Akamai acquires portfolio company Blaze.io →

Congratulations to Mike Weider, Guy Podjarny, and team!  As they always said Akamai and others used network optimization to speed delivery of the web and the new problem today was front-end bloat as many of websites had multiple objects and scripts running on them which could be optimized.  Hence, front-end web optimization was born and the Blaze.io team has been diligently working with a number of customers to make this a reality.  It is great to see them lead the front-end web optimization charge as part of Akamai which has significant reach across their potential customer base.

Plum District acquires portfolio company doodledeals →

Congrats to Caren Kay, Ben Sun, and team as Plum District raised $20mm and acquired portfolio company doodledeals.  Caren and Ben were early on trend of vertically-focused group buying and focused exclusively on the moms and family market proving the model out in New York and expanding to Los Angeles and San Francisco.  They smartly partnered with Diapers.com to gain critical mass and took off from there.  In the long run, it is great to see them have the opportunity to continue proving out their vision with the significant reach of Plum District!

As a young kid, I was always taught the valuable lesson of never giving up or quitting. No matter how many times you get knocked down, you have to stand up and keep moving. That is the same trait that I also admire in many of the entrepreneurs that I have funded over the years. […]

Investing in Internet-Enabled Education →

jfugit:

There’s no reason why 30 students should sit in a classroom and be lectured on the same thing at the same time at the same pace when everyone learns differently. There’s no reason why the tens of thousands of algebra classes are each being reinvented right now across the country by teachers of…

The NY Startup Market Rocks and is REAL

I may be biased having been an early stage VC based out of New York since 1996, but I must say that the vibe, energy, and people at the Techstars NYC Demo Day event yesterday was simply awesome.  Dave Tisch and team simply did a fantastic job guiding the startups, recruiting the mentors, and organizing the event.  I was quite honored to have been a mentor and to have had a chance to interact with so many high quality teams.  The audience was awesome as well bringing together many rock stars of the past with those of the future.  In addition, over 750 investors came in from all over including London, California, Boston, and DC to network and participate.

Rather than go in-depth on each Techstar company like Alyson Shontell orRyan Kim already have, I wanted to highlight some overarching thoughts on the NYC market having been an investor here for over 15 years.  As mentioned above, what I loved most about yesterday was not only catching up with many new friends, but also many old ones who were an integral part of NYC 1.0.  Besides talking about the interesting pivots that many of the Techstars companies took during their 3 month program, many of us simply could not resist talking about how the energy was similar to the mid-90s but why this felt different.  In fact, I would liken the 90’s Silicon Alley scene as one of discovery but also one where you could argue that the “Emperor had no clothes” meaning that there were lots of great entrepreneurs and startups but no real lasting value created.  Look, New York had to start from scratch but 15 years later what makes this different is that we can see a much better result-the same energy combined with real operating and entrepreneurial chops, real succceses and failures, real IPOs and multi-hundred million dollar exits, and a focus on the entrepreneur and product, not on the spreadsheet. So why will this be different this time around:

1. Stronger Ecosystem-accelerators like Techstars, DreamIt, andNYCseedstart have real entrepreneurs and VCs with real experience advising these startups - the pivot and changes from many of these startups from DemoDay was quite impressive and evidence of a stronger ecosystem
2. Real technical experience-what everyone of these startups had in-common was a strong core team of technical founders, rather than business folks outsouring development.  And with that, it was clear to see how much these startups could accomplish with so little capital and just sweat equity.  These entrepreneurs understand the concept of lean startup and as opposed to entrepreneurs of the past who hailed from big media/ad agencies/big companies, this new generation of startups starts with the tech guys, the way it should be.
3. Financial support system-now you have Angels and VCs who get it.  I remember the number 1 complaint in the mid-90s, New York VCs don’t get it.  They are risk-averse and spend too much time on spreadsheets analyzing the nth detail on a financial model instead of focusing on the talent and product/market.  15 years later, we have many Angels who are former entrepreneurs and many VCs who get it that are in NYC.  Add VCs from Boston and CA and elsewhere and you have quite an experienced plethora of investors to work with.

The next inevitable question from this rah rah post will clearly be is this a bubble where yesterday further showed the frothiness of the market?  I can’t comment on the public markets but what I can tell you is how these Techstars companies raise capital and at what valuations and timeframe will surely provide us with some leading indicators.  Hopefully they all get funded but I also hope that these entrepreneurs maintain their confident yet humble approach to building their business the right way and not get too caught up in chasing the highest valuation they can get.  All in all, what a great day yesterday and I hope to see many more awesome startups build real businesses out of the New York area. Regardless of what happens, we now have a history of failures and successes which means that we all have more experience to help guide us as we continue to move forward to solidifying NYC as a go-to place for startup activity.

Put your users first!

As a VC who invests in seed and first rounds, I love revenue just as much as the next guy.  However, the focus on revenue should play second fiddle to a user/customer first experience.  Over the years, how many times have we seen companies grow from next to nothing in user base and somehow forget why they got there in the first place?  Yes, the answer is because they made an insanely great product or service that catered to their users.  Over time they then figured out how to generate revenue without destroying the delicate balance of putting the user first but generating revenue for the business.  In an article in the NY Times yesterday, there is a great quote from the MySpace founder, Chris DeWolfe:

“The paradox in business, especially at a public company, is, ‘When do you focus on growth, and when do you focus on money?’ ” said Mr. DeWolfe. “We focused on money and Facebook focused on growing the user base and user experience.”

This a question that we constantly struggled with at Answers.com years ago and now have found to have struck the right balance.  I remember some of the management and board meetings where we would all intensely debate whether to add an extra advertisement or not on a certain page and how that would impact the user experience vs the revenue line.  While this sounds like minutiae and too much detail, I would argue that if you don’t have this debate internally that you may be tilted too far in one direction.  In the end user experience won, the page views continued to grow, and consequently revenue improved significantly.  Over my 15 years of investing, it is pretty clear to me that the users are in control, keep them happy, and they will come back for more!