After a lackluster year for enterprise technology venture capital investments, 2017 kicked off with a record breaking quarter for enterprise technology startups. Following 4 straight quarters of decreasing investment, investors poured a record-breaking $ 5 billion dollars into enterprise technology startups in the first quarter of 2017 alone – a nearly 80% increase from the previous… Read More
Windows 10 Enterprise offers quite a few exclusive features that aren’t available in the Professional edition of Windows. You can get these features without reinstalling Windows, and without even having an Enterprise disc. In fact, you don’t even need your own Windows 10 Enterprise key to perform this upgrade.
The Galaxy S 4 launch was also supposed to mark the release of Knox, Samsung’s plan to balance home life and work through software. Unfortunately, Galaxy owners will have to live slightly off-kilter for a while longer — the company has officially delayed full Knox service to a “later date.” While the GS 4 ships with the necessary underpinnings, both distributors and providers have to fall into place before the suite is completely ready. Samsung hasn’t officially said when it expects Knox to arrive in earnest, although the New York Times claims that it may appear as late as July. Whether or not that’s true, the setback adds to what’s becoming a hitch-prone debut for Samsung’s 2013 Android flagship.
Source: New York Times
Moxie Software has announced a new freemium service that integrates its collaboration service with its social knowledge engine. Under the new plan, Collaboration Spaces is now free for anyone to use with no limits on users and full features that come with the SaaS offering.
The social knowledge engine integration is offered as a premium service that can be integrated with Collaboration Spaces. The cost of the premium social knowledge engine is based upon the number of users on the plan.
Moxie’s model is based on the premise that general collaboration has only limited value. It’s good for sharing information, but the real context comes when business processes and analytics integrate into users’ workflows. The social knowledge engine is designed to give answers to questions. With the new premium service, answers that surface in Collaboration Spaces become part of the social knowledge engine and are fed back so actions can be taken quickly.
The new service follows Moxie’s announcement last fall that it would provide the ability for customers to tap into the Facebook social graph to determine the best time to engage with people on a brand’s Facebook page.
The Facebook service and the new social knowledge engine integration with Collaboration Spaces shows how Moxie is developing use-case-specific ways for contact centers in particular to use its technology.
Moxie sees itself differentiating from services like Jive and Yammer that charge by the user or the enterprise plan and offer general collaboration services.
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When it comes to consumer apps, the debate over HTML5 vs. native has seen native win a couple of key rounds recently, with a number of high-profile tech companies eschewing the open standard because of performance issues. However, when it comes to enteprise services, it looks like we may hear a different tune. Gizmox, which operates a platform that helps enterprises create new and translate existing IT services into mobile apps using HTML5, today is announcing that it has raised another $7.5 million and appointed a new CEO, Eugene Kuznetsov, to capitalize on what it sees as a growing market for HTML5 among business apps.
The funding was led by Atlas Venture with participation from other existing investors Citrix, IVC and Consolidated Investment Group, and takes the total raised by Gizmox to $18 million. As part of the deal, Jeff Fagnan and Christopher Lynch at Atlas Venture are joining Gizmox’s board.
With this, the company’s second round of funding (“you could call it a Series B” said Kuznetsov in an interview), Gizmox is looking build on the groundwork established by Navot Peled, the founder who had been CEO but is now shifting to hold the title of president.
Kuznetsov has cut his teeth both at large corporates and as a successful entrepreneur himself. After time spent at Microsoft working on Internet Explorer among other things, he left to start his own enterprise software company, DataPower, which was eventually sold to IBM, where he stayed on for 2.5 years integrating and developing the business, before leaving to start a new company, online privacy company Abine, where he remains as chairman. Atlas, which had invested both in DataPower and Abine, likely had a role in putting Kuznetsov into the new position.
So where is the opportunity for consumer-challenged HTML5 with enterprises? As Kuznetsov describes it, not only is it impractical for enterprises to use native platforms for the job, but it’s unnecessary.
“I think that the challenge for businesses is somewhat different than it is for consumers,” he said of the reason for opting for HTML5 when you are an enterprise. “Businesses today have rich complex client-server applications. These are things that you and I would never see unless we worked for Fortune 500 enterprises. They are very complex, with interfaces built over 20 years. Now there is pressure for those to work on iPads and other devices.
“But in many cases you you cannot re-write those in ios or C#. It has to be something that is open and standard. Native apps are not really an option for these enterprises because the software they have is too complex and they have to support a broad range of devices and has to be something standard. HTML5 works great for this.”
He contrasts this to the priorities for consumer apps, with their 3D graphics, or accelerometers.
“HTML5 works here because these are not games. This is not Angry Birds. It’s graphs and lots of data,” he notes, adding that the complexity instead comes in the forms of security and multiple interfaces — two areas where HTML5 works well.
Current customers of Gizmox’s are in the large enterprise space and include names like Visa, Daimler and Bezeq Telecom, who have to date used the platform not only to build apps but more significantly use it to translate existing IT apps into the mobile environment. The idea, Kuznetsov says, is to expand that list of customers, and this is where the bulk of the investment will go.
As for competitors, “I don’t think anyone does exactly what we do,” Kuznetsov says, but he notes also that companies like Appcelerator have promoted the idea that the issue of mobilizing IT apps can be solved with native platforms; while Sencha covers “some aspects” of the same areas that Gizmox does.
In that vein, to better compete, it might not be strange to see Gizmox fill out and develop its product in areas like further security and performance management services for the apps once they have made it to Gizmox’s platform.
Gizmox Funded to Capitalize on Shift to Enterprise-Class HTML5
Closes $7.5M financing; names serial entrepreneur Eugene Kuznetsov as CEO
Cambridge, Massachusetts – April 22, 2013 – Gizmox, a leader in enterprise-class HTML5 for new and existing business applications, has closed a $7.5M round of financing and named a new CEO to accelerate its sales and marketing efforts. The round was led by Atlas Venture with participation from existing investors Citrix, IVC, Consolidated Investment Group, and others. Jeff Fagnan and Christopher Lynch of Atlas Venture will join the Gizmox Board of Directors. The funds will be used to build and staff the company’s headquarters in Boston.
“There is an enormous platform shift of mission-critical business applications from traditional Microsoft client-server to mobile, web and HTML5. While this is well understood and underway for horizontal or consumer applications, the problem for complex business applications is still largely unsolved. Gizmox has a unique solution informed by years of technology development and many successful customer deployments, to facilitate this shift,” said Jeff Fagnan, Partner, Atlas Venture.
Gizmox provides an enterprise-class HTML5 platform for building rich UI business applications. Its two components are VisualWebGUI, a widely adopted web and mobile HTML5 framework for enterprise apps, and InstantCloudMove, which easily migrates from client-server to pure HTML5 and the cloud. Gizmox is the enterprise HTML5 platform for native-quality user interfaces. Differentiated from consumer-grade technology, Gizmox software was built from the start to provide the security, management and rich functionality required for mission-critical business applications.
Chris Lynch, Partner at Atlas Venture, added “Atlas Venture has led this investment in Gizmox to take advantage of the multi-billion dollar opportunity in enabling the transition to mobile HTML5 with the industry’s leading solution. With Eugene at the helm, having previously driven the shift to XML-based applications in the enterprise, we are thrilled to be part of this team.”
More than 50% of all enterprise applications, in most cases the core critical mission ones, are still client server, representing over 55 Billion lines of code.
In conjunction with the financing, Gizmox has named Eugene Kuznetsov as CEO. Kuznetsov was founder and President of DataPower, a SOA appliance company acquired by IBM, an IBM executive, and more recently co-founder and CEO of Abine, the leading online privacy company. Atlas Venture was an investor in DataPower and is the founding investor of Abine.
Michael F. O’Connor, Consolidated Investment Group, said “As demonstrated by its success with major customers, the Gizmox’s technology is unique in the rapidly-growing enterprise mobile market. We are excited to participate in this financing to support the next stage of Gizmox’s growth.”
Guy Rosen, Maayan Ventures Chairman, said,”We are happy to complete this significant investment round in Gizmox, which has been led by an experienced VC such as Atlas Venture, with the participation of Gizmox’s existing shareholders. This round marks a great milestone for the company in materializing its vast technological and economic potential.”
Is your organization still on the fence about BB10? Then here’s a little first-party app for Nokia Lumia phones that might be worthy of some evidence-based evaluation. It’s called Conference and it’s only at the beta stage, but it’s already able to serve its primary purpose: namely, letting you join a conference call without needing to grab details out of your calendar and key them in. The app receives the invite, with the necessary ID/PIN details supplied by the sender, and then lets you join a call with a single tap — or a voice instruction if you’re on Windows Phone 8. It also integrates with Lync and vibrates whenever someone uses corporatese in lieu of gravitas.
Source: Nokia Beta Labs
Google Ventures’ general partner Karim Faris joined us in the studio this week for Ask A VC, where we put VCs in the hot seat.
Faris, who focuses on the enterprise and e-commerce investments for the firm, talked specifically about the opportunity in the enterprise security space and why we are seeing a growing number of startups succeed in the market. We’re looking at a year of a number of breakout security companies, explains Faris, and maybe even a few IPOs in enterprise security. We also tackled reader questions about where mobile is headed in the enterprise.
Check out the video above for more.
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Ionic Security, a TechCrunch Disrupt SF Battlefield company that offers an enterprise security software, has raised $9.25 million in Series A funding led by Kleiner Perkins Caufield & Byers with TechOperators, Ken Levine and Dr. Paul Judge also participating. Ted Schlein, general partner at KPCB, will be joining Ionic Security’s board.
The company originally launched last Fall as Social Fortress, as a way for both consumers and enterprise users to simplify how they access and secure their important data, including emails, Yammer messages, photos, tweets, or status updates. The startup also allowed users to manage who gets to access to this data by encrypting everything.
Since last year, the startup shifted focus to the enterprise, and now, under the name Ionic Security, offers an end-to-end security, identity and access management platform for encrypted data in the cloud. And Ionic provides this without the need for, or use of, gateways. Users can centrally manage all employee login credentials for software apps plus internal applications.
As Kleiner Perkins partner Ted Schlein explains, there are a lot of companies working on access to cloud but no one ever put it together into a seamless system that addresses all aspects of cloud security and is endpoint agnostic.
The company’s software has seen interest from the defense industrial base and the healthcare and financial services industries in both North America and Europe.
“Security needs to change with the times,” says Schlein. “Enterprises have historically secured their data through network security, endpoint protections and central identity management offerings that are no match for the complex security challenges inherent in the combination of cloud services and the rise of bring-your-own-device policies. Ionic Security addresses this challenge head-on by providing enablement, not restriction and is poised to become standard in next-generation enterprise IT infrastructure.
The new funding will be used to expand Ionic’s engineering team, accelerate enterprise sales and for sales and marketing.
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Formation 8 wants to bring venture capital back to its roots: investing in solutions to hard technology problems that could change the world. It just raised its first fund of $448 million — but with a twist. Formation 8 plans to draw on its extensive network and local offices in Asia to win its portfolio of smart enterprise and energy technology companies’ huge deals with conglomerates in the region.
Specifically, Formation 8 is looking for “smart enterprise” startups that can help enormous companies like those that define Asia to make sense of the vast seas of data now available. Government, finance, healthcare, and business services can all fall within this net. Formation 8 also seeks energy companies that can transform the global energy value chain. It hopes startups can become platforms to maximize scalability and take advantage of the nimbleness their small size affords.
Formation 8 co-founder and partner Joe Lonsdale tells me his fund isn’t thumbing its nose at consumer markets, saying ”It’s not about what’s right or what’s wrong, but about what areas we’re the most passionate about and are the best at.” As for its focus overseas, Lonsdale riffs, “If you have a company that’s trying to transform a big industry, and you’re ignoring Asia, you’re making a mistake.”
Along with Lonsdale who worked at PayPal and co-founded Palantir, Formation 8′s founders include Brian Koo of Harbor Pacific Capital and InnovationHub, James Zhang of Softbank China Venture Capital and BioDiscovery, Tom Baruch of CMEA Capital and Intermolecular, and Jim Kim of GE and Khosla Ventures. Lonsdale will be speaking at TechCrunch Disrupt NY in a couple of weeks.
Formation 8 originally closed the first $200 million of the fund last year, and some strong early investments and success had more limited partners lining up to fill up the full $448 million. Lonsdale tells me those include “founders of PayPal, Palantir, Yahoo, and Yammer, plus Asian conglomerates and some New York institutions. He’s already thinking about the firm’s next fund, which he says will probably be around the same size. Why raise $448 million instead of a nice round number like $450 million? Apparently, it’s a play on the firm’s name. Four hundred forty 8. Get it?
The firm’s investment philosophy centers around ”Large, growing and global markets with hard problems that can be solved through technology and partnership.” It wants companies with a strong technology culture that offer long-term equity incentives, make data-driven decisions, dream big, stress discipline, and have the humility to accept advice.
While it invests in startups, Formation 8 recognizes that there are strengths to large corporations, too.
“Corporations have scale, existing relationships, and distribution advantages in large, established industries such as energy, education, healthcare, logistics, financial services, and government services,” Lonsdale writes. ”Many Smart Enterprise startups would do well to partner with large corporations that control the data, the knowledge workers, and the distribution channels.”
It’s in forging those partnerships that Formation 8 really differentiates itself. The firm’s local teams in Korea, China, and Singapore can help its portfolio with relationships, sales, deployment and market knowledge. When I asked if corruption would be an issue, Lonsdale admitted some concerns with how the Chinese army mixes with Chinese Internet industries, but says most of Formation 8′s markets like Korea are exceptionally honorable.
While there’s been a recent increase in deals between Silicon Valley and Asia, Lonsdale says the connection will grow, as smart enterprise and energy businesses disrupt the antiquated big company infrastructures developed 20 to 30 years ago by the first enterprise wave. He concludes: “You need really talented engineers that are really good at big data to fix the infrastructure in big industry. Obviously there’s a market for that in the US, but Asia is an even bigger market.”
See Formation 8 partner Joe Lonsdale speak at TechCrunch Disrupt NY on May 1st.
Kaazing, a provider of live Web and mobile communication and the developer of HTML5 WebSocket, has raised $15 million in funding, bringing the company’s total financing to $39 million. New investors this round include New Enterprise Associates and Columbus Nova Technology Partners, as well as existing investors. Kaazing says it will use the money to drive its plans for corporate growth.
“This influx of new capital will fuel our global expansion and further validates our market momentum with an enterprise-grade web communication platform built using the HTML5 WebSocket standard,” said Kaazing CEO and co-founder Jonas Jacobi in a statement.
“With iPads and other smart mobile devices rapidly displacing PCs and accelerating cloud adoption, enterprise application modernization is increasingly urgent. Today’s static web architectures are expensive and ineffective in supporting this huge market shift – Kaazing’s leading communication products are critical to the emerging cloud and mobile architectures. We are excited to be investors in the leader in this space,” added NEA partner Rohini Chakravarthy.
The company’s last round of funding was in June, when it raised $17 million. At that time, Kaazing said it would use the funds to fund opportunities for using WebSocket technology to power real-time communications. Last year, Kaazing also brought on Cisco veteran John Donnelly to expand its sales and business development channels.
Based in Mountain View with additional sales offices in New York City and London, Kaazing helps drive the real-time Web and mobile communications of Intel, Google, Bechtel, Oracle, and HSBC. The company was created in 2007 and its founding team helped design the HTML5 WebSocket protocol in order to enable a “full-duplex pipe” between participants, rather than the legacy infrastructure that required a request and response between two users.
BlackBerry has been hit hard by Apple and Android in the enterprise smartphone market, and now it’s making some moves to make sure that it doesn’t face the same fate in the automotive segment. QNX, BlackBerry’s operating system subsidiary that makes the new BB10 operating system, today announced that it would be adding music streaming service 7digital into its in-car entertainment and information system, QNX CAR. The deal will see 7digital’s catalog of 23 million tracks, and HTML5-based music store, preloaded on to the QNX system, and the music service will work across the 40 countries where 7digital already has licensing agreements.
(As a point of comparison on footprint, yesterday music streaming service Spotify added several new markets to its global coverage, and now works in 28 countries.)
QNX says that this will in turn mean that automotive OEMs and others working on in-car systems can now build customized digital music stores into QNX-based infotainment systems. These will link up with 7digital’s wider service across mobile and web platforms so that subscribers can access their music on any of them.
The move is another sign of how everything, including cars, can be hardware today. “The lines between in-car systems, mobile devices, and the web are blurring,” said Derek Kuhn, vice president of sales and marketing at QNX Software Systems, in a statement. “Our partnership with 7digital is a testament to how well digital music services can be integrated into a seamless automotive user experience.”
At the same time, digital music specifically has a huge opportunity in the next generation of cars — something companies like Spotify are also considering.
“Connected and mobile devices have changed the way music is consumed, but one thing that hasn’t is people’s desire to listen to music in the car,” said Ben Drury, CEO of 7digital. “We’re already working with partners in the automotive sector and now, for the first time, automotive companies using the QNX CAR platform can leverage our HTML5 music store, where their customers can access the largest collection of digital music from the convenience of their vehicles.”
7digital already has a strong relationship with BlackBerry; the service is preloaded on a range of the company’s smartphones, including the newest BB10 devices. The company, based in the UK, has raised $18.5 million to date, with its named investors including Sutton Place Managers and Balderton Capital. Its last round of funding, $10 million in October 2012, came from “two public technology companies.” I’ve reached out to 7digital to ask if BlackBerry happens to be one of them.
Samsung is another strong partner of 7digital; the streaming company power’s the world’s biggest smartphone maker’s Music Hub music service. 7digital also works on Pioneer’s in-car system.
For its part, QNX has been an early and strong player in in-car systems for years already, working with companies like Audi, Toyota, BMW, Porsche, Honda and Land Rover. Interestingly, it has something in common with BlackBerry in that both have reputations as workhorses. “The only way to make this software malfunction is to fire a bullet into the computer running it,” an automotive customer once said of QNX.
But as the mobile industry has shown us many times, it’s not always the early movers who are the long-term winners in this space. While QNX had built a reputation with in-car navigation and other legacy car-computer systems, in the new age of connected everything, the car could well become a hot battleground, like the smartphone is already, in the bigger war of ecosystems. There are already companies working on ways of synchronizing the apps in one’s phone with those in the car, and companies like Apple and Google, as well as automotive companies themselves, all want a piece of the action. Cars and car news featured prominently at both the CES and MWC events earlier this year.
IDC noted last November that iPhones are bing bought “in droves” instead of BlackBerry handsets; some of this is down to users bringing in their own devices; and some is down to concerted corporate buying schemes.
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Cash-strapped businesses and schools are getting some love from Dell today, thanks to its freshly unveiled Latitude 3330 laptop. Shipping with an entry-level price of $419, this modest machine packs an Intel Core i5 3337U processor, a 13.3-inch 1,366 x 768 display, 2GB of DDR3L RAM, a 720p HD webcam and a 128GB SSD. Sure, it may not be the most beastly configuration, but this hardware is definitely capable of handling your homework. In case an employer or local schoolhouse needs to find safe-keeping for a fleet of its rigs, Dell also revealed its new Mobile Computing Cart to take care of the job. This $1,900 transportable docking station supports remote management and can house multiple notebooks, including up to 30 Latitude 3330s at a time. Students on a ramen-noodle budget and fledgling entrepreneurs can expect both the computer and storage cabinet to land sometime at the end of the month.
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At the OpenStack Summit today, Red Hat announced RDO, “a freely available, community-supported distribution of OpenStack that runs on Red Hat Enterprise Linux, Fedora and their derivatives.” In essence, RDO will function for Red Hat OpenStack much like Fedora does for Red Hat Enterprise Linux: new features will land upstream, get integrated into RDO, and eventually make their way into the commercially supported offering.
From the press release:
RDO brings the core OpenStack components – Nova, Glance, Keystone, Cinder, Quantum, Swift and Horizon – as well as incubating projects Heat, for cloud application orchestration, and Ceilometer, for resource monitoring and metering. Installation is made easy with the Red Hat-developed installation tool, PackStack.
That last bit is interesting. OpenStack is a complex suite of tools, and the installation process is non-trivial. Any work to streamline that will reduce at least one barrier to success.
As for the name, RDO? It stands for “Red Hat Distribution of OpenStack.” Not quite as catchy as “Fedora,” but what can you do?
In order to make the adoption of Red Hat OpenStack as easy as possible, Red Hat also announced today the launch of an official Cloud Infrastructure Partner Program, “a multi-tiered program designed for third-party commercial companies that offer hardware, software and services for customers to implement cloud infrastructure solutions powered by Red Hat OpenStack.” Cisco, Intel, and Mirantis are all on board as early members of the Partner Program, along with 25 other companies.
Red Hat is the largest contributor of code to the latest release of OpenStack, and today’s announcements make it clear that OpenStack is a key part of Red Hat’s ongoing strategy.
Bernstein Research has issued a research report saying it expects AWS will have an estimated $20 billion in revenues by the end of the decade. In a separate report, RW Baird & Co. projects $10 billion in revenue for AWS by 2016 and up to $40 billion in losses from the traditional IT market. The estimates reflect Wall Street’s growing confidence in cloud services and the need that analysts see in letting their customers know that a shift is underway that will lead to continued flat revenues or even losses for enterprise companies and systems integrators. In times of disruption, something like AWS may actually exceed investment analyst projections. Conversely, AWS success is not a certainty. Technologies may advance that will flatten AWS advantages or Amazon can’t scale the group’s services fast enough to keep its edge. These are the factors that investment research houses consider when making corporate financial projections. Overall, Baird and Bernstein cite a number of reasons that account for why AWS will do so well. The reasoning is sound but not without weaknesses, such as why AWS success will be harder to come by with large enterprises.
A Turning Point
The public cloud reached a turning point last year. As Baird states in its report, the top 10 cloud providers grew 37 percent while more traditional technology companies grew by 2 percent. AWS does not break out its revenues. Bernstein, based on its own research, estimates that AWS grew 100 percent year-over-year. Bernstein estimates AWS is worth $24 billion, 13 times its approximate $1.8 billion in revenue (Amazon does not break out revenues for AWS). In contrast, Bernstein reports that Rackspace, as of April 1, trades at about 5.3 times 2012 revenue. Its revenue grew 28 percent compared year-over-year. Its public cloud service revenues of $309 million account for 23 percent of total revenues. Rackspace, it should be noted, has aggressive expansion plans of its own and has been one of the founders of OpenStack, the open cloud effort. Developer interest has grown consistently in OpenStack since its unveiling. Google is a more concerning foe with Google Compute Engine and Google Apps. And Microsoft’s Windows Azure puts the company in position to compete in the cloud space.
How The Market Breaks Down
Enterprise Software: Baird Analyst Steve Ashley, quoted in the AWS report, “views client/server vendors like… SAP and BMC as most likely disintermediated, and SaaS companies like Salesforce, Concur, and cloud infrastructure vendors like Citrix and Red Hat as beneficiaries of the shift towards cloud computing.” The former are large, powerful companies that have built core businesses critical to IT. How these companies adapt is still a big question.
Customers will continue to invest in these providers to keep their businesses running. The time is now to ramp up and offer SaaS options, embrace mobile and offer friendly developer environments. ”Over time traditional IT will be forced to go to SaaS. The first choice will be mobile,” said Forrester Research Analyst Lauren E. Nelson to me in a recent interview.
IT Systems and Networking: According to Baird, HP and Dell have the potential to be most disrupted. EMC, VMware and NetApp also face exposure. When customers start using AWS, they stop buying storage and networking equipment. That certainly is a factor but data is so deeply embedded into these systems that analytics will give these players value over time. They also have deep histories with enterprise shops, and that dominance is not going to pass anytime soon. Realistically, AWS does have its own weaknesses in both storage and networking. ProfitBricks, for example, is leveraging its InfiniBand network and instance sizes that can scale to 62 cores and 240GB of RAM. HP is making its own play with OpenStack, as is Dell, which is also putting a deeper focus on next-generation storage and networking technology. Here’s Baird’s “competitive heat map” that shows how AWS stacks up compared to the rest of the market.
The greater danger stems from the AWS infrastructure and the breadth of what the cloud service offers. Developers get choice when they use AWS. It’s useful for test and development, as an extended network for media companies to offload peak demand. Pharmaceutical companies use AWS for its computational power and storage. According to the Bernstein report, customers that use AWS face high switching costs, because they use more services and customize their applications. And so even if there is more competition, AWS will most likely be able to protect its high margins, which Bernstein estimate at 25 percent. Amazon weathers pricing wars with the rapid addition of new features.
Importantly, the vast majority of the customers we interviewed stated that they would not change IaaS providers even for a 20% or so price discount, as switching would bring risks and, importantly, require them to invest scarce development resources, for example, to redevelop monitoring and management tools on the new provider’s application programming interface (API). While customers running relatively simple applications (e.g., the front end of a website) did not see material switching barriers, most users we interviewed have more complex, and hence “stickier” use cases.
AWS benefits from the steep demand in the market for computational, storage and networking power. It is built on a distributed infrastructure. At its core, AWS is complex due to the additional technologies needed to make an app or service truly robust. But still, customers start with AWS and often remain loyal. In turn, AWS has become an ecosystem for developers. Ask about a startup’s infrastructure and the founder will often say they run it on AWS. But AWS is not the only game in town and it still has not proven that it can provide the deep infrastructure that the enterprise requires. It’s a 10-year cycle that is underway that will keep a lot of infrastructure intact, on-premise. That gives the enterprise giants some time, but to this date they have not shown a deep willingness to embrace the hyper-scale infrastructures that customers demand.
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“You can’t go into Compton to rehabilitate gang members if you haven’t been a Crip.” — Ben Horowitz, co-founder of fast-rising venture outfit Andreessen Horowitz.
Twenty years ago, the typical VC looked like a traditional banker, complete with an MBA and a background in finance. But a Wall Street background is becoming increasingly rare on Sand Hill Rd. The most coveted VCs are people who have built and scaled businesses, and who are deep in a particular domain. Why the shift?
Gang references aside, Horowitz explains that you can’t give founders great advice unless you’ve actually been down that path yourself — a path that is often filled with hardship and struggle.
Horowitz speaks from both sides of the coin. He advises his portfolio with the same teeth that were cut through co-founding enterprise company Opsware, and later selling the business to HP for $1.6 billion. One of his board members, Bill Campbell, brought the same level of operational experience from Intuit, Kodak, and Apple that Horowitz now brings to his companies. Horowitz describes Campbell’s experience-backed advice as “incredibly powerful”.
The advisors and investors you surround yourself with will be the people you rely on when times get tough, he says. When Horowitz had to do his first round of layoffs at Opsware, he turned to Bill for advice. “Being able to talk to him and understand how to do these layoffs in the right way, I didn’t kill my company and people felt like they were treated fairly.” In fact, some of the staffers Horowitz laid off at Opsware now work with him at Andreessen Horowitz.
“Having that kind of advice and support system built into the agreement when being funded is a great opportunity for any entrepreneur,” says Horowitz, whose co-founder at the firm is Marc Andreessen, co-founder of Netscape and Opsware. The firm’s other partners include John O’Farrell (exec at Opsware and Silver Spring Networks), Scott Weiss (co-founder of IronPort), Jeff Jordan (CEO of OpenTable, eBay/PayPal exec), Peter Levine (CEO at XenSource) and Chris Dixon (co-founder of Hunch and SiteAdvisor).
Other firms are also shoring up their operational talent. Peter Barris, managing director of venture firm New Enterprise Associates, entered the VC space in 1992 after leading two companies to massive acquisitions. “I came out of the operating world, and I was the exception not the rule. Now I’m the rule not the exception.”
Barris adds that in the 1990s the typical VC was a generalist in the largest sense, and now VCs are more focused on certain areas of technology. He attributes the current oversupply of VC dollars as one of the reasons why operating expertise is so much in demand right now. “In 1992, dollars were scarce and VCs were distributing to a big demand set. Now there is an oversupply of investment money, and the way VCs are competing is based on value. The operators and VCs who have domain expertise can help startups grow much more than generalists,” he explains.
Foundational Capital’s Paul Holland says that in this era of the discriminating entrepreneur, the founder “doesn’t just want to get money from an investor; he or she wants the investor to be a successful entrepreneur, who’s seen the movie, and will help guide them down that path.”
And it’s not just presence of experience, but the content of that experience. Steve Herrod, the former CTO of enterprise and virtualization giant VMware who just joined General Catalyst says that in his limited experience in the VC world, he’s observed that entrepreneurs are judging investors based on what specific domain expertise they can provide.
Greylock’s John Lilly is a strong example of an operator with domain expertise. Prior to joining the firm in 2011, Lilly served as CEO of Mozilla, founded and ran Reactivity, and was a senior scientist at Apple. “We’re a big believer in operators at VCs, and because we are all product folks by nature, we obsess about how you build big companies,” Lilly tells me. He also predicts that there will be certain VCs you go to for design, certain VCs who attract cloud-based enterprise investments, and specific VCs who are known for products dealing with networking.
Every investor I spoke to believes that we’re headed towards a world where nearly all VCs will have built companies. If that’s true, then can we expect the entire ecosystem to reach a higher level of empathy? Reflecting on his own days as an operator, Horowitz tells me that when entrepreneurs “get one out of five things right in a given day”, it’s hard to talk to an investor who simply doesn’t empathize with the complexities of the role.
In a way, Horowitz explains, the VC world is going back to its roots in the seventies. Sequoia Capital founder Don Valentine previously founded National Semiconductor, and was an executive at Fairchild Semiconductor. Kleiner Perkins Caufield & Byers’ founder Eugene Kleiner was a founder of Fairchild, while Tom Perkins was an early HP executive.
They drew on their operating experience to cultivate and invest in a new generation of entrepreneurs, and now Horowitz, Lilly and others are paying that expertise forward. In a noisy and highly competitive ecosystem, there’s something pure about operators helping operators.
In this week’s Ask A VC show, Javelin Venture Partners’ Managing Director Noah Doyle sat down to talk with us about why he started a venture firm, where the next innovations in mapping are coming from and more.
Doyle has extensive experience in the online mapping world—he directed the enterprise product line for Google’s geospatial products, including Google Earth and Google Maps. Prior to Google, Noah managed the Marketing Strategy and Corporate Development functions at Keyhole, a company that created the first Web-hosted digital earth model and was acquired by Google in 2004. Doyle explains to us that some of the new technologies he’s excited about include layering social data across maps.
Check out the video above for more!
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Amazon has claimed that Redshift will increase the speed of query performance when analyzing any size data set, using the same SQL-based business intelligence tools analysts use today. Hapyrus Co-Founder Koichi Fujikawa says their service, a big data router, makes Redshift even more effective and an alternative to Hadoop and Hive, the most widely recognized combination used for processing and analyzing data.
After setup, FlyData runs in the background, moving the data to Redshift. Fujikawa said Hapyrus sets up a virtual private cloud on AWS. Customers can integrate their own virtual private network to transfer the data.
Hapyrus competes against the likes of Informatica and Talend. Its current focus is on integrating with AWS, but going forward it will integrate data from a variety of sources. Fujikawa said in an email that Informatica and Talend provide complex data-integration solutions for big enterprise customers — mainly for on-premise systems. “We provide our data-integration service for cloud components like Redshift for any size of companies, from startups to relatively big organizations,” he said.
Fujikawa says Redshift can be 10 times faster than Hadoop and Hive. Customers he hears from say they are seeking alternatives for the everyday kind of work that needs to get done. They can get stymied by the time and the expense that a query takes when using Hadoop and Hive.
But there are also complexities with using Redshift, as Airbnb discovered:
First, in order to load your data into Redshift, it has to be in either S3 or Dynamo DB already. The default data loading is single threaded and could take a long time to load all your data. We found breaking data into slices and loading them in parallel helps a lot.
On its nerd blog, Airbnb said Redshift lacks some of the features that come with Hadoop. But data analysts are liking it so much that they want to use it pretty much exclusively. The Airbnb nerd blog makes the point that, in the end, Redshift and Hadoop may be more compatible than anything else.
“Redshift, as a data warehouse, should be compared to Vertica, Greenplum, AsterData, Impala, Hadapt, and CitusData,” said Drawn to Scale Co-Founder Bradford Stephens in a recent email interview. “They’re just different things.”
The smallest of startups take the tiniest bites out of the profit margins of the enterprise giants. But time and again we see companies like Hapyrus emerge with new, novel ways to use Amazon Web Services architecture in a fashion that gives them access to a customer base that can eat by the morsel instead of a gluttonous software feast.
Hapyrus is a 500 Startups company with angel funding from a group of prominent Japanese angel investors, including Shogo Kawada, co-founder of DeNA, a $4 billion Internet company.
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As often as Dropbox has been courting serious cloud storage users with Dropbox for Teams, it doesn’t feel that the name reflects the company’s loftier ambitions — so it’s giving the service a rebranding. Now called Dropbox for Business, it’s pitched more directly at the suit-and-tie set. There’s more than just talk involved in the new strategy, though. The shift also sees Dropbox build in identity management from five providers so that Dropbox users don’t have to sign into the service if they’re already logged in elsewhere: they can hop on to the corporate Active Directory service, for example and have Dropbox ready for action soon after. We doubt that the new moves by themselves will sway IT managers, but they may help would-be users who’ve been on the fence.
Gamification startup Badgeville just announced that it has appointed Ken Comée as its new CEO. Co-founder and outgoing CEO Kris Duggan will become the company’s chief strategy officer, and he will also remain on the Badgeville board.
Comée was formerly the CEO of Cast Iron Systems, a cloud company that was acquired by IBM, and of PowerReviews, which was acquired by Bazaarvoice. He might not seem like the obvious choice to run a gamification company, but Badgeville says it’s actually selling its tools (which allow companies to add social features and game mechanics to their products) to some big enterprise customers, like Deloitte, EMC, and Oracle.
“Gamification is not a fad,” Comée told me via email. He later added, “I see user engagement as the vital factor in the success of all cloud and web-based technologies. While we’ve … had tremendous success in driving user engagement across key consumer environments, we’ve also tapped into a great market opportunity to extend more into employee engagement.”
As a startup grows, it’s not unusual to see a more seasoned executive replace the founder as CEO. However, I asked why the move made sense now, and Duggan pointed to two things. First, he said the company needs “a proven leader to scale to the demand of our enterprise customer and partner base.” Second, this will give Duggan time to become “a full-time visionary and evangelist” who can “cement the market.”
I also asked how they’d avoid some of the conflicts that can arise when someone steps down from the CEO role but doesn’t leave the company. Both of them said they’ve already been working together, because Comée has been serving as an advisor to the company for the past four months.
“We make a great team,” he said.
Badgeville launched in September 2010 at the TechCrunch Disrupt conference in San Francisco, where it won the audience choice award. (Duggan is the one on the left accepting the award in the photo above.) It says that it now has hundreds of customers, and that its revenue doubled in 2011, doubled again in 2012, and will, yes, double this year.
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