. Every major on-premise vendor has an equivalent off-premise counterpart.

And yet here you have the same thing as in your first example: SAP and Oracle are buying SaaS companies and talking about how they, too, are running in the cloud.

It’s true. They can acquire their way in. They have a lot of money. However, I’ve worked at large companies, and when you’re in there, you have this revenue base, and have a history defining how you’ve done things for the past 20 years, from sales to engineering to architecture. So even at the executive level, you can have every intention to transform the business and move into the new cloud architectures and so on, as the strategy trickles down through the organization it becomes difficult to implement because of the way people are managed and it becomes very hard to swallow some of these acquisitions and have them flourish. Basically the old guard suffocates the new innovation by not letting it flourish.

So we talked about software-defined networks, and there was last year a lot of attention on new companies there. Where’s the next area of attention?

Three years ago we invested in Nicira under the assumption that this was coming. There are still opportunities there, but the nature of this business is such that when a successful outcome like that happens, there’s a flurry of activity, where the venture community tends to pile on the next 40 companies doing similar things. But there’s other areas. Storage is a really interesting area right now. If you look at computing being commoditized by VMware, and now networking being commoditized by SDN, storage is the most expensive component at that layer. And it has been dominated by the same architecture and the same companies — EMC, NetApp, Hitachi, IBM — for at least 20 years. Same architecture, same companies. So I do believe there is an opportunity for companies in that layer to be disaggregated. Now, people have been talking about that for a long time. I was one of the very early employees at a compay called Veritas in the 1990s. So it’s a space that I have an affinity for. The interesting part of that market is that people have talked about the commoditization of storage since then. That said, it’s actually pretty interesting.

So what is startup vs. incumbent dynamic in storage?

In the past there was only the enterprise data center. And a startup would have to go head to head against an established startup in the data center. Whatever you’re selling, storage or networking or security, you’re going head to head with the incumbent players. And for a startup it is incredibly different. There’s questions about service and support and features, and there’s a CIO who says, well you never get fired for buying X or Y. So what’s happened now — and it just became clear when I talked with a friend about this recently — is that whole cloud architectures that are being set up in parallel to enterprise data centers, maybe inside or outside a company, or whether it’s Salesforce or Facebook, or Zynga or Amazon, those are the companies that are very sensitive to price, anti-incumbent, they’re adaptable to letting startups come in. So where a lot of new startups are starting to get traction is with these new cloud architectures, and it might be within a corporate infrastructure, and where there’s green field opportunity. What you find in these environments is a lot of commoditization at every part of the cloud infrastructure layer — whether it’s compute, networking, security or storage — they’ve all been greatly commoditized as compared to the traditional data center. That parallel universe has given startups the ability to make an inroad by gaining traction and relevance. And those companies are the lead users. The cloud infrastructure has dragged the crusty old data center to innovate in a new way.

So who are the companies you’re starting to see and invest in doing that disruptive work in storage?

We recently did an investment in a company called Convergent-io, which is building a storage networking switch that will leverage commodity disks at performance and reliability rates that are equal to if not better than current storage arrays. So that is the whole magic. You have to get equal or better performance and reliability. The whole idea of using flash is really interesting, but that’s essentially using the same architecture. What I’m sort of trying to leapfrog in the storage space, is to ask how storage can become commoditized on the back of commodity components.

You’re not a believer in the idea that flash can save the world, at least inside the data center?

Flash is expensive, but it’s still a storage array that sits there with a lot of expensive stuff around it. The flash stuff is linear and sequential versus the way storage array has tended to work in the past. My belief is that fundamentally there won’t be a storage array anymore. Now, that’s a big leap. But in the same way, things will change up where software will just define the storage layer. I’m talking commodity flash and disk as being the basis for the infrastructure.

A company called DataGravity, based in Nashua, N.H., is aiming to reduce the complexity of getting useful information from stored data. It announced today that it has taken $30 million in a Series B round of venture capital financing. The round was led by Andreessen Horowitz, and Peter Levine, an AH partner, will join DataGravity’s board. Existing partners Charles River Ventures and General Catalyst Partners also particpated in the round.

The company is being a little cagey about what exactly it is doing, but it was started by Paula Long and John Joseph, two execs from EqualLogic, the storage company acquired by Dell in 2008. Long was a founder, and Joseph was vice president of marketing and product management.

Where EqualLogic was all about making the complex business of managing data storage in the enterprise easy enough for a general IT person to handle, DataGravity is aiming to do something similar in the area of extracting useful intelligence from data repositories.

“You’ll hear a lot about companies going after data repositories, but it’s usually done with a big professional services component to it,” Long said. “Usually a third-party company will arrive at your site with three or four people who will mine your data for you for $150 an hour. The companies we want to sell to won’t be able to afford that. Nor will they have the people with the necessary skills internally.”

“These are companies looking for business intelligence, but who are looking for it in a more consumable fashion,” Joseph said.

In a statement, Levine called DataGravity one of the “pioneering companies doing the hard work of solving intractable enterprise challenges.”

DataGravity expects to be more specific about its plans next year. In the meantime, it will use the new round of funding to help build the product and set a go-to-market plan for 2014. It is also actively recruiting people in the fields of data visualization and user experience.

In mid-November, longtime entrepreneur, active angel investor, iconoclastic blogger and hardcore New Yorker Chris Dixon told the tech world something it least expected — that he had taken a job as a venture capitalist at one of Silicon Valley’s most powerful firms, Andreessen Horowitz.

Well, he’s arrived finally, and moved himself to San Francisco and his office to Sand Hill Road for real — even though he is still keeping his apartment back East.

It’s been a long and winding road to here for Dixon, who was CEO and co-founder of SiteAdvisor, which was acquired by McAfee, as well as recommendations engine Hunch, which was bought by eBay a year ago.

He is one of the founding members of Founder Collective, an East Coast-based seed-stage venture firm run by entrepreneurs, making a lot of investments in companies such as Skype, Invite Media and OMGPOP. Previously, he programmed financial algorithms at a high-speed options trading firm, and has also worked at Bessemer Venture Partners.

And, perhaps most intriguingly, Dixon has also blogged a lot about what needs fixing in the VC industry (a lot, according to him).

Yesterday, I motored the Mazda 5 down to Andreessen Horowitz’s office to talk about the move with the always clever Dixon, who is hoping to focus on a range of consumer-focused investments, and perhaps cast his freshly monied net more widely.

Here’s the video of the interview:

]]> http://allthingsd.com/20130125/go-west-young-geek-chris-dixon-on-why-he-became-a-silicon-valley-vc-at-andreessen-horowitz-and-more-video/feed/ 0 http://allthingsd.com/20130107/seven-more-questions-for-okta-ceo-todd-mckinnon/ http://allthingsd.com/20130107/seven-more-questions-for-okta-ceo-todd-mckinnon/#comments Mon, 07 Jan 2013 15:30:42 +0000 Arik Hesseldahl http://allthingsd.com/?p=282755 It has been more than two years since we first came across Okta, the startup that aims to make it easy for companies to manage who can and can’t sign in to all the cloud computing services they use. The company has been going places since then.

Late last year, it landed a significant round of venture capital funding, a $25 million Series C led by Sequoia Capital. Prior investors Andreessen Horowitz, Greylock Partners, Khosla Ventures and Floodgate all participated, too. The round nudged Okta’s total capital raised to north of $52 million.

The funding announcement was accompanied by a larger vision statement about what Okta aims to achieve. In that statement, CEO Todd McKinnon argued that “identity is central to how work gets done in a business,” meaning that Okta aims to be a lot more than the company that makes it easy to manage account credentials.

I recently had a chance to catch up with McKinnon in New York to talk about what he meant by that, and to flesh out what he sees happening at Okta in the coming year.

AllThingsD: You’ve just landed a big C round investment, but it coincided with the publication of a big vision statement. What is the vision statement all about?

McKinnon: I think people misunderstand a lot of things about our company. The first thing they think is that we’re just for cloud stuff. And CIOs and other people thinking about building the next generation of their IT environment don’t want two identity systems. They don’t want the old that barely worked, and the new one that doesn’t talk to the old one. They want one. And we’re positioned to build that. We’re trying to be more aggressive at communicating that.

Initially, everyone understood the identity layer to be a simple manner of managing all the credentials for using cloud services. Now you’re reaching into more on-premise products. How much of a pivot is that for you?

The vision has always been about a single identity layer for everything. The reality is that we started as a little cloud company; the most receptive buyers were companies doing a lot of cloud stuff. So that was how we communicated about ourselves to the marketplace. And now the product has matured to a point where we can really communicate about the vision, about a unified way of managing identity.

Give me some sense of momentum. Funding is certainly an indirect indicator, but what else is going on?

We have, in the last year, added 140 enterprise customers, which brings us to more than 200. We’ve added 300,000 end users. Those are paid enterprise-user seats, which means there’s real money behind them, and that has brought our total user footprint to 500,000.

The obvious thing that people start wondering about a company like yours is when you might be ripe for acquisition, or if you’re going to go the distance. I can think of a handful of cloud and software companies, like Salesforce.com or Oracle or IBM, that could be logical buyers. What are your thoughts about this?

We’re building the identity layer for the next generation of corporate IT. Everyone is going to want to do something like this. You saw Saleforce’s announcement that they want to do this, too. This is clearly something strategic. The value of our product comes from it being in the hands of a neutral party. Our customers want Switzerland; they don’t want someone like, say, a Salesforce.com or a Google, because it would be beholden to their own apps.

I’m reminded that David Sacks, the CEO at Yammer, used to say something similar about being Switzerland when asked about being acquired. Look what happened there: Yammer is now part of Microsoft. Couldn’t the same thing happen to you? And what would it mean if it did?

It’s different for us. If you never connected Yammer to anything, it could be valuable. If any one of our integration partners, say, Jive or Box, or any one of those companies cuts us off, the value of the product goes down. So it’s different in that regard. The Yammer platform is still valuable with no integrations. Our platform is not. So I think that’s a big difference. It gets back to the funding. We’re venture-backed. At the end of the day, I have a responsibility to my shareholders, and we have to build enough momentum in the company to have the outcome of not being acquired, to be superior in the minds of my shareholders than the outcome of being acquired. Clearly at Yammer, they couldn’t do that.

Now you jumped ahead to my next question. Salesforce’s Marc Benioff announced a plan to create a competitor to Okta, and we talked about it at the time. How far, to the extent that you’re aware, has that effort come along? Are you worried about it?

Anytime a big company announces they want to compete with you, you should be worried. They said they’re going to build a product, and that’s definitely going to be a competitive threat. The reality is that Salesforce is doing a lot of things, and they’re spread very thinly. I don’t think they’re going to make the kind of investment necessary.

What will you do with the money?

The big thing is to build out the product. Right now, it’s robust, scalable, used by tons of customers live. But there’s a lot of work to do on it. We have 2,000 connectors to different applications and services, but there’s more than 2,000 of those. We need 20,000 connectors and then we need 50,000. We need to really expand that number and connect to everything. Every device, every application, every platform. So we’re going to use the money to build the product in that way. If a customer has an application that’s built by some regional provider, with maybe 50 customers in some niche business, to a customer in a certain vertical, that application is very important. They don’t want to have some kind of one-off situation where they can sign in to everything they use, but not this one thing. And it’s not economical for us to go out and build the connector ourselves. So we need to have a platform where someone can go and build the connector themselves and share it with anyone who might need it. The thing about our platform, because it’s based in the cloud, is that it can be maintained and supported over time. There’s also some exciting things we can do with helping companies collaborate with each other. So if two companies are using Okta, they can connect their systems across firewalls more easily. That’s the identity network we’ve been talking about.

]]> http://allthingsd.com/20130107/seven-more-questions-for-okta-ceo-todd-mckinnon/feed/ 0 http://allthingsd.com/20121221/why-malls-are-getting-mauled/ http://allthingsd.com/20121221/why-malls-are-getting-mauled/#comments Fri, 21 Dec 2012 23:04:37 +0000 Jeff Jordan http://allthingsd.com/?p=280152

Image by Paul Hohmann

“Online is clearly taking share from brick and mortar. … [T]his is likely to continue”
—International Council of Shopping Centers, last week

America has too many malls.

I’ve recently blogged that many traditional brick-and-mortar retailers are being threatened with “economic destruction” by their advantaged online competition. In an interview with Bloomberg TV, anchorwoman Nicole Lapin asked about the implications of this dynamic on retail real estate. I said I hadn’t studied it, but I thought the ramifications would be very big and very negative (I believe the phrase “apocalyptic” was used).

I’ve since had the opportunity to spend some time looking at this issue, and I believe we’re seeing clear signs that the e-commerce revolution is seriously impacting commercial real estate. Online retailers are relentlessly gaining share in many retail categories, and offline players are fighting for progressively smaller pieces of the retail pie. A number of physical retailers have already succumbed to online competition, including Circuit City, Borders, CompUSA, Tower Records and Blockbuster, and many others are showing signs of serious economic distress. These mall and shopping center stalwarts are closing stores by the thousands, and there are few large physical chains opening stores to take their place. Yet the quantity of commercial real estate targeting retail continues to grow, albeit slowly. Rapidly declining demand for real estate amid growing supply is a recipe for financial disaster.

There are very few thriving physical retailers these days outside of the daily consumables markets. I did a quick analysis on the high-level health of the National Retail Federation’s list of the Top 100 retailers in 2012, focusing on merchandise retailers that would likely be located in malls (removing grocery, drug, restaurant and online retailers). I looked at three measures of retailer health: total sales growth, comp store sales growth and number of stores.

The analysis doesn’t paint a very pretty picture regarding the health of the leading physical retailers in the United States. Total sales growth is mixed and is negative for 20 percent of the sample. Comp store sales growth — arguably the key measure of retailer health — is also mixed, and a quarter of the sample is negative. And note that many of these sales results include the retailers’ online segments, so the picture for their physical stores is even worse. Lastly, store counts are simply stagnant — about as many top retailers shrank their store count as expanded it, and precious few are expanding aggressively. The largest retailers in the U.S. do not look very healthy. And if they’re struggling, it’s likely that their more marginal physical competitors are struggling even more.

I went back to the Top 100 retailers in 2007 to see how that crop had fared five years later and found that four of these top retailers had already gone away through Chapter 11. Interestingly, the picture of these four doesn’t look that different than the 2012 list.

Source: Stores.org Top 100 Retailers

This declining retailer health is directly impacting malls and shopping centers in the form of very high vacancy rates and sluggish rents — exactly what you’d expect to see where supply exceeds demand. Both factors deteriorated quickly during the economic crisis of 2008-09, but they’ve shown virtually no improvement since in spite of improved economic conditions. The recession was the catalyst, but competition from online retailers can only be the continued driver. The mall business isn’t very healthy, either.

These trends are hitting the market capitalizations of most of the largest owners of retail real estate. Simon, General Growth, DDR and Kimco among them own over 600 MILLION square feet of U.S. retail real estate, according to nreionline. Simon’s stock has performed strongly, but the other three stocks have created virtually no value over the past decade.

Source: Yahoo! Finance

Most real estate professionals understand that profound changes are afoot. Don Wood, CEO of Federal Realty Investment Trust, says, “There is too much retail supply in this country.” The Wall Street Journal reports, “Green Street Advisor, an analysis firm that tracks REITs, has forecast that 10 percent of the roughly 1,000 large malls in the U.S. will fail within the next 10 years and be converted into something with far less retail. That’s a conservative estimate; many mall CEOs predict the attrition rate will be higher.” And Daniel Hurwitz, president and CEO of DDR, observes, “I don’t think we’re overbuilt, I think we’re under-demolished.”

I agree with the above perspectives, although I believe they likely understate the eventual impact on malls. A report from Co-Star observes that there are more than 200 malls with over 250,000 square feet that have vacancy rates of 35 percent or higher, a “clear marker for shopping center distress.” These malls are becoming ghost towns. They are not viable now, and will only get less so as online continues to steal retail sales from brick-and-mortar stores. Continued bankruptcies among historic mall anchors will increase the pressure on these marginal malls, as will store closures from retailers working to optimize their business. Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online.

This in turn creates further opportunity for online commerce. If I were thinking of starting a new retail brand right now, I would unquestionably start it online. And many very talented entrepreneurs are doing just this! I personally shop at Bonobos for pants, J.Hilburn for sweaters, Ledbury for shirts and Warby Parker for eyeglasses. All of these brands design and source their own goods. They historically would have started in the mall but they now are starting online, a trend that will undoubtedly continue. There clearly will be fewer new offline retailers to take the space vacated by the disappearing brick-and-mortar chains, further pressuring malls.

And in an ironic turn, many of these online brands are experimenting with offline stores — but typically with some important twists. Bonobos and Warby Parker have built showrooms in their New York offices where consumers can come in and try on samples. But if the consumer wants to purchase items, then the companies fulfill the product from their warehouses — they don’t stock inventory in their “stores.” Bonobos has expanded this concept into a few additional locations, but not mall locations. Instead, they are selecting lower cost, non-mall locations and using emails to their online customers to drive folks to these locations. They do this because a consumer’s purchasing typically expands after a visit to their physical store, and the costs are not high given the lack of inventory and lower rents and staffing costs. If this trend expands, it will provide further challenges to malls.

In researching this post, I came across a fascinating (and slightly morbid) Web site called deadmalls.com, a site that chronicles the tales of hundreds of already or soon-to-be dead malls. Co-founder Brian Florence writes, “I started deadmalls.com with my friend Peter Blackbird in 2000 when we both realized that Pete had mountains of data about dead and dying malls stuck up in his head. Why keep this information to yourself? And, realizing the burgeoning power of the Internet and its ability to draw in more information, the site was created to harness stories of woe and merriment from others. It’s been a great success.”

Unfortunately for mall owners, the content on deadmalls.com is about to expand substantially. There are just too many malls in America, and this will only get worse.

Jeff Jordan is a partner at Andreessen Horowitz and is on the boards of AirBnB, Belly, Fab, Circle, Lookout and Pinterest, as well as OpenTable, Wealthfront and Zoosk. Previously, Jeff was president and CEO of OpenTable, which he took public in 2009. Before OpenTable, Jeff was president of PayPal, and he was previously the SVP and general manager of eBay North America. He blogs at http://jeff.a16z.com/.

]]> http://allthingsd.com/20121221/why-malls-are-getting-mauled/feed/ 7 http://allthingsd.com/20121220/ifttt-raises-7m-led-by-andreessen-horowitz/ http://allthingsd.com/20121220/ifttt-raises-7m-led-by-andreessen-horowitz/#comments Thu, 20 Dec 2012 21:00:24 +0000 Liz Gannes http://allthingsd.com/?p=279756 IFTTT, the maker of handy tools that connect various Web and mobile apps together, has raised $7 million in Series A funding.

The San Francisco-based company provides connective tissue between services like Dropbox and Instagram, Twitter and Google Drive, and LinkedIn and Salesforce Chatter — and all sorts of similar combinations. Users can write rules to automatically archive their content, to receive notifications when something in particular happens or to aggregate and syndicate their own posts.

IFTTT tries to be friendly to non-geeks, but it’s still not terrifically accessible. That starts with its name, which is pronounced like “gift” without a “g.”

IFTTT CEO Linden Tibbets said users have created more than 2.5 million “recipes” already, and his company is working on new projects around a self-serve platform for apps to add themselves, a consumer-friendly mobile app and ways to retroactively apply IFTTT to data from the past.

Tibbets also said he hopes that IFTTT will prove useful enough that application makers start recommending it to their own users rather than building such functionality themselves.

Andreessen Horowitz partner John O’Farrell, who is joining the IFTTT board, talked a bit about how the company fits into the social media platform wars, where services like Instagram cut competitors like Twitter out and platform makers’ changing policies often befuddle developers.

“I don’t think there’s anything wrong with the silos,” O’Farrell said. “The silos are because these companies are very good at what they do.”

O’Farrell said Andreessen Horowitz had trouble fitting IFTTT into its consumer or enterprise investment buckets, but that was part of the company’s charm.

He further put in a plug for his firm as a Series A investor, saying it remains active at that stage of investing even as others have pulled away. Andreessen Horowitz made 12 Series A investments this year, by O’Farrell’s count, as compared to eight per year in its first two years as a firm.

IFTTT previously raised seed funding, and seed investors NEA and Lerer Ventures also participated in the Series A round.

]]> http://allthingsd.com/20121220/ifttt-raises-7m-led-by-andreessen-horowitz/feed/ 0 http://allthingsd.com/20121219/kamcord-gets-backing-from-top-investors-to-record-mobile-game-play/ http://allthingsd.com/20121219/kamcord-gets-backing-from-top-investors-to-record-mobile-game-play/#comments Wed, 19 Dec 2012 12:30:44 +0000 Tricia Duryee http://allthingsd.com/?p=279129 Andreessen Horowitz, Google Ventures and Tencent are just three of the investors backing a small San Francisco start-up called Kamcord, which is enabling gamers to record their play on mobile and share it to social networks.

Wikipedia

The interest in the six-person company shows how significant recording game play has become over the past year as other sites like Machinima and TwitchTV have become phenomenal hits within the gamer community.

What’s different about Kamcord is that it is recording mobile games, whereas other companies in the space have so far been focused on console gaming and PC gaming.

Matt Zitzmann, CEO and co-founder of Kamcord, said the company is announcing a seed round today totaling $1.5 million. Other investors in the round include Merus Capital, Y Combinator, XG Ventures, Digital Garage, Plug and Play Tech Center, iVentureCapital, GVA Capital and Netprice.

Kamcord is distributing its software to game developers via a software development kit, which records what’s happening on the phone’s screen while someone plays a game. After a level or game is completed, the gamer has the opportunity to watch the video and then share it to Twitter, Facebook, YouTube or email — which they very well might do if they achieve a new high score.

So far, the free SDK is live in more than 57 games on iOS, and is creating an average of seven videos per second. While that’s a lot of video, the number could be deceiving, since developers often automatically record game play regardless of whether a user ends up sharing or watching it. The video is stored on the phone until it is shared.

Zitzmann hopes to monetize the technology by helping developers drive downloads to their games. For example, last month he said that Kevin Rose, a partner at Google Ventures, tweeted a link to one of his videos. Afterward, 20 percent of the viewers clicked through to either the App Store or Google Play to see more info on the game (it’s unknown how many people downloaded it).

Zitzmann said Kamcord is playing off a number of trends that are currently hot, which is likely the reason for investor interest.

“We are riding a few waves: The rise of mobile gaming, plus app distribution changing and the popularity of recording and sharing,” he said.

Along with the potential for others to enter the space, Applifier, with offices in Finland and San Francisco, has developed a service called Everyplay that allows users to post their game play to social networks. The company recently raised $4 million, according to Inside Social Games.

]]> http://allthingsd.com/20121219/kamcord-gets-backing-from-top-investors-to-record-mobile-game-play/feed/ 0 http://allthingsd.com/20121217/andreessen-and-mixpanel-call-for-an-end-to-bullshit-metrics/ http://allthingsd.com/20121217/andreessen-and-mixpanel-call-for-an-end-to-bullshit-metrics/#comments Mon, 17 Dec 2012 19:34:59 +0000 Liz Gannes http://allthingsd.com/?p=278552

Creative Commons image via toolmantim

Page views, registered users, app downloads. A hundred thousand of these, a million of those. These are the numbers and milestones tech companies brag about, both to press and investors.

But honestly, Web sites that require you to repeatedly click through to see additional pages are often just crappy. Download counts can be easily inflated if an app developer is willing to pay. Registered user counts don’t show whether something is the next big hit or a passing fad.

Analytics company Mixpanel and its investor Andreessen Horowitz are trying to persuade the tech world to be more honest with itself by reporting numbers that are far more informative: Engagement and retention. (Yes, those happen to be the very things Mixpanel measures, but as I’ve written before, they make a lot of sense.)

Some people call page views and the like “vanity metrics,” but Marc Andreessen and Mixpanel founder Suhail Doshi have decided they want to raise the shame level by calling them “bullshit metrics.”

Andreessen told me in an interview last week, “People think they’re richer if they have Zimbabwean dollars than U.S. dollars.”

“We and other investors need to get more vocal,” Andreessen said. “Page views and uniques are a waste of time.”

Andreessen said his firm won’t throw start-ups out the door if their pitches include bullshit metrics — but it’s perhaps something they might consider.

And it’s not only start-ups that try to push big numbers over reality; Google famously obfuscated Google+ user counts as it was getting its social efforts off the ground.

The problem is, once one company reports a bullshit metric — like how many registered users it has — its competitors don’t want to appear smaller by reporting something real — like how many monthly active users it has. So the bullshit metric shaming needs to be a broader movement for it to work.

(To which I say, where are the bumper stickers?)

“We can do better as an industry. We should do better because collectively we’re not benefiting — we’re all just fooling each other,” Doshi wrote in a blog post he’s publishing today.

Bullshit metrics do a disservice to the companies reporting them, Doshi said. When companies focus on numbers that are not meaningful, they aren’t optimizing their efforts for what could really help their business.

As an alternative, Doshi proposes — and he is not the first to do so — that every business has a natural goal that correlates with its success. For instance, Yelp benefits most when it has more reviews, and Instagram when it has more photos uploaded. Measuring that “one key metric” can lead to insights that are particular to that business, and optimizing for it can give the company an edge versus competitors that are not so fine tuned.

Here’s Doshi’s blog post:

Bullshit metrics

Every day feels the same. A fledgling startup tries to appear like the up-and-coming market leader while the market incumbent aims to protect its dominance. It has become exhausting to keep up with how fast everyone seems to grow: 100,000 new users per week here, 20 billion monthly pageviews there, and let’s not pass up a watershed moment like 3 million members total. These are the industry’s most praised metrics.

Sadly, we haven’t moved forward over the past decade despite our whole industry becoming smarter about how it measures and analyzes data. Companies still pitch investors with a cumulative user sign up graph, sell advertisers on how many pageviews they get, and bamboozle reporters with the biggest numbers they can find regardless of whether they correlate to success. We can do better as an industry. We should do better because collectively we’re not benefiting–we’re all just fooling each other.

So, enough with the bullshit metrics.

New metrics for the new world

The internet has evolved in the past decade. Websites are no longer static; they are dynamic. Businesses strive to build products instead of websites because they are more rich, more engaging, and more sophisticated. The web 2.0 era was characterized by its use of AJAX which made websites feel like applications instead of web pages. The concept of pageviews is dying. This is far more pervasive within applications we use on our mobile smart phones. Companies are still pressured to tout pageviews as a metric for success to entice advertisers to spend their dollars with them. And yet, users are not generating more pageviews while flipping through photos on Facebook. Extrapolating this idea further makes you consider what signups really mean. Facebook has done a great job with this. They undoubtedly passed their first billion signups long ago, but they’ve made a point to only talk about getting to their goal of 1 billion users who have been active in the past 30 days.

With any change in an industry, we need a mental model of mapping the old way of measurement to the new way.

Actionable metrics

Companies need to start using a new set of metrics that don’t simply make them feel good. They should use actionable metrics that provide insight, provide guidance, and help businesses make better decisions. I fundamentally believe that actionable metrics give companies a competitive edge.

Today, engagement is the better page view. Engagement is a specific action a user takes and it’s something specific to each business. Twitter can measure engagement by number of tweets and YouTube by the number of views a video receives. For Yelp, an actionable metric would be the number of reviews posted because more reviews likely lead to more users that find more value out of Yelp. More users means more reviews–a network effect. For Instagram, a mobile photo sharing application, an actionable metric would be the number of photos uploaded daily rather than the number of users that signed up and never did anything. Engagement helps us understand how actively people are using our products, whereas a pageview could simply be someone showing up to the product and leaving confused or unimpressed.

The most important metric today is retention. It tells you how often a customer comes back and uses your product again. Retention is an objective way to measure how valuable customers find your product so you can improve it if it’s not valuable enough. The best venture capital firms in Silicon Valley are beginning to expect this metric. Companies are starting to include this metric in their pitch decks to provide transparency into whether they can actually get a high percentage of their 100,000 newly signed up users per day to come back weeks later. The truth is, if less than 10% of people come back, then people don’t find the product valuable. To make matters worse, the percentage of people that come back as time goes on usually declines. Gaming best characterizes this decline because consumers eventually get tired as the replay value of a game diminishes. Now, only a small percentage of the original people who signed up are staying engaged. This particular situation is a reason the number of sign ups a company has attained is not an actionable metric.

But the most important thing is that companies find a specific, actionable metric they can focus vigilantly on.

Your One Key Metric

My experience (I am the co-founder of Mixpanel, an analytics company that helps companies like Airbnb, Khan Academy, Dictionary.com, Match.com, and Path) has shown that companies should start by tracking a single actionable metric that they can literally bet the company on. I call this their One Key Metric (OKM). Companies choosing their OKM realize they must pick an actionable metric because pageviews or sign ups aren’t harsh enough and don’t correlate highly enough with the success of their business.

The best part of OKM is that companies can measure other things related to it, to understand how to improve it. In the case of Instagram, their OKM is likely to be photos uploaded. They can measure the percentage of people that download the app and uploaded a photo, the percentage of people who come back and upload a photo a week later, the growth rate of photos uploaded month after month.

Understanding your OKM often leads to deeper, more valuable questions. The answers often surprise businesses and guide them better than before.

Cutting through

Despite the internet’s evolution, bullshit metrics perpetuate a constant cycle of poor understanding. Let’s strive to understand how our businesses are doing and to pick better metrics–the harsher, the better. Let’s stop fooling ourselves with numbers that don’t represent reality. And let’s push the industry forward as a whole because collectively we’ll all benefit.

]]> http://allthingsd.com/20121217/andreessen-and-mixpanel-call-for-an-end-to-bullshit-metrics/feed/ 0 http://allthingsd.com/20121205/the-renaissance-of-enterprise-computing/ http://allthingsd.com/20121205/the-renaissance-of-enterprise-computing/#comments Wed, 05 Dec 2012 19:02:48 +0000 Peter Levine http://allthingsd.com/?p=275405

“Everything that can be invented has been invented.”
—Charles H. Duell, Commissioner, U.S. patent office, 1899

Last month, we gathered 75 of the top CIOs from around the country to discuss the new generation of enterprise software and the redefined role of the CIO. These CIOs are dealing with an unprecedented level of experimentation and innovative new approaches focused on unsolved problems in enterprise software. The end result will be a complete remaking of the entire enterprise software stack at the intersection of cloud, mobile and SaaS.

All of the CIOs are also facing a changed environment, one where every department within an organization makes its own software buying decisions, outside the purview of the CIO. This “departmentalization of applications” — from Box for collaboration to GitHub for software development to Tidemark for Enterprise Performance Management — means the CIO not only needs to figure out how to enable the department and employee to leverage these software products, but also meet the security and compliance requirements of the larger corporate environment — which, by the way, Bromium and Okta allow you to do. These CIOs know that they can adapt or organizations will adapt without them.

Their jobs weren’t always so difficult. For those of you old enough to remember, there was a time when enterprise computing was almost exclusively dominated by Microsoft, Oracle and Cisco. It was a time when on-premise, Windows-based applications were the de facto standard and there was no alternative. The enterprise was so entrenched that challenging the status quo was viewed as suicidal and very stupid. So hardened was the thinking that most innovation in the enterprise was relegated to mere feature extensions of existing solutions.

Fast-forward to today and the world of enterprise computing has done a 180. Traditional IT is being blown to bits as cloud infrastructure, Software-as-a-Service and mobile computing become the new standards. We are experiencing innovation and usage as never seen before. It is truly a renaissance of massive scale. Hundreds of billions of dollars are up for grabs as buyers shift to new architectures and away from old, as new users and new markets embrace the availability and ease by which they can consume technology.

On the Road to a Revolution

VMware and Salesforce catalyzed this movement from unlikely origins. Both were little known and under-funded, but against all conventional wisdom each visualized a new world order — a world in which the data center was virtual and where applications would run off-premise, eliminating op-ex and painful software upgrades. The world watched but there were few believers. “Suicidal,” people said. “Why would I ever permit my precious customer data to reside outside my firewall?”

But momentum grew. VMware figured out how to effectively break apart the functionality of software from the hardware it resides on, driving a new set of economics into data centers. Salesforce began expanding beyond CRM, demonstrating the wider viability of subscription-based payments and the customer benefits of constant iteration. Customers began to believe that this new vision might actually come true. From a single virtual server and a single customer relationship app, both companies paved the way for a new world order.

Every part of the business software stack is now being remade — from infrastructure to applications to mobile to analytics — with every incumbent in danger of having its core business eroded. And, sure, incumbents will try to buy innovative products and will try to develop their own competing technologies, but the reality is that this new paradigm disrupts the entirety of these businesses. Overcoming a foundational shift cannot be met by a simple product buy or even a strategy change — the new breed of enterprise software start-ups has different revenue recognition policies, different sales models and different go-to-market models, and engineering processes than incumbents. We are talking about transformations occurring here simultaneously in technology and business models! It’s an entirely new approach to IT.

The Departmentalization of Applications

Buyers are clamoring for this new approach. None of our portfolio companies use Oracle. Some use Microsoft, but the majority opt for Google or an open source package. In our own Executive Briefing Center, where we connect and facilitate exchange amongst global brands and the rising stars in tech, we’re finding that even enterprise CIOs are looking beyond mature players to new and emerging technology companies, especially in areas like cloud computing, mobile, big data and SaaS. These are the early indicators of a more permanent shift in IT consumption habits. This shift is resulting in software applications that are targeted for specific business functions. Apptio, for example, has built a world-class application that specifically targets the CIO as a customer. Mixpanel has an application that is in the big data space, but specifically targets analytics for mobile applications. This shift is what I am calling the “departmentalization of applications”.

And entrepreneurs know that incumbents are vulnerable. We see a tremendous number of entrepreneurs bringing a new approach to this crusty old enterprise software market. We see entrepreneurs like Ben Werther of Platfora, who is passionate about up-ending the Business Intelligence market, and Ash Ashutosh of Actifio, who is creating the next generation storage software.

These are entrepreneurs who choose to do the hard work of building software for companies to use, and the software they are creating is elegant, fast, does what it’s supposed to and priced fairly. This is an unbeatable value proposition. For everyone except perhaps the incumbents, this is a great time to be involved with enterprise software.

Peter Levine is a partner at Andreessen Horowitz and blogs at http://peter.a16z.com/. He has been a lecturer at both MIT and Stanford business schools and was the former CEO of XenSource, which was acquired by Citrix in 2007. Prior to XenSource, Peter was EVP of Strategic and Platform Operations at Veritas Software, where he helped grow the organization from no revenue to more than $1.5 billion, and from 20 employees to over 6,000.

]]> http://allthingsd.com/20121205/the-renaissance-of-enterprise-computing/feed/ 5 http://allthingsd.com/20121205/ciphercloud-lands-30-million-from-andreessen-horowitz/ http://allthingsd.com/20121205/ciphercloud-lands-30-million-from-andreessen-horowitz/#comments Wed, 05 Dec 2012 13:16:19 +0000 Arik Hesseldahl http://allthingsd.com/?p=275279 One of the biggest ongoing concerns in the adoption of cloud computing options by large enterprises is security. When you get right down to it, moving data to a cloud application largely means putting it, or copies of it, outside the trusted corporate firewall.

There aren’t many ways to alleviate that concern, but cloud companies, whether service providers like Amazon Web Services or application providers like Salesforce.com, have a pretty strong motivation to do everything they can to lock down their systems and prevent intrusions. And yet the concerns linger.

CipherCloud is a start-up that has come up with an interesting solution to the problem, which comes down to this: Its customers place a secure gateway — it’s a virtual appliance that runs on the customer’s own on-premise hardware — that encrypts data that gets placed in the cloud. It works with several widely used cloud services as well, including Amazon, Salesforce.com’s Chatter and Force.com, Google’s Gmail and Microsoft’s Office 365. It has 40 enterprise customers and 1.2 million end users.

The company said today that it has secured $30 million in VC funding in a round led by Andreessen Horowitz. Also investing in the round are Index Ventures and T-Systems, the venture capital arm of the German telecommunications concern Deutsche Telekom. AH had previously been among CipherCloud’s seed investors.

John M. Jack, a newly named board partner at AH, will join CipherCloud’s board. Jack is the former CEO of Fortify Software, which he sold to Hewlett-Packard in 2010. Before that, he was CEO at Covalent, which in 2008 was acquired by SpringSource, which was itself ultimately acquired by VMware in 2009. And before that, he was COO at Vantive, which was acquired by PeopleSoft in 1999, and is now part of Oracle.

Jack said one of the things that impressed him and the team at AH was the fact that users never really know their data is being encrypted as it comes and goes from the cloud applications. “They use their applications as they normally would with no impact to them,” he said. “Rarely do you see a company like CipherCloud that’s taking advantage of such a huge market opportunity.”

CipherCloud was started by Pravin Kothari, a founder of ArcSight, a security company acquired by HP in 2010 for $1.5 billion. He said one key trick that CipherCloud has up its sleeve is that in the act of carrying out the encryption, that application up in the cloud doesn’t break. Sometimes encryption will break the application, because it messes up the formatting of the data that the application is expecting, and also interferes with the ability to carry out basic things that users want to do on their cloud data, like searching. “We have some patents pending on ways to encrypt the data while preserving the formatting, and without interfering with searching and other tasks that users typically do,” Kothari told me.

The end result is that companies can get the benefit of shifting to cloud applications — which brings with it a lot of cost savings — without having to worry as much about data security. Cloud providers themselves can’t see the data, because the customer remains in control of their encryption keys.

The company can’t name any customers — security companies never do — but its customers include two of the five biggest banks. It has customers in eight countries and 10 different vertical industries.

CipherCloud is, by my count, AH’s third security investment. Founder Marc Andreessen hinted at the firm’s pivot toward security investments in an appearance at D: All Things Digital in 2011. Days later, it made an investment in Silver Tail Systems, which has since been acquired by EMC . Its other security investment is Bromium.

]]> http://allthingsd.com/20121205/ciphercloud-lands-30-million-from-andreessen-horowitz/feed/ 0