AllThingsD » Yuri Milner

Science Exchange Raises $3 Million to Help Outsource Experiments

Peter Kafka — Mon, 29 Apr 2013 18:12:14 +0000

If the Internet can let you rent someone’s futon, car or cooking skills, it can certainly help you get your hands on some spare scientists or lab time.

Right? Right. That’s the premise behind Science Exchange, a Palo Alto-based startup that lets researchers buy or sell access to people and equipment they can use to run lab tests and experiments.

Scientists are already used to outsourcing certain kinds of work, either because they don’t have the time or the resources to do it themselves. So Science Exchange isn’t trying to reinvent the wheel — they’re just digitizing it and putting it up for bid on the Web, like everything else.

“We’re not creating an entirely new behavior,” said co-founder Dan Knox. “We’re just making it easier to do.”

So far, Knox said, the thesis is proving out. Since launching in the summer of 2011, the startup has helped people conduct 1,000 transactions, and the volume is ramping up. Four months into 2013, Science Exchange has already equaled its volume from 2012, Knox said.

Since these deals involve expensive machines and/or trained people, they tend to run a lot higher than your average Etsy transaction: Knox said they average $3,000 a pop, with Science Exchange taking between 3 percent and 9 percent for brokering the deal.

Those numbers have been enough to help the company land a $3 million Series A round, led by Union Square Ventures, along with O’Reilly AlphaTech Ventures. Earlier investors who had helped the Y Combinator company raise a $1.5 million seed round are also back; they include Yuri Milner, Lerer Ventures and XG Ventures.

Moon Shot: Earthbound Investor Milner Talks About Origins of the Universe at SXSW

Kara Swisher — Sat, 09 Mar 2013 17:18:21 +0000

There were, of course, the questions on his famously huge Facebook investment many years ago, and why he’s put money in Y Combinator to spur startup innovation.

But it’s clear from his mainstage interview at the SXSW interactive festival in Austin this morning that high-profile Russian investor Yuri Milner of DST Global has been striving to think much bigger thoughts of late.

While he’s gotten a lot of attention for his big bets in the social networking site, as well as with Twitter, Spotify, Airbnb and many others, he’s slowed his investing in the U.S. considerably to focus more on what he and many others in Silicon Valley are calling “moon shot” ideas.

“Somehow, we have lost interest in big ideas,” said Milner, in an onstage interview with Vanity Fair contributing editor Bethany McLean about shifting away from thinking — which he has funded, in part — that has gotten more short-term and pragmatic. “I think we still have a destiny as human beings.”

That has included starting up his Fundamental Physics Prize, which has now become the priciest academic award, last year. And, more recently — with Facebook co-founder Mark Zuckerberg, Google co-founder Sergey Brin, and Genentech mogul and Apple Chairman Art Levinson, among others — the launch of the Breakthrough Prize in Life Sciences Foundation.

As Mike Isaac wrote when that initiative was announced less than a month ago:

“The first round of prize recipients includes 11 scientists from a range of research disciplines, including studies in genetics, cancer research and neural behavior. Each of the 11 prize winners will receive a $3 million award for their work, and Brin, Zuckerberg, Milner and the rest of the sponsors have agreed to a five-year commitment to awarding prizes.”

Milner, who was a physicist in his early career, said onstage that he has been disheartened to see that not enough younger people choose to go into fundamental science anymore. Thus he is aming to make it more attractive via his prizes.

“We don’t have enough heroes who are admired by a large portion of the population due to their scientific achievements,” he said, noting that it will require rewarding individuals in a “disproportionate manner.”

Still, in the Q&A session, the crowd in the Austin Convention Center wanted to know mostly about more earthbound questions, such as what tech company would last 100 years, as IBM has.

According to Milner: Google, Facebook and Wikipedia, due to network effects.

Another attendee wanted to know what he thought it takes to be an entrepreneur these days.

“It’s almost a heroic effort, and kind of goes against set ways of doing things,” answered Milner.

Then someone wanted to know how the political arena could be similarly transformed.

“That, I don’t know,” said Milner.

Moon shot, indeed.

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Anne Wojcicki of 23andMe on One Million-DNA March and More (Video)

Kara Swisher — Mon, 14 Jan 2013 11:00:43 +0000

Last week, I paid a visit to the Mountain View, Calif., offices of personal genomics company 23andMe, which just raised more than $50 million in a new funding round, to add to the $68 million it has garnered since it was founded in 2006.

The new financing includes Russian investor Yuri Milner, as well as existing ones including Sergey Brin of Google, New Enterprise Associates, Google Ventures and MPM Capital.

While there, I interviewed CEO Anne Wojcicki about what she plans to do with all that money, including the company’s effort to get one million people to get detailed information on their DNA by cutting the price of its tests to $99.

23andMe’s Personal Genome service now offers 244 reports on health and personal traits, as well as genealogy and ancestry information that people can share socially. That’s down from the original $999 price that provided only 14 reports.

Wojcicki said she hopes that will spur more interest about from whence we came, and also how important it is to know your own genetics, to be aware of, prepare for and also prevent diseases of all kinds.

(On a personal note, that is exactly what happened to me after Wojcicki contacted me in China, after I had a serious stroke, to give me critical info from my own 23andme profile about a blood anomoly I had that was key to my care.)

Here’s the video of my interview:

[ See post to watch video ]

Prismatic Banks $15 Million in Venture Capital

Mike Isaac — Wed, 05 Dec 2012 18:23:09 +0000

Social news reading app Prismatic announced a new Series A round of venture funding on Wednesday, banking another $15 million. Participating in the round were Accel Partners, Jim Breyer and Yuri Milner. The Prismatic app is something of a hybrid between Zite, Flipboard and other news apps, using your social channels to personalize the type of news that appears in your feed.

Yahoo's Marissa Mayer in Talks to Join Jawbone Board

Kara Swisher — Thu, 18 Oct 2012 18:59:29 +0000

Yahoo CEO Marissa Mayer is considering joining the board of Jawbone, the high-profile wireless gadget maker whose products include the Jambox speaker and the Up personal fitness wristband, according to sources close to the situation.

Mayer has been talking to the San Francisco-based company about becoming a director since before she become the top exec at the Silicon Valley Internet giant.

While the discussions of her becoming a director are in the late stages, sources cautioned it was not yet a done deal and that it still might not happen for a number of reasons.

That said, the move is an interesting one for Mayer and Jawbone.

The former Google exec is well known for her product chops and also her deep interest in tony aesthetics and high-level design — qualities that Jawbone is well known for.

And the addition of Mayer to the board of Jawbone would add someone with experience in scaling businesses from small to large as well as deeper technical expertise.

Mayer has been an active angel investor in start-ups and currently is on the board of Walmart Stores and is also on board of several cultural institutions in San Francisco and New York.

Jawbone has raised about $210 million in funding from such venture firms as Andreessen Horowitz, Khosla Ventures, Kleiner Perkins and Sequoia Capital, as well as Deutsche Telekom, investor Yuri Milner and others.

One interesting note: Mayer and Jawbone CEO and founder Hosain Rahman attended Stanford University at the same time and have remained close friends since then.

Jawbone declined to comment and Mayer never calls me back, although I am still waiting by the phone — wearing my denim Jawbone Icon HD wireless headset, natch — in the vain hope that she might.

Codecademy Rounds Up $10 Million for Web Lessons

Peter Kafka — Tue, 19 Jun 2012 11:01:56 +0000

Codecademy has lots of users taking its free, self-serve computer programming courses, including New York City Mayor Mike Bloomberg. Now it has a big slug of money, too.

The 10-month-old company has raised a $10 million B round, led by Index Ventures, along with Kleiner Perkins, Richard Branson and Yuri Milner. Many of the investors who chipped in on its $2.5 million A round last year are back, too.

Codeacademy was one of the buzzier start-ups of the last year, and helped kick off the “everyone should learn to code!” meme, at least among people who hang out around coders.*

So there was a lot of competition for the round. Co-founder Zach Sims won’t talk about valuation, but earlier this year I was hearing talk that the deal would end up in the $55 million range.

Sims will say that one of the reasons he’s happy to be working with London-based Index is that Codecademy has big international aspirations. So far, the start-up has served up 100 million coding lessons, and about half of its users live somewhere besides the U.S. “We’re going to hopefully be much bigger outside the U.S. than inside the U.S.,” Sims says.

Codeacademy relies on outsiders to create its online lessons for free, and it doesn’t charge users to take them, but at some point it will start figuring out how to generate revenue. Perhaps more important will be a move into teaching stuff besides computer programming, but Sims says that won’t happen soon. “For now, coding is at the forefront.”

*The counterargument to this is a must-read.

Zynga Loses Its CTO of Mobile as Shares Trade Lower

Tricia Duryee — Tue, 29 May 2012 18:50:36 +0000

Game Closure, which is building a platform to make it easy for games to be played across multiple devices, said it has hired Laurent Desegur, Zynga’s CTO of mobile.

Desegur will join the Mountain View, Calif., start-up as a VP of Mobile Engineering, in charge of the company’s game engine development. Before Zynga, Desegur was CTO at Big Fish Games, a major casual games company in Seattle.

The departure of the mid-level executive from Zynga coincides with the expiration of the social game company’s lock-up period today, which will allow more of its investors and employees to sell their shares on the open market.

The new shares forced Zynga’s shares down in afternoon trading, falling nearly 50 cents, or 7.2 percent, to trade at $6.14 a share, a new low.

The company’s stock price has plummeted by nearly 40 percent since the company’s IPO in December and has been hit hard by Facebook’s own IPO troubles. Zynga’s volume was also nearly twice as high as normal today with 36.5 million shares already trading hands.

Zynga’s CEO Mark Pincus will be onstage tomorrow morning at our D: All Things Digital conference, kicking off tonight in Rancho Palos Verdes, Calif., to address these issues and other.

In a release, Game Closure boldly claimed it was trying to take advantage of the lock-up period expiring to recruit employees from Zynga.

Founded in February 2011, the company has 30 employees today and recently received a $12 million investment from an impressive list of investors, including Highland Capital, Greylock Partners, Charles River Ventures, Benchmark Capital, General Catalyst Partners, SV Angel, Yuri Milner and Joi Ito. Game Closure participated in StartX, the Stanford student start-up accelerator.

Jawbone Gets $40 Million From Deutsche Telekom, Kleiner Perkins

Lauren Goode — Wed, 21 Dec 2011 21:25:55 +0000

Jawbone, maker of nifty audio devices and the recently maligned UP fitness wristband, has raised $40 million from Deutsche Telekom, Kleiner Perkins Caufield & Byers, Yuri Milner and investors advised by J.P. Morgan Asset Management. The new capital brings Jawbone’s funding to date close to $210 million. CEO Hosain Rahman has said that the company plans to introduce more products in the healthcare and audio markets, according to GigaOM.

Saudi Prince Invests $300M in Twitter

Liz Gannes — Mon, 19 Dec 2011 07:38:36 +0000

Prince Alwaleed bin Talal — the nephew of the Saudi Arabian King Abdullah — has invested $300 million in Twitter. Alwaleed is one of the richest people in the world, currently ranked No. 26 on Forbes’ billionaire list, with a net worth of $19.6 billion.

The Twitter investment, through his Kingdom Holding Co., was just announced via press release and confirmed by Twitter.

A spokesman for Twitter said he had no additional details to share beyond the release.

Twitter’s last round of funding, which closed this summer, valued the company at $8.4 billion and was led by Digital Sky Technologies (DST) of Russia.

Of late, the most well-known international Web investor has been DST founder Yuri Milner, who has stakes in Twitter, Facebook and Zynga. Prince Alwaleed has been more active as a media investor, with a large stake in News Corp. (which owns AllThingsD), for instance.

In a statement, a Kingdom Holding Co. executive noted the coming impact of social media on the media industry, and Twitter’s potential to monetize it.

If you’re looking to get a better sense of Prince Alwaleed, here’s a Charlie Rose interview from last year.

The Three Ventureers: Andreessen Horowitz Joining Conway and Milner in Y Combinator Start Fund

Kara Swisher — Fri, 14 Oct 2011 21:30:53 +0000

Silicon Valley venture firm Andreessen Horowitz said today that it was joining well-known investors Ron Conway and DST Global’s Yuri Milner in the Y Combinator Start Fund, which gives $150,000 to each start-up in its semi-annual group.

Andreessen Horowitz will be investing $50,000 of the total in each entrepreneurial effort, starting with the next “class” of up to five dozen companies later this month in the well-regarded incubator.

The money comes in the form of convertible debt, which is a loan that can convert if a start-up raises a funding round. Start-ups can refuse the money, although most do not.

“I can’t tell you how impressed we have been with the quality of the start-ups that Y Combinator has had,” said Marc Andreessen in an interview with me this afternoon. “[Co-founders Paul Graham and Jessica Livingston] have become the consigliere to a whole new generation of entrepreneurs.”

Indeed. Y Combinator assembles these start-ups twice a year, giving them about $15,000 to work on their idea, but — more importantly — providing a lot of support and entree to powerful investors in Silicon Valley. Its efforts have been critical to the beginnings of many successful companies, such as Reddit, Loopt and Scribd.

“So many of the high quality seed deals have been coming from Y Combinator and we wanted to be close to all those companies,” said Andreessen. “It’s a great view of what’s coming next from the very best start-ups.”

SecondMarket Employees and Shareholders Sell $13M in Shares on SecondMarket

Liz Gannes — Tue, 27 Sep 2011 15:53:21 +0000

SecondMarket said today that it had used its own liquidity program to sell $13 million worth of employee and existing shareholder stock. The SecondMarket shares, which were sold at a valuation of $160 million, were bought by Chamath Palihapitiya’s The Social+Capital Partnership, A Grade Investments, Yuri Milner and others. A tech company might call this “eating our own dog food,” but SecondMarket CEO Barry Silbert more delicately called it “eating our own cooking” in a blog post this morning.

CrunchFund? Unethical Ventures? Pig Pile Partners? No Matter What You Call It, It's Business as Usual in Silicon Valley.

Kara Swisher — Fri, 02 Sep 2011 13:16:52 +0000

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

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

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

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

I was upset.

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

And so it goes in Silicon Valley.

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

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

And now, inevitably, money.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

AngelPad Gets VC Firms to Commit $100K to All Its Start-Ups

Liz Gannes — Mon, 01 Aug 2011 18:31:41 +0000

AngelPad, a San Francisco-based start-up incubator led by former Googlers, will now offer all participating start-ups $120,000 — its usual $20,000, plus a convertible note for a hundred grand from two “large well-known Silicon Valley VC firms” that it’s not naming.

The funding is intended to alleviate founder stress and encourage faster product progress, said AngelPad’s Thomas Korte. Competing program Y Combinator has a similar deal to give participating companies $150,000 from DST investor Yuri Milner and Ron Conway’s SV Angel, the so-called “Start Fund.”

Korte said the AngelPad money is not the same: “It’s different. It’s a real investment from a VC firm, rather than just plain capital or quote-unquote free money.”

Korte acknowledged that having funding from the get-go will put more pressure on the companies in his program to make a return for their investors. “It’s probably more of a sense of responsibility,” he said.

AngelPad is two weeks away from starting its third class of 15 start-ups, but has left one spot open for a company that may be enticed by this new funding offer, Korte said.

Korte declined to specify which VCs are putting up the money, but said they focus on investments in B2B, mobile and e-commerce, like AngelPad.

Though AngelPad has a close relationship with Google Ventures, a spokeswoman for Google Ventures said that the firm was not one of the two participants in the new funding program.

From Russia With Love: Twitter Confirms "Significant" Funding With DST Global

Kara Swisher — Mon, 01 Aug 2011 16:54:31 +0000

Without giving any financial details, low down in a blog post this morning, Twitter confirmed it had gotten “significant” new venture funding from DST Global of Russia, as well as from existing investors.

As AllThingsD previously reported, DST will be the biggest player in a total round of $800 million for the San Francisco microblogging site, with $400 million going to cash out employees and other shareholders. The new funding will value Twitter at $8.4 billion.

In a quote, DST’s Yuri Milner said:

“Twitter is one of the few companies that has truly changed the world. Twitter’s astonishing growth is a testament to how important it is becoming to more people every day, and why we couldn’t pass up the chance to be a bigger part of its future.”

DST has funded all the prominent Web 2.0 companies, from Facebook to Zynga to Groupon, so now it is apparently Twitter’s turn.

Here’s the full blog post from Twitter:

Your World, More Connected

Twitter continues to grow around the globe at a record pace. Just a year ago, we delivered 65 million Tweets a day. Today, we generate over 200 million Tweets per day. One year ago, there were approximately 150,000 registered Twitter apps. Now, there are more than one million that connect to Twitter. And our team has grown from 250 people to more than 600 in the past 12 months.

More importantly, Twitter is where people around the globe come to instantly connect to what’s most meaningful to them. This makes Twitter the only place in the world to get a real-time pulse on what people are thinking and doing practically anywhere.

We’ve come very far in a short time. Now we have an opportunity to expand Twitter’s reach with a significant round of funding led by the venture firm DST Global, with the participation of several of our existing investors. We will use these resources to aggressively innovate, hire more great people and invest in international expansion.

Thank you for everything you’ve done to help get us here and for inspiring us to work even harder. We can’t wait for you to see what we have planned to make Twitter even better.

Meet Evan Reas of LAL and His Proximity-Based Social Graph for Colleges (Video)

Liz Gannes — Tue, 03 May 2011 01:20:07 +0000

The start-up LikeALittle, or LAL, had fended off NetworkEffect’s reportorial advances for weeks. Funny, considering the site helps people flirt with one another.

But last week we were granted access to the Palo Alto “hacker house” where the recently seed-funded LAL team has set up shop to expand its early success into a larger vision. No, LAL is not turning its flirting site into a dating site, but rather becoming a way for people to interact with others who are nearby, as co-founder and CEO Evan Reas described in a video interview embedded here.

LAL, which started at Stanford University last fall and now is live at 450 different colleges, gets 250,000 page views per day for its message boards and Web chat service. Reas estimates 75 percent of Stanford students have used the site. But total user numbers are slightly hard to ascertain, he noted, because LAL allows people to post and chat anonymously.

Reas promises that LAL’s grand vision will become more apparent in the coming weeks, but for now here’s why he’s been able to bend investors’ ears:

A dynamic social graph determined by users’ locations seems like an alternative to the static real-name-based Facebook social graph.
Flirting provides enticing content for both participants and voyeurs.
When it comes to virality, densely populated college campuses seem to be a match waiting to be lit.

LAL participated in the most recent class of Y Combinator and raised a seed round led by Marc Andreessen of Andreessen Horowitz, as was reported by TechCrunch.

Here’s the full list of investors, provided by LAL: Marc Andreessen, Paul Buchheit, Ron Conway, Scott Cook, Charles River Ventures led by Saar Gur, Matrix Partners led by Josh Hannah, Ashton Kutcher and Guy Oseary, David King, Yuri Milner, Shervin Pishevar, Brian Pokorny, Keith Rabois, Naval Ravikant, David Sacks and Y Combinator.

Reas told us LikeALittle was probably the seventh or eighth idea he and his co-founders Prasanna Sankaranarayanan and Shubham Mittal prototyped under the header Hawthorne Labs. The quick viral success of LAL at Stanford indicated to the three that they might have found their elusive “billion-dollar idea,” so they stuck with it, Reas said. Prior to Hawthorne Labs, Reas had been a co-founder of ProFounder and received his MBA from Stanford.

Here’s our video chat with Reas, shot in the “hacker house” backyard.

[ See post to watch video ]

VCs Pay Up for Second(ary) Chance to Invest in Web Winners

Liz Gannes — Tue, 15 Feb 2011 22:14:46 +0000

Silicon Valley’s top venture capital firms pride themselves on finding future hits before anyone else. That’s how they get the best returns, have the most influence and build their brands.

But the current market tempts VCs to change the game plan by buying shares of late-stage Web companies wherever they can find them–from start-ups directly or from employees and previous investors.

VCs didn’t start the fire; folks like Yuri Milner from Digital Sky Technologies (Facebook, Zynga, Groupon) and private company marketplaces that help stave off IPOs, like SecondMarket and SharesPost, did.

But these new Web giants’ valuations just keep going up. Think Facebook’s valuation was bloated at $50 billion? After seeing huge demand at that price, a month later, the company is exploring selling employee shares at a $60 billion valuation.

Watching those numbers rise so quickly makes VCs lose their hang-ups about price and just want to get in on the hotness.

Kleiner Perkins is reportedly buying $38 million worth of Facebook shares from existing shareholders at a $52 billion valuation, according to VentureWire. Meanwhile, Andreessen Horowitz bought $80 million worth of Twitter shares on the secondary market, after not participating in the company’s recent $200 million funding round, led by Kleiner Perkins.

Both those firms, along with Battery Ventures and Greylock Partners, also invested in Groupon’s last huge round, after the daily deal site walked away from talks of a $6 billion buyout by Google.

It’s not just the big names doing such deals. Venture capitalists were the buyers in more than 40 percent of transactions on SecondMarket in the fourth quarter of 2011.

VC activity easily outpaced other buyers, which were individuals, hedge funds, mutual funds, secondary funds and asset managers.

According to SecondMarket Head of Public Affairs Mark Murphy, VCs representing the largest percentage of buyers is a recent trend that started in the third quarter of 2010.

This comes at a time when raising money for a VC firm is tougher than ever.

What are VCs buying on SecondMarket? Facebook accounts for the single largest portion of transactions, at 39 percent. After that are LinkedIn, Etsy, Chegg, Epocrates, Silver Spring Networks, CafePress and Reply, and some other companies that declined to be named.

SecondMarket does not share pricing or volume stats or trends, except to say it sold $157.8 million worth of stock in the fourth quarter, up from $75 million in the third quarter.

Some VCs are steering clear of secondary markets and late-stage deals. Redpoint’s Geoff Yang was willing to go on the record about it in a recent interview. “What do venture capitalists know about being a momentum hedge fund?” he said.

It’s not just proven hits big enough for the secondary markets that are attracting funding interest. Everyone is still eager to find the next Groupon or Zynga. The Q&A site Quora, led by former Facebook CTO Adam D’Angelo, raised $11 million at a valuation of $86 million last year before it had even launched to the public. After success with early adopters, the start-up is now fending off offers of much more money than that.

So there’s pressure to either get in very early, or get in late if you can, because the time in between is fleeting.

VCs are also actively trying to get more involved in seed funding deals. For instance, Google Ventures recently set up its Startup Lab to attract early-stage companies where it charges them $5 per month for office space (see our video tour). And just this morning, NetworkEffect covered how VCs are actually more active than angels on the early-stage investment matchmaking service AngelList.

500 Startups Unveils Start-Up Accelerator Program

Liz Gannes — Thu, 10 Feb 2011 17:00:31 +0000

500 Startups, the angel fund led by the voluble marketer Dave McClure, is taking the wraps off its start-up accelerator program, which is already hosting 11 participants in Mountain View, Calif., and is focused on helping them with design and distribution.

(“Start-up accelerator” is the trendy iteration of “start-up incubator,” connoting a short-term program where participants gather and have some kind of curriculum, in the model of Y Combinator.)

500 Startups is led by McClure and former YouTube and Google product manager Christine Tsai. The existing class will hold a “demo day” for investors in the first week of April. The accelerator has no formal application process, but accepts new participants through referrals, including those who have already participated in a different start-up accelerator or already have outside investments.

In addition to ongoing events and the support of an extensive mentor network, participating start-ups get $25,000 to $100,000 in exchange for five percent of equity. That’s more money than elsewhere, but not as much as the $150,000 Yuri Milner and SV Angel are now offering to all Y Combinator participants.

Below are descriptions of the first 11 start-ups from 500 Startups’ jokey press release:

InternMatch
? InternMatch’s mission is to help college students discover amazing internships.
? Founded by: Andrew Maguire, Nathan Parcells, and Kyle Wilkinson
? Hails from: Seattle, WA
? Fun facts: Andrew Maguire spent countless hours during his college years playing speed chess on the streets of NYC, instead of studying for class. Nathan Parcells once spent 3 months on a 50 foot boat sailing to the Arctic Circle with his uncle. When he’s not coding to the break of dawn, Kyle Wilkinson plays guitar in punk band Shoot the Hostage.

Baydin
? Baydin’s mission is to facilitate purposeful communication. Right now, we’re building a personal trainer for your email, and let me tell you, Sue Sylvester’s got nothing on The Email Game.
? Founded by: Alexander Moore, Mike Chin, and Aye Moah
? Location: We started in Boston. Our team hails from Alabama, Connecticut, and Burma.
? Fun facts: For the times when there’s no saving it and email gets out of hand, we also make the Drunkerator (http://drunkerator.appspot.com), a hackathon project that lets you generate a drinking game for any reason. Take off your thinking hats and put on your drinking hats!

955 Dreams
? 955 Dream makes magical experiences on mobile devices.
? Founded by: Kiran Bellubbi and Kyle Oba
? Location: Mountain View, CA
? Fun facts: Both Kyle and Kiran have babies. Babies rule. And we have as many dogs in our office as humans. Dogs rule.
? Video: http://www.youtube.com/watch?v=cKphAh701Js

YongoPal
? YongoPal is focused on conversational English education for university students in Asia. Rather than creating a new learning method or providing tools for helping students prepare for specific exams, YongoPal focuses on boosting language competency through peer relationships — matching students of English in Asia with their peers at top-tier American universities for live online conversation practice and cultural exchange.
? Founded by: Darien Brown, Daron Hall, and Brian Suchland
? Hails from: Seattle, WA
? Fun fact: The YongoPal founders, Darien Brown, Daron Hall and Brian Suchland, currently share a two bedroom apartment with two university students from Korea. A no-kimchi-in-the-fridge policy is strictly enforced.

Spoondate
? Spoondate is a dating website that allows food-loving singles to meet and go on
awesome food dates with like-minded eaters.
? Founded by: Raissa Nebie and Van Nguyen
? Hails from: San Francisco. Raissa is from Abidjan, Ivory Coast via New York City. Van is from Delaware
? Fun facts: Raissa is a banker turned chef and has cooked a meal in over 10 countries across 4 continents. Van won first place at two “game jams” (where nerds build computer games in less than 48 hours).

Ninua
? Ninua collects the world’s stories, delivers them across platforms, and connects people around them.
? Founded by: Waleed Abdulla
? Hails from: Mountain View, CA
? Fun fact: Ninua’s main product, NetworkedBlogs, started as a weekend hackathon project to learn how to build an app on the Facebook platform. Its name at the time was “Blogs I Read”.

Crowdrally
? Crowdrally’s mission is to provide social influencers with organic digital
endorsements, so they can get paid without selling out.
? Founded by: Evan Kuo and Andy Chen
? Hails from: We are Berkeley and Stanford students born and raised in the heart of silicon valley.
? Fun fact: Evan has an absolutely terrible sense of direction and once engineered a GPS enabled tactile feedback belt to communicate realtime orientation through a ring of vibrational cellphone motors. Andy previously started an online marketplace for professional chefs to indulge his demanding eating habits.

Rewardli
? Rewardli lets business owners use leverage their social graph in new and interesting ways. Stay tuned for more.
? Founded by: George Favvas
? Hails from: Montreal, Quebec. O Canada!
? Fun fact: George sealed the deal by recording himself giving his Keynote presentation outside in snowy -10 degree weather. He had calculated that it took about 15 minutes for his fingers to freeze, which was a good incentive to keep his presentation nice and tight.

Wednesdays
? Stay in touch with friends and colleagues. Over lunch. On Wednesdays. For an invite to the beta, email an old friend with whom you’d like to stay in better touch and copy lunch@wednesdays.com.
? Founded by: Andy Chen
? Hails from: Silicon Valley
? Fun fact: The Wednesdays founders were inspired by a Scientific American article which said that lunches and other social support activities are important to staying healthy and happy, and ultimately increase survival by 50%.

[Super Secret Startup]
? Stew Langille, former VP of marketing at Mint.com, is starting a new media
company. More to be unveiled soon!

SpeakerGram
? SpeakerGram wants to connect people with a story to tell with an audience that
wants to hear them.
? Founded by: Sam Rosen
? Hails from: The concrete jungle… New York City!
? Fun fact: Sam Rosen is an amateur competitive eater. His personal bests include
a medium Papa John’s pizza in 2:24 and 45 BBQ wings in 8 minutes.

Y Combinator’s Paul Graham on the $150K Per Start-Up Offer

Tomio Geron — Wed, 02 Feb 2011 00:04:24 +0000

When Russian investor Yuri Milner approached Y Combinator’s Paul Graham about a week ago, Graham said he thought it was just “one of those random meetings” between two investors talking shop.

It turns out, however, that Milner–the chief executive of DST Global which made a splash in the U.S. by betting big money on Facebook Inc., Groupon Inc. and Zynga Inc.–was looking to offer to invest his own money in all 43 start-ups recently coming out of Y Combinator’s latest three-month boot camp.

“It’s probably one of the most surprising things that has happened so far,” Graham said.

As TechCrunch first reported, Milner teamed up with SV Angel–the seed fund run by prominent angel investor Ron Conway–to offer $150,000 each in convertible debt in each company.

Read the rest of this post on the original site »

Groupon Poised to Strike Partnership With China's Tencent, in Key Global Expansion Move

Kara Swisher — Sun, 16 Jan 2011 23:00:26 +0000

Groupon is in talks with Chinese Internet giant Tencent to form a partnership to accelerate its effort in the critical Asian arena, said several sources with knowledge of the situation.

Terms of the deal are unclear, but sources said that it is likely to involve some sort of co-branded joint venture effort between the two–a key strategic move for Groupon, given the hard-to-penetrate-if-you’re-not-Chinese Chinese market.

More typical for Groupon has been to buy a top local player abroad and rebrand it, such as its launch of Groupon Hong Kong, Groupon Singapore and Groupon Philippines and Groupon Taiwan through the early December acquisition of daily deal sites uBuyiBuy, Beeconomic and Atlaspost, respectively.

Moving into the lucrative international arena, where there are innumerable clones of the dominant social buying service, is one of the big strategic reasons for Groupon’s recent $1 billion funding and also last week’s very noisy IPO toe-dipping.

(How much is BoomTown wishing I could be a fly on the wall to see all those investment bankers courting kooky Groupon CEO Andrew Mason? Memo to Andrew: Act like Snooki from “Jersey Shore” and see how they still slavishly kiss up to you like the soul-sucking suck-ups they are.)

Back to China, where cloning popular U.S. Internet brands has become an art form.

That includes one particularly appalling rip-off (pictured here) in China that looks exactly like Groupon and is actually called Groupon.cn.

(Although you’ve got to be in awe of the complete non-effort to pretend it is anything but a complete shoplifting of the brand.)

But, no matter how much that digital swiping goes on, much of Groupon’s growth recently has been outside the U.S., and the company’s strategic future lies internationally.

Of course, global expansion–especially in the famously difficult Chinese market, where the government favors native companies to an unprecedented degree–has stymied many other U.S. Internet phenoms, from eBay to Google to Facebook. (In fact, for obviously thorny privacy reasons, the social networking site has no presence in China.)

But for Groupon, especially with its public offering plans and need to distance itself from close rivals such as LivingSocial, it is a must-do to reach the deal-crazy and huge audience in China.

Thus, having Tencent as its partner is an obvious plus, given it is one of the biggest Internet services in the country, including its huge QQ instant messaging offering.

In addition, there is a strong link between Tencent and one of Groupon’s key investors, Mail.ru Group.

Mail.ru owns five percent of Groupon, said numerous sources, and Tencent is an investor in Mail.ru, which recently had an IPO.

And DST Global, an investment vehicle that is now separate from Mail.ru–although it shares Russian exec Yuri Milner, who is Mail.ru’s chairman and also DST’s CEO–is also a Groupon investor.

Got all that? As BoomTown has written before: It’s a small and way-too-connected world after all, especially when it comes to the goat rodeo of Groupon investors.

What will be interesting to see is if this makes a difference in China, which has been a consistent black hole for most major Internet companies.

Groupon declined comment, and there has been no response yet to an email query sent to Tencent’s PR group.

Facebook Finances Focus of Bloomberg TV Tonight

Liz Gannes — Wed, 05 Jan 2011 18:36:16 +0000

When companies file normal IPOs, they go into quiet periods. But there has been nothing quiet about the latest financing behind Facebook, which has evaded the public markets by rigging a way to privately sell $1.5 billion worth of shares through Goldman Sachs in a deal that values the company at $50 billion.

Tonight, an hour-long special on the topic will air at 9 pm ET on Bloomberg TV (and will be streamed live on Bloomberg’s Web site), featuring Yuri Milner, CEO of Digital Sky Technologies and one of the key investors who helped put together that deal. Unfortunately, while Bloomberg’s press release listed Milner as a “guest,” it neglected to mention that he won’t be an actual live guest (as initially reported here). Instead, clips from a Milner interview last year will be interspersed with current commentary from writers David Kirkpatrick, Paul Kedrosky and Bill Cohan, and marketing professor Scott Galloway.

Goldman has reportedly given its clients limited information and only until the end of the week to pony up a minimum of $2 million to invest in Facebook. One Goldman customer told Reuters he felt like he was being expected to invest on “blind faith.”

BoomTown’s Kara Swisher yesterday described the Goldman-Facebook deal as “sneaky,” “elite” and “opaque.”

Here’s the promo for the Bloomberg program:

Please see the disclosure about Facebook in my ethics statement.

Twitter's Buffet of Options: Investors Like DST or Acquirers Like Google

Liz Gannes — Mon, 29 Nov 2010 11:00:10 +0000

Twitter caught some undeserved flack over the holiday weekend, after CEO Dick Costolo told a reporter for the U.K.’s Telegraph newspaper he is “working on clarity” around Twitter’s ultimate purpose.

The story garnered the unfortunate headline: “Twitter lacks ‘clear long term vision’ admits new CEO.”

The full Costolo quote was more reasonable and simply defined his job:

“I am working on clarity around that at the moment. I am currently trying to define what Twitter’s purpose is in the long term. We will be able to be more specific on that answer in the near future.”

In fact, it’s more like the present for the popular San Francisco-based microblogging service, which sources said has been wrestling with several lucrative scenarios over the last several weeks, including acquisition interest from both Google and Facebook and also a number of favorably termed major funding offers.

The big push is coming from DST Global, as this site reported a month ago, which was clearly implied by both DST’s Yuri Milner and Twitter’s Evan Williams in onstage interviews at the Web 2.0 Summit in San Francisco earlier this month.

In a recent visit to Twitter’s downtown HQ, sources said, Milner underscored DST’s generous funding offer to top execs.

Sources said DST, which has made big investments in Facebook, Groupon and Zynga, has offered over $100 million to Twitter at a valuation closing in on $4 billion.

It’s a move to shut out others, apparently, including, more recently, Kleiner Perkins–specifically its well-known John Doerr, who has been angling to move the venture firm more squarely into the social space.

After scoring a late entry to the social scene with its investment in the fast-growing Zynga, Kleiner has made a big marketing push recently to allocate a dedicated $250 million “sFund” to social start-ups.

Also reportedly interested in the deal are Andreessen Horowitz, which this summer outplayed and outlasted other VC firms and potential acquirers to get a piece of Foursquare.

Not surprisingly, Twitter has also been on the receiving end of serious look-sees in recent weeks from both Google and Facebook, according to sources, although there has not been an actual term sheet presented from either party. Those valuations for an acquisition have been well above $5 billion.

Of course, the interest in Twitter has been ongoing for a while from both the search giant, which has struggled in the social space, and the social networking giant. (And meanwhile, Google is also looking at buying Groupon.)

In late 2008, for example, Facebook tried to buy Twitter for $500 million in cash and stock, an offer Twitter rejected at the time.

Former CEO and Co-founder Evan Williams was behind the decision to go big rather than sell out then.

He turned down the deal after sleeping on it, penning a long email about “why there’s still so much we have left to do,” which Twitter investor Bijan Sabet of Spark Capital recently told the New York Times was “inspiring.”

Inspiring or not, Twitter’s board would have to seriously consider the landscape again if there was another massive offer for the company.

And, if a bidding war were to happen, Facebook seems unlikely to win versus Google. A deal costing billions of dollars would be dramatically different and more difficult than the “acqhire” talent strategy Facebook has employed to date. For Facebook, the biggest upside of deal would simply be beating Google.

Raising a monster round would be in keeping with Twitter’s short history so far.

In the fall of 2009, the company raised funding at a $1 billion valuation, when it had about 50 million accounts, under 100 employees and had yet to secure its first major revenue stream through deals to deliver real-time data to Microsoft and Google.

As a company and a service, Twitter is growing quickly. But it still only has 325 employees today, serving its 175 million users.

Williams, who stepped down from the CEO job in October, played coy at Web 2.0 when asked about additional funding rounds, simply saying “We have a lot of money in the bank.”

A Twitter spokesperson declined to comment on its latest funding and acquisition options and Facebook said it had “nothing new to report” on the subject.

And Google, DST and Kleiner have not yet responded to requests for comment.

Please see the disclosure about Facebook in my ethics statement.

[Image courtesy of Flickr user kristin_a (Meringue Bake Shop).]

DST's Alexander Tamas Talks About New Investors, New Investments and Dealing With Troubling Russian Stereotypes

Kara Swisher — Mon, 19 Jul 2010 18:15:07 +0000

After Russia-based Internet investor Digital Sky Technologies got $388 million in a stock-swapping deal with South Africa media giant Naspers–coming after an earlier $300 million investment from China’s Internet behemoth Tencent–BoomTown dialed up DST partner Alexander Tamas in London to interview him about the implications.

This developing international spiderweb of digital and media companies begged the question of what DST might do with all this new dough, especially since it has created quite a splash over the last year investing massive gobs of money in high-profile, social-focused U.S. Internet companies.

That has included, most prominently, social networking powerhouse Facebook, as well as Groupon and Zynga.

Actually, said Tamas, the money is for expansion of DST’s core businesses in Russia, Poland and the Baltics–in email, social networking, gaming and entertainment–at units such as Mail.ru, which was co-owned by Naspers and DST.

In essence, said many analysts, it will simplify its ownership structure, and could eventually lead to an IPO for DST.

For a 30 percent stake in DST and the $388 million, Naspers forked over its 39.3 percent stake in Mail.ru into DST.

“The idea was for us to be able to completely control our Russian portfolio,” said Tamas, part of a series of moves which included its recent purchase of AOL (AOL) instant messaging unit ICQ for $187.5 million in cash. “We wanted 100 percent at one company.”

Also a goal: To better link its services with those in China, owned by Tencent, which invested $300 million in DST in April, giving it just over a 10 percent stake.

Naspers, by the way, owns 35 percent of Tencent.

“It’s a pretty good dialog all around,” said Tamas (pictured here), linking companies with both global and local aspirations.

But it’s the global ambitions that have attracted the most attention to DST of late, which, Tamas noted, created some confusion and unfair maligning of the company.

Interestingly, although it is all mashed up on its Web site, DST itself is not technically the entity that maintains its investments in companies such as Facebook.

That would be DST Global, its international arm which directly hold the stakes. It is not part of the Naspers or Tencent deals.

Of course, both are run by the same people, especially DST CEO Yuri Milner, and DST has a stake in DST Global.

“Initially, DST did fund those transactions,” said Tamas. “But we wanted to separate these investments from the Internet company to give investors the clearer differentiation.”

As to its future investments, Tamas said the company will likely fund start-ups that “check the boxes,” including exponential growth and social virality.

That means only two investments annually, as opposed to 10.

He also said DST would continue to fork over large sums–its invested well over $100 million in each of its U.S. deals.

“There is a perception that we pay high prices,” admitted Tamas, who noted its Facebook investment is now valued at much more. “But we have a global outlook on what we are investing in.”

DST is also a believer in getting some of that financing in the hands of founders and early investors, since it relieves financial pressure to sell or go public before a start-up’s time.

“We want to give the companies we invest in a year or two run,” said Tamas. “That is the sweet spot.”

He said, after its U.S. flirtation, that DST is now looking more in Asia and Europe.

But, even with its expansion and getting investments from well-known media giant such as Naspers, Tamas said he is not sure DST can shake the continued questions about the sources of its funding, especially given some of its initial investors are clearly part of the much-maligned Russian business oligarchy.

“We always have to explain and justify all of Russia,” said Tamas defensively. “Obviously, Naspers did its due diligence, as have others, and they feel comfortable with DST.”

Still, Russian issues will remain a concern for the long term. As noted in a recent report by Bank of America (BAC) investment unit Merrill Lynch, for example, on the Naspers-DST deal:

“We are also concerned that DST’s dominance in the Russian internet space (close to 70% market/mind share) may attract the scrutiny of the Russian government. The precedent with the other leading Russian internet company Yandex, when the government got a veto on sale or a golden share, signals that the government may not welcome a full takeover of DST by Naspers or Tencent.”

“We know the issues,” said Tamas. “But the best digital companies going forward are going to have to understand and operate in different parts of the world that are not just in Silicon Valley.”

It's a Small World After All: Facebook's Russian Investor–Who Just Got $300 Million From a Chinese Investor–Nabs $388 Million More From a South African Investor

Kara Swisher — Wed, 14 Jul 2010 05:38:36 +0000

Naspers, a South African international media group said one of its subsidiaries was taking a nearly 30 percent stake in Digital Sky Technologies.

Russia-based DST has made a splash in Silicon Valley by investing massive gobs of money in high-profile, social-focused U.S. Internet companies, such as Facebook, Groupon and Zynga.

Both Naspers and DST are already close, as co-owners of Mail.ru, a large Russian Web firm with email, social networking, gaming and entertainment businesses.

Naspers said it will be contributing its 39.3 percent stake in Mail.ru into DST, as well as investing $388 million in cash in it.

In April, another international multimedia giant, China’s Tencent, invested $300 million in DST, giving it just over a 10 percent stake in it.

And, drum roll…Naspers owns 35 percent of Tencent.

It’s not clear what to make of this developing international spiderweb of digital and media companies, except to ask: What will DST do with all that new money now?

Until all is revealed, here is an interview I did at the seventh D: All Things Digital conference about a year ago with DST’s partner Alexander Tamas and Facebook COO Sheryl Sandberg about the firm’s aspirations:

[ See post to watch video ]

And here’s the official press release:

NASPERS MAKES STRATEGIC INVESTMENT IN DIGITAL SKY TECHNOLOGIES (DST)

DST to assume full control of Mail.ru upon share swap with Naspers

Johannesburg and Moscow, 14 July 2010–Naspers Limited (“Naspers”), the broad based international media group, and Digital Sky Technologies Limited (“DST”), one of the largest internet companies in the Russian-speaking markets, announces today that Naspers’s subsidiary Myriad International Holdings B.V. (“MIH”) will take a 28,7% stake in DST. The transaction will be effected by Naspers contributing its 39,3% stake in Mail.ru into DST and investing US$388m in cash. Concurrently, Mail.ru management and other minorities will also convert their shares into DST.

Upon the close of this transaction, DST will own over 99,9% of Mail.ru. Mail.ru is the leading communication and entertainment platform in the Russian-speaking internet world, with over 50m registered email accounts, leading market share in MMO games and one of the leading social networks in Russia.

Naspers and DST have worked closely together over the past three years as co-owners of Mail.ru and today’s transaction will enable them to further strengthen that relationship.

Chief Executive Officer of DST, Yuri Milner, said, “Naspers’s strategic insight has already proven to be valuable in our partnership and we welcome the expertise they will bring to DST. We are delighted to this transaction and look forward to creating further value through our relationship.”

Antonie Roux, head of Naspers’s internet operations, commented: “We have known DST and its management for years and we share a similar view and approach. We are excited to strengthen our partnership. This opportunity further expands our exposure to emerging markets and the fast-growing internet sector.”

The Secret Life of Chatroulette's Hacker Founder

Peter Kafka — Mon, 10 May 2010 15:23:59 +0000

Can’t read enough about Andrey Ternovskiy, the kid who built Chatroulette? You’re in luck: This week’s New Yorker has an excellent profile of the Russian teenager.

The piece seems to have been primarily reported this winter, just as Chatroulette was becoming a phenomenon and shortly before Ternovsky lit out for the United States. If you’re interested in digital media investing, there are a few tasty tidbits, like Union Square Ventures partner Fred Wilson’s assistance in arranging a visa for Ternovskiy, and the programmer’s disdain for Digital Sky Technologies’ Yuri Milner.

And there’s a tiny bit about Chatroulette’s finances, at least as of a couple months ago: Since Google (GOOG) wouldn’t get cut him an AdWords check, Ternovsky’s sole source of revenue was Mamba, a Russian dating service. But that was enough: He was generating $1,500 in advertising a day, which he said covered his costs. Still, there’s not much in the way of “news” here.

But make a point of reading Julia Ioffe’s story, which paints a compelling portrait of Ternovsky’s Moscow childhood. It’s going to seem both familiar and alien to a lot of you.

He was born on April 22, 1992, less than four months after the collapse of the Soviet Union, and grew up in a tidy apartment in a typically dingy Moscow high-rise. His mother, Elena, is a talented mathematician who works on differential equations at the élite Moscow State University. His father, Vladimir, is an associate professor of mathematics at the same university, and dabbles in cybernetics. Their household was loving but turbulent. The couple fought and frequently separated, and Vladimir started a parallel family, an issue that was never openly discussed. (“It’s a little game we play,” Elena said of the arrangement.) Andrey retreated to his room, where, thanks to Vladimir’s belief that “the future would have something to do with computers,” there was always a machine, as up to date as the family could afford. Vladimir invested great effort in Andrey’s upbringing, engaging a Chinese tutor, a weight-lifting coach, and a chess teacher. But most of Andrey’s learning occurred alone, with his computer. He started with games, usually of the reality-simulating variety. By fourth grade, he was writing code.

Like many young Russians with programming skills, Ternovskiy turned to hacking. When he was eleven, he came upon zloy.org (which translates as angry.org), a hacker forum led by a young man named Sergey (a.k.a. Terminator), who trained his followers in cyber warfare. Using the handle Flashboy, Ternovskiy soon mastered the art of the denial-of-service attack, wherein a target system is paralyzed by a mass of incoming communication requests. Next came Web-site and e-mail hacking, a service he gladly performed for girls who asked nicely. By 2007, at the age of fifteen, Ternovskiy had learned about what hackers call “social engineering”–getting what one wants through deceit or manipulation. Posing as a teacher, Ternovskiy got access to some practice tests before they were delivered to his school.

You can, and should, read the rest here.

Groupon Grabs $135 Million From DST and Battery–Valuation Above $1 Billion for Social Buying Site

Kara Swisher — Mon, 19 Apr 2010 02:07:24 +0000

Groupon, the social buying site that has become one of the hotter start-ups of late, has gotten a giant round of funding from the same Russian investors that backed social networking powerhouse Facebook and game phenom Zynga.

Digital Sky Technologies is the main funder of the round, but Battery Ventures is also participating.

The money, the company said, will be used to grow the business–and to speed far ahead of numerous rivals–as well as cash out employees and early investors.

Groupon is profitable and has 270 employees.

In December, Groupon nabbed $30 million in its second round of funding, led by Accel Partners.

The innovative Chicago-based service, which launched only a year ago, previously received $4.8 million in funding from New Enterprise Associates, as well as $1 million from an angel investor.

Groupon features a daily deal with a huge discount on a wide range of products and services–from spas to skydiving–in dozens of U.S. cities, including Chicago, Boston, New York and San Francisco, for large groups of potential buyers on the Web, through email or via social networking sites like Facebook and Twitter.

Using social tools, Groupon–a mashup term for “group” and “coupon”–tries to use collective buying power to get low prices and push customers to local businesses.

If it reaches the number of buyers it needs, which can be in the thousands, Groupon sells coupons to the consumers and collects a hefty fee for the sale from the businesses it sends customers to.

At the cost of discounting and paying off Groupon, small businesses get a crack at a lot of new customers–think of it as social networking lead-generation or perhaps, the “Social Shopping Network.”

Groupon grew out of a project of The Point, an online community launched in 2007 for organizing group action.

This kind of thing has been tried before, of course, centering on consumers who group together to get discounts on items by purchasing in bulk.

In Web 1.0, there were many group-buying sites, most of which failed badly. One of the more high-profile ones, Mercata, received $90 million in funding from investors, including Paul Allen’s Vulcan Ventures.

But now the group-buying space has been reinvigorated, with a spate of competitors, some of which are clear copycats of Groupon.

Here’s an interview BoomTown did with Groupon CEO and founder Andrew Mason, one of the more affable and level-headed entrepreneurs around–at least until this megafunding. (Don’t go changing, Andrew!)

I have been quite interested in the innovative Groupon, as I said in that post in March:

“The last time I really was truly bullish on a start-up and its founder–BoomTown’s motto is wait-and-see rather than hype-it-up–was AdMob’s Omar Hamoui. That turned out pretty well, with the sale of the mobile advertising site to Google (GOOG) for $750 million last fall. My 2010 start-up that passes the slightly-less-raised-eyebrow test is Groupon.”

Here’s the video interview with Mason:

[ See post to watch video ]

Here’s the official press release:

GROUPON RECEIVES $135 MILLION FROM DST AND BATTERY VENTURES

Investment to Support Rapid Growth of Social Commerce Globally

Chicago/Moscow, April. 19, 2010–Groupon, the leading social commerce site, today announced that DST, a leading global internet investment group, will lead an investment round of $135 million in the Company. A portion of the investment will be used to fuel Groupon’s global expansion, and the rest will be used to facilitate liquidity for employees and early investors.

DST comprises the majority of the investment, with participation from Battery Ventures, which is also a new investor in Groupon.

Groupon leverages group buying and social media to provide its millions of customers big discounts on the best local businesses in more than 50 cities across the United States and in Canada. To date, customers have purchased over four million Groupons on deals ranging from spa treatments and golf outings to fine dining and skydiving and have collectively saved over $150 million on these deals.

“Our growth is a reflection of the positive impact Groupon is having on consumers and businesses at a very early stage of the market development,” said Andrew Mason, founder and CEO of Groupon. “We are very pleased and excited to welcome DST and Battery as shareholders and we look forward to benefiting from their vast knowledge and experience of the social media sector as we continue executing on our growth plans in North America and globally.”

“This investment underscores our view that social networking and community based activity will drive, shape and define the web’s evolution in the years ahead,” said Yuri Milner, Chief Executive of DST. “Groupon, with its strong management team, offering and vision, is pioneering social commerce and is redefining the local advertising space. We look forward to being long-term partners of a company that is on a path to becoming a global Internet leader.”

“We’ve followed the social commerce phenomenon for many years, and are thrilled to have the chance to back such a visionary management team,” said Roger Lee, General Partner, Battery Ventures. “They saw a massive opportunity very early, and have executed flawlessly to define it and take the leadership position. We think there is a lot of runway ahead, and are energized to support the team in their quest.”

Founded in November 2008, Groupon has been aggressively expanding to cities throughout the United States, with plans to be in 100 cities by the end of 2010. Earlier today Groupon announced that it has launched its service in Orlando, Fort Worth, Tucson and Toronto, its Canadian city.