AlleyCorp Seeds a Blossoming Internet Hub in New York

The following is an excerpt from an article in 

The New York Times
Saturday, September 01, 2012

AlleyCorp Seeds a Blossoming Internet Hub in New York

By CLAIRE CAIN MILLER

Kevin Ryan reclines in a designer chair in his Park Avenue office, wearing a Luciano Barbera suit and a vintage Rolex watch. A picture of Mr. Ryan with President Obama is on the wall and an ornate Oscar de la Renta gown hangs from the door.

This is not a man who would blend in among the sneaker-clad start-up ranks of Silicon Valley. Yet Mr. Ryan, chief executive of the Gilt Groupe and a founder of several prominent Internet companies, is one of the technology world’s most influential people, with a career trajectory that mirrors the rise of New York’s tech scene.

Mr. Ryan and Dwight Merriman run a start-up factory called AlleyCorp, after Silicon Alley, a nickname given to New York’s answer to Silicon Valley. It has churned out companies that have almost nothing in common, from e-commerce to publishing to database software.

When asked about this start-up grab bag, Mr. Ryan smiled and said, “Are you saying I have a focus problem?”

Gilt.com, which sells luxury goods like designer clothes and vacation packages, is considering going public next year. Business Insider, another AlleyCorp company, is a blog publisher with 19 million readers a month, run by Henry Blodget, the infamous former Internet stock analyst. And 10gen, which makes MongoDB, open-source database software that is used by companies like Disney and Foursquare, was valued at $500 million by venture capitalists who invested $50 million in May.

These companies contribute to New York’s growing role as an Internet hub, particularly for the new generation of online media and retail companies. Last year, 256 New York tech start-ups raised $2.2 billion in investment, up from 149 and $1.3 billion five years ago, according to the National Venture Capital Association.

“Silicon Valley is on their fifth generation,” Mr. Ryan said. “We’re on our second or third generation of New York entrepreneurs, combined with a bigger and better infrastructure to support it, so the scene is just mushrooming.”

Mr. Ryan made his name during the first tech boom as chief executive of DoubleClick, the digital advertising company that Google bought for $3.1 billion in 2007.

“He doesn’t fit into the Valley mold as much, but he’s definitely one of the most prominent people here,” said Chris Dixon, a New York tech investor and entrepreneur. “He went off and did this thing that entrepreneurs fantasize about, starting multiple companies and having them be really successful.”

For more, visit www.nytimes.com.

Money, Mentoring and a Claim on the Payoff

The New York Times
Monday, August 13, 2012

Money, Mentoring and a Claim on the Payoff

By QUENTIN HARDY

If you believe someone has a great future as an entrepreneur, maybe you should own a piece of it.

That is the premise of an unusual effort by a former Google executive to promote start-ups through the creation of a new investment vehicle. Through the company, Upstart, successful older executives will give enough money to college graduates to see them through the earliest stages of their business ideas.

They also act as mentors, and in return get a claim on a percentage of a decade's earnings. If the entrepreneur's product hits, returns can be as high as 15 percent a year. Not bad, though probably commensurate with the risk.

For more, visit www.nytimes.com.

Online Advertising Startup Competes More Effectively, Spends Less on IT With Cloud-Based Windows Azure

News Press Release
Online Advertising Startup Competes More Effectively, Spends Less on IT With Cloud-Based Windows Azure

Fast-growing Crumbtag adopts Windows Azure to meet its massive data-processing needs without buying costly IT infrastructure.

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THE HAGUE, Netherlands — March 26, 2012 — To target its customers’ online advertising efficiently, Netherlands-based startup Crumbtag has adopted Windows Azure, a cloud-based platform that provides the firm with cost-effective processing power and agile scalability. Crumbtag had a novel idea for Internet ad placement that involved analyzing Web visitor behavior in real time, but this operation required massive data-processing capability. Since tapping into cloud services with the Windows Azure platform, the young company scales processing power and storage on demand, serves the needs of very large customers, and offers more competitive rates for online advertising. “Because we are not spending millions on IT infrastructure, we can pass those savings on to customers,” said Crumbtag Founder and CEO Jan Kopmels. “As a small startup, we’ve been able to compete successfully for multinational customers and also demonstrate to them that we use cutting-edge technology.” Kopmels estimates that with the cloud-based Microsoft Corp. solution, Crumbtag has avoided a $10 million (U.S.) outlay for on-premises infrastructure. Typically, online advertising firms match ads to users’ interests through the use of cookies, which are deposited covertly on a user’s computer during website visits. Cookies help determine the user’s online behavior, such as sites visited, paths to sites visited and shopping cart contents. However, privacy concerns have prompted many countries to outlaw them. From an advertiser’s perspective, cookies have limited value because they cannot be stored centrally for analysis. Kopmels wanted to capture user behavior and process it in a giant statistical database. This would allow customers to place ads without relying on cookies and also adjust and refine their placements dynamically with every Web page view and click. With a small but committed team, Kopmels launched Crumbtag in 2009 and spent two years developing technology for the ad-placement application. He came to the discouraging realization that the tiny firm would have to spend millions on datacenter infrastructure to process the prodigious amounts of data involved. “We needed a whole new infrastructure and business model to make Crumbtag viable,” he said. In December 2010, the company explored several market-leading cloud services. Because they’d developed the ad-placement application using the Microsoft .NET Framework and Microsoft SQL Server 2008 data management software, Crumbtag opted to go with the Microsoft cloud-based solution. “We looked briefly at Amazon cloud solutions but felt they were too immature,” Kopmels said. “Plus, we were a committed user of Microsoft technology.” It took Crumbtag just six weeks to move the application to Windows Azure — about 20 minutes of which was required to migrate the database to SQL Azure. “For an experienced .NET developer, moving to Windows Azure is a piece of cake,” Kopmels said. Crumbtag uses Windows Azure Compute to supply on-demand processing power for its application, which processes about 4,000 requests per second and provides a 20-millisecond response time to well-known Dutch companies ranging from small to multinational. Crumbtag also uses Windows Azure Caching to provide high-speed communication between virtual machines. As it pursues plans to expand across Europe in 2012, Crumbtag is using Windows Azure to scale up quickly to serve its growing customer base. Cloud computing enables the small company to offer a more cost-effective solution that helps it win business against larger, more established players that are saddled with aging on-premises IT setups. More information on Crumbtag’s move to Windows Azure is available in the Microsoft case study,Microsoft Showcase and Microsoft Customer Spotlight News Center. Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Senate Seeks to Toughen JOBS Bill, Aimed at Easing Rules on Start-Ups

Excerpt from an article in

The New York Times

Tuesday, March 20, 2012

Senate Seeks to Toughen JOBS Bill, Aimed at Easing Rules on Start-Ups

By EDWARD WYATT

WASHINGTON — A decade after the dot-com bubble popped and Enron became synonymous with spectacular fraud, Congress is on the verge of scrapping numerous safeguards against investment fraud and allowing some small companies to sell stock to the public with minimal disclosure or oversight.

The bill, which intends to make it easier for emerging companies to raise money and court investors, is scheduled for several procedural votes in the Senate on Tuesday and could come to a final vote as early as this week. A Senate amendment that differs substantially from a bipartisan version passed overwhelmingly by the House two weeks ago, faces a difficult hurdle.

The amendment must get 60 votes on Tuesday to revise the House bill, and it is unclear that Democrats will be able to attract enough Republican votes.

The JOBS Act, whose acronym stands for Jump-start Our Business Start-ups, has attracted widespread support on Capitol Hill and from the White House for its promise of attracting small-business investment and allowing businesses to hire workers. That it would give legislators something positive to take home to constituents during election season is a bonus.

But the bill faces stiff opposition from, among others, the chairwoman of the Securities and Exchange Commission, pension funds and lobbying groups like the American Association of Retired Persons, which fear that the bill will revive some of the worst practices of the dot-com era.

Marc Andreessen Inverview

This morning Marc Andreessen, co-founder of Andreessen-Horowitz, was interviewed on CNBC’s Squawk Box.  Mr. Andreessen was also the founder of Netscape.

The interview covered a variety of topics, including the current climate in Silicon Valley as opposed to that of the late 1990s, government regulation, venture capital, private equity, and trade with China.

The interview is over 18 minutes long, but it is worth a listen.

http://video.cnbc.com/gallery/?video=3000076440

Putting a Price on Personal Data

Excerpt from an article in The New York Times
Monday, February 13, 2012

Start-Ups Aim to Help Users Put a Price on Their Personal Data 

By JOSHUA BRUSTEIN

Facebook’s pending initial public offering gives credence to the argument that personal data is the oil of the digital age. The company was built on a formula common to the technology industry: offer people a service, collect information about them as they use that service and use that information to sell advertising.

People have been willing to give away their data while the companies make money. But there is some momentum for the idea that personal data could function as a kind of online currency, to be cashed in directly or exchanged for other items of value. A number of start-ups allow people to take control — and perhaps profit from — the digital trails that they leave on the Internet.

“That marketplace does not exist right now, because consumers are not in on the game,” said Shane Green, who founded a company called Personal in 2009.

The idea behind Mr. Green’s company involves two steps. First, his team created a series of personal data vaults, which contain thousands of data points about its users (the company calls them owners). This data can be as prosaic as birth dates, or as specific as someone’s preference for spicy foods. People control what information they share and remove data they don’t want to share at any time.

The problem is that companies don’t need to pay for the information when they get it free.

“The killer app isn’t here yet,” said William Hoffman, who is working on a multiyear study of the economics of personal data for the World Economic Forum. But with increased consumer awareness of the value of that information — Facebook could be worth as much as $100 billion — that may soon change. “I’m willing to bet that within the next 12 months something big will catch on,” he said.

The concept of treating data like currency has long excited certain computer programmers and academics. But to almost everyone else, it is boring. Personal data management has none of the obvious appeal of social networks or smartphones. But concerns about privacy may be changing that, Mr. Hoffman said.

For Some Internet Start-Ups, a Failure Is Just the Beginning

The following is an excerpt from a January 18 New York Times article with the above title.

For Some Internet Start-Ups, a Failure Is Just the Beginning

By JENNA WORTHAM

Every entrepreneur hopes to start the next big thing. But sometimes the first try doesn’t go as planned.

Bradford Shellhammer remembers the exact moment he realized his fledgling Web start-up, Fabulis, a review site and social network geared toward gay men, was a flop. Last November, he and Jason Goldberg, one of his co-founders, flew to London, expecting to hold a festive party for their users there. Instead they found themselves among a sparse crowd at a tacky club in Soho, listening to an off-key singer doing show tunes and being served overpriced drinks by shirtless bartenders.

“No one showed up!” said Mr. Shellhammer, burying his face in his hands at the memory. “It was so awful. We were just like, ‘What are we doing?’ ”

After that disaster, Mr. Shellhammer and Mr. Goldberg laid off more than half of their employees, threw out the code they had written and changed course. Six months later, they introduced a high-end e-commerce site called Fab.com.

Theirs is just one example of a start-up that decided to cut its losses and pivot — choosing an entirely new direction in the hopes of transforming a dud of a business into one that might have a shot at success.

To pivot is, essentially, to fail gracefully. While the term has been in the start-up lexicon for decades, it is coming up more often in the current Internet boom, as entrepreneurs find that many investors are willing to keep the money flowing even if a start-up takes a hard left turn.

“Ideas are like lightning in a bottle, so if the company is small enough and didn’t seem to capture lightning on their first try, it makes sense to try again,” said Ben Horowitz, one of the founders of the venture capital firm Andreessen Horowitz. “The art of the pivot is to do it fast and early. The older and bigger the business, the harder it is to change directions.”

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For Start-Ups, Sorting the Data Cloud Is the Next Big Thing

The following excerpt is from the Business Section of the December 26 New York Times.

For Start-Ups, Sorting the Data Cloud Is the Next Big Thing

By MALIA WOLLAN

SAN FRANCISCO — The idea of big data goes something like this: In a world of ever-increasing digital connectivity, ever larger mountains of data are produced by our cellphones, computers, digital cameras, RFID readers, smart meters and GPS devices. The huge quantity of data becomes unwieldy and difficult for companies and governments to manage and understand.

“My smartphone produces a huge amount of data, my car produces ridiculous amounts of really valuable data, my house is throwing off data, everything is making data,” said Erik Swan, 47, co-founder of Splunk, a San Francisco-based start-up whose software indexes vast quantities of machine-generated data into searchable links.

Companies search those links, as one searches Google, to analyze customer behavior in real time.

Splunk is among a crop of enterprise software start-up companies that analyze big data and are establishing themselves in territory long controlled by giant business-technology vendors like Oracle and I.B.M.

Founded in 2004, before the term “big data” had worked its way into the vocabulary of Silicon Valley, Splunk now has some 3,200 customers in more than 75 countries, including more than half the Fortune 100 companies.

The amount of data being generated globally increases by 40 percent a year, according to the McKinsey Global Institute, the consulting firm’s research arm. And while Splunk has a lead in selling software to analyze machine data, big data is big enough to create new opportunities for a multitude of start-ups, many of them using the open-source software Hadoop.

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