Strategies For VCs To Increase Startup Success Odds

Editor’s note: David Teten is a partner with ff Venture Capital and founder and chairman of Harvard Business School Alumni Angels of Greater New York. Follow him on his blog or on Twitter @dteten.

Lots of venture capitalists claim to add value to the companies in which they invest. But how do they do it?  And does it really produce better returns for their investors? We recently wrapped up a study on best practices of venture capitalists in creating portfolio company value through operational support, exploring exactly these questions.

We found that certain VCs are aggressively building out a focused portfolio operations skill set and recruiting more people with operational backgrounds. Based on a range of sources, we believe that most funds with well-developed portfolio operator models have top-quartile returns (typically above 20 percent IRR in the relevant time periods).

Given the mediocre median returns of the VC industry and the high failure rate of the typical entrepreneur, techniques to improve the odds of success are highly needed.

 Adding Value

VCs can add more value to their portfolios through team building, operations, perspective, skill building, customer development, analysis, and the network (the “TOPSCAN” framework):

Team Building: Designing and recruiting for a startup’s most important asset, its human capital base.

Operations: Enhancing administrative, accounting, legal, and technological capabilities.

Perspective: Strategy, competitive positioning, defining the target market, and scoping the product.

Skill Building: Building the right skills, especially for senior management.

Customer Development: Identifying and gaining access to the right customers.

Analysis: How entrepreneurs measure, understand, and report the performance of their early-stage companies.

Network: The cheapest and sometimes most value-added service that an investor can provide is access to his/her network, particularly to potential investors and acquirers.

The portfolio operator strategy has potential to boost returns.

A company’s need for these services is greatest in its earlier life. However, even among private-equity funds that invest in late-stage, stable, established companies, we see many such funds building portfolio operations groups. Later-stage, private-equity firms clearly believe that their portfolio companies benefit from a similar pool of operational talent, despite the fact that their companies are far more complete in their management and developed in their strategy than the companies backed by VCs.

The portfolio operator strategy has potential to boost returns. Our thesis that greater participation correlates with higher returns is consistent with two other formal studies: “Returns to Angel Investors in Groups”, and “Prediction and Control Under Uncertainty: Outcomes in Angel Investing.” Both studies found that higher levels of angel participation in investments, as measured by number of hours per week interacting with a portfolio company, correlates with higher returns.

In addition, VCs (particularly those focused on Internet investments) live in a social-media-enabled world where almost every investor has a very visible public resume on LinkedIn; many have a public blog; and blogs and sites such as TheFunded.com closely track their behavior. Social media footprints make it exceptionally easy for entrepreneurs to assess precisely how much value a potential investor can add and reach out to those investors specifically. Deal origination becomes very easy for firms with a strong reputation for adding value.

Current Practices

VCs have five main resources with which to increase portfolio company value: cash, brand, industry network, funding network and in-house expertise.

1. Cash. A significant operational toolkit is expensive. Given the low average returns of the VC industry, and the modest assets under management of VCs relative to the assets under management of a typical private-equity fund, many VCs simply cannot afford to invest meaningful dollars in a large portfolio acceleration infrastructure.
2. Brand. The fact that a company has been funded by a well-respected fund/partner alone can increase a company’s odds of success, because that brand makes it easier for the company to attract talented employees and follow-on investors. By definition, startups have no brand at launch.
3. Industry network. One entrepreneur observed about one of the most prominent VCs in America: “[X]’s default response to all problems is to email introduce you to 3-10 people in his network who can help.”
4. Funding network. Later-stage VCs pay careful attention to the earlier funders in a company, using the reputations of the funders as a proxy for their own diligence. The next-best asset to a large pool of capital in-house is the ability to easily help raise more capital in later rounds from past syndicate partners.
5. In-house expertise. VCs can provide consulting, accounting, or operational resources, both directly from their own staff and from preferred service providers.

All of the resources above are synergistic, i.e. more success creates more cash, which strengthens the brand, which increases the industry and VC network, which strengthens the in-house expertise. This is one of the key reasons that venture capital is one of the few asset classes in which past performance is predictive of future results.

There are three common categories of VCs in terms of attitude and practices toward investing and portfolio company support: financiers, mentors, and portfolio operators, ranked in order of increasing level of operational involvement.

1. Financiers: “I’m a banker, not an operator.”

The financiers are the most traditional group of VC investors; one said he views venture capitalists as “glorified commercial bankers.” Financiers believe that the most value added by a VC comes from carefully scrutinizing early-stage companies, generating leads, conducting a thorough due diligence process, and eventually investing the right amount of capital at the right valuation and structure. The relationship to their portfolio after making the investments primarily consists of monitoring.

Of course, the financiers are not completely detached from what is going on in their portfolio companies, but they tend to focus more on formal interaction. Examples include VCs taking board seats, suggesting structures for board meetings, and providing monthly reporting templates.

The most perfect example of a financier is Correlation Ventures, which some have called the “Moneyball” of venture capital. Even though the firm’s two managing partners are both former startup entrepreneurs, Correlation never takes board seats and has only modest operational involvement. They gain access to investment opportunities by offering a very rapid investment decision (two weeks or less), with a very low hassle process, leveraging their large investment in predictive analytics. They have $165 million in assets under management. Other examples are Right Side Capital Management and i2x.

2. Mentors: “I try to be the CEO’s consigliere.”

Most VCs can be classed as mentors. Mentors believe their fund and personal assets can improve the performance of the ventures they invest in. The most important asset they bring to the table is their personal and professional network, which they leverage to strengthen portfolio companies. Throughout our research, we observed many examples of this: introductions to potential customers, suppliers, partners, and executive-level employees.

What distinguishes the mentors from the portfolio operators, however, is that they deliberately choose not to institutionalize the support they give to their portfolio companies. Support is almost always initiated by the entrepreneur and does not involve preset systems or processes. As one mentor said, “My entrepreneurs have my cell and email address â€" and I always answer them.” As a result, mentors assessing a new investment need to be comfortable that their input will be heard by the companies â€" that the CEO is coachable.

In the past few years, there has been a surge of small, solo-GP funds, typically with under $40 million in assets. Although in many cases, these solo GPs have strong operational track records, they typically have limited resources to engage in-depth with their portfolio, and so would normally be classified as mentors.

3. Portfolio Operators: “We have a structured, standard process for adding value.”

Portfolio operators agree with mentors that their unique personal and fund assets can be used to develop their portfolio companies. However, unlike mentors, portfolio operators do this in an institutionalized and structured way. Whereas mentors tend to be reactive in their support, portfolio operators pro-actively look for ways to improve the performance of their investments through systems and processes. We know of numerous instances in which companies took lower valuations to win portfolio operator VCs as investors versus other categories of VCs, because the entrepreneurs so valued the resources a portfolio operator could bring to bear. In other cases, entrepreneurs have offered board options or other sweeteners to highly attractive portfolio operator VCs.

The most common service portfolio operators offer their portfolio companies is recruiting assistance. Most of the VCs in this category not only provide personal references to interesting candidates, but also use their own websites as job boards for portfolio companies. First Round Capital takes this a step further by running a program in which they recruit MBAs for internships and full-time positions with their portfolio companies.

We find that portfolio operator VCs are building teams of employees that are unusually large for the VC industry and include many people with strong operational backgrounds. These larger teams tend to be accompanied by a transition toward pyramidal organizations, which are increasingly becoming the norm in portfolio operator funds.

As Harvard Business School professor Noam Wasserman discusses in his paper “Upside-down Venture Capitalists and the Transition Toward Pyramidal Firms: Inevitable Progression, or Failed Experiment?”  VCs have long been structured as “upside-down pyramids” in which general partners outnumber more junior employees. This phenomenon is attributable to the fact that VCs are “knowledge intensive firms in which esoteric expertise predominates over standard knowledge.”

Moving Toward The Pyramid

The need to exchange rich information in the course of pre-investment activities (e.g. due diligence) serves as a dis-incentive to expand the firm beyond a certain size or adopt formal, pyramidal structures. Those structures are, to a certain extent, an emergent property of large and/or complex organizations, in which workers become specialized and need to structure their interactions more. Although later-stage VCs have the luxury of concrete quantitative data, early-stage VCs rely on more tentative information for which analysis cannot be easily delegated.

Post-investment activities such as operational support for portfolio companies, however, can be delegated and benefit from economies of scale. Pyramidal structures are the most efficient means of systematizing and delivering this support due to the benefits of leverage, delegation and specialization.

Three trends are accelerating the transition to pyramidal models and operational focus. First, the cost of starting a company has come down dramatically, and as a result young entrepreneurs with modest capital and only angel/Series A investors can find themselves leading significant businesses beyond their management capacity.

Second, the rate at which startups can scale has increased dramatically, so the judicious application of VC resources can have an exponential impact.

The pyramidal model ultimately won out in more mature knowledge-intensive industries.

Finally, we have moved to a more transparent world in which both VCs and entrepreneurs find it easier to conduct due diligence. This puts pressure on VCs to differentiate themselves substantively. The pyramidal model ultimately won out in more mature knowledge-intensive industries, such as law and investment banking, and the same may occur in venture capital.

Snapshots: Portfolio Operators

An example of a portfolio operator VC is Andreessen Horowitz, which has raised $2.7 billion since it was founded in 2009 and has made investments in Airbnb, Facebook, Skype, Twitter, Instagram and many other highly successful startups. They give their portfolio companies structured support through one of their four operational support teams, focused on executive recruiting, marketing/PR, technology, and business development. The fund has seven partners and employs more than 40 operational staff, helping portfolio companies with preparing negotiations, making client introductions and providing preferred suppliers.

My firm, ff Venture Capital, has a similar strategy; it has made more than 160 investments in more than 60 companies since 1999. As of October 2011, the firm had $38 million in assets under management and today has 16 full-time employees (including three general partners). We offer our portfolio companies resources, including a job board, recruiting assistance, strategy consulting, a mentor network, a pool of service providers, a portfolio executive community and accounting services.

First Round Capital is another example, with seven partners with more than $400 million in assets under management and 22 full-time employees. FRC has a wide range of initiatives to support portfolio companies. For example, they organize yearly CEO, CFO and CTO summits in which executives of all portfolio companies in certain roles come together, as well as a related online community. Because of the internal, closed nature of the platform, it has become a trusted source for advice (e.g. “Our finances are out of control and we need a CFO yesterday; what should we do?”). They offer the portfolio free access to a ‘venture concierge,’ a lightweight consulting and research service that helps their entrepreneurs save time on research-related tasks.

Google Ventures has over 115 portfolio companies, makes 60-80 investments per year, and is investing north of $100 million per year. They leverage both Google’s vast resources and a dedicated 54-person team, including 10 partners. Joe Kraus, partner, observed, “We believe helping companies plays more of a role than most people give it credit for.”

Given the economic constraints of the industry, how else can VCs systematically increase the odds that their portfolio companies will be successful?

This is a summary of the full original study, which was co-authored with Adham AbdelFattah, founder and CEO of CircleVibe and a consultant on leave from McKinsey & Co.; Koen Bremer, a consultant with the Boston Consulting Group in Amsterdam, Holland; and Gyorgy Buslig, a consultant with McKinsey & Co. in Budapest, Hungary.  

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Payleven, The Samwers' Square/PayPal Rival, Ramps Up Security With FSA Authorization, MasterCard mPOS Scheme

There is no single mobile payment company in Europe that has reached the scale and stature that Square has in the U.S., where the Jack Dorsey-led startup processed $1 billion in transactions in 2012. Payleven, one of the many mobile payment startups that want to take that crown on the other side of the pond, is today announcing two more steps in its strategy to convince businesses and consumers to sign on. Payleven, part of the Samwer brothers’ Rocket Internet stable, has been authorized as a payment institution by the UK’s Financial Services Authority; and it is also now part of MasterCard’s mPOS program â€" two moves to improve its credibility as a secure payment provider.

This makes Payleven the first company of its kind to get FSA certification in the UK â€" but not the first to get FSA certification overall. As one example, iZettle, a well-backed competitor, has FSA approval as a financial institution in Sweden because that is where it’s headquartered. In Europe, approval by one FSA typically extends that approval to the rest of the European countries in the EEA footprint.

“We are very proud to be a trusted and fully authorised financial institution in Europe. Payleven is the first mobile payment provider to receive [UK] FSA authorisation, so it’s a major milestone for the company,” said Alston Zecha, co-founder and COO of Payleven, in a statement.

The mPOS certification from MasterCard, meanwhile, puts Payleven on par with a number of other mobile payment providers who have already signed on to MasterCard’s authorization scheme, which lays out best practices for merchants and payment providers, not just in terms of unifying standards but keeping security. It’s another move to improve Payleven’s credibility as a secure payment provider, with MasterCard regularly publishing a list for merchants to see which payment services are able to process different types of transactions.

Payleven last year became the first of the mobile payment companies to unveil a chip-and-pin terminal to process card transactions.

These are required in the UK for payments on the Visa network, which in Europe now only accepts secure PIN entry as a way of authenticating users making mobile-phone based payments. Since debuting the chip-and-PIN reader last year, Payleven has been working hard to set itself apart from the Samwer “clone” stereotype.

“We are Payleven. We are more than a clone. We are not replicating but we are creating something differently,” Zecha told TechCrunch last year.

Indeed, not only has Square not yet opened for business here in Europe, but it has yet to role out solutions that would work with chip-based payment cards, focusing first on the magnetic stripe that is more common in its core U.S. market, among other point of sale services. eBay-owned payment provider announced in February that it would be offering its Here mobile payment service in the UK, its first European market, later this year. It will also come armed with a separate device for entering PIN identification to work with a merchant app on a mobile device.

In general, what FSA authorization means is that payment providers have been evaluated and approved by the financial regulator, and that they are meeting a required degree of security and risk management. Certifications of this kind help persuade skeptical businesses that they can put their trust into mobile payment startups not to run off with their money or compromise their security at any point. Longer term, it will also mean that Payleven (and others that get FSA approval) will be able to launch more extensive services directly to their enterprise customers without needing to use third parties who have FSA approval for the task.

In the UK, the FSA has been under fire for its role (or lack of role) in various financial problems over the last several years â€" one of the most recent being an admission of its slow response to the Libor interest-rate fixing scandal. On the other hand, the FSA has also been making some moves to make it easier for startups like Payleven to get into the transactions game. Just this week, it announced proposals to make it easier for startups to establish themselves as banks â€" needing just €5 million ($6.4 million) in capital for FSA approval. In other words, approval from an FSA may be a mixed blessing, but an important one all the same.

Payleven has to date publicly disclosed some $15.2 million in funding, with backers including NEA, Holtzbrinck Ventures and Italian businessman/politician Silvio Berlusconi’s family fund.

Payleven is a device that attaches to your smartphone or tablet with iOS or Android which allows credit card processing.

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Rocket Internet GmbH invests in the development of innovative companies in the internet industry. Their passionate, dynamic, highly motivated team works to establish promising business models in the market.

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Bitcoin: How An Unregulated, Decentralized Virtual Currency Just Became A Billion Dollar Market

Hang around in the tech industry long enough and you or someone you know will be heard saying, “that’s so crazy it just might work.” Two years ago, if you’d have told me that an open-source, P2P currency would soon be a thriving, billion-dollar market, I would’ve told you that you were on a lonely bus headed to CrazyTown, U.S.A. But today, Bitcoin officially became a crazy idea that’s actually working.

Today, all the Bitcoin in circulation â€" some 10.9 million of them â€" have collectively crossed the billion-dollar mark. As it is wont to do, the value of Bitcoin (and its exchange rate) has fluctuated wildly today. At one point, it hit a dollar value around $78, then pushed into the mid-nineties. As of this minute, it’s hovering around $90.

Okay, it’s still a tiny fraction of Google’s market cap, but this is something â€" especially for a largely unregulated, decentralized virtual currency. (Say that three times fast.) The world’s most popular controversial crypto-currency, mind you.

Bitcoin supporters will scoff and tell you that this is no news, and that Bitcoin has been alive and thriving for years. In fact, it first appeared back in 2009, and has been slowly gaining steam since. But Bitcoin has largely remained outside the realm of mainstream media attention, because no one has been quite sure what to make of it. Is it a passing fad, a hilarious geek-driven phenomenon, or the real deal?

In fact, it has really been relegated to the realm of the super geeky, or seen as the currency of anarchists or crazy digital libertarians. The black market marketplace known as Silk Road, which allows pretty much anyone to anonymously sell “alternative products” (i.e. large quantities of one’s drug of choice), uses Bitcoin for its currency. Something which hasn’t exactly helped Bitcoin’s “cross over” appeal.

And geeks have had a point: Eventually, with the increasing popularity of P2P networks, virtual currency and digital marketplaces, it was only a matter of time before these entities would collide and a virtual currency of record would emerge. No government control?! Even better!

Bitcoin crossing the $1 billion threshold may not seem like much, but if anything, it seems to be a sign to anyone listening that the crypto-currency is ready to be taken seriously. Of course, there are still a lot of concerns, as John Biggs laid out in 2011.

But why has Bitcoin become a billion-dollar market?

First off, startups are beginning to carry the torch. As Alex wrote yesterday, Expensify announced that it is now supporting Bitcoin “to give international contractors an alternative to PayPal and the high fees associated with the service.” Reddit has jumped on the bandwagon, too, along with WordPress and Namecheap, among others.

Adam Draper, the founder of Menlo Park-based accelerator, Boost VC, recently announced that the team would be focusing on Bitcoin-focused startups for its summer class. As he laid out in a post today, one of the other big reasons Bitcoin is beginning to take off â€" besides, of course, that it allows secure digital transactions without transmitting personal information â€" is that investor confidence is growing. Bitcoin startups are beginning to raise, and Draper claims that their fund is far from being the only one that’s interested.

What’s more, the government has finally realized that it needs to start taking virtual currency seriously and develop a strategy for dealing with these types of currencies. FinCEN recently put out a series of “Guidelines,” which will inform future regulation, but also works to establish trust and credibility for virtual currency, particularly Bitcoin.

There’s also the climate of the global financial markets, particularly the panic in Cyprus, after the government froze its citizens’ bank accounts following its bailout. Many believe that the tenuous financial markets in Europe and beyond create an atmosphere that’s ripe for a digital panacea like Bitcoin.

Of course, the other side of the Bitcoin argument is that the perfect storm of unsteady financial markets, and skyrocketing growth of virtual currency (plus hype), is creating a perfect storm that equates to Bitcoin just being one giant bubble waiting to pop.

What’s more, as my colleague Greg Kumparak pointed out today, Bitcoin itself is still in a tenuous place, policy-wise. There’s a good chance that a decentralized, unregulated market is going to scare the pants off the government once it’s fully cognizant that Bitcoin is a billion-dollar market â€" and growing. “It’s the easiest ‘this funds terrorism’ scare argument the government will ever have to make, so a big battle within the next year or two is pretty much guaranteed,” he said.

Whether phenomenon or legitimate institution, Bitcoin is definitely making a bid for the latter â€" and one to be taken seriously. Either way, feel free to marvel at how a virtual currency that appeared practically out of thin air (created by some phantom mathematician/economist) just became a billion-dollar market.

See you on Silk Road?

Bitcoin is a digital currency created in 2009 by Satoshi Nakamoto. The name refers both to the open source software he designed to make use of the currency and to the peer-to-peer network formed by running that software. Unlike some other digital currencies, Bitcoin avoids central authorities and issuers. Bitcoin uses a distributed database spread across nodes of a peer-to-peer network to journal transactions, and uses digital signatures and proof-of-work to provide basic security functions, such as ensuring that bitcoins...

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Global IT Spend Will Rise 4.1% To $3.8 Trillion In 2013, ‘A Calm Ocean With Turbulent Currents', With Mobile Driving Growth

Gartner has just released its annual projections on worldwide IT spend over the next two years â€" arguably the analyst house’s most wide-ranging report covering sales in hardware, software, enterprise and telecoms. The overall trends continue to point up: globally we will see $3.8 trillion spent across all categories, a rise of 4.1% on 2012. That’s a sign of slight recovery on a year ago: growth in 2012 was only 2.1%. Mobile and enterprise services are fuelling a lot of the good news, with declines in areas of legacy technology like PCs and voice services. Gartner further notes that the same growth will largely continue into 2014.

Telecoms services will continue to account for the biggest proportion of IT spend, but they are also a sign of how times are changing. They will account for $1.69 billion of spend, nearly 45% of the total.

But within that, there are some declines as well as growth. Specifically, fixed voice services â€" which not only have been commoditized through competition, but are becoming less used by consumers who opt for mobile-only contracts â€" will continue diminish in size. Meanwhile, mobile data services, driven by trends in smartphone and tablet usage, continue to grow. These two trends will offset each other, resulting in “roughly flat” growth over this year and the next.

The rise of mobile is being felt in other categories, too.

Hardware sales â€" noted as “devices” in Gartner’s table below â€" will be the fastest-growing category this year, up nearly 8% to $718 billion, or 19% of all IT spend. PC sales, however, will be flat, and printer sales are in decline â€" another two signs of how there is some pain and woe still to come for some companies, especially legacy incumbents, in the tech world. (The current state of play with Dell being one specific sign of that.) Instead, the rise in devices is down to the impact of mobile, Gartner notes, and specifically the rise in smartphone usage, which has been so strong that Gartner actually raised its previous device forecast of 6.3% growth.

Gartner cautions that while nothing is going away soon, wider trends in mobile, cloud, social media and information management are affecting all categories of spend, which will have a knock-on affect in making some companies stronger, and some weaker, in the next several years:

“The global steady growth rates are a calm ocean that hides turbulent currents beneath,” writes John Lovelock, research vice president at Gartner. “The Nexus of Forces â€" social, mobile, cloud and information â€" are reshaping spending patterns across all of the IT sectors that Gartner forecasts. Consumers and businesses will continue to purchase a mix of IT products and services; nothing is going away completely. However, the ratio of this mix is changing dramatically and there are clear winners and losers over the next three to five years, as we see more of a transition from PCs to mobile phones, from servers to storage, from licensed software to cloud, or the shift in voice and data connections from fixed to mobile.”

To give some more color device side, analysts at IDC yesterday released figures that estimate that this year some 60% of “smart connected devices” shipped in 2012 were smartphones, with that proportion rising to 67% by 2017. PCs, meanwhile, just under 30% of devices were PCs (desktop and laptop combined) in 2012, but with that number dropping down to a paltry 17% by 2017. Tablets will make up the difference, rising from 10.7% to 16% by 2017.

After devices, Gartner notes that enterprise software will be the second-biggest growth segment, up 6.4% to $297 billion â€" still making it a relatively small category at just under 8% of all IT spend. Gartner notes that database management systems, data integration tools and supply chain management are three growing areas, while IT operations management and operating systems are seeing “lower growth expectations.” Again, the shift away from these latter two categories are signs of some of the impact of cloud-based services, which take away both the need for on-premises management and software investments.

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Gartner Says Worldwide IT Spending on Pace to Reach $3.8 Trillion in 2013

Analysts to Discuss Latest IT Spending Outlook During Complimentary Gartner Webinar on 2 April

STAMFORD, Conn., March 28, 2013 â€" Worldwide IT spending is projected to total $3.8 trillion in 2013, a 4.1 per cent increase from 2012 spending of $3.6 trillion, according to the latest forecast by Gartner, Inc. Currency effects are less pronounced this quarter with growth in constant dollars forecast at 4 per cent for 2013.

The Gartner Worldwide IT Spending Forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets. For more than a decade, global IT and business executives have been using these highly anticipated quarterly reports to recognise market opportunities and challenges, and base their critical business decisions on proven methodologies rather than guesswork.

“Although the United States did avoid the fiscal cliff, the subsequent sequestration, compounded by the rise of Cyprus’ debt burden, seems to have netted out any benefit, and the fragile business and consumer sentiment throughout much of the world continues,” said Richard Gordon, managing vice president at Gartner. “However, the new shocks are expected to be short-lived, and while they may cause some pauses in discretionary spending along the way, strategic IT initiatives will continue.”

Worldwide devices spending (which includes PCs, tablets, mobile phones and printers) is forecast to reach $718 billion in 2013, up 7.9 per cent from 2012 (see Table 1). Despite flat spending on PCs and a modest decline in spending on printers, a short-term boost to spending on premium mobile phones has driven an upward revision in the devices sector growth for 2013 from Gartner’s previous forecast of 6.3 per cent.

“The global steady growth rates are a calm ocean that hides turbulent currents beneath,” said John Lovelock, research vice president at Gartner. “The Nexus of Forces â€" social, mobile, cloud and information â€" are reshaping spending patterns across all of the IT sectors that Gartner forecasts. Consumers and businesses will continue to purchase a mix of IT products and services; nothing is going away completely. However, the ratio of this mix is changing dramatically and there are clear winners and losers over the next three to five years, as we see more of a transition from PCs to mobile phones, from servers to storage, from licensed software to cloud, or the shift in voice and data connections from fixed to mobile.”

The outlook for 2013 for data center systems spending is forecast to grow 3.7 per cent in 2013, down 0.7 per cent from Gartner’s previous forecast. This reduction is largely due to cuts to the near-term forecast for spending on external storage and the enterprise in the economically troubled EMEA region.

Worldwide enterprise software spending is forecast to total $297 billion in 2013, a 6.4 per cent increase from 2012. Although the growth for this segment remains unchanged from Gartner’s previous forecast, this belies significant changes at a market level, as stronger growth expectations for database management systems (DBMS), data integration tools and supply chain management compensate for lower growth expectations for IT operations management and operating systems software.

While the outlook for IT services remains relatively unchanged since last quarter, continued hesitation among buyers is fostering hypercompetition and cost pressure in mature IT outsourcing (ITO) segments and reallocation of budget away from new projects in consulting and implementation.

The global telecom services market continues to be the largest IT spending market and will remain roughly flat over the new several years, with declining spending on voice services counterbalanced by strong growth in spending on mobile data services.

More-detailed analysis on the outlook for the IT industry will be presented in the webinar “IT Spending Forecast, 1Q13 Update: The Nexus of Forces Effect on Spending.” The complimentary webinar will be hosted by Gartner on 2 April 2 at 4:00pm UK time. During the webinar, Gartner analysts will look at where IT spending is headed in 2013. To register for the webinar, please visit http://my.gartner.com/portal/server.pt?open=512&objID=202&mode=2&PageID=5553&resId=2359126&ref=Webinar-Calendar.

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data upon which to base its forecast. The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available at http://www.gartner.com/technology/research/it-spending-forecast/. This Quarterly IT Spending Forecast section includes links to the latest IT spending reports, webinars, blog posts and press releases.

Gartner Consulting provides fact-based consulting services that help their clients use and manage IT to enable business performance. Gartner’s 1,200 analysts and resarchers offer consulting services and advice to business executives in 80 countries. In addition, Gartner publishes original research and answers client questions.

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Audioair Wants To Unlock Audio From Muted TVs Everywhere And Give Your Local Bar A New Way To Advertise

If you’ve ever been in a sports bar with your friends to watch a big game, you’ve likely run into the “muting” problem. While the bar may have two dozen TVs, each might be playing a different game, and there’s either too much sound or none at all. At most local restaurants, bars, airports and health clubs, you’ll find TVs muted for this very reason.

Some have opted to, say, put speakers on tables in their bars to project sound more directly, but the problem is that this puts a damper on any socializing you planned to do with your friends and fellow bar mates. Might just be me, but repeatedly yelling “WHAT DID YOU SAY?!” over the audio can detract from the viewing experience. After all, you’re really there to enjoy some quality time with friends â€" the thrilling play-by-play isn’t the only attraction.

Durango, Colorado-based Airborne Media is hoping to offer another solution with a new product called Audioair, which aims to turn smartphones into your own personal listening device to help unlock sound from the tens of millions of muted TVs out there. Essentially, Airborne wants to put its audio solution anywhere an un-muted TV would add to the location’s overall noise pollution â€" every airport, hospital, sports bar, stadium or health club in the U.S.

But how does it work, you ask? Users download Audioair’s free mobile app, which taps into the sound system (via Wi-Fi) at any Audioair subscriber location, allowing you to determine which TV you want to listen to, projecting the audio through your smartphone so you can listen from your pocket or through headphones. Airborne is currently piloting its solution at 47 sites, including sports bars, restaurants, student health facilities and even a large resort casino, and plans to be in 800 locations by the end of the third quarter.

To help get Audioair off the ground, the startup has raised $3 million in seed funding, $1 million of which is convertible debt, from a handful of local investors. But, let’s be honest, creating a personal audio channel for muted TVs has some appeal, but it could be subject to a fairly limited use case. It’s not difficult to imagine significant others and friends the world over not being particularly pleased when, in the middle of a conversation, you throw in your headphones to hear the local play-by-play.

Plus, Airborne has to convince enough restaurants that it’s a good idea to invest in their on-premise hardware and buy another TV for their in-venue display. How does it hope to accomplish that tall order?

Airborne believes that its technology can help change the consumer experience within a multitude of these noisy environments and bridge the gap between mobile devices and customer engagement displays. So, not only does it want to provide a better audio experience for the end user, it wants to act as an interactive social networking experience and dedicated, location-based advertising network for bars, restaurants and any local venue.

The service allows users to chat with other people in the venue directly through the Audioair app, along with checking-in and adding content from their phones to the sports bar’s local network. This adds a social networking element to the end-user experience; in the meantime, Audioair allows venues to display local advertising on the user’s phone or on a 42-inch digital display that they install in the bar.

At the outset, the startup has been offering discounts on the cost of the TV (and the installations themselves) to reduce friction for early customer acquisition, but the idea is that â€" once/if this catches on, bars will be paying for the cost out of their own pockets.

Audioair charges a monthly fee, which will be an add-on to the fees bars are already paying to DirectTV and so on for cable, but the idea is that the product can help venues reduce the perceived (and actual cost) by helping them attract more customers who stay on the premises longer â€" because they can actually hear the sound of the game.

On top of that, bars can distribute on-site promotions through Audioair’s digital display and mobile app, facilitating increased spend, while engaging customers in an in-bar, interactive social and ad network.

Venues can then share in the ad revenue gained from their displays, while receiving analytics on how customers are interacting, what they’re sharing and so on. They can also disseminate the needed info publicly or privately as needed (think personalized hospital, airport alerts).

The Airborne Media founders said that they see revenue coming from three buckets â€" advertising, installation and licensing â€" with revenue initially coming from subscription and installation and advertising revenue becoming the main stream over time. As to the licensing piece, the team says that they’ve filed for eight patents on their system (which are currently pending), which could help them manufacture some defensibility for a model that could become vulnerable to competition from big players as prices on hardware continue to drop.

Audioair also tries to sweeten the deal by providing an optional on-site server to manage the local, network and cloud-based content and, by splitting a portion of the advertising revenue with the owner, the startup wants to help them cover the cost of the subscription fee and grow their own revenues over time.

The Audioair creators also believe they have a leg up on the competition because it has inked a partnership deal with one of the original commercial DirecTV installers, which has exclusive territory rights to a big chunk of real estate â€" from Florida to Washington, D.C. It provides DirecTV service and support to over 5,000 restaurants and will be helping Airborne make installations throughout its territory, which the founders believe will be critical to helping it expand its footprint.

Again, it seems like a niche play, but if something like this is going to work, it could be a multi-pronged approach that’s not only an audio helper but a local information and advertising system, complete with hardware support and revenue sharing. There are 38,000 sports bars and restaurants in the U.S., 28,000 health clubs and plenty of airports, casinos and college campuses where Audioair could potentially have some appeal.

If the startup is able to keep its prices from stifling those venues that are willing to give it a try â€" and surmount the potential “this is too complicated” reaction from local venues â€" while offering real value-add on the advertising side (and some better design of its mobile interface), there’s a chance Audioair could have some real legs.

Founded By Early oDesk Employees, Freelancer Marketplace Rev.com Raises $4.5 Million Series A

Rev.com, a freelancer marketplace founded by early oDesk employees, is today announcing $4.5 million in Series A funding led by Venky Ganesan of Globespan Capital Partners. Also participating in the round were Craig Sherman (former COO of Ancestry.com) and Austin Ligon (founder of CarMax). All three are now members of Rev.com’s board of directors, following the round which closed back in August 2012.

The company had actually been quietly operating under different branding for the past couple of years, but today it’s now publicly launching as “Rev.com.” It’s a name that co-founder and CEO Jason Chicola explains is meant to reflect the company’s focus on using technology to increase the turnaround speed on customers’ projects.

Chicola says that the idea for Rev.com was inspired by his time at oDesk, a well-known freelancer marketplace. He started the site with co-founder Josh Breinlinger, also of oDesk, but who is no longer involved at Rev.com day-to-day. (He’s currently a venture partner at Sigma West, but still sits on Rev.com’s board.)

“We saw work-from-home as a huge trend â€" and we think it’s barely in its first inning â€" but we also saw ways to do it better,” says Chicola of the original inspiration. “What we observed is that the thing that makes work-from-home tough for businesses is that it’s really hard to manage workers who are far away.”

Businesses have a tough time interacting with people who are overseas and in different time zones, he explains. There is also the hassle involved with having to select the best workers from a large pool of possible freelancers, leaving business customers unsure of what the final results will be.

To solve the former challenge, Rev.com steps in to act as middleman, managing the freelancer workers itself. And as for the latter, it focuses on screening workers in advance, and proofreading their projects upon completion. The company doesn’t let in everyone like many freelancer sites do, but instead only accepts around 10 percent of those who apply. Applicants have to pass a formal screening process involving tests indicative of the types of jobs Rev.com offers. A second pool of pre-qualified freelancers works then makes sure that the quality of these workers’ efforts remain high by proofing and grading projects upon completion.

Today, the company is focused on two areas: audio transcriptions and translations. But it’s planning to grow its services lineup to include other popular work-from-home job types in the near future. Pricing for these services is displayed on Rev.com’s homepage. (It’s $1 per min. transcription; 12 cents per word business translation; $33 per page certified translation). Rev.com takes its cut of each project, paying workers a little over half of what it charges businesses for the work performed.

Chicola explains that what makes Rev.com different from other freelancer marketplaces isn’t just the way its business is structured â€" it’s the focus on developing an online technology platform that helps freelancers speed up and streamline their processes. For example, the transcription product that Rev.com offers freelance workers will have special features designed for their needs, like ways to rewind the audio by a set number of seconds, tools to quickly denote each speaker’s name while transcribing, ways to create shortcuts for words that appear often or are complex terms that could be easily misspelled, and more.

Plus, he adds, “by having this transcription environment in our browser, the worker doesn’t have to download the file separately and upload it somewhere else…they can just play and go.” Chicola says its platform is about “half done,” but continuing to build out the product is one of the key things the new funding will be put towards.

In order to attract talent, Rev.com focuses on giving workers more jobs and helping them complete those jobs more quickly, though Chicola admits that Rev.com doesn’t pay the most on a per-job basis.

“On most sites that are out there, workers spend half their time or more looking for work â€" that’s time they’re not getting paid,” he says. “We designed our whole system to keep them busy. If we can keep them higher utilized, they can make more money per week than somewhere else.” He also notes that at Rev.com, the goal is also to offer freelancers a “nice” place to work, where they can make friends, have a good social environment, where they think it’s fair, and where they can get recognized for their work.

Today, Rev.com translators make on average around $1,000 per month part-time, while some of the busier workers make up to $4,000 per month. Transcriptionists tend to make around a quarter of that.

As noted above, Rev.com had quietly launched its services in 2010, beginning with translations, followed by transcriptions in late 2011. These were under different branding (FoxTranscribe and FoxTranslate). During this open beta of sorts, the company grew its user base to include a combined total of around 1,000 regular business customers, including Pfizer, VisaNow (global immigration), U.S. Bank, NYU, Land O’ Lakes and Princeton University, as well as several government agencies, such as the National Park Service and U.S. Small Business Administration. On the transcription side in particular, 20 percent of its user base is the media, which uses it for transcribing interviews.

The company will continue its product development and hire additional engineers. Interested users can sign up here for Rev.com services.

Rev is a place to work for the best freelancers. Rev’s proprietary technology platform is built to create a great work environment for translators and transcriptionists, so we can deliver clients ever increasing speed and quality. Rev’s mission is to give more people the freedom to work from home. We are bringing the best of the office to our online workplace. We believe that attracting the best workers is the key to delivering great service to our customers.

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Ahead Of SXSW, Ride-Sharing Startup SideCar Prepares For Fight With Austin Authorities

By all accounts, next week’s SXSW Interactive conference should be huge for ride-sharing startup SideCar. The company will be partnering with a number of the biggest names in tech to provide free rides to and from parties being thrown during the event as a way to introduce the service to people who don’t live in San Francisco or have never tried out ride sharing. But recent actions by authorities in Austin could put a damper on the company’s coming out party.

SideCar is hoping to take advantage of the huge number of tech-savvy people descending on Austin next week as a way to educate people from around the country on the advantages of ride sharing. To do so, it’ll have a local community of drivers providing rides around town from 8:00 am to 3:00 am.

As part of the festivities from March 8 through March 17, SideCar will be giving free rides to and from some of the biggest parties during SXSW. That includes events from Twilio, Tumblr, Twitter, Livefyre, Mass Relevance, LinkedIn, The Raptor House, Text100, ShareThis, The Villa Austin, Tropo, Echo, The Backplane, Spotify, and Slacker Radio. (Yes, it’s quite a list.)

In addition to the parties, SideCar will be granting VIP access to some attendees during SXSW, giving them the ability to set their location as a free hotspot for three hours at a time. Those VIPs will be able to use the service to get free rides for themselves and anyone else going to or coming from “Spotlight” locations they’ve chosen. Those users will only be able to set one spotlight at a time, but anyone traveling to or from those destinations won’t have to pay to do so.

For anyone who’s ever tried to get around Austin during SXSW, the addition of a new fleet of SideCar drivers, in addition to the city’s licensed taxis, should be a welcome change. Due to the number of people who are in town over the course of the conference, taxis are generally in short supply.

But not everyone is excited about having a bunch of unlicensed drivers handing out rides around town. Earlier this week, SideCar received a cease-and-desist order from the city. And on Thursday, the Austin City Council voted to enable its police officers to impound the cars of unlicensed drivers who are found to be giving out rides for pay in violation of City Code 13-2-3 â€" i.e. the rule around operating licensed taxi services. That, of course, could put a damper on SideCar’s plans, as it relies on unlicensed drivers to make the service work.

Then again, Austin’s reaction to SideCar’s ambitious SXSW promo probably should have been expected. After all, the company entered the Austin market in part through its acquisition of local ride-sharing company HeyRide. And HeyRide was no stranger to controversy in the city â€" it too had a cease and desist issued against it by Austin authorities after it opened up for business last year.

Austin isn’t the first place where SideCar has faced scrutiny from local regulators or authorities. It got hit with a cease-and-desist order for operating in its home market of San Francisco last August, and later received a fine for violating the California Public Utility Commission’s charter party regulations. And on Monday, Philadelphia police impounded the cars of three SideCar drivers as part of a sting operation.

Despite the threat against its drivers, SideCar CEO Sunil Paul said the company won’t be altering plans for its big SXSW marketing push. It’s already discussed possible police action with drivers it has signed up in Austin, and has promised to support them by paying any fines incurred during the conference and providing legal help if necessary.

“We talked to our community of drivers there, and they are excited,” he said. “They are confident that what they are doing is right and they are excited to help support this rollout during South By Southwest.”

At the same time, SideCar is attempting to skirt around taxi regulations by paying its SXSW drivers as “brand ambassadors,” rather than compensating them based on the usual distance or time travelled while driving passengers around Austin. Since they’re being paid flat rates rather than per-ride, Paul doesn’t believe that those drivers should be in violation of the local taxi ordinance. Even so, he blamed Austin’s recent moves on pressure from the existing taxi lobby in the city.

“The complaints are coming from people with business models that they’re trying to protect,” Paul told me. But, he said, “the role of government is not to protect these business models.”

With all that in mind, a lot rides on next week’s SXSW promotion, as SideCar hopes to introduce its service to a whole new group of passengers from around the country. In addition to San Francisco and Austin, SideCar is in the midst of aggressive expansion to a number of new markets, including Seattle, Los Angeles, Philadelphia, New York City, Boston, and Washington, D.C. For riders in a number of those markets, SXSW might be their first experience with a SideCar, and the company is hoping that experience is a good one.

SideCar is a real-time ridesharing community that connects drivers with spare seats in their car to passengers who need instant rides across the city, via a user-friendly proprietary smartphone technology. It helps drivers because they use their own car and help cover the costs of maintenance - all while meeting people in the city. Meanwhile for passengers it makes it easy to get a ride, cheaper than alternatives, and gives them a unique personal interaction.

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The Evolution Of Google Reader Started With A Crash

Editor’s note: Jason Shellen is a former Googler and founding product manager of Google Reader. He is now co-founder at Boxer and advisor at Tapedeck. Follow him on his blog and on Twitter @shellen.

As part of Google’s recent announcement that it is shutting down Google Reader in July, I thought looking back at the history of how our beloved, but beleaguered, feed reader came to be, why we’ll miss it and what we really want in the future.

Back in the days on the Blogger team, we spent a lot of time thinking about how to get people blogging after they had signed up. However, when Blogger achieved critical mass, the need to model good blogging seemed less important since great writers, musicians, photographers and journalists were gravitating towards the form and showing the rest of us what made good blog content. The questions we began to hear from users changed from “How and what do I blog?” to “Where do I find the good ones?” and “How do I keep up with all of these great blogs?” Naturally, blog search and a blog reader or aggregator of some sort couldn’t be too far off.

Meanwhile, there was an ever-increasing number of good Windows and Mac desktop aggregators popping up (Feed Demon, NewsGator, Radio Userland and NetNewsWire). They were mostly made by great independent developers but didn’t have a web-app component until a few years later. Then along came Bloglines. It was the first feed aggregator that our Blogger team gravitated towards. It was very simple at first and gained more powerful features over time. But my personal frustrations were growing not just with Bloglines, but with some of the social integrations I wanted to see on the web.
I remember a very early version of Firefox had crashed, taking with it my open Bloglines tab and thus losing the 100+ items that it would surely “mark as read.” If I went back to Bloglines it would appear as if I had read all of those items, and there would be no way to catch up. I was upset!

I wheeled around in my chair in the Blogger bullpen and complained to Biz Stone: “I wish there were some sort of eye tracking that would tell which item I had read and saved my state!” He agreed with my wacky proposal. I continued to stew.

Aside from dreaming up features for products I didn’t control, I had spent a considerable amount of time at Google helping to form the cross-industry group that ultimately published the Atom feed format and Atom Publishing Protocol. We were pushing Atom to become a recognized Internet standard, with companies such as Six Apart, IBM and Macromedia onboard. When Blogger turned on Atom feeds for all of our millions of users, Blogger single-handedly became the No. 1 producer of feeds in the world. This was huge for aggregators, because for any of them to become mainstream, more content in a subscribable format was needed.

One beautiful wonderful thing happened along the way to creating Atom.

Atom was an effort to make feed reading and subscriptions more consumer friendly. If we were really successful with what we had built, we imagined a world where you didn’t need to market the plumbing of a technology to realize the benefit. Some who embraced RSS-only saw this as an opportunity to latch onto a brewing controversy or, worse, as the window to market RSS to consumers. The next few years would be a boring marketing landscape, as we saw orange and blue chicklets slapped up haphazardly around the web. In hindsight it’s easy to see that consumers understood words like “follow” or “friend” for content they wanted delivered regularly rather than “subscribe,” “RSS” or “Atom feed.”

One beautiful wonderful thing happened along the way to creating Atom. For a few years, I had kept a little side-blog right alongside my main blog at shellen.com. The main view showed larger posts, but I was using some server-side code to read a file I was publishing in another directory and display the second blog on the right-hand column. It was great for shorter posts, but I wondered if there would be a way to display an Atom feed alongside my blog instead of my slapped-together solution.

I wondered this aloud to Chris Wetherell one day in 2004, an engineer on the Blogger team.

“Say Chris, do you suppose you could display an Atom feed in JavaScript?” He took the challenge and “Feedless” was born. I dropped in a few files on my blog server and pointed it to my new Blogger-created Atom feed. It worked!

However, Chris wanted to show me something else. He quickly modified his first script into something that could display more than one feed into a beast that could blend items together. My mind raced and I saw the value immediately. We could create Blogger Friends, a page on Blogger where you could see all of the blog posts from your friends. LiveJournal had something like this years earlier but maybe you could even follow people who weren’t on Blogger? Before long this was all Chris and I could talk about, and plans began for Chris’ 20 percent project to become a full-fledged Google project in early 2005.

The “Goals and Objectives” section of the product plan for Project Fusion (an early codename for Google Reader) stated “Our goal is to build a robust web service and best-of-breed user interface for viewing subscriptions. We will be producing an API for read/unread state of individual posts on a per-user basis and will also build our feed viewer on top of this API.” Pretty geeky stuff. However, we also had a vision statement that was sufficiently less geeky and more jaw-droppingly, ambitious. “Our vision is to become the world’s best collaborative and intelligent web content delivery service.”

I’m sad to see it go but Google Reader shutting down isn’t a surprise to me.

As far as we were concerned, the text of blog posts was just the beginning of a content revolution. In fact that early codename, Fusion, was meant to be a hint of the future of how web content would be consumed, fused together perhaps in a new TV-like format.

The future was ripe with possibilities. Our little team was going to launch our product on Google Labs, which meant we could try wild ideas. We knew that Google Video was around the corner and YouTube was still an independent but promising site. We also knew that the Picasa acquisition would help bring fast photo embedding and display to the web. The possibilities were seemingly endless. Our short-term vision included tying all of this together in an easy-to-consume way that also allowed you to easily share it with friends and find or subscribe to more content from a search box powered by Google all from within our app.

In October 2005, Google Reader launched to 100,000 of our closest friends. The team pulled off some amazing feats in a short amount of time. We quickly learned that there was indeed a truly long tail of feed-based content. We experimented with audio, video and photo content displays. We became the relied-upon backend for iGoogle’s feed-based gadgets and had a Reader gadget on iGoogle that became one of my favorite ways to use Reader.

But in early 2006, it was clear to me that, while I was proud of what we were building, we weren’t likely to be that magical fusion of all things digital. I moved on to other projects at Google. Reader was and remains today a great delivery system of content you knew you wanted to see every day.

I’m sad to see it go, but Google Reader shutting down isn’t a surprise to me. The recent hiccups and fact that it remained separate from any other Google social efforts didn’t bode well for its long-term health. I’m certainly overwhelmed by the petition and public outcry. And who doesn’t love a good “Downfall” parody? But what is it that we’re responding to in Google’s decision to shutter Reader?

Reader was like TiVo for the web, appealing to completists and skippers alike.

Reader was an application that felt like you were in control of the programming. You could summon the content you told it to keep track of at your leisure. Reader was like TiVo for the web, appealing to completists and skippers alike. Read everything or read nothing. The choice was yours. When we started Reader, I envisioned something a little more like Google News that knew about your likes and dislikes and would program based on what we thought we knew about you. Indeed recommendations became a part of Reader in the past few years.

But it’s no surprise that Facebook and Twitter (who know an awful lot about what you like) are in a better position to deliver suggested content these days. They don’t explicitly put you in the driver’s seat of programming what you see. We rely on the people (or brands) we follow to act as filters. But it’s not that level of control we came to expect with Reader.

A feed reader lets you subscribe to known content. A feed reader lets you know about content you should subscribe to. A good feed reader lets you know what your friends are reading and gives you the opportunity to share. A smart feed reader displays content in a specific way based on the content and shows you only what you need to know and nothing you don’t. Perhaps the smartest of them all doesn’t need to care whether or not this content comes from a feed at all, toes the line between curating and creating content, and maybe already exists.

I’ve been asked a lot recently if an aggregator or feed reader is even needed these days and what should take Reader’s place. Certainly the folks at Feedly, Digg, Zite and others have promising efforts, but my recommendation is to build something that moves beyond the confines of reading or feeds. Just build the world’s best collaborative and intelligent content-delivery service.

[Illustration: Bryce Durbin]

Uber, Lyft, SideCar, And The So-Called Safety Problem

Uber is unsafe. Lyft, SideCar, and other ride-sharing services are unsafe. At the very least, there is the question of their safety for passengers. And why? Because they represent a new type of technology, a new way of doing things, and that is inherently scary.

Never mind that it’s more difficult to commit a crime using these new transportation services than it would be for a regular old taxi or gypsy cab driver. And never mind that these fears are being stirred up be the emergence of a single allegation over the past six months of one individual acting badly. Never mind all that, because a few people are apparently freaking out over the potential for new ride-sharing services to enable widespread criminal activity.

These fears are being driven by the resurfacing of a single case in Washington, D.C., where one of Uber’s drivers was accused of sexually assaulting a customer after driving her home. The allegation, which first came to light back in December, resulted in a driver contracted by one of Uber’s partners being arrested on Thursday. But he was soon after released without being charged.

And as a result, Uber itself has been accused of “letting the issue of safety slip.” The problem is, the company typically partners with third-party limo and taxi services to pre-vet drivers, doing background checks and ensuring that they have all the necessary licenses or permits. City to city, Uber drivers are required to abide by whatever local regulations are in their jurisdiction. If driving for UberBLACK, that means having whatever license or permit is required to operate a livery vehicle. If it’s UberTAXI, drivers need a local medallion to operate. Only in San Francisco â€" and last week, in Austin â€" does Uber operate a so-called “ride-sharing service,” where drivers don’t have those types of licenses or permits.

And that’s where things start to get tricky, when making the argument that Uber is somehow delinquent in its hiring practices. For the most part, Uber and its partners follow the same regulations all the usual cab or limo services do. Which is to say, if Uber’s regulations are soft, so are those that are followed by every other taxi or limo service out there.

Do a quick search on Google or Google News for “cab driver rape” and you’ll find no shortage of articles detailing such cases. What stands out about the news stories in those links is the unfortunate and sad truth that sexual assaults by taxi drivers are not as unusual as they should be.

But Uber’s got something that regular taxi or limo services don’t have. So do SideCar and Lyft. They have an identity system that connects a driver to a ride. They have rating systems to help determine which drivers are doing a good job, and which aren’t. They have feedback systems through which unhappy passengers can report something that went wrong. And, in the case of a crime, they have time, date, and ride logs so they can quickly identify perpetrators. Which means, if you were a criminal and somehow got through the pre-vetting process for any of these new services, you’d have to be an absolute idiot to commit a crime while on the job.

Hopefully, if you’re the type to try out new things, and you’re not scared by the idea of using technology to make your life better, that will provide some comfort to you.

Disclosure: TechCrunch founder and current columnist Michael Arrington is a general partner at CrunchFund, which is an investor in Uber.

Photo Credit: davidsonscott15 via Compfight cc

Uber, a San Francisco based technology startup is innovating at the intersection of mobile technology, car transportation & logistics. The Uber experience captures the elite limo experiences and transforms it into an on demand service that fits an efficient and modern lifestyle.

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SideCar is a real-time ridesharing community that connects drivers with spare seats in their car to passengers who need instant rides across the city, via a user-friendly proprietary smartphone technology. It helps drivers because they use their own car and help cover the costs of maintenance - all while meeting people in the city. Meanwhile for passengers it makes it easy to get a ride, cheaper than alternatives, and gives them a unique personal interaction.

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Accel Closes $475M Fund To Invest Mainly In Europe And Israel, Focusing On Its Series A “Sweet Spot”

Accel Partners has just this morning announced another hefty fund of $475 million. It’s the company’s fourth fund for Accel London and will be used for investments across a wide range of technologies â€" consumer Internet, big data, cloud, SaaS and mobile among them â€" and primarily companies in Europe and Israel, at all stages of investment but focusing mainly on its “sweet spot” of Series A.

The news comes on the heels of reports in February that Accel was preparing to close a fund of $450 million.

The rumors, in fact, started at the end of last year, but with much bigger sums: French financial paper Les Echos reported in December that Accel was raising a fund of about three times as much, with $500 million going to Europe. But Kevin Comolli, the Accel London partner that helped open the VC’s office in the city 13 years ago, says this was a misfire.

“There is absolutely no truth to that,” he tells TechCrunch. “This is the first and final close.”

He says that this latest $475 million makes Accel London the largest VC fund in Europe now focused on early-stage technology, with about $2 billion raised since 2000. Accel London IV will be used, Comolli says, to invest across every stage of the game, from seed rounds of $500,000 through to growth rounds of $50 million. “But our classic sweet spot will remain Series A,” he says.

In that sense, this fund is an interesting development in the wider discussion the tech industry has been having about the so-called “Series A Crunch.” Comolli would not give his opinion on whether he thought that Accel, or Europe, was bucking that trend â€" or whether in fact the crunch issue has been overblown, or whether emphasizing Series A rounds is because of the proliferation of too much seed money going to too many companies, now needing their next round to go on. Instead, he sees this as continuing interest in the wider investment opportunity for tech in this part of the world.

“It’s great news for the industry because of a perceived sense of shortage of capital in this asset class,” he says. “This is about Series A, yes, but also limited capital partnerships. I can’t speak to other people’s fundraising but it’s a powerful statement to raise this quickly and be oversubscribed.”

The new fund is also a sign that there continues to be money swimming around looking for landing points in the European and Israeli tech sectors. And it’s an international interest: some 65% of the capital in London IV comes from US investors, says Comolli.

He says that the new fund will see Accel expanding its geographical focus more. “We’re interested in Eastern Europe more, and the Nordics have also been very active for us,” he notes. Gaming juggernaut Supercell, he points out, has had the biggest revenue and profit ramp that Accel has seen in its entire history. (Accel was one of Supercell’s earliest investors.)

First investments to come out of the new fund will be made in the second half of this year.

Accel is one of the bigger VCs active in Europe and it has been active in a number of investments worldwide. Exits include QlikTech, Playfish and Kayak, which it says represent an aggregate market capitalisation of over $4 billion. Other startups in its portfolio of 500 investments include Alfresco, Angry Birds maker Rovio, Avito, CHECK24, ForgeRock, Gameforge, Hailo, Mind Candy, Showroomprive, Spotify, Supercell, Varonis and Wonga.

Full release below.

ACCEL LONDON CLOSES $475 MILLION FUND TO BUILD ON STRONG PERFORMANCE IN EUROPE

Accel’s total funds under management for Europe and Israel now at $2 billion

March 21st, 2013 â€" London: Accel Partners, the leading global venture capital firm, today announced the first and final close of Accel London IV, a $475 million fund focused on Europe and Israel. The fund was raised with unprecedented speed and demand.

Accel London IV will build on the firm’s success across the region and invest in early and growth-stage technology companies in Accel’s core areas of expertise, including consumer Internet, big data, cloud, SaaS and mobile.

“The fact that Accel London IV was raised in eight weeks and was significantly over-subscribed is a powerful endorsement of Accel London and the market opportunity in Europe and Israel from our world-class investors,” said Kevin Comolli, Partner at Accel London.

Accel London’s team has a strong track record of success, which reflects the depth, breadth and balance of its investment and operating expertise. Accel London’s recent success stories include QlikTech, Playfish and Kayak, representing an aggregate market capitalisation of over $4 billion. Its current portfolio includes some of the largest and fastest-growing private technology companies in Europe, including Alfresco, Angry Birds (Rovio), Avito, CHECK24, ForgeRock, Gameforge, Hailo, Mind Candy, Showroomprive, Spotify, Supercell, Varonis and Wonga.

“Accel’s latest fund is excellent news for the European market. The London team’s deep local knowledge and experience, combined with Accel’s global network of resources and Silicon Valley heritage, make it unique amongst venture firms, offering a distinct advantage to entrepreneurs looking for a partner to help build a category-defining, world-class business,” said Lars Björk, CEO QlikTech. An Accel investment, QlikTech’s listing on NASDAQ resulted in a return of over $400 million to the Accel fund, one of the largest venture returns in Europe.

Harry Nelis, Partner at Accel London, said, “Europe has a strong talent base, including a growing community of repeat entrepreneurs, whose success, experience and ambition continue to fuel our ecosystem. Innovation and entrepreneurship are thriving in Europe and with technology hubs developing across the region, the next billion-dollar company could emerge from anywhere.”

The Accel London investment team includes Kevin Comolli, Sonali De Rycker, Bruce Golden, Harry Nelis, Philippe Botteri and Michiel Kotting.

Accel Partners is a global venture capital firm with offices located in Silicon Valley, New York, London, China, and India. They typically make multi-stage investments in internet technology companies. Founded in 1983, Accel Partners has a long history of excellence and innovation in the venture capital business and is dedicated to partnering with outstanding entrepreneurs and management teams to build world-class companies. Accel today invests globally using dedicated teams and market-specific strategies for local geographies, with offices in Palo...

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March Madness Gets A Full Court Press From The Tech World, As Pickmoto, IFTTT, & More Cater To Hoop Lovers Online

As you’ve no doubt heard by now, March Madness is upon us, with the NCAA tournament officially kicking off tomorrow. Yes, March Madness brings April gladness, as the saying goes. In fact, difficult as it may be to fathom, the NCAA men’s basketball tournament turns 75 years young this year.

There are many ways to celebrate and commemorate this annual event, which I would argue is one of the best in all of sports. Of course, there’s bracketology, betting and making enemies in your office by stealing the pool; in short, there are a number of tech-related threads floating around the NCAA Tournament this year, and below we’re taking a quick look at some of the more memorable examples.

But first, you’re probably wondering how to watch the madness live, online. The officially sanctioned way to do it is via March Madness Live, a digital offering from the NCAA, which includes iOS and Android apps and gives you audio and streaming video access to every game in the tournament.

Unfortunately, the experience is a little bit different this year. Last year, whether on the web, iOS or Android, users could pay for access to all 67 games, but in 2013, you’ll have to authenticate with your cable login info before you can watch games appearing on TNT, TBS and TruTV. On the bright side, games airing on CBS will be available for free â€" as these are the later and arguably more important games in the tourney.

You’ll be able to view games via NCAA.com, CBSSports.com or BleacherReport.

Pickmoto

A young Bay Area startup called Pickmoto wants to make it easier for basketball fans to create pools, make picks and goad their friends into making horrible picks. The free-to-play app, which is  available for the iPhone and in a mobile-optimized web app for non-iPhoners, adds a spin on the familiar NCAA Tournament bracket, allowing fans to make picks round-by-round instead of having to pick the winners of every game before the tournament starts.

As I’m usually scrambling to make all of my picks at the last second (Thursday right before the first game starts), I, for one, am a fan of this approach. It levels the playing field by allowing you to adjust after each round â€" meaning there are no more first-round bracket busters with Pickmoto. Users get to make picks after seeing how teams are playing and form pools mid-tournament just for Sweet 16 games, for example.

Pickmoto initially launched its app in the fall as a way to offer simpler sports betting for the mobile experience, beginning with NFL and the NBA. Rather than designing a more detailed, stat-centric app à la awesome predictive tools for journalists and fantasy sports enthusiasts like numberFire, Pickmoto wanted to avoid replacing the fantasy experience and make a simple sports betting tool for everyday fans.

The new app goes for the same ease-of-use feel, offering an easy way to run your office pool, replacing the old group email and spreadsheet approach. Now the startup offers pools, chat functionality and wager management, prizes, stats, leaderboards and curated news, which have led to 15K downloads in the last two weeks and over one million picks to date.

Pickmoto at home here.

Bracket Management

Other bracket managers include, beyond NCAA March Madness Live, ESPN Bracket Bound 2013 for the bracket-focused gamers (which includes news, video analysis and game stats) and Simple Bracket for those who want simplicity, an experience devoid of ads and no gimmicks. You will need a Twitter account, though.

IFTT Meets ESPN

IFTTT, which stands for “if this, then that,” is an awesome service that allows you to connect all your accounts to its service (like Facebook, Instagram, Twitter, Dropbox, etc.) and create recipes that make them work together in clever ways. Basically, you can set triggers for specific actions (like, if I post an Instagram, automatically save it to Dropbox) in umpteen different ways.

This week, IFTTT announced that ESPN had created a channel that, once activated, allows you to follow and get automatic updates on breaking news from ESPN’s writers, along with your favorite teams. The channel is your “source for in-game updates and final scores for all your top teams,” the channel’s description reads. Of course, you see where this is going: There are tons of ESPN-related recipes therein, including those focused on the NCAA Tournament, like “Text me Men’s NCAA Basketball breaking news,” for example. Pretty cool. Thanks, IFTTT. Bless you.

Google Embeds Brackets In Search

You’ve probably already noticed this, but just in case you’ve been using Bing or Yahoo, Google is now embedding the NCAA Tournament bracket at the top of results for a number of tournament-related search terms. The bracket pops up first if you search for keywords like “Basketball bracket,” “March Madness,” or “NCAA tournament,” for example. As you would imagine, the embedded bracket instantly “gives you each game’s round, teams, rankings, date, and time, score, and winner.” TC’s Josh Constine has the full story here.

YouTube’s Celebration of 75 Years

YouTube recently launched a new channel called NCAA OnDemand, which is set to become home to scores of clips and highlights from this year’s tournament. What’s more, the channel will also include a bunch of playlists, including upsets, best dunks, buzzer beaters, etc. Ryan has the full story here.

How To Watch From Work Or From Outside The States

While March Madness will be streamed live to viewers in the U.S., international viewers may not be so lucky. And, for the sake of productivity, there’s a chance your friendly local employer may block access to some of those sites. So, the same could go for you if you’re looking to watch the game while on the job. The word is that 30 percent of corporate IT workers have said their company will block streaming this year.

One option for both scenarios is to use AnchorFree’s Hotspot Shield VPN, which sets up a virtual private network to hide your IP address and allow you to access CBSSports.com, etc. The company said that visits to NCAA.com and CBSSports.com through Hotspot Shield increased in average by 710 percent during March Madness 2012, for example. Find more in Chris’ coverage here.

Other Apps Worth Checking Out

Back in November, ex-Googler Nikolai Yakovenko launched Chadwick, an AI-based app that attempts to reduce the noise of our social feeds and deliver immediate coverage of live games to your phone via text and push notifications. Chadwick has been updated for the NCAA tourney, and it shows a whole ton of improvement. Check it out here.

SportStream is another great app if you’re looking for that realtime, second-screen social media experience. The app feeds you a stream of tweets, video, Instagram photos, Facebook posts, play-by-play, and box scores on the games you’re following. A useful tool for March Madness fans. [More here.]