The Smart Money is Investing in Tech

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Where is the smart money going when it comes to tech companies? Some leading experts will be exploring that subject at Fortune’s upcoming Brainstorm TECH conference.

Anton Levy of General Atlantic, Kirsten Green of Forerunner Ventures, and David Trujillo of TPG will share the stage in a panel discussion on what industries, ideas, or trends they’re betting on; what they’re seeing in the tech space; and the changes they’re watching for.

It’s no surprise that technology is on people’s minds, with the June ransomware attacks and Microsoft’s announcement of its new SMB-oriented software-as-a-service bundle. A recent article in Institutional Investor says that tech deals are booming in the PE sector.

Not only that, but 2017 has been a boom year for tech IPOs, with Snap going public in March, and Carvana, Cloudera, Elevate Credit, Mulesoft, Netshoes, Okta, and Yext also making their public trading debut. The aggregate value of these IPOs is a whopping $37.5 billion, with Snap making up the lion’s share at a valuation of approximately $20 billion.

Today’s tech IPOs are already light years ahead of those in 2016. By May of 2016, only two companies had gone public. Between January and May of 2017, more than four times that number went public, and more public offerings may be on the horizon. (Tech companies that have been floated as possible IPOs, despite rigorous denial from some of them, include Airbnb, Dropbox, Pinterest, Spotify, and Uber.)

Because of the growing success and valuation of tech companies, private equity money is now flowing into the sector, accounting for almost 40.1 percent of U.S. buyouts last year. This is the highest proportion on record. Firms with a broad range of investment interest, such as General Atlantic, KKR, and Carlyle, are jumping into the game and are being joined by tech-focused PE firms like Golden Gate Capital and Siris Capital.

“An increasing number of tech-related companies have moved beyond the traditional territory of venture capital funds, and the sector as a whole has increasingly become a target for the wider private equity industry,” Christopher Elvin, Head of Private Equity at Prequin, told Institutional Investor.

China has also become a PE magnet. However, concerns about the possible imposition of U.S. trade tariffs, plus concerns about its credit, real estate, and technology sectors seem to be cooling interest in the nation. However, when risk and potential are calmly weighed, China may be the most promising private equity market in the world.

This echoes sentiments that General Atlantic CEO Bill Ford shared in a recent interview with Bloomberg. “We’ve been bullish on China despite lots of mixed sentiment—the country is succeeding in pivoting its economy from export and manufacturing to services and consumption,” he said. “We’re seeing companies there generating 15 to 20 percent-plus nominal GDP growth.”

With so many potential IPOs on the horizon, and some really promising companies to be found in emerging markets, it’s no wonder that the smart money is betting on tech to be the next private equity profit-maker.

I will be curious to see what Levy, Green, and Trujillo share at Brainstorm TECH about their vision for private equity in the tech sector and if it matches up with what other observers have been saying.

MIT Grad Built $110 Million Company in Less Than a Year

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$110 million is a lot of dough… especially for a company that’s less than a year old. But believe it or not, that’s how much Function of Beauty is rumored to be worth.

Function of Beauty is an online, direct-to-consumer hair product company that creates customized shampoos and conditioners based on the client’s needs. They have a solution to combat nearly every type of hair care problem, including frizz, oily scalp, dry tresses, and dull color.

The New York-based startup has already raised $12 million in funding through Y Combinator. The company just launched in October of last year.

CEO and founder Zahir Dossa says he came up with the idea of creating tailor-made hair care products during his studies at MIT. The “aha” moment happened when he began researching different industries for his dissertation, which focused on ecommerce and value chain optimization.

“I saw that was the most bloated [industry] was beauty, and more interestingly, the value chain for beauty hadn’t really changed over the last 100 years,” Dossa said in an interview with Business Insider. “There were all these middlemen in the way.”

He quickly saw an opportunity in hair care due to the various different problems that people are trying to address. From a business standpoint, that makes for a near endless amount of solutions—well, almost endless. According to Business Insider, Function of Beauty can generate 12 billion different formulas.

“If we know what a person’s hair profile is and how they’d like their hair to behave or look or feel, then basically we can combine those two data points to be able to come up with a unique base for each person based on their profile, and then various performance blends that we can add that appeal to each hair goal that they fill out,” Dossa stated. “And then there are other various ways to personalize it, like the fragrance or the color.”

Better yet? If the client doesn’t like the product, they can return it and receive a new formula, free of charge.

It’s easy to see why Function of Beauty is doing so well, given how focused the company is on the consumer’s needs.

McDonald’s to Use Snapchat for Summer Jobs

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Many teens turn to the fast food industry when it’s time for their first summer job, and McDonald’s has found a way to reach this new crop of potential employees.

This week McDonald’s will be releasing a series of 10-second ads on Snapchat, aimed at teens who are looking for summer work. These ads will feature current employees talking about why they love their jobs, with the hope of enticing viewers to become its new batch of hirees. Jez Langhorn, a McDonald’s human resources executive, believes this is the best way to reach their target audience.

“As we see the younger generations seeking out their first jobs, we want to make them aware of the great opportunities available at McDonald’s,” Langhorn said in a statement.

McDonald’s plans on hiring 250,000 seasonal employees for jobs starting this month and ending in August–just in time for the new school year.

Clever advertising and intelligent marketing are just two of the reasons McDonald’s is one of the most ubiquitous companies in the world. It’s no surprise that McDonald’s is using the most popular social media platform with teens to engage them, especially one that comes with a catchy name: Snaplications.

“We thought Snaplications was a great way to allow us to meet job seekers where they are—their phones,” said Langhorn.

While some may say kids would have McDonald’s in their mind anyway, it’s still a very smart way of interacting with today’s teens and young adults. It’s also not entirely new.

McDonald’s began using Snapchat in Australia earlier this year (with positive results), and in keeping up with the online/social stratosphere, it’s looking to engage jobseekers on both Hulu and Spotify.

Job seekers are encouraged to find out more by going to McDonald’s website (via the Snaplication, of course) or any local restaurant.

Next Generation Farming Techniques Involve the Clever Use of Technology

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The next generation of farmers believe that there are better ways to farm outside of mainstream techniques.

Millennial farmers are incorporating technology into everyday farming practices as a means of increasing productivity and streamlining conventional processes. For example, trends show that younger farmers are leaning towards organic and sustainable small-scale farming.

These small farms often gain support for their technology through crowd funding and are sustained by Community Supported Agriculture (CSA). Many utilize farm shares where members subscribe for a portion of produce weekly, monthly, or yearly. They use technology that provides accurate tracking of their produce and livestock so that they are better able to plan for their farming needs and the production requirements to deliver goods to consumers.

Technology also offers opportunities to produce food more sustainably. A mixture of data, math, sensors, analysis, hardware and software allows farmers to go beyond what the eye can see. This data can be monitored all at once, creating greater efficiency in the agricultural process.

Forbes reports that “consumers have gravitated to mobile devices and smart technology to live healthier, safer, and more connected lifestyles–monitoring our thermostats and securing our homes and tracking our health. The migration of technologies that we use in our everyday lives into tools for farmers to grow crops more effectively and create sustainable farms is the model for a new generation of farmers.”

Farmers have successfully integrated such technology as moisture sensors, terrain contour mapping, smart irrigation, drones, and self-driving and GPS-enabled tractor technologies into their daily routines.

Drone technology is another powerful addition to smart farming. Drones allow farmers to map fields aerially in real time. Aerial imagery can expose heavily compacted fields and crop health issues, as well as show improvement in yields.

Drones can also help pollinate crops. Bio-inspired drones could have huge effects on the pollination crises and the decline of bees. They can be designed to fly from crop to crop, fertilizing plats mimicking natural pollination. These flight patterns might also provide researchers with some clues about how to help with pollinator declines.

The hope is that smart farming will help our agricultural industry reduce negative side effects on the environment, protecting our planet’s resources, while still producing the best food supply for a growing and hungry population.

The Battle of Free Shipping Continues

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It’s hard to be a big box retailer these days and charge a hefty price for shipping. We keep seeing big-name stores that were once prosperous now closing up shop, and a lot of that has to do with the ease and affordability of online shopping.

For a time, many still chose to shop in-person because that option offered no shipping fees, but that era is slowly coming to an end–and major stores are now battling it out for the best free shipping deal.

This week, Amazon announced that it would be (once again) lowering it’s free shipping minimum for non-Prime members. Shoppers now only need to spend $25 to forgo shipping costsa price that is very reasonable for most people. At the beginning of 2017, the spending minimum was $49, but that changed when Walmart came out with their own two-day, free shipping deal on orders of $35 or more. With the $25 limit, Amazon is now the cheapest place for shipping.

Yet, that could very well change.

Target, which has been offering free shipping at the $25 rate for quite awhile, is planning to run a test program on next-day shipping, starting this summer. As of right now, the pilot program will only be offered in the company’s native Minneapolis (and only to REDcard members), but if it’s successful, the company would most likely branch out to Targets countrywide.

That said, Target plans on charging a “low, flat-fee” for shipping, although executives have yet to determine what that fee will be. If it’s something insignificant (say, $2.95) and you’re ordering a $500 dresser, that fee is worth the next-day shipping. If people are willing to pay a small amount to ensure their items are delivered in a timely manner, it will be one more sting against Amazon–which is exactly what Target wants.

New York Times and CB Insights Name Sandy Miller to Top 100 Venture Capitalists for Second Year

 

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For the second year in a row, Sandy Miller of Institutional Venture Partners has been named as one of the top 100 venture capitalists in the world, according to The New York Times and CB Insights. The list is determined using data analytics focusing on investments, consistency, and reputation, among other factors. Miller is joined on the list by fellow IVP General Partner Todd Chaffee.

In addition to co-founding Thomas Weisel Partners with Silicon Valley investment banker Thom Weisel, Miller has 35 years of experience in venture capital and technology investment banking. He’s served on more than 25 public, private, and philanthropic boards. In his work he has led investments in companies such as AddThis, Constant Contact, Datalogix, OnDeck, Zynga, and many more. He was also a Managing Director at Montgomery Securities, Merrill Lynch, and DLJ, as well as a strategy consultant at Bain. Since 2006, Miller has been a Managing Director and General Partner at IVP. He ranks at #41 on the list.

Todd Chaffee, also of IVP, has been a Managing Director and General Partner since March of 2000. He has more than 25 years of experience with operating and investment, including investments in Akamai, Ariba, Business Insider, Netflix, Pandora, Yahoo, and many more. Prior to his work with IVP, Chaffee was Executive Vice President of Visa, overseeing Visa’s Advanced Technology, Strategic Planning, Corporate Development, and Equity Investment divisions. He ranks at #97 on the list.

IVP was one of the first venture capital firms on Sand Hill Road in the Silicon Valley. Founded by Reid Dennis in 1980, IVP focuses on financing later stage companies and helping with overall strategy to ensure company health.

This is the second year CB Insights and The New York Times have put together this list using CB Insights’s Investor Mosaic Algorithm. The algorithm uses straight data as well as submissions to determine the best firms and individual professionals in the venture capital market. Determining factors include investor exits, network centrality, illiquid portfolio company value, and recency of performance. Putting it all together, CB Insights and The New York Times are able to come up with a list of the current best-ranking VC professionals.

Best Practices for Responding to a PR Disaster

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When it comes to PR disasters, how you respond can be the deciding factor in whether your company sinks or swims. That’s why it’s important to have a plan put in place should a crisis come your way.

Don’t wait until disaster strikes. Take action now.

You should prepare for a PR disaster for the same reason you prepare for a natural disaster: just in case. Regardless of whether or not you anticipate trouble coming your way, you should have all your steps outlined so you know exactly what to do if the situation occurs.

Respond within 8 hours.

This is an incredibly short time frame, which is exactly why statements need to be crafted ahead of time. There should be two statements: one from the CEO and one from an official spokesperson. For smaller companies, just one statement from the CEO will suffice.

While it’s difficult to craft a statement when the circumstances of the situation are still unknown, you should still have a general outline ready. Specifics can be inserted later and you can always make changes to the document. Basically, the last thing you want is to have no plan, no statement, and no clue what to do next.

Acknowledge the situation.

This doesn’t mean admitting fault. It means that you’re aware that the situation occurred.

Let the public know what you plan to do.

The public wants to know what steps you’re going to take moving forward. This can mean cooperating with law enforcement officials, it can mean launching your own internal investigation, or it could mean offering some type of compensation to your customers. The idea is to show the public that you’re doing everything in your power to make things right.

Follow through on your promises.

Following through on your promises is even more important than letting the public know what your course of action is. If you do not follow through on what you said you would do, the public will view you and your company as being untrustworthy.

There are many other best practices that you should implement in order to further prepare yourself for a PR disaster. This article is intended to be merely a beginner’s guide to the subject matter. For more in-depth tips, check out the following books:

Damage Control: The Essential Lessons of Crisis Management
Masters of Disaster: The Ten Commandments of Damage Control
The Four Stages of Highly Effective Crisis Management: How to Manage the Media in the Digital Age

If You Can’t Beat ‘Em, Buy ‘Em Out

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It’s not an uncommon occurrence: two companies duking it out in the marketplace, their battle only ending when one buys out the other. Whether it’s GoDaddy buying up European rivals to expand its reach or Billtrust taking its competition, Invoice Connection, out of the game to do away with constant low ball pricing scares, there are plenty of reasons why a company might choose to buy out a rival.

Of course, ideally, the situation is more of an amicable, strategic merger. San Francisco investment banker Thom Weisel is no stranger to this sort of development: his Montgomery Securities was sold to NationsBank in 1997, and in April of 2010, Stifel Financial purchased Thomas Weisel Group.

Montgomery Securities, a privately held investment bank that focused on lucrative IPOs of high tech companies, ultimately became a subsidiary of NationsBank called NationsBanc Montgomery Securities Inc. Weisel continued to serve as the unit’s chairman. This came after Weisel announced several months earlier that Montgomery was looking for strategic partners. So rather than a foundation of anger and distrust, this deal was made based on a desire for compromise.

“The combination of our two companies is a great fit and will allow us to reach our goal of providing one-stop shopping to our clients,” Weisel said at the time.

As for Stifel’s acquisition of Thomas Weisel Partners, the all-stock transaction, involving more than $300 million, definitely sweetened the deal. And while Stifel did basically buy Thomas Weisel Partners out, Stifel made the purchased investment bank a fairly autonomous subsidiary with Weisel himself a co-chairman of the board.

Unfortunately, not all buyouts are this smooth. Flint Lane’s Billtrust, an electronic and paper billing service aimed at plumbing, electrical, and lumber supply wholesalers, suffered from years of bitter rivalry with Invoice Connection, a rival company who consistently went after Billtrust’s clients by offering much lower prices.

Still, Lane wasn’t going to let the simmering animosity affect his business decisions. He met with Invoice Connection co-founder Earl Beutler, and on June 6, 2011, the two companies signed a letter of intent for Billtrust to buy out Invoice Connection. The deal closed in September of that year.

The world of mergers and acquisitions is, at least in theory, a realm of utmost professionalism. Companies make decisions about expanding, partnering, and buying based on the market and what’s best for each individual business. But there’s always the cutthroat underbelly, where sometimes the best solution to the problem of competition is to…well, buy it out. No matter what unpleasantness may (or may not) occur during the actual handoff, the positive outcomes are usually worth it: the subsequently formed businesses are stronger and can offer their clients more services and opportunities.

So in the end, having a rival might not be such a bad thing after all.

Print Media Isn’t Dying

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For a while there, everybody was concerned that print media was going extinct because people were reading newspapers and books online. That’s turning out to be a false alarm though, as several studies have shown that physical books are experiencing a resurge in popularity.

Newspapers, which have been seen as struggling in the digital age, are also doing fine (at least in the United Kingdom, anyway). According to a recent study, print newspapers are more popular than their digital counterparts, with readers spending 89% of their time with print editions and only 4% and 7% with web and mobile versions.

Other studies have shown that in Germany, print newspapers are 38% more likely to be used as a weekly news source than the web, while in the U.K. that number is only 13%. The authors of the British study think that German readers could spend even more time with their print papers. So while not everybody is reading print newspapers, or maybe newspapers at all, those that are seem to prefer print.

What this tells us is that digital technology hasn’t been as “disruptive” as we’d thought (disruptive in this case meaning that it would kill print media). The people lamenting the death of print media have mostly been people who were slow to embrace digital media in the first place. But there’s no reason that print and digital media can’t coexist, since they serve different purposes for different people.

Could print media eventually die out? Sure, but that’s still a ways down the road. In the meantime, it’s here to stay.

What does that mean for publishers, whether that be books, newspapers, magazines, or comics? It means that they need to pay attention to the way readers actually engage. Better than wasting their time trying to find ways to hinder digital media, they should find ways to work with it, or to find audiences that prefer print products they already make. Adaptability, and paying attention to what’s actually happening, is key here.

Study Shows That People With ADHD Add Value to Business

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There are numerous traits associated with entrepreneurial success, including risk taking, passion, persistence, and time commitment. But these traits are also associated with something else: ADHD. Most of us are used to hearing ADHD discussed as a problem, making it hard for students or workers to focus. But that’s only because we’re used to discussing ADHD in the context of structured environments that expect the same thing from everyone.

New evidence gathered from an international study found that, “some of the symptoms of ADHD resemble behaviors commonly associated with entrepreneurship—in a positive sense.” Some of the symptoms even had “a decisive impact on the subjects’ decision to go into business and on their entrepreneurial approach.”

These symptoms include impulsiveness, which allowed the study participants to make decisions without getting bogged down by details and concerns. Additionally, their boredom with their jobs often led them to start their own businesses. Hyper-focus allowed them to hone in on a task and really go after it, which contributed as well to their high activity level. But all of these pros could just as easily become cons, such as when impulsiveness makes it difficult to focus on routine tasks like bookkeeping.

It’s worth nothing that not all ADHD participants were successful, and sometimes their businesses failed, but so do a lot of business, regardless of who starts them. What this study does is gives us a new light in which to look at both entrepreneurship and ADHD, which should help us develop better understandings of both.

The markers by which we measure the success of a business might not be telling us everything about what makes a successful business, or who should start one. And by finding these connections to their symptoms, we can take a more positive look at ADHD as something other than a problem. It’s not something that needs to be treated or cured, but something that people need to learn how to make work to their advantage.

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