Friday, November 8, 2013

ResearchGate: “Forget About Revenue Until The Network Is Valuable Enough To Command It”


ResearchGate’s Ijad Madisch’s lifelong ambition of winning a Nobel Prize for changing the way scientific research is undertaken piqued the interest of Valley investors several years ago. Now with more than $35 million in funding from investors like Bill Gates, Benchmark, Founders Fund and Accel, he’s running one of Berlin’s flagship startups with 3 million scientists using the site. It wasn’t such an obvious journey. Madisch had been working as a medical doctor in Boston several years ago. He asked for permission to go half-time on being a doctor, so that he could spend the other part of his time working on what would become ResearchGate, a LinkedIn-like social network for scientific researchers. His manager told him it was a “birdshit” idea and that scientists by nature weren’t very social. Madisch went his own way, ultimately relocating back to Germany to build the company. Today onstage at TechCrunch Disrupt in Berlin with Benchmark’s Matt Cohler, he shared a few nuggets of wisdom from his path so far. “I always was convinced that ResearchGate can change the world,” Madisch said. “The World Wide Web was created to exchange knowledge and now you can buy shoes online, but science is still the same.” Cohler, who sits on the board, brought experience from his days as an early team member at LinkedIn and Facebook. The pair really synced on the idea that ResearchGate needed to put off building a revenue model in favor of focusing on product and generating network effects. One of Cohler’s early pieces of advice to Madisch was to forget about revenue until the network was valuable enough to command it. “We need to really create value for the scientists first. If we succeed with this, then we can start worrying about making money,” Madisch said. “You have to be very brave and experienced to give this advice. I wouldn’t have gotten it from any East Coast or German VC investor. And it was the best thing we could have done.” Madisch said the site, which attracts 1.4 million uploads of papers per month and 1,300 data sets uploaded every few days, had led to a few breakthroughs. There was a Nigerian scientist named Emmanuel Nnadi, who was studying pathogens and found a baby in a local hospital who had died in 28 days. The cause of death was a mystery. Nnadi collected samples but had no equipment to analyze them. However, he connected with an Italian scientist on ResearchGate named Orazio Romeo, who agreed to study the samples. They discovered a new type of deadly pathogen that had previously only affected plants. It had mutated somehow to affect humans. Now Madisch is working on ways to surface data to the right groups of scientists in a more automatic way. “There are all these different connections, which we can draw using new technical architecture,” he said “We will find results, which we can only find because we connect the right data without doing any more research and this will change the whole world.” As for the somewhat contrarian decision to relocate back to Germany and base the company in Berlin instead of Boston or Silicon Valley, ResearchGate’s board member Cohler said that Boston lacks the foundations for helping consumer Internet companies grow. “We always ask, ‘What’s the best place in the world for a particular company given its culture, values?’” Cohler said. “We’ve got a pretty strong point of view that Silicon Valley and San Francisco is the right answer for many companies and that’s why most of what we do is based there.” He went on, “But I only had one strong point of view — that Boston was not the best possible place to build this company.” Cohler said there were many reasons for this, but went on to say that Massachusetts labor laws have a chilling effect on how employees can move from startup to startup. Massachusetts strongly enforces non-compete agreements, unlike California. This affects how knowledge is transferred from generation to generation of startups and entrepreneurs. Cohler said that Berlin has many of the right ingredients to be a strong startup hub, with a decent pool of technical talent, a low cost of living and a place at the intersection of technology and many other industries and cultures.

Jibe Secures $4 Million Credit Facility To Help Make Companies Better At Hiring


The last time we heard from TC50 alum Jibe, it locked up a $10 million Series B from the likes of Longworth Venture Partners (which led the round), Polaris Partners, Lerer Ventures, DFJ Gotham, and Thrive Capital in a bid to make it easier to apply for jobs from smartphones. This time around, though, Jibe has more money to expand its operations but without having to offer up any equity in exchange - the team recently announced that it's secured a $4 million credit facility from Silicon Valley Bank as it prepares to flesh out its backend services for enterprise partners looking to hire the right people. “We're helping to process hundreds of thousands of applications now,” CEO Joe Essenfeld told me. “But these companies really want to rely on data to see how the application and hiring process differs for different kinds of jobs.” Speaking of hiring, he also noted the Jibe team isn't complete just yet and that hiring would continue as the company prepares to move into a new office in Greenwich Village. As it happens, Jibe has already put part of its new plan into motion. Earlier this month it rolled out a suite of backend tools meant for recruiters. If you thought applying for a job was tough, think about what it must be like for the poor recruiter/HR person stuck trying to sift through that pile of applications. Essenfeld said that three (sadly unnamed) Fortune 1000 companies jumped on the bandwagon when the startup released its recruiter analytics tools, which lets business insiders see where its applicants are coming from, how they stumbled upon the job opening, and how much time they spend on the application. Perhaps most important is the ability to pinpoint the moment those would-be employees give up on filling out their applications, which should give those companies some insight into how to smooth out the onboarding process.

LinkedIn Beats In Q3 With Revenue of $393M, EPS of $0.39, But Weak Q4 Guidance Sends Its Stock Lower


LinkedIn reported its third-quarter earnings today, with revenue of $393 million (up 56 percent) and earnings per share of $0,39. Analysts had expected LinkedIn to earn $0.31 per share, on revenue of $385 million. In the comparable year-ago quarter, LinkedIn earned $0.22 on revenue of $252 million. On a GAAP basis, LinkedIn lost $0.03 per share. However, LinkedIn's performance is generally measured on a per-share basis in non-GAAP terms. For the quarter, LinkedIn's Talent Solutions group had revenue of $224.7 million (up 62 percent year over year), its Marketing Solutions had $88.5 million in revenue (up 38 percent), year over year), and its Premium Subscriptions top line totaled $79.8 million (up 61 percent), year over year). LinkedIn reported revenue guidance for its fourth quarter of $415 million to $420 million. Investors had forecasted a figure of around $20 million more. In normal trading, LinkedIn was up around 1.5 percent). Following its earnings beat, LinkedIn is down in after-hours trading. Investors, it appears, are disappointed with what appears to be slowing top-line growth at LinkedIn. LinkedIn is a very richly valued company. Before its stock moved, following its earnings release, LinkedIn had a trailing PE ratio in the hundreds, a forward PE of 111, and a PEG ratio of 2.92, according to Yahoo Finance. That means it cannot afford missteps, as investors are expecting consistently strong results. The company had non-GAAP net income of $46.8 million in the period. For the quarter, LinkedIn's adjusted EBITDA totalled $92.8 million. The company had a GAAP net loss of $3.4 million in the quarter, up around 50 percent year-over-year. LinkedIn had 259 million users at the end of the quarter. In sum, LinkedIn had a strong quarter, but its lower-than-expected stated expectations for its year-end quarter have unnerved investors.

Yelp Ekes Out A Win In Q3 As Revenue Jumps 68% To $61M, EPS Losses Grow To $0.04


Yelp, the local online business and restaurant guide that has become the web's go-to resource for reviews of local businesses since launching in 2004, announced its 2013 third quarter earnings after the market closed this afternoon. For the second straight quarter, the company beat expectations, with revenue coming in at $61.2 million in the third quarter and a per-share loss of $0.04. Considering Yelp posted a greater-than-expected loss of $2.3 million, it wasn't a categorical victory, but it was a win nonetheless, with revenue increasing 80 percent from the same period in 2012, while cumulative reviews grew 42 percent year-over-year to over 47.3 million, average unique visitors grew 41 percent year-over-year and local business accounts grew 61 percent to 57,000. Wall Street expected Yelp to announce a loss of $0.01 per share on revenue of $59.40 million for the quarter. Yelp passed muster in revenues, but saw an uptick in its net losses in the third quarter of $2.3 million, or $0.04 per share, compared to a net loss of $2.0 million in the third quarter of 2012. Thanks to a fairly consistent performance in recent quarters and solid progress from its local ads business, Yelp's stock price has bounced back significantly over the last six months - 180 percent in all. This is a strong signal that investor confidence has returned for Yelp, even if many analysts believe that the market is a little too bullish on the company at the moment. The company's stock price had been hovering around $68 per share on Tuesday, but is currently down 6 percent in after-hours trading on the higher-than-expected loss, though it continues to vacillate. Reflecting on his company's third-quarter performance, Yelp CEO Jeremy Stoppelman highlighted the company's renewed focus on its mobile experience as a continuing source of growth and opportunity. The CEO also expects its new “Yelp Platform,” which launched in July and allows local businesses to interact directly with customers via its portal, to provide additional value for businesses while increasing engagement among consumers. The company also saw continuing growth in its unique user base over the last quarter, which now stands at 117 million. In its earnings statement today, the Yelp CEO continued: We saw another quarter of strong momentum thanks to the high-quality, authentic content contributed by Yelpers around the world … and our focus on connecting consumers with great local businesses continues to drive our success. In the third quarter, we improved the user experience by adding the ability to write and post reviews from mobile and launched new features such as the customer activity feed for business owners. Looking to the rest of the year and beyond, we are well positioned to capture the large local opportunity ahead of us through our innovation around mobile, geographic expansion and closing the loop with local businesses. Yelp | Infographics Other than that, after adjustments, Yelp's EBTIDA came in at $8.1 million for the third quarter, compared to $2.2 million for same quarter in 2012. The company showed 46 percent of its advertisements on mobile devices in Q3, which represented a 6 percent increase from the prior quarter. However, Yelp's performance here will need to be stronger going forward, considering companies in its class, like Facebook, have been able to drive significant increases in revenue by way of mobile advertising. Again, the 46 percent figure is only a 6 percent improvement from last quarter, which takes on a greater significance considering the company doesn't break out mobile revenue as many other companies do, instead limiting its report to mobile advertising share. Nonetheless, overall, Yelp's mobile ad business has continued to grow steadily over the last year, and the optimization of its mobile platform has become one of its chief priorities. For example, last month, Yelp finally gave users the ability to post reviews from their mobile devices - key functionality that has long been missing from its mobile experience. Yelp's cash position grew slightly over the last three months, increasing by about $5 million to $101 million at the end of the third quarter. Its acquisition of SeatMe in early July for $12.7 million was announced at the time, but recorded as part of this quarter's financial statements. The company also said today that it has finally integrated Qype's French and U.K. portals after acquiring the European startup last year. The total cost of restructuring and integrations in Q3 was $2.8 million, compared to $1.8 million in Q3 2012. All in all, Yelp booked a mixed performance in the third quarter, just beating revenue expectations, while keeping firm hold of its cash and growing traffic. However, the company's loss widened in the third quarter, thanks in large part to the cost of acquisitions and integrations mentioned above. During the third quarter, Yelp took its first steps into Latin America, for example, beginning with Brazil. Yelp will likely look to Brazil to act as a gateway to the region, helping it to secure a foothold in Latin America. Looking forward, the company will likely continue to accelerate its international expansion and, while this could be a drain on profits in the short-term, Yelp could see significant gains in local ad revenues in the long run as it launches in new markets. As a result, the company expects revenue between $66 million and $67 million in the fourth quarter, slightly above analysts' forecasts, which tentatively pegged the company's sales at $64.9 million. Finally, the company separately announced a $250 million follow-on share offering, with an over-allotment of $37.5 million, which Yelp will reportedly use for "general corporate purposes."

EA Beats In FQ2 With Non-GAAP Revenue of $1.04B And EPS Of $0.33, Raises Earnings Guidance


Electronic Arts had non-GAAP revenue of $1.04 billion in its fiscal second quarter (2014), and non-GAAP earnings per share of $0.33. The street had expected Electronic Arts to earn $0.12 (non-GAAP), on, again, non-GAAP revenue of $978 million. The beat has sent Electronic Arts up almost 4% in after hours trading. Electronic Arts also raised its annual non-GAAP EPS guidance to $1.25 from $1.20. That's a mild upgrade, but one that is welcome. Electronic Arts is a very cyclical business. In its first fiscal quarter of 2014, it had non-GAAP revenue of $495 million, which was considered a beat. The market current expects Electronic Arts to post non-GAAP revenue of $1.8 billion in its fiscal third quarter, a period that includes the holiday sales cycle. The company expects non-GAAP revenue of $1.65 billion in the next quarter. The gap between street expectations and stated guidance is quite large. Investors are therefore expecting the company to best its guidance by a firm margin. Mobile, as with everyone, is a key part of Electronic Arts content strategy. For its fiscal second quarter, the company reported non-GAAP net revenue of $105 million. However, that figure is a mere 19 percent improvement on its year-ago quarter. Moving past the endless non-GAAP numbers, here are the bare-bones figures for Electronic Art's quarter: GAAP net revenue: $695 million GAAP net loss: $273 million GAAP EPS loss: $0.89 The company ended the quarter with $1.4 billion in cash and equivalents. The question for Electronic Arts is now plain: Can the company best its own (non-GAAP) revenue guidance in its fiscal third quarter? If it fails to, it will dramatically fall short of investor expectations and will suffer a strong correction. We'll know in about three months.

AbbeyPost, An Etsy For Plus-Size Clothing, Has Its Eye On Democratizing Fashion


Like so many other startups, AbbeyPost grew out of a personal pain. Founder Cynthia Schames had become fed up with the lack of stylish plus-size clothing available to her. “I was having the hardest time finding clothes. I live in New York,” Schames says. “If I can't find stuff to wear, where is everyone else shopping?” AbbeyPost, which launched in January, is an online marketplace for plus size clothing from designers and independent boutiques. Schames explained that while there are great boutiques around the country that carry quality designs for plus size women, they're only great for locals. The aim for AbbeyPost is to become, like Etsy, a large-scale, inclusive discovery forum that gives women more options than they might find on their own. The target audience is the “Pinterest mom.” She's in her thirties to early fifties, Schames says: most likely a mother, and she leads a busy life, regardless of whether or not she works. The company is almost entirely bootstrapped for now, having received one small angel investment of $25,000. They are now looking to raise a seed round of about $350,000, Schames says, in order to make additional hires and build a native mobile app. As will happen with any marketplace that has yet to hit its stride, the product listings are still a mix of professional lookbook shots and low-fi, stretched-out images. The lingerie category, for instance, errs on the side of the latter, while curated collections float the better quality photos to the top. While AbbeyPost is still working on building up its density of sellers, Schames has plans for the site that go beyond a simple marketplace. Because sizing can be so inconsistent between brands, AbbeyPost is developing a feature that uses a 3D body scan of the woman to make fit recommendations based on her exact measurements. A user takes two webcam photos of herself - one from the front, one from the side - which helps the tool's algorithm generate numerous data points on her unique shape. Those images are immediately discarded, Schames noted, and they aren't used to generate an avatar. The scan gathers over 115 data points on the body, and, when done correctly, the measurements can be accurate to within a quarter-inch. “We quickly and accurately get sizing information that becomes a permanent and persistent profile so we know what size she is and her measurements every time,” Schames says. The longer-term vision for AbbeyPost's body-scanning tech is to build a custom apparel brand that uses those data points to create digital patterns tailor-made for each individual woman. It's a big goal, and Schames says it wouldn't launch any time in the near future. But the team thinks they have worked out a supply chain that allows them to turn around an order in fewer than three weeks. Creating a plus-size pattern doesn't simply mean scaling a straight size proportionally, Schames says, because a woman's curves become more exaggerated as s he goes up in size. Small differences between women's shapes become clearer, making it harder to fit more women into one standard size. The appeal of custom clothing begins to make sense then. “Ultimately, what we really are is a social e-commerce platform, brand, and data platform,” she says. That last bit - data - means widgetizing AbbeyPost's fit formula out to retailers so that shoppers can determine the best size for them for any given brand. Again, that's about a year out, Schames says. AbbeyPost is interesting for its technology. More important, though, is the stance it takes with regard to plus-size women and fashion. With AbbeyPost, Schames is also hoping to make a dent in a retail culture that treats plus size shoppers as second-class citizens. The site has an internal social network, in which users can post photos of themselves in their new outfits. It's like an image review, Schames says, but the focus is less on the product and more on engaging the individual. Plus-size women often miss out on the social aspects of shopping, whether they're going out with their straight size peers or shopping online. “Shopping is inherently a really social activity. If you're the fat girl in the group, you don't really have that opportunity. You stand in the corner going, ‘Where are the earrings? Because that will fit me.' That sucks,” Schames says. While AbbeyPost is out to cultivate a body positive culture online, plus-size fashion has in recent years seen a shift toward e-commerce - and not in a good way. Old Navy yanked its plus-size options from stores in 2007 to feature them as online exclusives, while Saks removed Salon Z from its flagship store in 2011. Target, Schames says, has also been pushing more and more of their plus-size items online. “We already know by their admission that some retailers don't want fat people in their stores. Abercrombie & Fitch. Lululemon,” she continued. “There may be an element of that. It [the decision to move plus size online] may come down to simple economics of sales per square foot, but that stretches credibility because a majority of women are plus size or above.” A bright spot in the startup world is Rent the Runway's recent addition of plus sizes to their dress rental offerings, which required convincing straight size designers like Carmen Marc Valvo, Badgley Mischka, and Theia to create equally beautiful designs for the plus-size shopper. Recognizing that vast, underserved market is one of the smartest things Rent the Runway has done to date, and to ignore the plus size shopper is just bad business. And, as Tim Gunn pointed out, to then serve her only unattractive options is plain insulting. “Nobody's being honest with this consumer, and nobody's encouraging her to own where and when and how she is. And I think that's part of my job,” Schames says. “One of the things we really like to say at AbbeyPost is that at AbbeyPost, we love who you are. And we mean it.”

Nokia Had A Stunning Q3 In North America, With Device Volume Up 367% From Last Year


According to its most recent earnings report, Nokia appears to have finally The Nokia Lumia line of smartphones was released in November of 2011, during the company's fourth quarter. In that period, the company later noted that it sold “well over 1 million Lumia” devices. In the following quarter, the first of 2012, Nokia did not disclose Lumia sales figures. In the second quarter of 2012, it reported 4 million units were sold during the period. From this we can surmise that Nokia enjoyed modest, but quickly expanding sales rates of its Lumia line. However, in the third quarter of 2012, sales fell to 2.9 million units, a very troubling point for the company. Nokia blamed it on having “shared the exciting innovation ahead with [its] new line of Lumia products.” From that point, Lumia sales have expanded in each sequential quarter, from 4.4 million in the third quarter of 2012, to 8.8 million in the third of 2013, Nokia's most recent quarter. Here's the chart, so you have the full picture: So, global growth has been steady, and in the fourth quarter Nokia could sell more than 10 million Windows Phone devices, breaking that threshold for the first time. Contrasted, however, with its North American sales, you have to appreciate the company's struggle: While its global operation was expanding and ticking right along, North America was stuck. Introduction of the Lumia 520 (and 521) on the low-end, and the Lumia 1020 on the high-end, coupled with the software improvements in Windows Phone 8, appear to have unlocked, at last, the keys to growth in the United States. This matters because if Nokia failed to ignite growth in this market, it would not be out of the question that its carrier support would have been in jeopardy. And once lost, such support is difficult to rekindle. Therefore, the strong quarter implies that Nokia's long-term prospects in the U.S. market are at least alive. – Nokia's Windows Phone strategy has long been panned by critics as doomed, helpless, hapless, perfidious, and expensive. Microsoft's Windows Phone strategy has been pilloried in the same way. Now that the two are joining teams, the opprobrium can be aimed at a single entity, saving time. Kidding aside, Nokia – which is the de facto Windows Phone OEM, period – proved that it could ship volume on the platform several quarters ago. But the North American question lingered: Could Microsoft's own platform sell in its home market? After years of slog, the answer is now a firm maybe. So what to look for? Sequentially rising Lumia volume in North America. If Nokia moves, say, 2 million devices in the fourth quarter in the region (and again notes that the rising device figures are based on smartphone sales), we'll have a ball game.