“The initial versions of Glass were just Sergey [Brin]‘s Oakleys with a phone taped to them,” Bill Maris, managing partner of Google Ventures, told me in a noisy cafe in Midtown Manhattan. Given his position and our topic of conversation — Google’s Project Glass — he was conspicuous for wearing no eyewear whatsoever. “[Sergey's prototype] was not very compelling.” You’d forgive him for being a bit skeptical back then about what the company’s leadership was hoping would be the next big thing — or, at least, a thing worthy of the time and money required to iterate from those humble beginnings to the sleek device we now know and covet.
So, then, how did we get from those initial doubts to the launching of the Glass Collective, dedicating millions of dollars to finding, funding and fostering innovative applications (not just of the software variety) for Google’s new wearable? Maris spoke of Glass project lead Steve Lee and a later prototype that took photos every few seconds. “Imagine if you had this for your entire life. You could ask: ‘What did I do 10 years ago today?’” That was compelling enough for Maris to commit to the foundation of the Collective, helping Google move the project beyond a single product and into the all-important realm of the platform. This is a platform, he believes, that could change our lives over the next 10 years just as smartphones have over the past decade.
The retail world of consumer electronics is a tough game, with a lot of the traditional bricks-and-mortar trade continually pushing online to compete against the likes of Amazon and eBay for consumers that prefer to get a wider selection for cheaper prices to seeing the products in action before purchasing. A startup called YBUY is trying to turn that ecommerce model on its head, by offering a kind of extended lease service to online buyers, giving them the chance to try out gadgets at home before closing the deal. With daily new sign-ups registering around 2,000 at the moment, today YBUY is announcing it’s picked up $ 1 million in Series A funding from Google Chairman Eric Schmidt’s investment firm Tomorrow Ventures. YBUY says that the money will be used mainly to help it continue growing its business, which has had a strong response since launching at the end of 2011. Currently it has a waiting list of nearly 50,000 people to use the service — so most immediately it is gradually opening up the service to them.
The concept behind YBUY is fairly straightforward: for a flat fee of $ 24.95 per month, it offers a selection of consumer electronics and kitchen gadgets — both new and refurbished — giving users the option of getting them for 30-day testing periods before actually agreeing to buy them. YBUY pays for all the postage and packaging to send you the product and get it back if you don’t want to keep it.
Stephen Svajian, the founder and CEO, tells me that the product selection is pretty varied: it ranges from iPad tablets to Jawbone and Breville kitchen products. But it also features products from Kickstarter campaigns. The idea is curating and aggregating the best and becoming an alternative to, say, a Google product search. “We only represent what we think is the best product in a particular category,” he tells me. “We do a lot of the work [looking for them] the online shopper would typically do.”
YBUY is not yet disclosing its total number of customers or tunrover but says that it’s been growing 25 percent month-on-month, and as an example created 2,000 accounts yesterday. Svajian says that in customer interviews, the main reasons for going for YBUY over something like Amazon are multiple. For one, there is the issue of financial commitment. Even if sites today have good return policies, “They don’t like to see the $ 600 leave their bank account on something they’re not sure about.” Then there is the issue of returns: these can be a hassle, but YBUY encloses return packaging with each product. The third reason is a bit of a surprise: “They feel bad,” he says. Apparently there is a kind of stigma or guilt around returning products that keeps people from doing it, whereas here it’s built into the business model, almost being encouraged. There is also the issue of trust: online there is a bit of a worry that people will never get all their money back in return situation.
Although YBUY bills monthly, Svajian says he doesn’t put itself into the category of “subscription e-commerce.” That’s because they are getting ready to introduce another model as well:
“We felt it would be useful to have a subscription early on to drive engagement and to be able to run experiments to track against different months,” he says. But in the next few months, the company will be rolling out a different option for customers. “They’ll be able to choose whether to bill monthly or just get billed when they receive a product. We’re big believers in one, single experience for customers and our customer interviews have told us they want this model, but we’d like to see the data before we commit to just one option.”
If there is a comparison between YBUY and another business, it might be Costco, where YBUY appeals to the discover/demand driver, and Costco to discounts. “We’re both a membership club with a disruptive distribution channel that delivers long-term value to customers,” he notes, but adds: “It’s strange thinking about us like Costco, because we just give you cool stuff and Costco gives you cheap stuff, but I think our manner of disruption will be similar and we’re focused on the long-term.”
What’s perhaps most compelling is that as the service continues to grow, it’s actually making better and better margins on the service. In December, he says, they were losing $ 50 per customer. Now they are making around $ 35 per customer, with the value per customer at $ 450, with the profitability per customer ranging between 25% and 50%.
In terms of partnerships, YBUY currently has no plans to do any white-label agreements with brands to offer this kind of leasing service on their behalf, or for any other e-commerce sites that want to introduce this kind of service into the purchasing mix. And Svajian says that he is reluctant to make direct deals with manufacturers full stop, even for promoting on their own site: “We’ve done a deal with a manufacturer and we’re reluctant to do that again. We think its more important to have integrity around the process. If we are paid by the manufacturers to slot their products, then that detracts from our value prop to customers – to get them the best stuff. We need to be rabid about the value we deliver to customers and we don’t want anything to get in the way of that.”
The whole try-before-you-buy space is pretty nascent at this stage but we are seeing others moving here, too. Warby Parker is doing it with eyewear; and Trunk Club’s applying it to fashion, among others. On that trend, Svajian is adamant that it’s not just a fad but something that speaks to what customers are actually needing today: “This isn’t disruption for disruption’s sake. Rather, it’s important to note that this disruption is being driven by the customer. Customers want to try before they buy. The consumer will drive the push into this model.” For now that will keep YBUY in the U.S. with international growth somewhere down the line.
Svajian is a lawyer by training but has been a serial entrepreneur, with YBUY being his fourth company. Jim Patterson, the Yammer chief product officer, has been a partner in two of them — in addition to being an angel investor in YBUY. One of them, AudioCaseFiles, targeting the legal market, sold for a 10x return for its investors when it was sold to Courtroom Connect.
Other angel investors, in addition to Patterson, in this Series A round include David Hanna, Chairman and CEO of CompuCredit Corporation.Related Posts:
“We collected the imagery in December of 2010 and had been looking for a way to create a 3D model of the dataset. I was introduced to URC Ventures and the results of the processing are impressive. Their work is critical to GlacierWorks’ mission to document and vividly illustrate changes to Himalayan glaciers that have taken place over the past century,” said David Breashears, GlacierWorks Executive Director. To build the 3D model, URC Ventures utilized proven dense 3D extraction technology converting ordinary 2D imagery into a 3D space, pixel by pixel. The technology developed over the last 10 years by Urban Robotics for specific government applications scales to very large numbers of images and does not require single data capture location points, special cameras or rigorous calibration. www.glacierworks.com www.urcventures.com Video Rating: 5 / 5Related Posts:
Dropcam has been busy. The video monitoring start-up just released an Android app that brings a better experience to the mobile platform. The new app is built natively for Android rather than using Adobe Air and provides live video, two-way audio and free motion alerts through a better user interface. The company said today in a press release that the app was built to better match the iOS version.
The company also took to the wires this morning to announce $ 12m in Series B funding. Menlo Ventures led the round, with existing investors Accel Partners and Bay Partners participating as well, bringing the total amount raised to $ 17.8M. Dropcam says it will use the cash to grow its San Francisco software engineering team and expand global manufacturing operations.
“We appreciate Dropcam’s position in the industry and are confident in what this company can do for the connected home. Dropcam is in a unique position to lead the way in this space because of their unparalleled commitment to quality software layered on top of impressive hardware. This is a tough balance for young companies and Dropcam is doing a commendable job at this,” said Mark Siegel, a Managing Director of Menlo Ventures said in a released statement this morning.
This comes several months after Dropcam introduced its second generation monitoring camera at CES 2012. At $ 150 the Dropcam HD hits at lower price than its predecessor and features 720p video, better low light capture and, of course, remote access. After a period of tight demand, the Dropcam HD is now widely available.Related Posts:
Like any money-hungry corporation, Sprint’s branching out to pursue greener (as in the color of dolla dolla bills) pastures. The Hesse-led co’s just announced the creation of its New Ventures unit, an overseas- and wholesale-focused entity which is set to expand upon Android’s rapidly growing user base to generate some lucrative B2B handshakes with manufacturers and foreign operators. First up on the organization’s plate is the white labeled extension of the company’s branded apps, now nestled under the carrier agnostic Mobile ID and Mobile Zone monikers. Those software packs will function much like they do here in the US, offering subs a pre-selected assortment of skins containing applications, ringtones and wallpapers, in addition to a centralized hub for account management. No word yet on what international partners have signed up for the licensed service, but with Mobile World Congress only a few days away, we’re sure those necessary details will be forthcoming.
Continue reading Sprint launches New Ventures arm, adapts ID and Zone apps for foreign markets
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Lucasfilm’s former chief technology officer just became HP’s former VP of worldwide developer relations — Richard Kerris is calling it quits. HP confirmed Kerris’ departure, stating that he “has decided to leave HP to pursue an opportunity outside of the company, effective immediately.” Kerris joined HP in February 2011 as the outfit’s webOS frontman for the development community, vowing to work hard to win its favor before the firm discontinued operations for the platform’s devices earlier this year. Kerris isn’t the first employee to go since the webOS cut, and sadly, he probably won’t be the last either.
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IDG Ventures India has invested $ 3 million in Vserv, which operates a mobile in-app advertising network in India. The company has developed an “App Ad-Wrapper” solution for J2ME Apps and is now extending this solution to Android apps.
It essentially offers mobile app developers a solution to potentially increase ad earnings with in-app and WAP advertising campaigns.
Vserv says it focused squarely on emerging markets, and that it has delivered ads in over 200 countries to date.
Last week we broke the news of the impressive-but-not-jawdropping $ 200 million acquisition of Cloud.com by Citrix and the stellar year of returns that Redpoint Ventures is having. What makes Redpoint’s record so unique is that the firm is having a good year despite the fact that they’re not in one of the big five: Zynga, Facebook, LinkedIn, Twitter, 0r Groupon. Hell, let’s make it a big six and throw in Pandora since the IPO made so much noise.
The venture world has never been more polarized between have and have-not firms. There’s talk that Accel is sitting on a fund that will have the highest returns the industry has ever seen, thanks mostly to Facebook. Meanwhile, Greylock must be sitting on one of– if not the– best fund in its history between early stakes in LinkedIn, nicely priced stakes in Facebook and Pandora and a late stage investment in Groupon. Of course no single individual in the venture business may be in a better position to enjoy 2011 than Reid Hoffman: He’s the founder and largest shareholder in LinkedIn, the first money into Zynga, a partner at Greylock, and an angel investor in Facebook.
Meanwhile, there are dozens of venture firms on the other side of this divide who are going out of business. Like the kid stuck practicing the violin while he watches his neighbors play football in the yard, these firms can only look on as we endlessly debate whether it’s a bubble or not. It certainly doesn’t feel like 1999 to them. 1999 was a time that anyone with a plausible reason to call themselves a venture capitalist could raise money. These firms– and there are a lot of them– are struggling to raise another dime.
My best guess is there are dozens of them, but there could be more. Dying venture firms are like the walking dead. They can have years of staggering around with stakes in still active portfolio companies, hoping they’re still holding a lottery ticket that could put them back in the game. If not, they just slowly wind down.
Part of the reason for such an industry disconnect is the polarity of returns. The consumer Web companies that are this cycle’s winners are some of biggest the world has ever seen, thanks to the spread and maturity of the Web, and the fact that most of them have waited so long to seek an exit. But the other big trend has been the feature/app company flip for less than $ 100 million. It’s been well documented that small and mid-cap companies can no longer go public, and those several-hundred-million-dollar acquisition singles and doubles– like Cloud.com and fellow Redpoint exit Clearwell– have been hard to come by.
All of that is what makes Redpoint’s winning 2011 such a hopeful sign that there’s still something in between the two extremes. The firm has found multiple exits affording them returns of 10x or more without stakes in the big Web 2.0 names. They’ve done it through less sexy Internet companies like Home Away, international exits like Qihoo, and some solid doubles and triples in the enterprise business. Redpoint hasn’t counted on lucking into the big score, the firm has made well-reasoned investments at reasonable prices and dug out its own luck.
I caught up with Redpoint’s newest partner Satish Dharmaraj on video last week to talk a bit more about the firm’s run. He joined the firm two years ago after a stellar record as an entrepreneur, and Cloud.com was his first deal. We talked about how Redpoint is making money, and we also talked about what it was like for Dharmaraj to be on the other side of the table.
Yesterday, at the MobileBeat Conference in San Francisco, Google Ventures Managing Partner and Co-founder of Android Rich Miner announced that Crittercism, a startup that provides support infrastructure for mobile apps, had raised an undisclosed seed funding round from Google Ventures, Kleiner Perkins, Opus Capital, Shasta Ventures, and AOL Ventures, among others. GigaOM was the first to report on the startup’s mystery raise, but we’ve since learned from sources close to the deal what the actual amount was: $ 1.2 million.
Our sources also indicated that those leading the charge were Ellen Pao at Kleiner Perkins, Wesley Chan at Google Ventures, Bob Borchers of Opus Capital, who was part of the original iPhone team and is former director of worldwide marketing for the iPhone, Rob Coneybeer at Shasta Ventures (who also invested in Gowalla), and Adam Smith at AOL Ventures. Early Facebook engineer Lucas Nealson also participated.
While $ 1.2 million may not seem like a deal-size that is cause for a big fuss, considering EA’s $ 650 million acquisition of PopCap and Jawbone’s $ 70 million round yesterday, we’re hearing that the deal was pretty competitive and Crittercism had to turn investors away to make room in this round.
The impressive list of investors, combined with the fact that more money and investors may have been on the table — not to mention research2guidance’s recent report that the mobile application development services market is projected to grow to $ 100 billion by 2015 — seem to be confirmation of the serious growth happening (and coming to) mobile app development, and the potential of startups like Crittercism that provide support systems for these app developers.
Crittercism is an alum of the AngelPad accelerator program and raised this round shortly after its demo day in March. The startup’s Co-founder and CEO Andrew Levy is a former Y Combinator alum, but he decided to join AngelPad, because he said that AngelPad offered more of a “focus on product market fit” and offered “lots of industry connections” since many of the partners are former LinkedIn and Facebook employees.
Interestingly, while Levy said that he recommends both programs to aspiring entrepreneurs, he found that AngelPad attracted founders with more startup experience, compared to Y Combinator, which has more of a “startup bootcamp” feel. Different strokes for different folks, but interesting experiential info for those founders looking for the right accelerator.
As to Crittercism itself, the startup has built a platform that enables developers to diagnose mobile app crashes and to easily provide customer support to an app’s users. Crittercism’s iOS library (previously in beta) was yesterday made available to all mobile app developers and has also made its Android SDK available for limited release.
While most of the growth in the mobile apps space has been among startups offering tools for speedy or custom development, there is ample room for those providing customer support and services that help developers diagnose and solve mobile app crashes and outages. Troubleshooting errors and customer support is an extremely important part of customer satisfaction and engagement, but it also eats up time and resources for developers.
The startup’s solution, then, provides businesses with a library that can be added to any app and connects to a SaaS platform that monitors those apps. The solution prioritizes the most nefarious bugs as they occur, while gathering diagnostic data on hardware and software, so that developers can see what was happening on the device when it crashed.
And, perhaps most importantly, developers are able to notify users when an issue has been fixed and can “specifically target users that ceased to use the application as a result of a crash or bug in the software”, according to Crittercism’s release. This feature may prove to be very important for user retention, a problem that has long beset app developers, as users often download an app once, use it a few times until a bug is spotted before dropping it.
For more, check out Crittercism’s home page here and let us know what you think.