It’s a meritocracy. I have no doubt that there are pockets of issues. I can only speak about Sequoia, we have quite a few women partners.

– Sequoia Capital partner Greg McAdoo, answering a panel questions at TechCrunch Disrupt about whether there’s sexism in the venture capital industry

Recently, Funzio sold to Japan’s Gree for $210 million, and Zynga acquired OMGPOP for $180 million; not too long before that, Electronic Arts paid $750 million for PopCap.

In an interview, Pocket Gem’s COO Ben Liu said that mobile game companies are hot commodities right now, but to sell is shortsighted.

“We feel like it’s the early days of mobile,” Liu said. “There’s a decade-long shift occurring from PC and the Web to mobile, and games is only the first vertical to take off. There’s so much opportunity. We need all of our attention on that to be successful.”

Liu would not disclose the company’s revenue, but said that it has been growing extremely fast. Over the past year and a half, the company has moved its offices five times to accommodate the growth of its staff — from 10 to 120 employees.

And as of a few months ago, the company recorded 60 million app downloads since its founding in 2009. Its hit title Tap Zoo generated 20 million downloads alone.

Pocket Gems’ games fall into the “casual” genre, and are focused on building products that have fairly addicting play; they attract a predominantly adult female audience. The games normally have “tap” in the name — Tap Zoo, Tap Pet Hotel and Tap Jungle allow players to build, respectively, their own zoo, pet hotel and mystical rain forest.

Last week, Pocket Gems released its first game exclusively for Android, called Tap Dragon Park, which allows players to train dragons to defend their kingdoms.

Pocket Gems has been able to rise in the rankings without having to tap investors too much. (Maybe their next game will be Tap Bank?) It has raised $5 million in capital from Sequoia Capital and a handful of angel investors, and is profitable.

Here are Liu’s thoughts on some of the issues facing the mobile games industry.

On making acquisitions versus being acquired:

Liu says Pocket Gems isn’t entertaining offers at this time, but will consider making acquisitions of its own. “We’ve been completely focused on organic expansion, but I think as we continue to grow, something we’ll look at is acquisitions, as well. We are focused on building a great team organically, and are opportunistic.”

How many games can you release in a year?

“Last year, we launched 10 games total. Some of them are new IP that requires a larger team and can be franchise-sustaining, and others are seasonal titles or extensions.”

Is there an issue with copycats in the space?

“Yes, all of our games have been cloned extensively by most of our competitors. But that’s one of the prices of success. We’ve always prided ourselves on being an innovator. The thing that is difficult to clone is creativity. … We have a saying: Pocket Gems is a leader and not a follower. And many of our competitors have a fast-follower strategy.”

What are your thoughts about third-party distribution platforms, like Gree and DeNA, which are trying to create mobile social networks?

“We haven’t opened our games to third parties. It’s in our interest to develop our own platform. Their businesses are really compelling, but there’s no winning platform yet in the mobile space. We have our own loyal community, which is a powerful game engine. We don’t want to be dependent on someone else’s platform. Our own great platform is a powerful source of marketing, and it is good at letting our users know about the games. That’s the most effective.”

Is summer a good time for people to play and discover new mobile games?

“It’s a good time. People are on vacation and in transit, and it’s a natural device to use during those times. And people have more downtime and free time. We’ve found historically for it to be good. Holidays are another.”

Though most everything the company provides is free, with no ads, it has been profitable since the beginning of 2009, based on charging a few dollars per month for premium features like larger uploads and selling domain names.

In fact, Weebly is so profitable that co-founder and CEO David Rusenko told me yesterday that it may well go public within the next few years. I think the expression on my face could be described as “Wha??”

“It all comes down to the growth rate,” he continued. “Within a few years, I expect we will have the profile to IPO.”

Even though it’s profitable, Weebly raised an undisclosed amount of funding from Sequoia Capital last year, because of the venture firm’s track record in bringing companies to IPO, Rusenko said.

But really, in an age where it’s all about online conversations and social engagement on Facebook and Twitter, is a Web site creation service so important?

“A Web site is the only medium of semipermanent communication where you can express yourself,” Rusenko argued.

By the way, San Francisco-based Weebly has just 42 employees.

Rusenko said Weebly’s customers include restaurants, teachers and real-estate agents. “Almost all our Web sites are really on the long tail.” Though Weebly’s tools and templates are quite simple, Rusenko said, “We’re building the complete platform for what 90 percent of people need.”

To date, Weebly has grown exclusively by word of mouth — Rusenko said the company has an 80 percent Net Promoter Score (which asks respondents how likely they are to recommend a company), and 80 percent of new users come to the site by searching for “Weebly” or typing Weebly.com directly into their address bar.

As of today, Weebly is kicking off some marketing and PR. The occasion is a nifty iPhone app that helps users create and maintain a Weebly site entirely from their phones. You can check out what it looks like here:

Today, Birst will announce that it has taken a $26 million round of funding led by Sequoia Capital. It is Birst’s fourth round of funding, and existing investors including Hummer Winblad and DAG Ventures are also participating, but it’s not a traditional Series D. Sequoia is investing with its Growth Fund, and that creates a slightly different investment dynamic, Doug Leone, a Sequoia Capital partner, told me.

Here’s what happened: Sequoia had already invested in Birst with its Venture fund. But over the last year or so, Leone started seeing something interesting. Companies that Leone is involved with, either as an investor or as a director — specifically Aruba Networks and Rackspace — had selected Birst after a business-intelligence bake-off versus other vendors. As a director of those two companies, he was able to see the close-up evaluation they did in making their selection.

On top of that, Leone noticed that Birst kept bringing in more customers per quarter, and that those customers were putting ever more dollars on the table. “We decided to make a preemptive offer with our Growth Equity Fund,” Leone told AllThingsD yesterday. “We saw what we thought was the knee of the curve. We saw quite clearly that we were at the beginning of a phase of hypergrowth for this company.”

The main difference between the venture-capital and growth-equity investments is that growth investments are made in companies that have growing revenue and a proven business model, whereas VC investments are made in start-ups that are just getting off the ground. It’s sort of a statement of faith in where Birst appears to be going. “It’s like a later-stage investment. It’s the last money the company is going to need.”

It’s not a small statement, either. This $26 million round is bigger than its previous three rounds combined, and brings its total capital raised to $46 million.

So what’s it going to do with all that money? CEO Brad Peters said he’s seeing a significant acceleration. Customers like the flexibility of a cloud-type BI solution, even if it’s running on-premise. “We need to get Birst out there. We need to build our sales organization, we need to build our distribution channel.” He also said a big announcement around infrastructure is pending, in order to better help Birst — his words — “catch the big-data wave.”

And will it join the parade of companies going public after Facebook? Not right away, Peters said. “We’re on that trajectory, but it won’t happen this year, or probably next. Maybe just after that,” he told me. “We’re building this to be a standalone, independent company.”

The textbook case for BI is comparing data on marketing spend to deals. If you find you’re spending a lot of money on one type of marketing campaign that seems not to be generating leads and deals, and not enough on one that seems to be working better, you can see the pattern and make needed changes. It’s all about synthesizing raw data and turning it into information you can make a decision on, Peters told me last year.

There’s a lot of venture-capital money flowing into young BI companies. Both Good Data and Domo have raised a lot on their own, and there are probably other companies I haven’t thought of, not to mention the large software players like Oracle and SAP, who do business intelligence, and IBM, which tends to favor the word “analytics” over “business intelligence.” Hewlett-Packard’s Autonomy business unit could also arguably be considered a business-intelligence outfit. Given all that activity, it just might be intelligent to to keep watching this business.

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.

If the company is successful, it will have quadrupled its worth since raising $100 million at a $1 billion valuation only 10 months ago.

While that would be astonishing for a three-year-old company, it’s important to note that negotiations continue, and that investors could ultimately value the company at a slightly more modest number (hmm, like $3 billion?!).

A Square spokesman declined to comment.

Square, which was founded by Twitter inventor Jack Dorsey, has quickly made accepting credit cards via a mobile phone into a mainstream and affordable concept for small merchants.

Over the past year, it has quickly expanded beyond handing out magnetic-swipe readers to offer more robust experiences for both consumers and merchants, including software on the Apple iPad that acts like a register, and software on the iPhone that is a virtual wallet.

The payments method has received a warm reception from mostly small businesses, including taxicabs, food trucks, coffee shops and even lawyers and accountants.

The rumors of Square looking to raise more capital started spreading after Owen Thomas, formerly of the Daily Dot, noticed that Dorsey and Square’s COO Keith Rabois were in Boston and Baltimore, where many institutional investors are based. Thomas called Legg Mason, which confirmed it was looking at the San Francisco company.

Previous investors in Square’s three rounds, totaling roughly $137 million, include Kleiner Perkins Caufield & Byers, Tiger Global Management, Sequoia Capital, Khosla Ventures, Visa and well-known entrepreneur Richard Branson.

The big question is whether Square will be able to demand such a hefty valuation.

To determine that, based on what is known about the company, I did some back-of-the napkin calculations to come up with its annual revenue.

Last month, the company said it is now processing $4 billion in annual transactions. Since we know that Square charges 2.75 percent per swiped transaction, and 3.5 percent plus 15 cents per keyed-in transaction, we can start to get a better picture of its finances.

Let’s assume that a quarter of the company’s transactions are keyed in — which demands the higher rate. That would mean the company’s revenue would total nearly $83 million for swiped transactions, and $35 million for keyed-in transactions. Because of the additional 15-cent fee per transaction, let’s add another $15 million (which might be generous, but would break down to 100 million transactions at $10 apiece).

In all, the company’s annual revenue would then be close to $122 million.

Most, but not all of that revenue, is then handed over to the credit card companies for processing fees.

To be sure, the company has grown quickly since its inception, and has its eyes set on the very large point-of-sales market. This year, Square said it had plans to expand internationally, and has just hired a new executive from PayPal to take the lead on the effort. In the future it could also generate revenue from advertising or other loyalty programs, although it does not today.

But, by at least one historical measure, the valuation is rich beyond belief.

PayPal, which was also looking to disrupt the banking industry by enabling peer-to-peer payments online, was sold for $1.5 billion to eBay in 2002, just months after going public at a valuation of nearly $800 million.

At the time it went public, the company was roughly doubling year over year and had generated $103.7 million in 2001, its first full year of operations — or slightly less than Square’s estimated revenues.

Much like PayPal back then, Square faces intense competition, making alliances with much larger companies or raising big war chests critically important.

Square faces stiff competition and pricing pressure from Intuit, eBay’s PayPal, Google and other upstarts, like Pay Anywhere.

Still, it has made a splash that is seeing major reverberations around the sector, which a big valuation will make larger still.

But some deserve the attention: It looks like Instagram is close to wrapping up a Series B round led by Sequoia Capital, according to several sources close to the situation.

Instagram co-founder and CEO Kevin Systrom

The maker of the fast-growing photo-sharing app, which just made its way to Android, is set to receive $50 million at a $500 million valuation, the sources said. Others joining the round could include DST Global.

The Wall Street Journal had reported that some were skeptical that Instagram deserved a half-billion-dollar valuation without revenue to speak of, but there does not seem to be a lack of people wanting to get into the deal.

Instagram received Series A funding of $7 million led by Benchmark Capital just over a year ago. At the time, it had 1.75 million registered users.

The company had 30 million iPhone users before it came to Android this week, at which point it got more than a million new users in 12 hours.

Instagram, which just got its own office on San Francisco’s South Park, had 13 employees at last count. CEO Kevin Systrom declined to comment on fundraising.

(Image courtesy of JD Lasica on Flickr)

The bill makes it easier for some elite companies to stay private, but it also makes it easier for companies to go public by reducing regulatory burdens associated with U.S. IPOs. I spent some time this week asking venture capitalists, secondary market organizers and CEOs how they think it will affect their business.

First of all, the bill says companies with less than $1 billion in revenue — called “emerging growth companies” — don’t have to make Sarbanes-Oxley audited financial reports for up to five years, don’t have to make Dodd-Frank compensation disclosures, can meet with investors before filing to test the waters, and have other rules relaxed.

Here are some relatively readable summaries of the Jobs Act from law firms Perkins Coie and Latham Watkins, and investment bank Goldman Sachs.

There are a slew of rule changes, but the consensus from everyone I talked to is that the JOBS Act is more a reducer of friction than a significant change to the incentives around going public.

The JOBS Act is “more of a perception gain,” said Benchmark Capital partner Bill Gurley, speaking on a panel on IPOs organized by Wealthfront at the Rosewood Sand Hill last night. “It’s marginal, it’s not a revolution.”

Still, the IPO costs today are pretty major, and anything that reduces them could be good for would-be public companies. If it costs $3 million to $5 million today for a company with $80 million in revenue and 10 percent operating margins to go public, “that’s half of your profit right there,” Gurley said.

Multiple speakers at the event griped about the cost of Sarbanes-Oxley as well as the industry of consultants and advisers that has arisen around it. They praised the JOBS Act’s move to give young companies more time to comply so they can push back on the “bullshit overhead” surrounding compliance, as Aruba Networks CEO Dominic Orr put it bluntly.

Some companies anticipate a more dramatic and material effect. Speaking from Washington, D.C., where he’d flown in for the JOBS Act signing, Rally Software CEO Tim Miller told me, “If [the JOBS Act] had passed a year ago we’d probably be a public company today. Right now, it’s so expensive to go public as a small-to-midcap company that it would have taken all our potential profits and then some — and sharing that information publicly would have been a competitive threat to our business.”

On the other hand, another part of the JOBS Act makes it easier for some private companies to stay private. It raises the shareholder limit before companies are required to make public disclosures to 2,000 from 500. And that 2,000 doesn’t include employees.

The consensus I heard is that the infamous 500-shareholder limit has gotten a lot of publicity for the way it affected Google and Facebook, but the reality is that it doesn’t impact very many companies.

Still, raising the limit could, for example, take pressure off Twitter.

A byproduct of the 500-shareholder limit has been the use of restricted stock units, rather than regular stock options, by companies like Facebook, Zynga and Twitter so they can keep hiring without passing the mark. RSUs have become common enough that the SEC released general guidelines for them earlier this year.

RSUs are non-transferable and have no strike price — they’re activated only when a company is sold or goes public. So it’s possible that, post-JOBS Act, companies will go back to providing a more traditional equity upside with stock options.

But some VCs pointed out that the other benefit of RSUs is that they help companies avoid reporting “409A valuations,” which are the tax code’s requirement for a publicly disclosed fair market valuation associated with stock option grants. Private companies like to avoid telling people how much they’re worth.

The coincidence of the JOBS Act and the impending Facebook IPO seems to be prompting the industry to consider the state of secondary markets for private company stock — and perhaps turning away from them.

One of the secondary trading leaders, SecondMarket, last week laid off 10 percent of its staff, while referencing the Facebook IPO.

SecondMarket SVP Jeff Thomas told me this week he thought the major impact of the JOBS Act will be a movement away from RSUs as companies revisit their compensation incentives for employees. Of course, that would be in his interest — because RSUs are non-transferable, they can’t be traded on secondary markets.

Even if going public gets a little bit easier, public markets still come with the problems of “casino investors and quarterly reporting demands” that companies would rather avoid, Thomas argued.

But Gurley and other VCs were dismissive of organized secondary markets. They prefer that their private companies figure out more controlled ways to manage late-stage liquidity for early investors and employees.

Sequoia Capital tells its portfolio companies to include a “right of first refusal” in all their stock options so they can buy them back instead of allowing outside transactions, said long-time partner Doug Leone at the Wealthfront event last night. “Within Sequoia companies, that door is getting shut,” he said.

Karma is designed to help users find reasons and inspirations to give gifts to their Facebook friends, by identifying their birthdays and other occasions (it also works without logging into Facebook).

The selected products seem to mostly be on the fancy, hipster side of the spectrum. They include jewelry and artsy home decor, chocolates and champagne, and Netflix and Spotify subscriptions.

After the giver picks a gift and chooses a custom card, Karma texts, emails or Facebook-messages the recipient to personalize the gift (by picking colors, sizes, etc.) and enter a shipping address.

Karma was founded in June 2011 by the co-founders of Tapjoy, and is funded by Kleiner Perkins, Obvious Corporation, Sequoia Capital and Felicis Ventures.

There are many so-called “social shopping” apps, but Karma’s gifting concept — with its focus on decreasing the friction between gift buyer and recipient — helps this one really live up to the name, for once. Tricia Duryee has written lots on other companies in the space; here, for example.

I couldn’t easily find the Karma app, which was just released, by searching in the Apple store tonight, but here are direct links for iOS and Android.

The move to beef up communications expertise at the prominent Silicon Valley venture firm continues: Sequoia Capital has hired Andrew Kovacs, a well-regarded senior manager from Google, for a new job to help its portfolio companies with public relations and other related issues, sources said.

Google’s top flack Rachel Whetstone told staff about the move this past week, sources said, which will take place in mid-January.

Kovacs (pictured here, looking very GQ), who has been at the search giant for five years, has most recently headed PR for its apps unit.

His appointment comes after competing firms, including Andreessen Horowitz and Kleiner Perkins, bolstered talent to the comms areas of their firms, in order to better service the companies they invest in.

This is especially important to early-stage start-ups and their often young entrepreneurs, who usually have little experience with the media or with marketing. But such expertise is increasingly important in the crowded and ever-noisier tech sector, as companies try to rise above the fray.

Sequoia already has a longtime marketing partner, Mark Dempster, to whom Kovacs will be reporting, serving the firm’s companies in the U.S. and Israel. Kovacs will not be working on PR for Sequoia itself.

Some of Sequoia’s better-known start-ups include Dropbox, Tumblr and Eventbrite.

Mu Sigma helps some of the world’s biggest corporations make sense of the vast amounts of data being produced online. The company, which is headquartered in Chicago with most of its analysts in Bangalore, employs about 1,500 people, up from about 1,200 in June.

The latest funding round was led by General Atlantic, with Sequoia Capital, a current investor, raising its stake. Sequoia had invested $25 million in Mu Sigma in June. The valuation set by the latest fundraising wasn’t disclosed.

Read the rest of this post on the original site »

This time the target is Cotendo, a company that uses a network of 30 data centers distributed around the world to put video content physically closer to consumers, and thus speed up delivery, especially to mobile devices. The acquirer is Internet concern Akamai, which says it will pay $268 million, plus the assumption of unvested options.

Cotendo had been reported to be the subject of a bidding war between Akamai and rival Juniper Networks. Breathless reports at the time, sourced to enthusiastic Israeli newspapers, valued Cotendo as high as $350 million. The deal will close during the first half of 2012.

Even at the lower price, the deal marks a nice exit for several U.S.-based venture capital funds. Cotendo raised $7 million from Sequoia Capital and Benchmark Capital in 2009, and then another $12 million in a round joined by Tenaya Capital last year. In June, it took a $17 million strategic investment from Juniper and Citrix Systems.

Cotendo had grown into an Akamai competitor, with a reputation for being faster at some things than Akamai, and also cheaper to boot. That made it an obvious Akamai target, given its history of acquiring rivals — usually after suing them. In 2005, it took out Speedera Networks for $130 million, after a contentious patent lawsuit between them. Akamai had sued Cotendo last November. So the next time Akamai sues someone, set your stopwatch, because the defendant may be the next one to be acquired.

Akamai’s statement on the deal is below:

Akamai to Acquire Cotendo

Combined technology and teams expected to help accelerate pace of innovation in cloud and mobile optimization

CAMBRIDGE, MA and SUNNYVALE, CA – December 22, 2011 – Akamai Technologies, Inc. and Cotendo announced today that the two companies have signed a definitive agreement for Akamai to acquire Cotendo.

Helping to mitigate the challenges of operating in a hyperconnected world, Akamai provides a secure platform over which businesses can engage users across the Web, mobile, cloud, or a mix of public and private network environments. Cotendo offers an integrated suite of Web and mobile acceleration services. The combination of the two companies’ technologies and teams is expected to increase the pace of innovation in the areas of cloud and mobile optimization.

“As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo,” said Paul Sagan, president and CEO of Akamai. “Cotendo’s technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world.”

“The Cotendo team is very proud of our accomplishments in delivering proven and effective solutions for accelerating Web and mobile assets. By combining our innovative technology and employees with Akamai, we expect our customers and partners will gain access to a comprehensive, global platform and wider portfolio of leading-edge services supported by some of the most experienced providers in the industry,” said Ronni Zehavi, CEO and co-founder of Cotendo. “We look forward to working with Akamai in an effort to create the strongest offering in the industry.”

Founded in 2008, Cotendo is headquartered in Sunnyvale, CA, with a technology center in Israel. Cotendo currently has approximately 100 employees, with over 50 based in Israel.

Under terms of the agreement, Akamai will acquire all of the outstanding equity of Cotendo in exchange for a net cash payment of approximately $268 million, after expected purchase price adjustments, plus the assumption of outstanding unvested options to purchase Cotendo common stock. The closing of the transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to occur in the first half of 2012.

Houzz has brought home $11.6 million in a Series B round led by Sequoia Capital and other investors, including earlier-stage investors Don Katz, Gary Ginsberg, Oren Zeev and Amos Wilnai. Alfred Lin, a VC at Sequoia and former top executive at Zappos, will join Zeev and others on Houzz’s board of directors.

Co-founder Adi Tatarko said Houzz has increased its traffic tenfold since its last funding round of $2 million in 2010, the site has also introduced e-commerce features to drive purchases of home goods.

Houzz first launched in early 2009, a few years after Tatarko and her husband, Alon Cohen, purchased a home and had a hard time finding the right contractors for home renovations, even with friends’ referrals. (Despite the wealth of options now at their fingertips through their own site, Tatarko says they haven’t yet completed the renovation of their own home.)

Tatarko and Cohen eventually quit their full-time jobs and focused on building up the site to what it is today — a fast-growing (and slightly addictive) home renovation Web site that consumers can browse to create idea books and where designers, contractors and renovation experts can upload their portfolios to in order to attract more clients.

There are now 30,000 professional profiles on the site, Tatarko says, spanning 50 metro areas in the U.S.; Houzz sees more than 50 million page views a month and 2.5 million uniques. Users of the Houzz iPad app, which has been downloaded a million times, browse for one hour on average.

The site also now offers more options for sharing through social media, as well as virtual price tags on certain items — a lamp, for example, or a love seat in a living-room setting — that will direct a user to a place where those items can be purchased.

Houzz is currently free for consumers and professionals using the site; Tatarko says they plan to keep it that way, generating revenue through a direct-advertising model. Houzz, she adds, is on track to become profitable in the next year.

Houzz’s growth comes as the U.S. home remodeling market is seeing signs of recovery. This follows a 12 percent drop in spending between 2007 and 2009, due to the financial crisis, according to a report from the Joint Center for Housing Studies at Harvard University. Home remodeling fared relatively well compared to new construction in 2009, with remodeling climbing to more than two-thirds of total residential investment; the market for renovations in the U.S. was said to have approached $300 billion in 2010. (The Harvard report does note, though, that all homeowners aren’t kitchen-gutting and paint-slapping-happy: Housing prices are depressed, and a record number of home owners are late on mortgage payments.)

Tatarko says she and Cohen will use the funding to invest in more engineers to continue to build out Houzz.

At that price, Jive will debut with a market capitalization of nearly $700 million, and has raised about $161 million.

The offering will amount to a nice payout for Jive’s investors and shareholders. Based on the reported share holdings in Jive’s S-1 filing with the SEC, here’s how some of them are making out — assuming the share price stays at $12:

• Sequoia Capital: 16.95 million shares, amounting to more than one-third of Jive’s equity, worth $203.4 million.

• Kleiner Perkins: 6.7 million shares, worth $80 million.
• Bill Lynch, Matthew Tucker: Jive’s co-founders own 7.1 million shares each, amounting to combined equity of nearly 32 percent, worth $85 million apiece.
• CEO Tony Zingale, the former CEO of Mercury Interactive who oversaw its sale to Hewlett-Packard, has 3.6 million shares, worth $43 million.
• John McCracken, Jive’s senior VP of worldwide sales, has 784,000 shares, worth $9.4 million.
• CFO Bryan J. LeBlanc has 694,000 shares, worth $8.3 million.
• Bill Lanfri, a Jive director, former CEO of Big Bear Networks (a Sequoia investment), and a founding investor in RedBack Networks, has 581,000 shares, worth $7 million.
• Robert F. Brown, Jive’s senior VP of client services, has 434,000, worth $5.2 million.
• Brian J. Roddy, senior VP of engineering, has 429,000 shares, worth $5.1 million.

Remedy Health Media, a New York-based health information company, has bought HealthCentral, a start-up that offers online clinical and patient tools, community and content in a variety of topic areas.

Terms of the deal were not disclosed, but the Arlington, Va.-based HealthCentral has raised $50 million from investors such as the Carlyle Group, IAC/InterActiveCorp, Polaris Venture Partners and Sequoia Capital. Allen & Co., which was HealthCentral’s financial adviser for the transaction, was also an investor.

The market for online-based information about health has been a fast-growing one, but it’s still a nascent arena.

Here’s the official press release:

Remedy Health Media Acquires HealthCentral: Creates Industry-Leading Health Information and Technology Platform

NEW YORK, NY – Remedy Health Media, America’s fastest-growing health information and technology company, today announced its acquisition of HealthCentral, a leading provider of online clinical and patient community resources and tools that help millions of patients and caregivers take control of their health and improve their well-being. The acquisition brings together two companies with the shared mission of empowering patients and caregivers with the information and applications needed to efficiently navigate the healthcare landscape to receive better health outcomes. The acquisition is expected to close this week. Terms were not disclosed.

“This acquisition means Remedy now provides the health information industry’s leading portfolio of digital, mobile, and point-of-care information and technology products,” said Remedy Chief Executive Officer, Mike Cunnion.

HealthCentral’s CEO, Christopher M. Schroeder, adds, “This combination creates real opportunities for innovation in an industry segment that is growing rapidly and seeking new solutions. All of us at HealthCentral are very excited that the union of the two companies and the strength, scope, and reach of the new Remedy will be a unique force for better health and wellness.”

With the addition of HealthCentral, Remedy Health Media creates a market-leading platform for healthcare audiences seeking proprietary information and technology to manage their health concerns on their terms as well as marketing partners who want to connect with patients and caregivers on a number of platforms: online, in doctors’ offices, pharmacies, and through their mobile devices. The new Remedy Health Media will influence more than 150 million consumers annually. The company’s reach now includes 23 million unique monthly visitors to its health websites, more than 17 million patients and caregivers at pharmacy counters nationwide, a 20-million member customer database, and a network of more than 600,000 physicians.

“With the acquisition of HealthCentral, we’ve dramatically increased our online reach, sales capacity and our ability to create industry leading health information and technology applications,” notes Cunnion. “The combination creates exciting opportunities to provide even more value to our audiences, customers and strategic partners.”

Remedy Health Media is a Veronis Suhler Stevenson (VSS) company; a leading global private investment firm focused on the information, education, media, communications and business services industries. “Communications growth will be driven by the convergence of technologies in digital and mobile platforms,” said David Bainbridge, Managing Director, Veronis Suhler Stevenson. “Nowhere is this more evident than in the health and wellness sector where the ability to access accurate information is paramount.”

HealthCentral is backed by leading interactive media and technology investors IAC/InterActiveCorp, Polaris Ventures, Sequoia Capital, The Carlyle Group and Allen & Company. Notes Alan Spoon of Polaris Ventures, “We are thrilled to join forces with Mike and the Remedy team. This combination is a unique opportunity to create the largest and most innovative platform for health seekers looking to take action on their terms, and connecting them with our partners and clients.”

Schroeder will remain involved in the business as a consultant to Remedy and the board of directors, and has been named an Advisor to Polaris Ventures.

It wouldn’t be a bad exit for a bunch of U.S.-based venture capital funds, either. Cotendo raised $7 million from Sequoia Capital and Benchmark Capital in 2009, and then another $12 million in a round joined by Tenaya Capital last year. In June, it took a $17 million strategic investment from Juniper and Citrix Systems.

Cotendo is an Akamai competitor. Its content delivery system uses a network of distributed servers around the world to put content physically close to consumers, and it specializes in speeding up delivery to mobile phones and tablets, which is a lot like the business Akamai is known for. The thing about Cotendo is that it has a reputation for being faster at some things than Akamai, and also cheaper.

Akamai has been known to buy competitors. In 2005, it took out Speedera Networks for $130 million, after a contentious patent lawsuit between them. Part of the story driving the Akamai takeover chatter is the fact that Akamai sued Cotendo last November. Akamai CFO J.D. Sherman will be speaking at a Credit Suisse conference in Phoenix on Wednesday. Maybe he’ll shed a little light on the situation.

Meanwhile, analyst Brian Marshall of ISI likes the idea of Juniper acquiring Cotendo in a joint deal with AT&T. Since AT&T is a big Juniper customer, accounting for about 8 percent of sales, and AT&T is also a big Cotendo customer, it would mean good things for Juniper’s relationship with AT&T. If the numbers being reported are correct, it would amount to about 10 percent of Juniper’s cash on hand, which was about $3.4 billion as of the quarter ended Sept. 30. It would be a much bigger deal for Akamai, which had $688 million in combined cash and short-term investments as of the same date.

But here’s a contender: TuneIn is a radio app that gets more usage on iPhone and Android than Pandora or Spotify, according to a recent study.

In fact, TuneIn told AllThingsD last week, in October it had 30 million active users listening to 58,000 different stations from all over the world, with 200 new streams, podcasts or on-demand channels added every day.

Palo Alto, Calif.-based TuneIn is not your average start-up. It was founded in 2002 in Dallas as RadioTime, and for years built an online directory for radio stations that was available through partnerships with makers of devices like the Logitech Squeezebox and Sonos.

Then an outside developer made a popular iPhone app called TuneIn that used the directory to help users stream and record radio on their phones.

RadioTime bought TuneIn last year, and renamed itself and its radio apps for nearly every phone, living room and car app platform. Some 150 of those platforms have TuneIn available now, many of them preinstalled.

TuneIn users can browse among stations and genres; they can also search for an artist or song to find stations that are currently playing it. Most of the apps are free, but on iOS, Android and BlackBerry, users can pay for a pro version that lets them record what they’re listening to.

Late last year, Sequoia Capital secretly invested $6 million in the company and moved it to California. In recent months, it helped find a replacement for the longtime CEO with gaming industry vet John Donham. Donham most recently co-founded Metaplace and sold it to Disney, where he ran technology and product operations for Disney Interactive Media Group.

Donham (pictured below) said in an interview last week that he was happily going about his business at Disney and about to blow off a call from Sequoia’s recruiter because he’d never heard of TuneIn, when he realized he already had the app installed on his phone. Then he looked at some of the glowing TuneIn app reviews from people listening to their hometown radio from halfway around the globe. And then he got a look at the usage stats.

“There’s nothing viral about TuneIn,” Donham recalled thinking. “How did it get to millions of people with no viral and no marketing?” He joined in August.

Of course, there’s a good reason that Spotify and Pandora get more love than TuneIn. They’re creating new music discovery experiences, rather than simply translating existing radio content for a new medium. And they are personalized and social.

(This weekend, while listening to a random pop station on TuneIn at the gym, I heard its local ads for a laser hair removal shop in Minnesota. It’s probably not going to be getting my business anytime soon.)

But while apps like Spotify and Pandora may be shiny and better-known, Donham said, radio is still the top way people find new music.

For now, TuneIn doesn’t add its own advertising, though that will probably come, Donham said. The company is starting a campaign this week with listener-funded stations — like its local KQED — to solicit donations from listeners directly within its apps. It will also soon add discovery and sharing features.

Update: This story was updated to reflect that Sequoia Capital’s investment came in 2010.

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.

Fast forward to October, and Slootman is not only CEO of a new company, ServiceNow, but is getting his old band from Data Domain — which he sold to EMC in 2009 after a takeover battle with NetApp — back together.

So what is ServiceNow? It was started in 2003 by Fred Luddy, the former CTO of help-desk management outfits Peregrine Systems and Remedy, one of which is now part of Hewlett-Packard, the other part of BMC. The ServiceNow idea is basically to compete with HP and BMC by replacing those old on-premise help desk management applications with a cloud-based software-as-a-service offering.

ServiceNow has grown like crazy, doubling its sales every year for eight years in a row — it now has 500 employees and boasts $130 million in recurring revenue. Slootman joined as CEO in April. And now he’s hired a bunch of his old buddies from Data Domain to join him.

Having earlier in the week tapped Arne Josefsberg — a 25-year Microsoft veteran who was most recently general manager of the Windows Azure service — as its chief technology officer, ServiceNow has just hired a batch of Data Domain guys away from EMC:

• Michael Scarpelli, the former CFO of Data Domain will now be ServiceNow’s CFO.
• Dan McGee, the onetime senior vice president of engineering, will be — you guessed it — senior vice president of engineering.
• David Schneider will be senior vice president of worldwide sales and service, taking the same title he held at Data Domain.

Though people know Slootman primarily for his work in the storage business at Data Domain — which he ultimately sold to EMC for $2.1 billion — he calls his journey into that line of business a “diversion.” Before Data Domain, he was a senior executive at Borland Software. “Before I was a storage guy, I was an applications guy. I worked in the software layer, so this is right in my wheelhouse,” he told me. “People say the cloud is hot, but what’s even hotter is cloud management, because people need software to manage it, and we’re right smack in the middle of that set of issues.”

So what’s the plan for ServiceNow? To kick things up a notch, naturally. “We’re getting the company IPO-ready,” Slootman says. And while it hasn’t hired any bankers yet, it’s not for nothing that Slootman just brought in a team of trusted execs who were along for the ride with Data Domain’s 2007 IPO and subsequent acquisition.

If and when it happens, a ServiceNow IPO will be rather different from so many others in recent history. ServiceNow is already cash-flow positive: It has $70 million in cash on the balance sheet, Slootman says, and started with practically no venture capital. It took a small $2.5 million round from JMI Equity in 2005; in 2009, Sequoia Capital invested by buying out some employees’ shares, and Sequoia’s Doug Leone joined the board of directors.

So what happened at Greylock? “I found out that I don’t have the temperament or disposition or DNA set to be a venture capitalist,” Slootman told me. “A lot of people told me I wouldn’t last, and they knew me better than I knew myself. If you’re going to fail at something, it’s best to fail fast and move on to the next thing.”

Here’s some electric weekend reading for those interested in the push and pull between venture investors and start-ups in the frothy Web 2.0 environment.

In an email to Airbnb CEO and co-founder Brian Chesky (which I obtained, embedded below), former Facebook exec Chamath Palihapitiya, who now runs an investment fund called the Social+Capital Partnership, is passing on participating in the recent $112 million round for the hot online rental site that was announced in July.

The deal — which values the company at $1.2 billion — has not officially closed yet, but includes venture firms such as DST Global, Andreessen Horowitz and others. Previous investors include Sequoia Capital.

Palihapitiya confirmed to me that it was his email and that his possible investment in Airbnb was small.

That said, his concerns center on how much voting control of new investors’ preferred shares the founders have in the latest round and also a $22.5 million cashing out, $21 million of which is going to those founders.

Another $9.6 million is being used to buy secondary stock from current Airbnb shareholders, who have to render parts of their vested stakes for the money.

Such wrangling between investors and entrepreneurs is not uncommon in Silicon Valley these days, as ever-dumber money chases ever-more-powerful geeks. But Palihapitiya’s email is a smart, reasonable and well-written argument to stop the madness.

According to sources close to Airbnb, the numbers that he refers to below are accurate, as is what appears to be an unusual level of voting control by its founders. Presumably, it is to protect the company from possible future sales on the secondary markets and to keep control with its founders as the number of investors grows.

In any case, the Palihapitiya email to Chesky is well worth the read (I have removed email addresses as a courtesy):

From: Chamath Palihapitiya
Date: Sat, 1 Oct 2011 11:16:05 -0700

To: Brian Chesky

Subject: Airbnb financing…

Brian,

Cc Marc, Reid, my deal team

Thanks again for giving me the chance to participate in your latest financing. I had a chance to review the docs at length yesterday and I wanted to follow up as, quite honestly, I’ve never seen a deal like this over ~60 investments I’ve done and I’m pretty concerned.

I’m all for getting the best valuation you can, minimizing dilution and maximizing control. We did this brilliantly at Facebook…all of our financings (except our first $$$ from Peter Thiel) were done not out of necessity but opportunity. As such, our investors had virtually no control and it resulted in a much better outcome. As we’ve discussed, I generally don’t believe investors add much to a success story and so minimizing their impact is a great strategy when you are onto something that is working.

This said, while several of these concepts are reflected in the current deal, there is one big thing that I am fundamentally against and violates my principles and will prevent me from participating in your round. When I saw that you guys were taking $31M out of the company, I didn’t think much of it as I just assumed it would entirely be via a secondary sale.

But as I understand the deal, it seems that you are doing only $9.6M in secondary and $22.5M as a dividend to common (of which $21M goes to you and your co-founders). I am really uncomfortable with this and don’t think its in the spirit of building a good, long term business. Effectively, it is a strategy that allows you guys to take money out of the business and not dilute yourself — I’m not sure why this is such a big deal when you guys are almost 90% vested and the financing is at $1.2B where your dilution is marginal. Further, it excludes many of the employees that probably have helped you and your co–founders get the company to this place as most of these folks probably don’t have any stock but have unexercised stock options and thus won’t get a dividend.

My basic principle on this stuff is that if you want liquidity, that’s fine, but you should make it available to everyone. Otherwise, no one should get it. Your current deal is the farthest away from this principle that I’ve seen in a while…this strategy has been done once before — at Groupon. We can see how “well” they are doing and how short term the investor community is now viewing their motives. I really think you can do better than this…and that you are better than this.

Separately, when you look at successful tech companies, it seems that dividends are an approach used by cash rich operations to distribute excess earnings — in fact, the most successful, cash rich tech company in the world, Apple, hasn’t issued a dividend and they have more than $75B in cash! Again, while I think Airbnb will be a good company, this is nowhere near the truth now — you guys still need to scale and build this thing for the future.

I really think you are onto something but I would implore you to not take the easy way out. Treat your employees the same as you’d treat yourself. Do things that you will be proud of and can defend to anyone including your Board, employees, prospective hires etc. In such a competitive hiring market, you are competing with not just your obvious competitors, but also any successful tech company who is also looking for great talent. A principle that treats your employees as well as you’d treat yourself is a huge strategy for differentiation, retention and long term happiness of the exact types of people you will need to be successful. In contrast, if you are viewed as self-dealing and shady, it will only hurt your long term prospects…

In summary, I’m passing on this financing because I strongly disagree with what’s going on. I’m not sure who advocated this approach but I did mention this to Reid [Hoffman, another Airbnb investor via Greylock Partners] last night and he was of a similar mind to myself and surprised this was the approach being taken. If you want some good advice — I would ask that you consider pinging him about different ways to think about going about the liquidity portion.

If you change your mind on how to close this financing, let me know and I’d love to reconsider. Otherwise, good luck and lets keep in touch.

Take care,

Chamath

Now we have another entrant called Birst, which today will announce what it calls a Business Intelligence appliance. No, it’s not hardware — that’s what I thought, too . It’s actually software that you install locally on your own on-premise servers. And yet it’s still a software-as-a-service (SaaS) offering. How does that work?

Having already become a player in the basic cloud-based BI business, the company realized that most of the data that makes BI valuable in the first place doesn’t live in the cloud but actually is used with applications that run behind the firewall.

I talked with Birst co-CEO Brad Peters, who told me that the software runs like a SaaS product — you access it through a browser, just like you would any other typical SaaS product, and you get the same benefits, including zero worries about upgrading or adding new features. But you also get the benefit of having it run on-premise behind the firewall. “It’s the exact same experience as with the cloud,” he says.

The whole point of BI, Peters says, is to take data created in various business applications — whether it’s SAP, Salesforce.com, Concur, Omniture, Siebel or what have you — into a dashboard, where it is arranged into a graphical presentation or report that you can then use to make business decisions.

The textbook case for BI is comparing data on marketing spend to deals. If you find you’re spending a lot of money on one type of marketing campaign that seems not to be generating leads and deals, and not enough on one that seems to be working better, you can see the pattern and make needed changes, Peters says. “What BI is really about is taking the raw data and synthesizing it so that business people can act on it,” rather than relying on spreadsheets.

Big companies like SAP and Oracle are in the BI business, too, but their solutions cost a lot of money and are therefore aimed more often than not at bigger companies. Yet Birst has its share of larger customers: Citrix Systems is a Birst customer, as is Rackspace, the Web and cloud services host.

So far, Birst has raised a combined $20 million in two rounds from Dag Ventures, Sequoia Capital and Hummer Winblad. Peters said the company is keeping most of its funding details close to the vest — he wouldn’t say how much Birst’s most recent round was, for example — arguing that there’s been too much attention paid so far to BI start-ups and how much money they’ve raised. “Ultimately, a software company needs to make money, and BI is really hard,” he says. “You can waste a lot of money really easily. There’s been about $300 million raised by companies trying to do BI, so clearly the amount of money raised doesn’t correlate to success.” Those sounds like words to the wise.