On this week’s Ask A VC episode, Index Ventures partner Danny Rimer joined us in the studio. Rimer has been in the venture industry for over 11 years so he had plenty to share on how VC has changed, and the differences in the venture world in Europe and the U.S.
Rimer, who has led the firm’s investments in Etsy, Nastygal and many others, also talked to us about the future of e-commerce and how the industry is changing for startups.
Check out the video above for more!
A Russian startup called Unface.me has created a new social network inspired by the Gossip Girl TV series which lets users create an alter ego to — let’s face it — troll their friends, or even post even worst types of gossip entirely anonymously. The site connects with Facebook and Russian social network VKontakte so it can pull in users’ genuine friend networks, then furnishes them with a series of tools to poke fun, dish salacious gossip or vote on who of their friends is coolest and therefore who is not. Y’know, teen stuff.
Teens powered the rise of social networking giant Facebook. But today’s teens are arguably starting to be less enamoured with the platform their siblings spent all their time on, what with so many other, more flexible ways to ping and poke each other. Facebook’s insistence on real names, and its standard comms toolset of public posts, private messages and IM isn’t helping here. Looked at through the hyper layered and stratified teenage lens, it’s pretty limting. Which is giving startups the opportunity to crowd in.
Zuck and co were also not as quick to respond to the growth in mobile messaging as they should have been. The long and short of it is that today’s teens are spoiled for choice; they don’t need Facebook to stay in touch — they have a whole arsenal of creative digital tools to get around being grounded.
Facebook’s difficulty, of course, is that it can’t keep up with the kids without risking alienating its massive user base of oldies. With such a whoppingly huge user base that spans multiple age-groups comes a big responsibility not to put segments of users off. Keeping things fairly simple is the compromise path, but that too risks boring the kids — so they go looking to get their kicks elsewhere, whether it’s Snapchat or Unface.me.
Now it must be said that Unface.me is pretty rough round the edges — and focused pretty squarely on the Russia market for now. It isn’t necessarily anything more than a curiosity. It’s just come out of a closed beta, so its user base is small, with a test group of around 20,000 that it’s now looking to grow — having just opened up to the public. It says it’s also starting to advertise to get the word out. But as an experiment in extending social networking by adding an element of privacy it’s interesting to watch — also bringing to mind secret-sharing app Whisper.
Unface.me’s founders are three computer science graduates from Moscow State University, with respective specialisms in marketing, business development and web development. The startup is currently bootstrapped with funds from founders, friends and family.
“The inital idea came from the Gossip Girl series, but we decided to go further and develop a place where people can share their feelings freely and get honest opinions from their friends, but sharing secrets and gossips can be done too. We strongly believe that anonymity loosens up and helps discovering new facts about friends and yourself,” Unface.me’s Dmitrii Ponomarev tells TechCrunch.
The site has been in development for around a year and a half, with the closed beta kicking off six months ago. The “mission” is to “let every person discuss freely anything or anyone”. And, judging by some of the public posts, there’s certainly plenty of that going on already. Indeed, it’s pushing into some pretty unpleasant territory, which is generally what happens when you mix teens and gossip, regardless of the medium they’re using.
The key twist here is the mixture of unknown and known, says Ponomarev. Since the users are interacting with their real friends, pulled in from third party social networks, not random online strangers. From there they can choose to chat and post anonymously or under a fixed alterego. Or indeed using the real name they use on the linked social network.
“A user can anonymously write a story about his friends on yesterday’s party, share it anonymously via sms and watch the discussion,” explains Ponomarev. “Or he or she can post a photo of his new look and get really honest responses from friends because the are anonymous. Or he can start an anonymous chat with his friends and discuss something that matters with his friends but no one will know each others’ names… We’ve gone much further than just posting anonymous text messages.”
Teens are famously creative in their communications. Even within the Facebook straitjacket they find subtle and not so subtle ways to hack the limits — by ‘being in a relationship’ with all their BFFs, say, or asking each other to like a post for feedback on what they look like and so on. Unface.me looks like it’s picking up on that preference for teens to gamify their communications — and giving them even more layers to interact with each other.
Facebook can still be part of the mix, of course — as one of the foundation networks that Unface.me is using as its jumping off point. However, if more teenage chatter ends up going on anonymously outside Facebook’s walls that’s not an outcome that will end up pouring coin into Zuckerberg’s coffers as it restricts the flow of data. Addressing the innovation challenge posed by upstart startups that are offering cooler, more teen-friendly ways to do stuff is the sort of war that is looking impossible for a single, central dominant service like Facebook to win. When it comes to the social networking/social messaging space, it’s definitely time to get the popcorn in.
We’re all familiar with the bill shock associated with roaming abroad with our cellphones. There are plenty of players that allow you to swap out your SIM card and use cheaper traffic, including Cubic Telecom. However, that process is tedious. So Cubic has secured new funding to enable a range of tablets and notebooks to have their technology built into partner devices. To do this they’ve raised a further $5.2 million in funding from Enterprise Ireland, Qualcomm Incorporated, ACT Venture Capital and TPS Investments.
The money will be used to expand globally, and invest in the technology which essentially allows Cubic to operate like its own global mobile phone carrier, not an MVNO. As a licensed mobile network operator (MNO), Cubic Telecom partners with Tier 1 mobile operators to provide coverage in 230 countries. Its Software Defined Network (SDN) works across multiple technologies (3G, 4G-LTE, CDMA and WiFi).
The Dublin based company has also secured contracts with a number of leading Fortune 100 tablet and notebook manufacturers to be in-built into their devices, though these partners have yet to be announced.
The embedded nature of the service means any changes to the internal SIM can be Over The Air (OTA).
Barry Napier, CEO of Cubic Telecom, says they will “enable the latest devices and applications to be always connected anytime anywhere.”
In plain English, that means Cubic Telecom devices can integrate with content and apps. Thus, imagine a world where an app provider asked Cubic to allow its use to be free on Cubic dvices. All it would require would be a simple OTA update from Cubic to its customers. That could be a very powerful place to be.
The company also announced that it will create a total of more than 70 new jobs over the next 3 years, as part of an investment supported by the Department of Jobs, Enterprise and Innovation through Enterprise Ireland.
Imonomy, an Israeli startup which makes software that analyses webpages and automatically inserts relevant, copyright-free images to accompany the content, has closed a $400,000 seed round from a group of angel investors. Investors include Inon Axel, former CEO of Kasamba (acquired by LivePerson for $40m), Liron Rose, cofounder of AfterDownload (acquired by ironSource for $28m), and Itai Levitan and Tal Shaked, partners at AfterDownload.
Imonomy said it will be using the new seed funding for product development and initial marketing and sales activities.
The startup was founded in the middle of last year by Oren Dror and Amit Halawa who previously held senior R&D and engineering positions at Yedda, an online Q&A service that was acquired by TechCrunch’s parent company AOL, back in 2007.
Imonomy targets its software at smaller-sized web publishers who have a pool of online content but don’t necessarily have the means to spice it up with illustrations — either lacking the production staff to spend the time hunting down royalty free images or the licensing money to pay to display copyrighted images. Imonomy says its semantic software is being used by more than 500 medium-sized websites (with up to 10 million monthly impressions) at present, including AOL Answers and Articles Base.
Imonomy’s software scans web content to figure out relevant images to serve up from its database of copyright-free images, and also determines the optimal place to position them on the page to improve user engagement. Inserted images support hover over links to other articles and also displaying ads, giving publishers (and Imonomy) a way to monetise the added eyecandy. It’s effectively a more aesthetic version of inline text link ads.
“The idea behind Imonomy is that publishers of content-heavy web sites need to tools to help their sites be visibly attractive,” the startup tells TechCrunch. “High quality copyright-free images are hard to come by and the time and effort required to locate such pictures is a hassle. Imonomy created its content enrichment and monetization system to automate this process in order to help publishers save time, improve user engagement and create monetization opportunities.”
Here’s how it describes its system on its website:
Our database contains millions of images that cover every possible topic. Our system scans your webpage, finds the best fitting image and automatically insert them into the published page. Thus making content more interesting and informative. Our technology brings our customers greater user engagement and lower bounce rates, which has been in proven to result in significantly increased revenues. imonomy also creates intelligent links between pages, which encourages visitors to easily navigate to additional relevant content. The visual semantic engine can be implemented easily on any website, and we also provide a free API that expands the functionality and the systems abilities.
In terms of competition, Imonomy concedes there are “numerous content enrichment tools” out there — name-checking the likes of OutBrain, Zemanta and GumGum — but argues that its approach is unique because it’s bundling “content enrichment and monetization opportunities in a single automated process to publishers for free”.
It’s not charging for use of its technology, instead it has a freemium model, tied to the ads that are inserted along with the images — sharing this revenue with its publisher customers so also taking a cut itself. Its revenue-sharing percentage depends on the size of the publisher and the volume of traffic on its website. But for larger sites with more impressions it takes a lower percentage than for smaller, less well visited sites. The startup added that it expects to be profitable by the end of the year.
An example of an added image plus ad powered by Imonomy’s engine is shown below:
JustFab, the subscription-based fashion commerce site, is putting the $109 million that it has raised so far to use: today it is announcing the acquisition of The Fab Shoes, a European e-commerce shoe club in France and Spain, to build out its global operations. Terms of the deal were not disclosed.
The deal will give JustFab a stronger foothold in the European market: it already has operations in Germany, where it has a European HQ in Berlin, as well as in the UK; now it will be adding France and Spain, with the integrated site coming in July 2013. Growth in Europe has been coming at a fast pace for the company so far. In 2012, JustFab did $2 million in sales, co-founder and co-CEO Adam Goldenberg tells TechCrunch (he shares the CEO role with co-founder Don Resller). ”This year we are on track to exceed $30 million.” The Fab Shoes has slightly more than 500,000 users; combining that with the 1.5 million across Germany and the UK, JustFab will now have over 2 million members, with 15 million worldwide, and is on track to do $250 million in revenue globally ($215 million in the U.S.).
Call it a funny coincidence, but this isn’t the first acquisition JustFab has made of a would-be competitor with the word “Fab” in its name. Earlier this year, the company acquired FabKids to spearhead a move into children’s fashion. “We have a running joke that whoever is called ‘Fab’, we’ll buy them,” says CEO Adam Goldenberg. (And indeed that may not extend to the biggest Fab of all, Fab.com, which apparently is now raising a $250 million round at a $1 billion valuation.)
More seriously, Goldenberg says that his company is not singularly focused on buying up so-called “clones” of its own service. Taking a lesson from some of the challenges companies like Groupon have had digesting large, inorganic acquisitions to scale up their services — from what we understand Groupon has yet to migrate many of its extensive global assets on to a single common platform with the U.S. operation — JustFab has a different approach.
As Goldenberg describes it, the company’s M&A policy is based on acquiring smaller businesses that complement JustFab’s and are also built on the same subscription model. This means that they can be easily integrated into the bigger company’s infrastructure.
There is another reason for this: it’s increasingly a challenge for e-commerce fashion companies these days to raise money, with much of it going instead to those that have proven to have the most scale. “This is part of the reason why we raised such a big round last year,” Goldenberg noted. The Fab Shoes, founded in early 2012, was raising financing — or trying to — when JustFab came knocking.
“Scale and infrastructure are key if you want to grow quickly in the fashion business,” said Pablo Szefner, CEO of The Fab Shoes, in a statement. “While The Fab Shoes has had a lot of early success, we are thrilled to take our core business to the next level. With JustFab, we can provide our existing members and potential new customers with excellent styles, quality and service for an outstanding shopping experience.”
“We met Pablo and Xisco” — Pablo Szefner, CEO of The Fab Shoes and Xisco de la Calle, its COO — “and we decided this would be a great talent acquisition as well.” De la Calle will become the VP of operations for JustFab Europe, while Pablo becomes General Manager for France and Spain, overseeing 12 employees in Barcelona and Paris.
While some have waved a red flag over subscription-commerce sites — the implication being that they are not transparent enough about how they charge users on a regular basis — Goldenberg is insistent that this is a model that works well and is a hit with its customers, and investors. “There is a subscription commerce funding craze right now,” he says. “But because it is so low-cost you have to have the scale to make the economics of it work. We have millions of satisfied customers.”
Looking ahead, he says the company is planning to launch more products beyond the shoes that are the basis of the company’s model. In addition to childrens’ clothes that will go online in June, there is already denim and handbags that altogether make up about 30% of the company’s sales. And he hints that there will be another fashion category being launched later this year. “We’re building the next generation of H&M and Zara,” he says. Through all of that, “we’re staying entirely focused on subscription-based commerce.”