Friday, November 22, 2013

$4 Billion Is The New $1 Billion In Startups

Source: http://www.businessinsider.com/4-billion-is-the-new-1-billion-in-startups-2013-11

Sean Parker Spotify Facebook party

Music streaming company Spotify just raised $250 million at a $4 billion valuation. 

That sounds high, but $4 billion seems to be the magic number for today's biggest startups. Recent valuations have dwarfed Tumblr and Instagram's once-massive $1 billion buyouts.

Uber received a $3 – 4 billion valuation in August when it raised a $258 million round of financing led by Google Ventures. Pinterest raised at a $3.8 valuation in October. A few weeks ago, Snapchat was mulling over a new round at a similar valuation. Evernote hasn't raised a round in over a year, but it's likely near the $3 – 4 billion valuation range now. Dropbox doubled the magic $4 billion figure and is raising at an $8 billion+ valuation. Today, Spotify joined the $4 billion club.

Why have valuations gotten so much higher in recent months?

First, there's a lot of private money out there, and investors need to invest it somewhere. When late-stage VCs stumble upon startups that can become category leaders, they throw piles of cash at them.

Uber is the category leader in on-demand transportation and logistics. Pinterest is winning in the visual retail discovery market.

"When one of the big players emerge [in a market], then you have these big firms that need to deploy a lot of capital," says RRE investor Steve Schlafman. "A lot of these companies don't need to raise more money...the only way these companies are going to raise more money is on a much! higher multiple. But I wouldn't call it irrational exuberance. These are big spaces with likely one or two winners (transportation, music, discovery, messaging)."

It's important to note that a lot of high-valuation deals give investors preferred stock, not common stock.  That means their investments are much less risky. Even if a startup gets bought for less than its official valuation, the preferred stock still gets bought out in full — sometimes at a premium or multiple. If a startup's valuation increases, both preferred stock investors and the founders win big. Even if a startup goes to zero, preferred stock holders get their money back first — if there is any left — while a founder with common stock might lose everything. 

It's also important to remember that investors don't want marginal wins. They're after home runs, so it's in their best interest to keep promising startups private and flip them later for higher returns. Investors who put money in Instagram at a $500 million valuation, for example, probably didn't anticipate the company selling for a smaller, 2X multiple. 

To prevent startups from getting acquired early, some investors let founders pocket cash during fundraises. Founders are able to take a few million dollars off the table and become instantly rich, just like they would if they sold the company. Eliminating the financial lure of an acquisition keeps entrepreneurs focused on building longer-term businesses.  

Snapchat's co-founders, for example, reportedly pocketed $10 million each during their last round of financing. They're rumored to be taking much more than that off the next round of financing — whenever that officially closes.

Some of the valuations are the result of hype though. And sometimes aggressive valuations can backfire.&n! bsp;

"I think later stage investors are analyzing growth rates and size and using Facebook (and other public stocks) as a comp on valuation," one industry insider says.

"If Facebook stock is high, than those startups will get a high price if they continue to exceed expectations. This can be tricky though, as we saw with [recent] late stage deals ... When growth slows down, the pain is harsh and swift." 

Instagram would be worth $5B+ today. It buttressed FB stock & gave it's mobile strategy legs. Insanely smart,cheap acquisition by Zuck.

— Shervin Pishevar (@shervin) November 13, 2013

SEE ALSO: DOWN ON STARTUPS: What Happens When No One Thinks Your Startup Is Worth Billions Anymore

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See How This 'Smart' Credit Card Will Replace Almost Every Card In Your Wallet

Source: http://www.businessinsider.com/coin-smart-card-walkthrough-2013-11

coin smart card

There's a new startup that's looking to completely reorganize your wallet.

It's called Coin. We first got wind of it last week when the company made a big splash in the tech press with the unveiling of its $100 "smart" credit card.

We talk about a lot of companies that claim to be changing the way we handle payments. Coin is different — they're just making the current system better by reducing the number of cards we need to have with us at any given time.

At first glance, the Coin doesn't look all that special. It costs $100 and looks like a sleek, simplified credit card.



It can be swiped at any register, just like your debit or credit cards.



But amazingly, it actually takes the place off all of those cards in your wallet.



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Thursday, November 21, 2013

There's An Electronic Currency That Could Save The Economy — And It's Not Bitcoin

Source: http://www.businessinsider.com/electronic-currency-2013-11

Electronic Money_Cover

The United States has been marred in slow economic growth and a weak recovery for years now. Unemployment remains high. This is despite extraordinary efforts by the Federal Reserve to stimulate the economy. This drawn out period of low inflation and high unemployment has gotten more and more people talking about a "new normal" of mediocre growth.

Economists have been looking for ways to give central banks more power to combat recessions and prevent these long, drawn out recoveries. Larry Summers laid out this major impending economic challenge in his recent speech at the IMF. Normally, when a recession hits, central banks cut interest rates to incentivize firms to invest and to spur economic growth. But when interest rates hit zero, those banks lose one of their most important tools to combat recessions. This is called the zero lower bound.

Hitting the zero-lower bound means that interest rates cannot reach their natural equilibrium where desired investment equals desired savings. Instead, even at zero, interest rates are too high, leading to too much saving and a lack of demand. Thus we get the slow recovery.

Until recently, we hadn't hit that bound. But since the Great Recession, we've been stuck up against it and the Fed has been forced to use unconventional policy tools instead. What Summers warned of is that this may become the new normal. When the next recession hits, interest rates are likely to be barely above zero. The Fed will cut them and we'll find ourselves up against the zero lower bound yet again and face yet another slow recovery.

So what's the answer?

University of Michigan economist Miles Kimball has developed a theoretical solution to this problem in the form of an electronic currency that would allow the Fed to bring nominal rates below zero to combat recessions. He's been presenting his plan to different economists and central bankers around the world. Kimball has also written repeatedly about it and was recently interviewed by Wonkblog's Dylan Matthews.

"If you have a bad recession, then firms are afraid to invest," he told Business Insider. "You have to give people a pretty good deal to make them willing to invest and that good deal means that the borrowers actually have to be paid to tend the money for the savers."

But paper currency makes this impossible. 

"You have this tradition that as it is now is enshrined in law in various ways that the government is going to guarantee to all savers that they will get [at least] a zero interest," Kimball said.

If the Fed lowered rates below zero in our current financial system, savers would simply withdraw their money from the bank and sit on it instead of letting it incur negative returns. The paper currency itself — because it's something that can be physically withdrawn from the financial system — prevents rates from going negative.

This is where Kimball's idea for an electronic currency comes in. However, unlike Bitcoin, which prides itself on its decentralization and anonymity, Kimball's digital currency would be centralized and widely used. He would effectively set up two different types o! f curren cies: dollars and e-dollars. Right now, your $100 bill is equal to the $100 in the bank. If you're bank account has a 5% interest rate, you earn $5 of interest in a year and that $100 bill is still worth $100. But what would happen if that interest were -5%? Then you would lose $5 over the course of the year. Knowing this, you would rationally withdraw the $100 ahead of time and keep it out of the bank. This is where the separate currencies come in.

"You have to do something a little bit more to get the negative rate on the paper currency," Kimball said. "You have to have the $100 bill be worth $95 a year later in order to have a -5% interest rate. The idea is to arrange things so let’s say $100 in the bank equals $100 in paper currency now, but in a year, $95 in the bank is equal to $100 in paper currency. You have an exchange rate between them."

"After a year, I could take $95 out of the bank and get a $100 bill or if I wanted to put a $100 bill into the bank, they would credit my account with $95."

Got that? After a year of a -5% interest rate, $100 dollars are equal to $95 e-dollars. This ensures that paper currency also faces a negative interest rate as well and eliminates the incentive for savers to hoard dollar bills if the Fed implements a negative rate. Presto! The zero lower bound is solved.

The benefits of this policy go even further though: We can say goodbye to inflation as well.

"Once you take away the zero lower bound, there isn't a really strong reason to have 2% inflation at this point," Kimball said. "The major central banks around the world have 2% inflation and Ben Bernanke explained very clearly why that is. It's to steer away from the zero lower bound."

He's right. Back in March, Ryan Avent asked Bernanke why not have a zero percent inflation target. Bernanke answered, "[I]f you have zero inflation,! you&rsq uo;re very close to the deflation zone and nominal interest rates will be so low that it would be very difficult to respond fully to recessions."

But if nominal interest rates are allowed to go below zero, then the Fed has ample room to respond to recessions even if rates start out low. This is another major benefit from eliminating the zero lower bound.

What Kimball, whose blog is titled Confessions of a Supply Side Liberal, is most excited about is moving beyond the demand shortfall the economy currently faces to the supply side issues that hold back long-term growth.

"If you care at all about the future of this country, one of the things you need to realize is we need to solve the demand side so we can get back to the supply side issues that are really the tricky thing for the long run," he said. "The way to solve the demand side issues that is the most consistent with not messing up our supply side is monetary policy and making it so we can have negative interest rates."

At the moment, e-dollars are still only a theoretical concept, but Kimball is hopeful that they could be put into action in the near future. He believes that if a government bought in, it could be using an electronic currency in three years and reap the benefits of it soon after. 

"This is going to happen some day," he concluded. "Let me tell you why. There are a lot of countries in the world and some country is going to do this and it's going to be a whole lot easier for other countries to do it once some country has stepped out."

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Your future OLED TV could be created with an inkjet printer

Source: http://www.engadget.com/2013/11/21/kateeva-oled-tv-inkjet-printer/

Even though California startup Kateeva demonstrated it could print OLED displays way back in 2010, the printer it used was a prototype meant strictly for show and tell. The age of printed OLED TVs might finally be upon us however, as the company recently unveiled the YIELDJet, a machine it's calling the "world's first inkjet printer engineered from the ground up for OLED mass production." The machine is quite an impressive affair, comprising a shifting slab capable of handling glass or plastic sheets big enough for six 55-inch displays along with custom print heads designed to emit teeny tiny OLED pixels.

Why is this a big deal? Due to the oxygen and moisture-hating nature of OLED ingredients, current OLED televisions are built with tricky vacuum evaporation and shadow masking techniques that are too inefficient and wasteful to be inexpensive. The YIELDJet, on the other hand, prints the LEDs in a pure nitrogen chamber to avoid those problems, plus it promises better film coating uniformity as well. This, Kateeva said, will hopefully result in OLED TVs that won't cost an arm and a leg yet still look stunning when hung on your living room wall. Combined with Sony and Panasonic's separate efforts to mass-produce the stellar-looking sets, we certainly hope that day comes sooner rather than later.

[Image Credit: OLED-Info]

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Via: MIT Technology Review

Source: Kateeva

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You've Never Seen GPS Data Look This Beautiful

Source: http://gizmodo.com/youve-never-seen-gps-data-look-this-beautiful-1468837981

You've Never Seen GPS Data Look This Beautiful

It might look like a talented artist has been enthusiastically scribbling over an aerial photograph, but this is in fact a set of GPS data looking more beautiful than you could ever have imagined.

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This New Li-On Battery Packs More Power and Is Way Safer, Too

Source: http://gizmodo.com/this-new-li-on-battery-packs-more-power-and-is-way-safe-1468851001

This New Li-On Battery Packs More Power and Is Way Safer, Too

Li-on batteries are great and all, but there's a barrier preventing them from storing much more power: they, um, tend to catch fire. But a company called Solid Energy claims to have developed a technology which makes the power source both more energy dense and safer, too.

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Middle Earth comes to life in epic Chrome experiment

Source: http://www.engadget.com/2013/11/20/hobbit-chrome-experiment/

We're go out on a limb here and say that the Venn diagram of Engadget fans and Tolkien fans looks something like this. So, we figure you'll probably want to hear about a brand new Chrome experiment that brings various parts of Middle Earth to life, including the Trollshaw and Dol Guldur. It starts with a pretty simple interactive map, but from there you're able to dive into several locations and learn about Hobbit lore through text, animations and audio. At the end of each lesson on Tolkien's fantasy world, you're challenged to complete a simple mini game that has you causing flowers to bloom or avoiding troll attacks. While the WebGL-powered games are pretty impressive, its the HTML5 audio and animations that are the real eye-candy here -- doubly so since they work just as well on a phone or tablet as they do your desktop. As you swipe through slides in the story, camera angles change in coordination with your finger and characters dart across bridges. Honestly, even if you're part of that tiny sliver in the diagram that can't stand Tolkien, it's worth checking out the latest Chrome Experiment, if only to remind yourself of the growing power of the web browser.

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Source: Chromium Blog

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Wednesday, November 20, 2013

This App Lets You Control Objects On Your Computer Screen Just Like Tony Stark Does In 'Iron Man'

Source: http://www.businessinsider.com/leap-motion-desktop-app-2013-11

Leap Motion Free Form App DemoLeap Motion, a company specializing in motion sensor devices, has expanded their services into a brand new desktop app called Free Form.

The app is an extension of the services found on the Leap Motion Controller. The program focuses on 3-D sculpting from the base of your fingertips. Similar to the technology found in the "Iron Man" movies, the app lets designers develop and sketch out their designs in a much more refined model. 

It has a large selection of customizations tools which can let users adjust and mold their drawings in which the CEO Michael Buckwald has compared to playing with Play-Doh.

As of right now, Free Form is still in beta with developers working out more of the kinks but Buchwald is expecting it to expand to other platforms like smartphones and tablets and be released to the public in 2014. Check out Engadget's demo to see it in action.

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