If you don’t follow the financial section of the paper and you’re not a network administrator in a massive organization, it’s likely that, like most companies engaged in software solutions for the enterprise sector, you’ve never heard of and Varonis Systems. The company, one of Israel’s most successful information security companies, managed to pull off a billion dollar valuation almost completely under the radar.
But the most interesting part of this story is that the Israeli startup, which had an initial public offering on the Nasdaq at a value of just $524M million, managed to double its company value by 100% on the same day of issuance and break the billion dollar mark.
Solving for the weakest link
Varonis Systems was founded in 2005 by Yaakov (Yaki) Faitelson and Ohad Korkus, trying to solve several Information security related issues such as information rights management, access control, file usage and information sharing. Learning from their experience at NetApp and NetVision, the two founders understood that a large part of security issues facing organizations arise, not at a result of equipment or software failure, but rather due to the unauthorized access and usage of information by users within the organization.
Thus, the two decided to try and find a solution that would allow companies to map and analyze large amounts of information in an organization and apply them to a central policy monitoring and control platform. Some say that the company started about a year or two ahead of the market but today there aren’t many network administrators in large organizations who do not know of the company’s Datadvantage package, with many making use of it.
The company’s solution enables enterprise CIOs to make updates and offers a simple view for each of the information sources in the organization to be managed centrally. In addition, the system enables users to locate files and information (such as credit card numbers, medical information or other sensitive information) according to predefined templates, policies and apply security permissions in uniform fashion for everyone. Along with their monitoring and auditing capabilities, Varonis solutions are particularly effective at providing full documentation for each type of access to files and information.
Varonis is a recognized leader in the field despite there being quite a few companies with competing solutions, including a number of Israeli startups. The area of Data Governance is now considered one of the emerging areas with the most significant amount of growth potential for Enterprise, especially due to the ever-increasing demands for regulations requiring full documentation of information access and strict management of accessed information.
The long road to the $1B mark
Since the company’s founding in 2005, the founders have managed to raise just over $13M from Israeli VC’s Evergreen Partners and Pitango Venture Capital, as well as the American venture capital fund Accel Partners and storage company EMC before it reached its first tender offer.
In 2008, a little more than 3 years since the company was founded, EMC tried to acquire the company for an estimated $200M but the move did not work out. Although unsuccessful in their purchase bid, EMC is still considered today the largest customer of Varonis Systems responsible for close to 10% of the company’s sales in 2012, according to a report released before the IPO.
Since then, Varonis managed to increase sales (which totaled -74.6 million in 2013 according to public reports) and raise another $20M to fund the long path to IPO which culminated this past Friday.
The biggest beneficiaries of the move are likely to be the three largest funds that supported the company, Accel Partners, which owns 25.6% of shares, Evergreen holding 23.1% and Pitango holding 17.7%. Added to these is EMC still holding 6.4% and each of the co-founders who hold a little over 9% in total.
Although corporate headquarters has been running out of New York for several years now, Varonis still maintains its development activities in Israel.
Should a 100% increase in share price on the first day of trading be considered a huge success?
Naturally, the typical answer to this question would be that any increase in share value should be considered a success. Nevertheless, a significant increase that more than doubles a company’s value the day after issuance is usually indicative of a significant miscalculation of the company’s valuation by the underwriters which will leave quite a bit of money on the table that could have been used by the company. To better clarify, if the company was issued at par with what it reached at the end of the first trading day, about $44 per share (versus the 22 it originally was priced at), the may have pulled in double the amount (a little over $200M) following the actual issue.
Nevertheless, when pricing out share values, there are other components that must be taken into account by the underwriters. One such element is the effect of public opinion, consisting primarily of investors and bankers familiar with company executives as part of the pre-IPO RoadShow. Reportedly, the first pricing set by the public opinion in question was between $17 to $18 per share before the issue rose to $21, and finally settled on the final price of $22.
In this case, if the company believes it can raise more money, it should try to issue at a value share that’s higher, which could jeopardize the whole issuance (if not enough people end up buying the stock) or lower the share price significantly over the course of the first few trading days, a move that will significantly affect the general public’s trading behavior.
In the case of Varonis, it seems that the company chose not to take the risk, rake in the safe profit for the company coffers and relinquish any potential stock surge to the investors.
It’s not unusual for an online service to be down from time to time and WhatsApp is not stranger here as well. Ever since the original app was created and and multiple times in the last year, the company servers have frequently failed to deliver their service, last time happened on December 8th, approximately two months ago.
So why is this time any different, In contrast to what we’ve seen in previous cases, this outage seems to be almost worldwide affecting users from India, through Israel to Ireland and Brazil and users from all these countries have been complaining for more than an hour about the service’s availability on both Twitter and Facebook (Which as you might recall, is the soon to be owner of the messaging app).
The funny thing is that WhatsApp users are complaining about the service on Facebook and we’ve already encountered some freshly-made memes :
We’ve reached out to WhatsApp for comment and will update as soon as we hear back.
Update: Whatsapp has officially confirmed (Via Twitter) that the problems exists and that they are working to solve it. No details on the problem besides stating the regular “Server Issues” and nothing as to when they expect a solution.
sorry we currently experiencing server issues. we hope to be back up and recovered shortly.
Update #2: Following the service going back operational, the company has reached out to geektime with a response
“WhatsApp will continue to operate autonomously and independently from Facebook. The announcement of our acquisition does not change the way we work or our philosophy. Our users and their privacy always have been and still continue to be our most important priorities. Thanks to all of you for your support.
Facebook just announced in a regulatory filing that the company will acquire messaging behemoth WhatsApp for a huge amount of $16B in cash and stock. This comes after a long courting period, where Whatsapp had gracefully declined $4B and more from Facebook and other suiters.
According to the deal terms disclosed in the filing, the deal itself will depend on regulatory approval (which is a very big IF to pass) and in case it fails to do so, Facebook will be “fined” with $1B in cash and $1B in company stocks.
According to the official statement released by Facebook, “The acquisition supports Facebook and WhatsApp’s shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies.”
Mark Zuckerberg’s post about the acquisition
The post also revealed that WhatsApp currently serves over 450 million people each month, 70% of whom are active any given day: “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO. “I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected.”
WhatsApp will continue to operate independently and retain its brand after the acquisition and WhatsApp co-founder and CEO Jan Koum is expected to join Facebook’s board. According to our sources, Koum is expected to take an active role in Facebook, assisting the company with its mobile and messaging strategy.
These are the details as they appear in the filing:
On February 19, 2014, Facebook, Inc. (“Parent”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Rhodium Acquisition Sub II, Inc., a Delaware corporation and wholly owned (in part directly and in part indirectly) subsidiary of Parent (“Acquirer”), Rhodium Merger Sub, Inc., a Delaware corporation, a direct wholly owned subsidiary of Acquirer (“Merger Sub”), WhatsApp Inc., a Delaware corporation (“WhatsApp”), and Fortis Advisors LLC, as the stockholders’ agent.
Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into WhatsApp (the “First Merger”), and upon consummation of the First Merger, Merger Sub will cease to exist and WhatsApp will become a wholly owned subsidiary of Acquirer. The surviving corporation of the First Merger will then merge with and into Acquirer, which will continue to exist as a wholly owned (in part directly and in part indirectly) subsidiary of Parent. Upon consummation (the “Closing”) of the transactions contemplated by the Merger Agreement (the “Merger”), all outstanding shares of WhatsApp capital stock and options to purchase WhatsApp capital stock will be cancelled in exchange for an aggregate of 183,865,778 shares of Parent’s Class A common stock (valued at $12 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share (“Specified Price”)) and $4 billion in cash to existing WhatsApp securityholders, subject to certain adjustments such that the cash paid will comprise at least 25% of the aggregate transaction consideration. In addition, upon Closing, Parent will grant 45,966,444 restricted stock units to WhatsApp employees (valued at $3 billion based on the Specified Price).
SlickLogin, an Israeli startup and developer of smart identification technology through user smartphones has been acquired by Google for several million (the official transaction amount remains undisclosed). SlickLogin was founded under a year ago by Or Zelig, Eran Galili and Ori Kabeli. The company first unveiled its technology at TechCrunch Disrupt held last September. the company has yet to launch their product nor have they any customers to date.
Given the low price tag and the fact that to date the three founders are the only employees within the company, the deal can be considered more of an acquhire than your standard acquisition. Still, the technology is expected to be integrated into Google’s future iterations of their user identification technology.
SlickLogin is a graduate of the UpWest Labs accelerator’s sixth cycle of Israeli startups which ended less than three months and this is the second exciting company of the program’s alumni.
For Google, this is the fifth acquisition in Israel after iRows (the company established a development center in Israel back in 2006), LabPixies, Quicksee and of course Waze.
Bridging the gap between information security and UI
The idea behind SlickLogin is to bridge the gap between information security and user experience by significantly improving the experience of identification with the system, making the process smooth, fast and secure.
Presently, passwords alone are not sufficient to keep users and their information safe since these are often based on simple passwords or permanent identification questions that make the hacking process simple even for non-hacker types.This problem is common among large companies and organizations and the result is their most sensitive information is vulnerable to anyone who wants it. SLickLogin’s solution, which launched in closed beta at the conference, consists of a cloud-based platform that uses two factors of identification without burdening the user with a process involving landing pages or actions other than typing a password.
It’s important to mention that Two-Factor Authentication already exists and is being applied in a number of cases in the market using a variety of solutions such as smart cards, OTP (one-time-passwords) devices and even the use of text messaging as a mobile device integrated solution.
SlickLogin obviates the need for additional hardware by relying on user smartphones, but unlike existing solutions, the company’s system does not require the user to receive a text message or move any given mobile device to their computer. Rather it performs the identification independently by playing an ultrasonic frequency from the mobile device. The system on the computer or any other device analyses the frequency for identification and no other additional identification process is required. If you look at the process side, it appears as if the user just types their username and password, since the rest of the process is carried out automatically and transparently when the two devices are near each other.
Why Google acquired SlickLogin
The young company is still in its early days and has developed a unique technology (patent protected) to make the identification process easier and simpler, a domain that Google is always looking to improve in.
The introduction of Two-Factor Authentication came three years ago in February of 2011 when Google launched the option to use an added layer of protection via the use of text messages or voice calls to provide OTPs for computers not identified as a user’s own computer.
A year later, Google launched the Authenticator application for Mobile (iOS and Android) designed to replace the cumbersome and expensive process of sending messages by phone relying instead on OTP algorithms generated and sent through one’s Google account.
Beyond the significant value for these three entrepreneurs to join the development team at Google, Google’s connection with SlickLogin will allow Google to provide a smarter identification process that’s far more convenient for the user.
Video: The last presentation of SlickLogin in Disrupt2013
Israeli startup Origami Logic, a developer of Marketing Intelligence solutions announced today (Wednesday) that it has completed $15M B round bringing the total investment in the company to $24.3M. The round was led by venture capital Jafco Ventures, an investment fund located in Palo Alto, with participation from existing investors Accel Partners and Lightspeed Venture Partners. Jeb Miller, partner at Jafco will be joining Origami Logic’s board as part of the funding deal. This funding completes the first round we reported on in November of 2012 from when Origami Logic picked up their first $9.3M.
The company develops analytics platforms designed to give marketers access to extensive data in a simple and practical format, tailored to their particular needs. The new funding will be used to increase the R&D, marketing and sales efforts of the company.
Informed decisions in marketing
Origami’s solution is not intended to compete with other solutions or methodologies for managing advertising campaigns but rather complements them and provides them with the surgical tools and information needed by marketing people within an organization to carry out such campaigns with the utmost efficacy. In an interview with CEO Ofer Kahane, he explained that, “Modern marketers need to make critical decisions daily, including inside rating analysis and customer touch points in cellular, Internet search and display e-mail.
“As part of operating in a field whose goal is to change customer purchasing behavior, many marketers are faced with an incredible amount of data making it difficult for them to see the big picture. Origami constitutes the lens that coordinates all the data and displays it in a sensible and effective format for marketing and sales. With Origami’s help drawing conclusions and insights for campaigns becomes that much easier.”
Origami Logic was founded in 2011 by Ofer Kahane, Ofer Shaked and Alon Amit. The Company’s operations center is situated in Menlo Park, California. The three founders are not from the high-tech scene but rather met and started working together during their tour of military service were they were responsible for planning transport and overseeing the development of information systems that competed with scattered data analysis capabilities from different areas.
Kahane founded and ran the company ClassX, which merged with VocalTec. He then founded Kagoor Networks which specialized VolP technology and was acquired by Juniper Networks. Shaked founded and ran the company FareChase, acquired by the search giant Yahoo and became Yahoo Travel. He then built and ran the engine Yahoo Answers. Amit came to the company after working on projects at Google and Facebook where he was responsible for systems Backend search ads on Google and Facebook’s advertising system.
uTest Israel, which offers crowdsourced software testing services, announced today (Tuesday) the completion of a $43M series E round. The current funding round was led by Goldman Sachs, together with all the company’s previous investors, including QuestMark Partners, Scale Venture Partners, Longworth Venture Partners, Egan-Managed Capital and Mesco.
As part of the current round uTest plans to change its name to Applause. The name change comes as part of an expansion of the company’s operational purview to include analytics, a move that began about a year ago.
The company plans to use its latest funding to upgrade and expand a range of services that correspond with the new vision of the company. Among these services the company plans to expand its testing service In-the-Wild, which allows for testing in real environments wheer products are expected to operate. In addition, the company wants to bring qualitative examinations of 360 brands worldwide.
In January of 2013 the company launched Applause, a tool intended to give users, enterprises, developers and marketers the possibility to analyze and track the popularity of their various applications in accordance with the opinions and reviews posted on various app stores. As part of the company’s new vision and focus on a variety of existing tools, Applause will offer a set of tools and analytics that allow key stakeholders within the company, including developers, QA, product managers, marketers, and of course the management team, to better understand what users want with regard to the experience of using the product and the product itself. In essence, Applause plans to help companies produce the best apps for their clientele.
In addition, the company plans to increase its distribution channels through strategic partnerships and global expansion with a focus on markets in Europe and Asia. Despite the name change, the name uTest will not go away anytime soon and in fact the company plans to leverage it for its community of crowdsourcers in relation to paid projects. The company plans to offer training in channels, certifications, writing and reading reviews on different testing tools on the market, job search boards and display related events.
Defining the vision
In an interview with Geektime, Doron Reuveni – Co-Founder and CEO spoke about the rebranding decision saying, “This expansion of our vision is a part of our natural growth. Users are familiar with the uTest as a software testing service provided by the community. But we do a lot of things in addition to crowdsourced testing to help our clients, whether they’re startups or large organizations. We help them get applications to market that their customers will love.
So we focus on a number of things: Field testing with the help of the community, analytics based on app store feedback, tools that test environments and production and that enable for the discovery of bugs and more.
By combining these elements our customers get something that does not exist on the market elsewhere: Inside/out, full quality assurance. That is, they get real feedback from the field and the real world. Whether it’s bugs, crash analysis, app store reviews; and this is all part of our greater vision.
As part of this vision, the old name was no longer appropriate so we decided to go with the name Applause. It’s also a major strategic change but it helps to expand and better describe what we do today. However, it’s important to clarify that the brand uTest will not disappear but will become the more focused brand of our crowdsourcing community.”
Before this funding you raised $37M dollars and now you completed a round of $43M
“Just by looking at the type of investor – Goldman Sachs – this is certainly indicative of a certain direction of the company. This is a time where we’ll have to scale, make sales and shift to the new name, so it is likely to take a good year or two until all this happens.
“We’re working within a market worth $20B. We want to establish a company that will lasts and that does billions in revenue. We want to invest in M&A activity in an aggressive manner in order to complete the elements that we need in development and accelerate our vision. Of course we want to increase sales and marketing over the next two years and we plan to grow substantially by opening up offices around the world, expanding the sales force and creating more partnerships with distributors.”
Applause lives in the world of B2B SaaS and as such, measures itself in terms of customer satisfaction, growth in ARR and the like. Reuveni explains that there special metrics to measure companies of this size because when companies of this size have 12 month forecast their measurements are for more concrete than when a small startup makes a forecast for a similar time frame.
Regarding the selection of a lead investor for the current round Reuveni notes that, “As CEO I spend my time talking with bankers and investors. When the representative from Goldman Sachs sat in my office I was impressed by what he did in the past and his abilities to help the company reach its next level. So we decided to go with them believing they were the most strategic fit.
Your domain is based on the community. You may, at one point, experience a lack of labor force and that’s something you can’t control
“This can happen. In Fact, for Lionbridge, their community of translators decided to go on a kind of strike. But when you manage a workforce of 100K you can do much more and the chance for something like that happening is low. In fact, in most cases community members organize together to help, not the other way around.
We refer to our reviewers as working all things – paying them twice a month, they know when payday comes and this element is very important for us. In fact, we have an internal staff in charge of just this task. We have a vice president who oversees the community and is responsible to represent the community within the company. I agree that if we do not treat them well then problems may arise.”
You’re looking to expand with regard to M&A?
“We want to complete the missing elements we already have today in Applause. While we have a lot of tools, there are holes in our ALM and Analytics. Some holes we patch through partnerships with external companies but there are still elements that need to be completed through acquisition or merger because we want be responsible for the entire process. Additionally, we’re looking for potential adoption of small companies that operate in a similar way or have similar market representation in Crowd Testing.”
Do you have plans to expand outside the mobile world and the Web?
“We already perform tests on game consoles and smart TVs, as well as the software running inside cars. We notice that the differences between buying one car or another primarily comes down to the software that comes with it since most cars and manufacturers have already shown that they’re reliable. An additional field that’s strong today is Speciality Hardware where you can find companies such as Garmin, Adidas, Runkeeper, FitBit and others – and that’s before we talk about smartphones.”
uTest was founded in 2008 by Doron Reuveni and Roy Solomon. Their offices are based in Israel and the US with development centers in Poland and Hertzeliya. The company has raised $80M and tested more than 30,000 Builds for 2,000 companies including well known names like Google, Microsoft, Amazon, USA Today, Rolex, Box and Runkeeper. Its community has over 10,000 testers. 20% of its clients are international outfits outside the United States.
This entry is being posted in response to two posts published by Roi Carthy, now a Managing Partner of the Initial fund, formerly a product manager at Soluto (which he later invested in) and blogger for TechCrunch (his last piece for the publication having been featured in May). It should be noted that I know Carthy personally and this response post was sent to Carthy for review of its accuracy before publication.
To understand the content of the post I suggest we get some context and go back in the event that started it all: Izhar Shay, a General Partner for the firm Canaan Partners, posted on his Facebook page (it was later removed, but the translation of the post can still be found on the business insider) a warning, as it were, that he believes he knows who the perpetrator of a leaked rumor to the Calcalist that disclosed the acquisition (allegedly) of PrimeSense by Apple. PrimeSense is a portfolio company of Canaan Partners to which Shay belongs.
Shay explained that the leak and the subsequent publication of rumors swirling around the leak negatively impact on the purchase to a degree that could lead to the dissolution of the entire deal, badly damaging the entrepreneurs, employees and investment firms involved. In order to make sure we’re all on the same page here, we’ll define a rumor to be a newsworthy piece of information that originates from a single source, or from multiple sources who are all connected to the original source, and unsubstantiated by any known facts.
Another thing; I intentionally refrain from mentioning anything about the leakers themselves – that’s a topic for another discussion, altogether.
Familiarity: The system’s trifecta
To fully grasp the relationship dynamic at play when it comes to Israel’s startup ecosystem it helps to separate out the three primary elements that make up its core. This is in contrast to Carthy who mentions two but neglects to include a critical third party: The first is of course startups, investors are a close second and the third I believe is the media. The role of media in the triangle is to connect the other two sides. It is because of media that startups and investors are able to know about one another, understand the role of the other, and people in the industry and in the world are able read, watch and learn about the relationship between the two. (In some cases, individual elements of the ecosystem may merge in the body of a single entity. We here at Geektime consider ourselves to be very much a startup as well as a news site while Carthy is himself both investor and blogger.)
These three factors are in a very delicate relationship. A form of ‘gentleman’s agreement’ as Carthy puts it in his post, where each member understands the pros and cons of how their actions can help or hurt the other. However any given party will choose to act when faced with sensitive matters, the media will eventually want to know about it, startups and investors will want to tell each other about it – each preferring disclosure at the time of their own choosing. However, there’s often a leaker waiting to throw all those timetables off course.
To beat out the competition that make up the various media outlets and scoop the most interesting stories, the most interesting people, the most important news of the day – that is where the real work in media takes place.
What comes first, competition or family
In Carthy’s first post he raised three points regarding journalistic practices speaking to the issue of leaks and the value of publishing news or rumors. He denounces the first two as misconceptions and transfers all the burden of responsibility of the third, exclusively to Israeli media. He does so under a pretense of distinguishing between the binding moral obligations that separate family from strangers.
Let’s go over the three arguments as they were originally posted:
Argument 1: It’s in our business interest to publish acquisition leaks.
Rebuttal 1: Horsesh*t. Nobody gives a damn who came out with the story first. There is absolutely no financial gain by such stories. Your business interest should be to spotlight young and innovative companies. To tell entrepreneurial stories. To write pieces that enlighten the local readership. Your business interest is to think long-term.
Carthy, who wrote as a blogger himself for one of the more aggressive publications out there (as recognized by those familiar with it) and who knows in many cases there’s no point to writing about certain news, technology or startup items if you’re not going to get there first – wants to tell us that breaking stories doesn’t matter. I want to explain why being first can make all the difference:
Just to enlighten those who are not involved in the worlds of blogging and digital media, or journalism in general: Most readers go to the original source post. Our reputation as bloggers and journalists grows as a result of getting to interesting stories first.
This is not just about pride. Being known as the one to break major stories transforms you into the destination of choice for the rest of the industry: Sources choose you to make their announcements, customers prefer to pay you knowing they’ll get the best exposure to a growing readership. Being first is why a global media arm will quote you and why you are seen as a source for news and real value above other media outlets. To become such a source of value is why we chose this profession. I will say that there are other important additional parameters that go into journalism, like the depth to which an article drills down into a story etc., but to ignore the goal of being first falls somewhere between lacking journalistic responsibility and lacking an understanding of the role of media in general.
Argument 2: If we don’t publish acquisition leaks, our Israeli competitors will.
Rebuttal 2: Not if we have a gentleman’s agreement. Assuming you’re men and women of honor, we can all meet, agree, and shake hands on this.
I’ll start by saying that ‘gentleman’s agreements’ are a wonderful thing. An embargo on a story’s release till an agreed upon hour is a fine thing, and usually stable until one media outlet thinks the other is planning on breaking the embargo (for motivations underlying breaches of trust, I refer you to the previous point) and then the entire house of cards collapses.
For those who do not know, this is a very aggressive industry whose pace is led by what’s being published at the moment. The cost a few hours can mean the difference between breaking ‘just one more article about that trending topic’ in the best of cases, or ‘no longer relevant’ – a far more common price that’s paid.
Argument 3: If we don’t publish acquisition leaks, our international competitors will.
Rebuttal 3: True. But they’re not family. We are.
In truth, at first I wasn’t going to write a response post at all, thinking I would just sit on the sidelines like I usually do whenever there’s a little too much drama involved. But when I read Carthy’s above point I felt it was he who was choosing to go against the family.
Carthy suggests we, the Israeli media, forfeit our livelihood in favor of the international press, who aren’t quite up to snuff on the local market, allow them to ask us what they need to know to get a handle on things, and then wait for them to publish – at which point it would be fair game to report on our local stories using the international press as our “sources”. Such a suggestion completely undermines the value of the Israeli media in general. His words call for unity and togetherness but in reality he’s inadvertently sacrificing the “family” in favor of the international media.
The most important elements of our ecosystem are balance, reason, and a consideration of consequence before action. The dynamic between the various players in our industry, as it stands, is a delicate one. Statements like these threaten to disrupt the balance and can harm those journalists and bloggers who are out there trying to do their job and fulfill their role as part of the larger picture.
It’s not only Meir Orbach – reporter for the Calcalist – who lectured Carthy on facebook about the role of freedom of expression for the reporter/blogger – not to mention a very surprising supporting comment by Izhar Shay (Remember him? He’s the investor who threatened to out the leaker and basically got this whole story rolling), it’s also Robin Waters (former reporter for TheNextWeb and now author of his own blog) who posted a response to Carthy which further doused the flames of Carthy’s argument. However, Carthy decided to stoke them some more, taking upon himself the role of blogger/legislator and proposing a new set of Prime Directives. Let’s talk about them:
Israeli media v.s global media
Carthy’s directive reads as follows:
Israeli startup acquisition rumors should be published only after having been corroborated by three independent sources.
Investors and startups get a free pass while the Israeli media (which apparently Carthy considers a non entity as far as the startup ecosystem goes) has to take its shots for the team – as Carthy himself writes:
Commercially, yes, the downside is that non-Israeli journalists and publications will reap the benefits of breaking acquisition rumor stories. That’s simply the price you pay for family.
I can’t even begin to describe how disappointed I was to read this. He sacrifices the Israeli media without any qualms about it.
Carthy basically asks Israeli media to give up the only advantage it has over international media outlets (the fact that we’re here, and we know what’s happening in Israel before anyone else does) but never for a moment does he consider what effect such a compromise will have on the Israeli media and the profession of journalism in general; i.e. protections of freedom of the press and freedom of speech.
Make no mistake, the international media feed off leakers at a far higher rate than the Israeli media does. Still, Israeli media professionals work extremely hard to cultivate reliable sources and validate information. This is the essence of our leg work. It’s hard but we enjoy it and we expect to reap the rewards.
If we give up this element of our job we might as well pack up our desks, lock up the office, return the keys and go home.
Food for thought: There always were, are and will be leaks. Nonetheless, responsible media outlets seek comments from companies in question to corroborate, elaborate or refute the information received, usually having to settle for a “no comment” or just being outright ignored. Yet we still try to give companies a chance to respond instead of taking the attitude that we’ll publish based on what we’ve got and companies will just have to deal. Perhaps its time to ask whether some of the responsibility shouldn’t fall back on the companies themselves? Maybe they should work with the media rather than against it? Maybe the ‘New Directive’ should be directed at them and not the media? If we’re really a family, everyone should be held responsible, right?
The point: Think before writing
It was not easy for me to write this post, and I thought a lot before publishing it. I have no desire to undermine anyone in the startup scene given my appreciation for all the players involved, most of whom are familiar with each other on a personal level. In no small way do I try to understand the needs of each party and the value that each one brings to the other, and writing this post was a difficult decision for me.
This issue relates to all of us; to Carthy, to those who justify his words without considering the consequences, and especially to us the media, who do not, and should not, need to stop doing what we do in a responsible manner.
But if I have to choose between editorial/media work that in time morphs into the lazy reliance on others to do the job for me; if I have to choose between taking an attitude of, “we’re loading up on items that others wrote to make life easier on us”, or doing the the leg work myself – I prefer to continue with the leg work. To investigate, explore, innovate, and find things out for myself. And to do so with balance – not by knocking out one of the three pillars of Israel’s startup ecosystem in favor of another.
Before the weekend Carthy and I corresponded over email Wednesday night and over the phone for about an hour Thursday morning. Carthy chose to respond to this publication with the following post:
I agree the leakers are where the problem originates, but I’m approaching the media outlets because I believe it they who can institute a different, more responsible (in my opinion, and that of others as well), journalistic policy as it relates to jeopardizing startup acquisition deals.
The issue at hand is not ‘Freedom of Press’, but the balance between the commercial interest of media outlets vs. the commercial ramifications of a startup acquisition blown because of a published leak.
I lean far more to the startup interest side, and would prefer a more ‘over-protective’ policy at the cost of the price media outlets will have to pay commercially.
I am speaking on my own behalf alone. My interest is the well-being of startups. Full stop.
10 Israeli startups of intrigue presented at the Geektime conference this week, the coolest conference to ever have the name Geek attached to it. In this series we’ll be providing you with an in-depth look at said startups, if for no other reason than the fact that we can’t have you, our avid Geektime readers, not being able to keep up with the conversation at the next big soiree you attend where everyone will obviously be talking about these companies. So without further ado, here they are in all their glory:
mirOculus was established as part of the summer program over at Singularity University located at NASA’s Research Park last summer. As participants in the program the students were asked to develop a solution that will use a product or exponential technologies to meet the global challenge that will affect billions of people over the course of the next decade.
During the program Faye Christodoulou – a post doctoral student from Greece specializing in microRNA – met Pablo Olivares – a Chilean doctor and founder of startup Dandoo, Alejandro Tocigl, Ferran Galindo, Jorge Soto – Head of Innovation for the Mexican government, and Gilad Gome – a biotechnology researcher at Tel Aviv University and winner of the Ramon Prize.
The group elected to take on a project to impact global health and to that end they’ve developed a biochemical test to be used as an early warning system of multiple cancer types using MicroRNAs as their screening identifiers. During the program the team created a prototype device capable of performing this multilateral test which can be placed in any nurses office and is performed with no more complexity than a standard blood test.
MicroRNA, what are they exactly?
Various forms of cancerous tissue have very different profiles as depicted by the newly discovered and relatively small molecules known as microRNAs. Comparing these profiles allows researchers and doctors to identify different types of cancers with relatively high percentage of accuracy.
Recent years have begun to see the identification of miRNAs outside of cells, their presence or the lack thereof within body fluids, serving as an indication of the early formation of cancerous tissue.
Currently, existing probes require expensive equipment and materials with skilled operators to conduct detection tests. This new technology offers an effective yet cheaper and faster solution with whcih to discover microRNA, cancerous profiles. The test transfers the collected data to servers in the cloud that analyze the miRNA patterns and deliver a prognosis.
These and other findings indicate a very positive future for the use of RNA Biological markers in body fluids to help detect and treat pathological disorders, something urgently needed to help reduce the mortality rate specifically related to cancer and perhaps other diseases in the future.
Mir.I.Am is a “box” through which the miRNA test plate is placed. The machine requires no specialist training so any nurse can theoretically perform the test. After the sample is placed within Mir.I.Am the data is sent cloud servers for analysys with a full waiting for results averaging from between 30-60 minutes. As such, any doctor visit can include the possibility of a routine cancer check with results coming in by the time the full doctor checkup is over.
The Mir.I.Am product has yet to officially launch but the team has a working prototype in Mexico. Meanwhile, mirOculus has filed a provisional patent provizor with the team securing exclusive rights to the invention and all its accompanying Intellectual Property.
Having to compete with biotech giants like Agilent Life and Asicon, mirOculus’s product and methodological breakthroughs affords a clear competitive edge despite the companies relatively tiny size. This small and affordable solution can easily be seen replacing the expensive and cumbersome technologies of its competitors. The company estimates that the cost of the chemical, machine and newly developed data analysis can break the miRNA diagnostic methods that exist in the industry and they plan to sell the equipment at an affordable coast as to allow the penetration of all markets around the world with the aim of promoting the early diagnosis of cancer and other diseases in the future.
Unlike many other booming tech scenes around the globe, Ireland’s startup community is still contending with a recession embattled economy, but that doesn’t seem to have stopped the local tech scene from becoming one of the most promising and investment-attractive scenes in all of Europe.
Maybe it’s the pubs that can be found on nearly every street corner (usually also in the middle of the street) or maybe it’s the fact that Ireland’s tech scene has the largest number of developers per capita in the world (albeit still somewhat small in direct one-to-one comparisons) or the somewhat alarming flexible tax rules. Whatever the reason, Dublin has managed to establish itself as the technology capital of all of Europe. Google, Facebook, Twitter, Zynga and others, all have chosen Dublin as their home for their European HQ – and that in-turn has driven the surprising growth behind the city’s vibrant tech scene.
The startup scene in Dublin is still quite young, but there’s plenty of action going on even at this stage. With 4 local VCs, 3 Startup Accelerators (Dogpatch Labs, Wayra and the NDRC’s Launchpad) and large European VCs keeping an eye from afar, the Irish scene currently has a little over $250M worth of warm cash waiting to be invested in new promising startups as they arise. According to the local entrepreneur community, that’s enough for just about a few dozen companies to emerge from the scene each year, but the survival rate for these startups is incredibly low. Furthermore, besides for the Orchestra acquisition by EngineYard a couple of years back, we still haven’t heard of anything “big” coming out of Ireland yet leaving the Gaelic Isle plenty still left to prove before it can be considered to be living up to its full potential.
Keeping all of the above in mind, one short trip to Dublin was all it took to find some pretty interesting companies that are definitely worth keeping an eye on. Here’s the hottest of the bunch:
Founders: Eoghan McCabeand, Des Traynor, Ciaran Lee, and David Barrett
Funding: $7.75M from 500 Startups, Freestyle Capital, The Social+Capital Partnership, David Sacks, Biz Stone, Andy McLoughlin and other angels.
A startup from Polaris Ventures’ Dogpatch Labs in Dublin, Intercom.io is the developer of a customer relations management tool (CRM) designed specifically for web and SaaS businesses. The main attraction of this platform is a one-step integration allowing for all the data within a given database to be automatically updated, tracking everything that goes on in the system from customer registrations, to actions customers perform (or don’t perform) in the system, as well as the monitoring and management of feedback via e-mail and social media.
Just a few months back, Intercom raised an A round valued at $6M from The Social+Capital Partnership alongside Freestyle Capital and David Sakes – the CEO of Yammer – and added Facebook’s Pail Adams to the team to serve as the new head of product design. The company already has over 2500 active businesses using their platform with big names that include the like of Bit.ly, Heroku and Github. With the SaaS market expected to grow to $75B in 2014 and CRM grabbing a whopping 40% chunk of that pie according to globally renowned research firm, Forrester – we’re expecting Intercom.io to be an important player in this space.
Founders: Dan Barry, Martin Gallagher and Mikel Gainza.
The glory days of Guitar Hero might be long gone, but ever since its success many companies have jumped on the the hyped up guitar game bandwagon. Although at first glance, Riffstation does look like just another “Learn-how-to-play guitar” app, one of a dozen others we’ve seen over the last few years, it appears that Barry and the gang have managed to utilize their years of Audio DSP background to bring something completely unique to their solution.
Unlike other guitar platforms on the market, Riffstation is not your basic beginners tool and is mainly used today by professional guitar players to learn new chords, master riffs and create custom jam tracks in any genre of music you can think of. The highlight of the PC/Mac Riffstation app is its ability to import an audio file of pretty much every format known to man (or computer) and auto-detect a song’s chords, display them in real time in an audio waveform graphic and provide diagrams that demonstrate exactly where your fingers should be placed on the guitar, and when. The software even allows for the isolation and removal of guitar sequences from specific songs, affording the user greater control over their music while granting them the ability to grab specific sequences of a songs to create their own custom tracks with.
Although they’re looking at developing a mobile version in the future, Riffstation remains a PC/Mac based software that’s yours for a one-time purchase/download. Barry shared with us that the company already enjoys hundreds of downloads every month and is now currently operating at a profit. With a skilled team and a unique product we see it being only a matter of time until one of the larger guitar manufactures or another big player in the music industry takes a good long look at these guys.
Founders: Brendan O’Driscoll, Aidan Sliney and Craig Watson.
Funding: NDRC Launchpad.
The youngest of the rising stars in the Irish tech scene broke straight out of NDRC’s launchpad accelerator program as the winner of its winter 2013 startup batch. Soundwave’s App (for Android and iOS) is yet another music discovery app, albeit with its own little twist. Soundwave’s app tracks the songs you listen to on your smartphone every time a song is played, factoring in a number of variables including song-based background information (track name, artist, album etc), the location of the user and the time the song was played, before pinging this information to its database in real time. The information is used by Soundwave to create a new music discovery experience for the user based on the latest music trends as filtered by personal listening habits including location to genre based preferences and social network input.
The simple but sound (pun intended) business model behind Soundwave at this point in their life-cycle is affiliation. When users discover new songs through the app and choose to download them from iTunes or the Play store, the company receives a 5-10% commission off the purchase price.
Whether it’s because of their app’s beautiful design or their unique take on music discovery mechanisms, the noise these lads have been making over the last few months has managed to generate over 250K downloads across both iOS and Android platforms while attracting the attention of Apple co-founder, Steve Wozniak. According to O’Driscol, Wozniak met with Soundwave earlier this year and has been extremely supportive of the company’s ambitions. With the company’s successful launch on iOS7 and featured by Apple as one of the leading apps for the new version, we believe these guys will be making plenty more waves in the industry in the months to come (once again, pun, very much intended).
The truth is we weren’t sure whether including EZETop, Soon to change its name to Ding, in the list is the right thing to do. Not because they’re not a hot prospect, on the contrary, it’s because they’re on fire. The Bootstrapped company has managed to stay under the Irish radar even though it is one of the most successful startups coming out of Ireland in the last few years, mostly due to its founder’s dislike of publicity. Roden, employee no. 1 at eSat (The Irish Cellular provider that was sold to BT back in 2000), used his own money to back the company which enables people living abroad to instantly “recharge’ mobile phone credit banks of family members back home using its money-to-airtime transfer service.
The 7 years old company can hardly call itself a startup, but Roden explains the they are still far away from what he would characterize as an established successful company. EZETop currently offers its services throughout 450,000 store locations as well as directly through mobile operators (phone to phone) across North America, Europe, the Middle East and Asia Pacific. The company also operates the largest international online recharge site and offers a white label solution for operators that sees a transfer rate of just under $1M dollars a day.
With the internet and cellular phones continuing to become fixtures of a standard economic banking system, Ezetop’s strategic positioning could lead to this unlikely startup becoming a paradigm of a new breed of “Western Union” like services for the digital age.
Funding: $850K by Polaris Venture Partners, Lere Ventures and Greycroft Partners.
Remember the days when MTV was the address to discover new artists and listen to great music? Well, success breeds change and nowadays MTV has morphed into a network of reality shows and an advertising platform for big-label commercial music. Not that there’s anything wrong with that, but three guys from Dublin had an itch to bring back the good o’l days of authentic new music discovery programming by building a place where new artists can take to the stage (or balcony for that matter) and gain exposure to millions around the world. Founding their startup back in 2006 from their own apartment balcony in Dame Street, Dublin – BalconyTV has grown to become one of the largest online video music websites featuring indie bands, musicians and all sorts of acts from balconies worldwide.
The site now hosts over 10K videos from 57 different cities including Dublin, London, Tel-Aviv, Hamburg, New York, Paris and Auckland, to name a few. With hot new talents being discovered every day from all corners of the globe, backing by former MTV network CEO, Judy McGrath – who also happens to sit on the advisory board and 1.3M views a month, the team behind BalconyTV has set a goal of bringing back the golden age of original MTV like programming to mainstream TV. With large TV and Content companies eyeing internet video as the next big thing, it would be a safe to assume that you’ll be seeing a lot more of Balcony on your boob tube in the near future.
Funding: $1.1M by Polaris Venture Partners, RRE Ventures and Frontline Ventures
There are about a gazilion management platforms, log-parsers and everything in between being used to monitor and operate systems worldwide, everyday. So why should this one be any different? The guys over at LogEntries started off at UCD, worked their way through the NDRC’s Launchpad program and are now located in the Dogpatch labs space where they’ve managed to come a long way and carve out for themselves a unique-but-no-so-niche angle of monitoring various applications through the gathering and analyzing of log files. LogEntreis’ platform allows almost anyone with only the bare minimum of technical knowledge (you still need to understand what a log file is and what it says) and no prior programming knowledge to gather valuable data and transform it into actionable insights.
LogEntries works out-of-the-box with all the largest operating systems and cloud platforms including Windows, all styles of Linux, Amazon Web Services, EngineYard, Heroku and even PHP and Python based applications. The basic idea is that the platform knows where the logs are and how to parse and analyze them, without you having to any heavy lifting besides for stating the server’s IP address or DNS.
One sure fire way to gauge whether an enterprise oriented company has a chance of making it on its own is to see if they can land an some big name clients early on into their promotional phase. Dell, Macys, Salesforce and the Financial Times are definitely a good start, but we still don’t think these guys will be getting very far on their own. Instead we believe they’ll be acquired by one of the big players in the field sooner rather then later.
Funding: $5.5M from Ron Conway, DFJ , Oyster Capital Partners and Salesforce.
It’s no big secret that business networking has become one of the most important aspects for success in the 21st century business. Dublin-based Datahug is taking this notion one step beyond what LinkedIn has done and actually works like a huge BI engine on top of all your organization’s contact. I intentionally draw a distinction here between the word choice of ‘organization’s’ as opposed to ‘organizational’ since what Datahug does is to actually go through each and every contact in all the e-mail accounts and meeting schedules of every company employee, separately. After doing that, the platform can then understand who knows who within your employee pool, at which point the platform generates warm leads for your team to turn them into potential customers.
Although Datahug is playing with a very narrow feature, it offers a great deal of value to a critical part of the business operational structure. So huge, that it raised some of its $5.5M from non other than Salesforce; a company that rarely invests in startups at all, preferring to acquire them instead, if and when they show interest. Add that to the impressive portfolio of large enterprise customers the company has built up over the past year, including Catalyst, Grant Thornton, Plantronics, BDO and other Large VCs – and one can’t help but assume it won’t be long before the company will become just another feature within the vast offering of Salesforce after a successful buyout.
Created by the people behind Funconf and the Web Summit, Tito.io is not just another ticketing platform competing in the crowded space along big names like Eventbrite and Amiando. The Tito.io platform offers an out-of-the-box solution that is far simpler, more customizeable and has an interesting pricing model that offers smaller commissions for a yearly subscription.
The fact of the matter is that only a few months after launching their private beta, the platform has managed to snag more than 150 events world wide, among them a few well-known conferences such as Nodeconf, JSConf, Brooklyn Beta, Nordic Ruby, The Realtime Conference and the Dublin Web Summit – all for which speak for itself as to the company’s current success and future prospects. Add that to the more than $2M in ticket sales that have gone through the system since its launch and you definitely have yourself a new player in the ticketing scene, well-worth taking a good look at.
Funding: $300K by Waira Accelrator (Telefonica) and private investors.
It’s been years since eCommerce became mainstream and dealing with online fraud is as common as any other online security problem plaguing the Internet today. No matter how good you build your defenses, there will always be someone who to crack them. Standing against all of those malicious hackers and fraudsters is Cork-based Trustev, who just launched their real time online identity verification system to help combat online eCommerce fraud.
The special thing about Trustev’s solution is its use of a proprietary social fingerprinting technology as a part of the front side checkout process. What it actually does is to use Social media accounts such as Twitter, Facebook and LinkedIn to pre-qualify potential customers through analyzing their social data.
The Online identity management and verification space is getting crowded as the larger players such as Paypal and even Airbnb launch their own online ID verification solutions, but Trustev has a unique approach to the space and has some very smart algorithms behind it.
Founders: Peter Coppinger Daniel Mackey
A good startup is one where the founders put together a team to build something to scratch their own itch. A great startup is one where the founders are the team. TeamworkPM satisfies such a description. They’re a Cork-based startup that started as an app development company and then ran a consultancy working for the likes of Pfizer, Lilly and others. When they saw a need to manage their own workload, they first tried out the various solutions already out there on the market but none of them were a true fit for what they needed, so they decided to build their own themselves.
There are many team project management solutions, but TeamworkPM has proven to be much more efficient in handling the incredibly diverse nature of tasks a project manager has to contend with including task delegation and management, setting milestones and time stamps, uploading relevant files, working with e-mail alerts, and so on. But the icing on the cake with TeamworkPM is their fast, friendly and effective support. Mackey explains that one of the most important things for the company is to ensure that every person in the company participates in the customer support cycle. According to Mackey, if a user would suggest a feature that would benefit over 90% of their other users, the company will most often work to introduce such a feature, not in their next version release, but rather in a matter of hours.
The company currently employs 12 full time team members and enjoys $2.7M in annual income with a 45% profit margin. With an awesome customer base that includes the likes of Microsoft, eBay, Universal Studios, Paypal and Pepsi, the guys from cork are definitely on the right path for achieving big-time success.
According to an official report submitted at the end of last week to the U.S. Securities and Exchange Commission (SEC), Yaron Carni, one of the representatives of Tel Aviv Angel Group and a well known fixture of the Israeli venture capital and startup scenes, has raised $30M for a new VC fund called Maverick Ventures.
Successful track record slammed
In order to raise money for the new fund, Carni revealed some numbers from his past successes with Tel-Aviv Angel Group for the first time. A representative of the group made up of industry-leading investors from around the world who are interested in investing in Israeli technology companies, his best-known accomplishment is selling the startup LabPixies to Google in 2010 for $25M, an investment that yielded a return of 2 times its investiture in only 18 months.
In addition to LabPixies, Carni was also behind a number of other successful investments including Vaultive – dealing in data encryption on different cloud computing platforms, and ContextIn – developer of optimization technology for the online advertising space. Carni sold his holdings in both these investments at relatively early stages in their funding cycles.
On top of these exits is a list of investments made by the Tel Aviv Angel Group for which Carni is behind, including Neomatix – developers of an application measuring the air pressure in a car’s wheels that raised half a million dollars from the group, Tomigo – offering wider distribution for headhunting firms who also raised $500K, and Faunus – a developer of technology for early detection of diseases in animals and agriculture.
According to reports, most of the amount for the new fund has already been drafted and the fund is expected to go live right after the holidays. Like Carni’s previous investments, the new Maverick Ventures is also expected to focus on Israeli companies in mobile, Internet and New Media fields with short-term investments ranging between 24 to 36 months.
Maverick Ventures was established by Carni along with Miguel Abadi – founder and CEO of Gems Investment Research, and Michelle Abadi – product manager and partner of the Brazilian branch of the investment company. Carni and the Ebadi’s will join other partners who worked with Carni in the Tel-Aviv Angel Group including Joe Raby – a former senior vice president at Morgan Stanley and Eric Sirkin – a serial entrepreneur and former Apple executive who will serve as the fund’s CTO.