All posts by Michael Carney

Four years in and highly profitable, ZipRecruiter hauls in $63M in its first ever funding round

Pallet of Cash

When Ian Siegel and his co-founders began to build ZipRecruiter in 2010, the goal was a lifestyle business. Today, after four years of bootstrapping the business to profitability and what by any measure would be described as astonishing growth, the SaaS SMB recruiting company announced its first ever outside funding: a massive $63 million Series A round.

The round was led by Institutional Venture Partners (IVP) and included participation from Basepoint Ventures, and Industry Ventures. IVP principal Eric Liaw will become the company’s first and only external director, alongside Siegel and his three co-founders, Joe Edmonds, Willis Redd, and Ward Poulos. The round included some secondary liquidity for founders and early employees, although the company declined to reveal further details.

The decision to raise capital didn’t come easily, according to Siegel, ZipRecruiter’s CEO, who said the company first “dipped its toe in the water” this January after fielding plenty of inbound interest in prior years. But when the company’s first quarter performance outpaced even its own lofty internal expectations, fundraising was again put on hold with the thought that profit might be enough to fund the next level of growth.

“The reality is that the market has just so fully embraced our product that we feel that we have to be a good steward of that product and not sacrifice quality and customer experience because we’re capital constrained,” Siegel says. “We need to be building our product not for tens of thousands of users, but for hundreds of thousands. Bootstrapping leads to scrappiness, but it often means you’re building an MVP solution at every turn. We started to feel some strain based on the velocity of our growth.”

ZipRecruiter helps small- and mid-sized businesses (SMBs) compete with Fortune 500s in the recruiting sphere by automating job posts distribution across 50 online job boards and offering a back-end candidate tracking and management solutions. The company has “tens of thousands of customers” and says that it’s on pace to exceed 100 percent revenue growth this year, a rate that will put it close to if not over a $100 million run rate by year’s end. On the other side of its marketplace, ZipRecruiter boasts 4 million active job seekers and sends out more than 14 million job alerts per day, matched algorithmically based on geography, category of interest, and skill set.

The problem, however, has been that ZipRecruiter has a number of high-performing marketing channels that it can’t fully address due to capital constraints, Siegel says. With new customers comes additional customer support staff and related infrastructure, forcing short-term trade-offs based on cash flow constraints.

“No matter how much we increased marketing it returned phenomenally,” Siegel said. “Eventually we were forced to examine the choice between that and hiring. We always go back to, ‘do what’s best for the customer,’ which in this case meant bringing on outside capital.”

Siegel describes the company as spoiled for choice when it came to venture firms. But the decision to go with IVP came down to style and experience. “IVP is stylistically so great of a match for us, and they have real acumen in high growth SaaS businesses,” he says. Basepoint, on the other hand, was a more of a personal relationship. The newly formed seed stage fund was founded by former Rustic Canyon Partners partners Nate Redmond and David Travers, both of which were “around the kitchen table” when the ZipRecruiter idea was first taking shape, Siegel explains.

Unlike most high growth technology firms, ZipRecruiter has been profitable for the majority of its existence, wildly so, in Siegel’s words. More rare is that the company anticipates maintaining this status going forward, even as it invests in continued growth. The company has 140 employees today and plans to grow that headcount considerably, with nearly all new hires taking place in the Santa Monica area. The company is in the process of moving into new office space along the city’s 3rd Street Promenade, an all too familiar occurrence in recent years amid the torrid growth.

“It’s rare you see a business reach the scale, growth and profitability of ZipRecruiter and the company’s success to date is a testament to the entire organization,” says IVP’s Liaw in a statement today. He later adds, “With 28 million SMBs estimated to employ approximately 50% of the US workforce, we believe the market opportunity for ZipRecruiter is enormous.”

Recruiting is not a terribly sexy category and the SMB market has been the bane of many startups’ existence. Add to this that ZipRecruiter’s competition is household names like the notoriously inexpensive, but no frills Craigslist and Monster.com and it’s hardly a sure bet that the company will be able to sustain its early momentum. The company’s founders and investors, however, don’t appear very worried.

“We expect this funding to amplify approach we already have,” Siegel says. “A lot of what we’ll do now is plan for scale, and put more people and systems in place to make that transition to the next level smoothly. We’ll also begin to think more thoughtfully about build versus buy or partner. The truth is we’ve really built a great product and customer satisfaction is really high. The next challenge is really increasing awareness. Nobody is in a rush to achieve liquidity. We’re all on board to maximize this opportunity we have in front of us.”

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







CA Senator votes against Uber, despite conflict of interest, then promptly gets a DUI

uber_liability

When judges are asked to preside over a case involving family, or any similar conflict of interest, they are expected to recuse themselves. For California state Senators, apparently the same standard doesn’t apply.

Last Thursday, San Diego Democrat Ben Hueso voted in favor of a bill that would make it far more difficult for ride-sharing companies like Uber and Lyft to operate within the state. The problem? As first reported by the Sacramento Bee, Hueso’s brothers own a cab company: San Diego-based USA Cab. The brothers and USA Cab have collectively contributed nearly $9,000 to his political career, campaign finance records show.

Hueso tells the Bee:

“I worked in the cab industry for 15 years, so I’m an expert. Much like an attorney would carry a bill on law, or a doctor would carry a bill on health care, I thought I would be the perfect.”

While Hueso is right that lawmakers often rely on prior experience to guide their legislative activities, the direct competition between his brothers’ company and these ride-sharing upstarts, and the immediate benefit his brothers stand to gain from the passage of this law make this situation more unsavory than most. Hueso’s is one of two competing bills in the California Senate. His, CA-AB1234, would increasing insurance requirements for ride-sharing companies. A second, unrelated bill would increase background check requirements, preclude drivers with histories of credit card fraud, and require the companies to participate in a additional DMV programs.

The passage of either of these bills would be a major blow for Uber and Lyft, and a major coup for the badly wounded taxi industry.

But conflict of interest wasn’t Hueso’s only blunder in the last week. Adding insult to injury, the very next day after the above vote, the state Senator was caught drunk driving. California Highway Patrol Officer Julie Powell tells the Bee that Hueso was seen going in the wrong direction down a one way street. The Senator was booked into jail at 3:27 a.m, and jail records show his blood alcohol content exceeded the legal limit of 0.08 at that time, although the CHP declined to release the precise figure.

The news was much to the delight of Uber CEO Travis Kalanick:

If only Hueso knew of an alternative to driving drunk, perhaps one that could be called at the push of a button from his smartphone. The Senator has apologized publicly for the drunk driving. No word on whether he’s ashamed of being a hypocrite and a nepotist.

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







With another Uber driver robbed in LA, questions mount about safety of ride-sharing apps

uber-muggings

Uber made headlines last week for announcing that it would soon launch in Tel Aviv, seemingly in disregard for the fact that Israel remains mired in a month-long (decades long, really) conflict in Gaza. But one doesn’t need to look nearly that far to find the company’s drivers dodging bullets.

Case in point, a gunman robbed an Uber driver at gunpoint early this morning in Los Angeles, taking his credit cards and drivers license – news reports make no mention of whether his Uber-issued iPhone was also taken, but this has been a common occurrence. While fleeing the scene, the attacker then shot and robbed an unrelated pedestrian.

Across the country in Atlanta, Georgia, four men reportedly ambushed an Uber driver last week as he was cleaning his vehicle after dropping off a load of passengers. The masked criminals were “brandishing guns” and stole the drivers’ wallet and mobile phone (again no mention of whether this was his personal phone or an Uber-issued device).

This is hardly a rare occurrence. A Google search for “Uber driver robbed’ turns up more than 380,000 results from across the US. Los Angeles, Atlanta, Memphis, Seattle, DC, Ohio, and Virginia are all represented on the first page.

As we reported last week, Uber drives in Los Angeles have been the victims of a spate of attacks recently. Uber drivers and some members of the LAPD have their own theories about who’s behind at least some of these attacks, pointing the finger at Taxi companies upset over rising competition. To be clear evidence is thin, and this is little more than a theory at the moment. Further, the attack earlier this morning does not appear to fit the MO of a coordinated, intimidation-focused attack.

The more pressing takeaway is that being a “future of transportation” driver is starting to look no safer than driving a classic Taxi – in other words, not safe at all. As I noted last week, a 2007 Seattle PI article describes Taxi driving as among the most dangerous occupations in the US, writing:

Since 1980, 1,030 taxicab drivers died on the job. They suffer the highest homicide rate of all occupations. In 2005, taxicab drivers were estimated to be 18 times more likely to die on the job than other working Americans. The Occupational Safety and Health Administration reported in 2000 that 183.8 taxicab drivers per 1,000 were injured from assaults or other violent acts.

More concerning, is that the very smartphone apps that have made Uber and competitor Lyft so disruptive may be at the same time making their drivers more vulnerable. For a criminal looking to target Uber or Lyft drivers specifically, it’s as simple as opening up the app and viewing the real-time locations of nearby vehicles on a map. There’s an argument that ride-sharing drivers should make less attractive targets than traditional taxis given that they do not accept cash – all payment is handled through in-app credit card processing. But if they’re easier to find, that may be enough to turn these drivers into popular targets.

As it stands today, Uber, like any employer (er, hirer of independent contractors) should be worried about ensuring its drivers’ safety. If this trend continues, the company may need to start worrying about the very mobile apps that drive its entire business model.

[Illustration by Brad Jonas for Pando]

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







Murdoch’s BSkyB opens a SF office in search of tech investments and partnerships

bskyb

There’s a new strategic investor making the rounds in Silicon Valley looking for deals at the intersection of technology and content. Like nearly all other strategics, this group is making promises of “synergies” and “value adds” and “leverage.” Unlike most investors, however, history suggests it might actually be true.

BSkyB (Sky), which is the UK’s biggest pay-TV broadcaster, and is owned by Rupert Murdoch, is opening an office in San Francisco with the express purpose of finding technology investments and partnerships. Manning that post is the company’s former Director of Product Management & Marketing and newly minted VP of Business Development Hilary Perchard, an 11-year veteran of the Sky organization who moved to the Bay Area in March.

“I really drew the short straw in the office, huh? They asked me to move to this place where the weather’s nice and there are smart young people everywhere building amazing companies,” Perchard says, apparently unaware that, like London, SF isn’t exactly known for its sunshine.

Sky has been early to a number of major technology trends over the last decade, including mobile, broadband, TV everywhere, and internet connected in-home hardware, Perchard says. In many cases the firm has developed its offerings in these categories internally, but the success of several recent investments has seemingly strengthened the argument in favor of buy, rather than build.

Perchard is clear that partnerships are at the forefront of this strategy. Sky will very willingly write a check to get involved with a new technology, but rather than a simple return on investment, the company is looking to learn and to source products and services that it can deliver to its consumers in the UK and Europe. To which Perchard adds, emphatically, “We have no desire to come into the US. We view it as kind of a messy market.”

One of Sky’s most successful initiatives has been, its NowTV OTT (over the top) content offering, which today contains 60 channels and reaches 3 million monthly subscribers.

“Like most new technologies we’ve explored, we found OTT to be additive not substitutional to our more traditional offerings,” Perchard says. “Our customers appreciate the flexibility around length of subscription, the channels that they can watch, and the option to do it where and when they choose.”

It was NowTV that led Sky to make its first startup investment. Eager to offer its subscribers a hardware device from which to stream this content to their televisions, the company first looked into building something itself. The conclusion was that it would cost too much and take too long. So Sky approached Roku in pursuit of a white-label partnership. After some negotiating, the firm agreed to invest in Roku’s Series E round (and later Series F) and the NowTV box was born. Perchard describes NowTV as a completely separate brand, akin to Mini alongside BMW.

“Our CEO said, ‘If we can do this with Roku, there must be many, many other examples of where we can do it,’” Perchard says. “Everybody else always says to me, ‘Let’s do another Roku’ – something that allows us to really kick start a business.”

He continues, “We go at new technology hard, we always have. Our approach to innovation is to take an attack strategy, which is very different than the approach of many of the cable companies in the US, where they seem to prefer to take a defensive strategy and try to fend off attackers. Maybe it’s because we still consider ourselves a relatively small, regional business. Going forward, we expect that more and more innovation will come from outside our business, increasingly from the West Coast of the US.”

Sky’s other big bet is in Jaunt, a Palo Alto-based cinematic virtual reality company. At just over one year old, the company is still in the R&D phase, but Sky has already participated in three funding rounds (Seed, A, & B) and is beginning to produce test content for the format, including shorts in the Dance, Drama, Comedy, Boxing, Sports, and Music genres.

“They’re still perfecting the tech. We started out thinking of this as a three-to-five-year project, but in the last six months, that timeline has started to feel like it’s contracting,” Perchard says. “We’re starting to form some views on what this technology medium would be good for.”

Sky’s investments generally range from the low hundreds of thousands of dollars to the mid-single-digit millions, Perchard says, depending on the stage of the company and the status of any parallel commercial relationship. As should be evident from its involvement in Roku and Jaunt, Sky is intent on backing companies for which it sees integration potential, be it in the near or mid-term. Put another way, these aren’t financial investments, in the purest sense. The goal across all these deals, according to Perchard, is to keep UK and eventually European consumers thinking that if you want the best paid TV has to offer, than Sky is the only answer.

“Increasingly, we’re finding our sweet spot is around the junction of content and technology – Silicon Valley doesn’t entirely get that junction,” Perchard says. “We will still pursue things across all of our strategic themes, but that can take a little longer because we do have this sweet spot and this strategic advantage.”

Those themes that Perchard mentioned are: OTT and content discovery, Ad-Tech, and growth opportunities like internet of things, gaming, and security. It’s the latter area that has contributed most significantly to Sky’s growth in recent years.

Over the last several years, Sky has grown its subscriber base from just 10 million to 11.5 million, Perchard says. But in that same time, the company has increased its products and services on offer from 10 million to 30 million (although this number seems oddly high and it’s unclear as to what exactly qualifies as a product). In other words, once a customer is enrolled in any level of service, Sky is eager to increase the number of things it sells them. For many Valley startups, these 11.5 million subscribers might start to look like fish in a highly strategic barrel.

“If there’s a business that looks really good, but is overly focused on a big exit in the near term at the expense of building a real business, that wouldn’t be really good for us,” Perchard says. “We look at businesses for two opportunities: things where we can learn about something in nascent stages (Jaunt), and things where we want to build a big commercial relationship (Roku).”

That’s an attitude that would seem at odds with the mentality of traditional VCs who are very much focused on achieving big exits. But Perchard argues that hasn’t been the case in his experience, and VCs have been eager to bring Sky into deals, if for nothing else than for the global expansion potential.

“Most often, we take small minority stake in these businesses,” he says. “And we’re certainly not trying to slow them down. Actually we tend to be the one chomping at the bit to integrate their technology, in the UK and Europe. We certainly don’t put any constraints on startups in terms of where they can do business and when. That’s not fair and certainly wouldn’t endear us to the venture community. We don’t mind if they’re working with other companies, even our direct competitors.”

Strategic investors and corporate VCs don’t always get a lot of love in Silicon Valley. They can be thought of either as dumb money or as somewhat mercenary, intent on leveraging their involvement with a startup to learn and better their own business, often with disregard for the startup’s best interests. But Sky is adamant about breaking that stereotype. Whether it can do so successfully, only time will tell.

In terms of what companies would be a good fit for potential investments going forward, Perchard points to an interesting, albeit unexpected place. “There are an interesting subset of businesses that have become really successful in US, but haven’t grown internationally. We find the UK is often a good stepping off point. We can also help US businesses test things in the wild without launching in the US first.”

At the end of the day, this is all about getting ahead of the next technology wave, something that Perchard and his team describe as the global convergence of TV and the Internet. With much of the creativity and innovation in this area occurring in and around Silicon Valley – or at least within the portfolios of the investors based there – it would seem to be the right place for Sky to start its shopping spree.

[image via TNW]

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







Matrix partner Dana Stalder a leading candidate for PayPal president, source tells Pando

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Matrix Partners’ Dana Stalder is one of the leading candidates to take over as President of PayPal, Pando has learned from a well-placed source.

We’ve so far been unable to confirm the report with executives from eBay (we’ll update this story if we do), but if his place on the short list for the top job is confirmed, it’s a nice endorsement for Stalder, who is a good friend of former PayPal President David Marcus.

Far more interesting, though, is what it says about the question on everyone’s lips this week: Is eBay about to spin out PayPal?

Spoiler: Unlikely.

Stalder has been a general partner at Matrix Partners since 2008 and prior to that was at eBay and PayPal from 2001 through 2008. In his four years at PayPal, Stalder held the title of SVP of Product, Sales, Marketing & Technology at PayPal, and before that was VP of Internet Marketing & Business Development at eBay. Early in his career Stalder was a VP at Netscape and a manager at Ernst & Young. (Stalder could not be reached for comment, we will update this story if we reach him.)

According to Stalder’s bio on his own website, he “led the expansion of [PayPal] away from solely facilitating purchases made by its parent company, eBay, and oversaw all aspects of PayPal’s global operations.”

While at Matrix, Stalder has invested in a number of financial technology companies including ZestFinance and Zong. He’s done well as a VC, but not quite superstar well. He is on the board of directors of Zendesk, Gilt Groupe, JustFab, ApartmentList, Quiri, and QuinStreet.

But while not the biggest exit, his experience at Zong is particularly relevant. It was PayPal’s acquisition of Zong in 2011, that eventually landed the company’s founder David Marcus the role of CEO at PayPal, until his resignation in June of this year. Indeed, the entrepreneur testimonial on Stalder’s Matrix profile is from none other than Marcus, reading:

Dana literally helped me transform and accelerate our business from the minute he joined Zong’s board of directors.

Dana is first and foremost a phenomenal operator turned venture capitalist. This gives him a huge edge as he’s been close to the fire, and he’s a great judge of talent. I particularly appreciated his directness and style that enabled us to have very meaningful and efficient conversations.

David Marcus complimenting someone on “directness” is like a fish complimenting your swimming. Stalder is clearly not a man who you should ask “Do I look fat in these pants?”

Simply put: Stalder is cut from the same cloth as the current PayPal management team. His hire would be a strong sign to investors, employees, and developers that eBay CEO John Donahoe is planning on continuing to run the same David Marcus playbook. And that playbook didn’t include a spin out– much to Marcus’s chagrin.

Stalder is known in the Valley, but hardly a global tech name. Which, if rumors of his possible next move are true, is exactly the point. He’s the guy you hire to lead PayPal as a division of eBay, not as a separate, high profile public company. His strength is in deeply understanding the PayPal that exists now, and the ex-Zong team who set it on the current trajectory, not in managing quarterly earnings calls.

His place on the short list would be another signal supporting what we wrote the other day: That while eBay’s John Donahoe knows he needs to spin PayPal out eventually, there are serious reasons why he is hesitating right now.

The report also raises the question of what this means for Braintree CEO Bill Ready. Ready is widely viewed as the preferred choice for Braintree and PayPal insiders and would seem to be a natural candidate if the plan is, in fact, to stay the course. Ready and Donahoe are effectively co-running PayPal today as this CEO search unfolds. For him not to land the appointment would call into question his long-term role at the company.

That matters for developers, as Ready and his team have been their champions within PayPal. Braintree was bought — in part– because it did a better job courting them, and as a result all developer programs across PayPal now report to Ready.

While he wouldn’t comment for this story, Ready has told Pando on numerous occasions previously that he was thrilled to work under Marcus and that the former CEO’s leadership was a big reason he ultimately decided to sell to PayPal. He has also said he didn’t envy Marcus’s Herculean task of changing the PayPal culture. But with the top spot vacated, it’s hard to imagine he’d be content remaining in second position… for long.

It’s entirely possible that neither Ready or Stalder end up with the PayPal job. It’s also possible the board is conducting parallel searches if they are still actively considering spinning PayPal out. The quicker they decide, the quicker investors will stop hoping a spin out is imminent — or start laying aside cash to make a move towards owning the biggest chunk of an independent PayPal they can afford.

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







Are the hackers winning? 2014 is shaping up as a record year in security breaches

hacker

Hackers have been busy in 2014. According to a Data Breach QuickView report by Risk Based Security (RBS), the first half of 2014 has already surpassed the record set across all of 2013 for the number of consumer records exposed.

The company writes, “Mid-year 2014 data breaches exposed over 502 million records far exceeding the mid-year point in 2013, the previous all-time record setting year… and the recently reported exposure of 1.2 billion email addresses and usernames has not been included.”

This news comes weeks after Target released an analysis of the cost of its 2013 breach which, at 110 million records exposed, was the seventh largest breach in history and and was surely among the most-widely publicized. The final tally: $148 million, plus an incalculable loss of consumer trust. The incident, and a confidence eroding response by management, also ended up cost the company its CEO and CIO.

If you’re looking for some consolation, the closest thing in the RBS report is that the total number of hacking incidents in 2014, which stood at 1,331 through the first six months, is likely to fall short of the all-time record set in 2012 of 3,195. So while incidents may be declining, ever so slightly, the average single breach is growing larger. That’s a somewhat misleading takeaway, however as 61.7 percent of all incidents exposed less than 1,000 records, while 10 incidents each exposed more than 1 million.

The largest breach in history occurred in June of this year with the NYC Taxi & Limousine Commission – Uber’s favorite foe – exposing a staggering 173 million records. This year also featured the fourth and eight largest breaches in history, in eBay’s loss of 145 million records and Korea Credit Bureau’s exposure of 104 million.

“Compared to the same time period for 2013, there has been a 59% increase in the number of breaches caused by hacking and a 46% increase in the number of records compromised,” says Risk Based Security CEO Barry Kouns. “Clearly hackers are taking advantage of existing vulnerabilities wherever they can be found, and they can apparently be found everywhere.”

Kouns later adds, “It’s hard to find a bright-side. Already 2014 has added three incidents to the “Top 10” data breaches all time, taking over the number one, four and eight spots. … when you analyze the data breaches, you see that twenty-three organizations were breached more than once this year alone.“

According to the RBS report, 57 percent of breaches exposed usernames, passwords and email addresses 70.1 percent exposed at least passwords, as of the midpoint of this year. The hackers haven’t played favorites, targeting nearly all industries and company sizes. The so-called “business sector” suffered 54.9 percent of all breaches, whereas government saw 16.1 percent, education 8.7%, and medical at 8.5 percent – the catch-all unknown category included 11.8 of all breaches.

US businesses and entities have been responsible for just 39.6 percent of all incidents recorded this year, but have accounted for 74.3 percent of the exposed records.

The takeaway seems to be that if you have consumer data or corporate IP of any kind connected to an external network – meaning nearly every company or organization in the world – you will be targeted at some point, and likely already have. According to the 2013 Mandiant Threat Landscape report, advanced hackers are able to remain inside a breached network for a median of 243 days before being detected. In other words, just because you’re not aware of a breach, doesn’t mean it hasn’t happened.

Any company that doesn’t do everything in its power to monitor for and protect against these attacks will get what it deserves. Consumers, on the other hand, have far less power to protect their data in the hands of large corporations. Welcome to the brave new (connected) world where he world’s most nefarious criminals are always just a fiber-optic cable away.

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







German’s Fidor bank will begin using Ripple for international wire transfers next week

Ripple

Germany’s Fidor bank will finally begin completing international wire transfers via the Ripple virtual currency protocol next week, making it the first bank in the world to do so. The two companies first announced a partnership in May, but have evidently spent the time since working on integration. The bank also may have been using the protocol for behind-the-scenes interbank transfers before going live with customer transfers.

Reddit user Skysailer posted to r/Bitcoin an email that he received from the bank that reads (after translation by Google Translate):

First we would like to thank you for your loyalty!

We have continued to work in our services to make banking with Fidor even better: In brief, any time you can easily and quickly check your balance with the mobile Fidor account Motion widget on your Android smartphone. We also allow you soon same day and cost transfers abroad via Ripple. Due to the above-mentioned new products we will generally Expand Terms and Conditions for 27/08/2014. From 27.08.2014 You will be asked to login to your account to accept the new terms and conditions. You will also find a detailed explanation of the changes.

Best Regards

Your Fidor Bank Team

As the letter suggests, fund transfers processed via Ripple will occur same-day, making the protocol in many cases several days faster than traditional international wires. These transfers will also be significantly lower-cost than traditional wires.

The Fidor relationship is seen as a highly important test for Ripple, which, if successful, could lead to additional relationships with other banks around the world. Of course the opposite is also true and a negative result of this test could stunt Ripple’s continuing adoption.

For a refresher on Ripple, the protocol and associated XRP virtual currency are designed not as a transactional currency or even as a long-term store of value, but simply as an intermediary currency. For example, if a user in the US has funds in dollars and wants to send those funds to a user in India, where Rupees are the local currency, the traditional process would involve currency conversion fees. Using XRP, the sending user (or their bank) would exchange the dollars for XRP and then find another user on the network looking to exchange Rupees for XRP. With Rupees in hand, the transfer can be completed to the end recipient. All of this happens in seconds or minutes and at fractions of the cost of traditional wire transfers and currency conversions.

In short, Ripple is the way money transfer and bank settlements would be handled if they were invented today and not subject to decades of legacy technology, systems, and regulations. As I wrote in May:

When consumers and institutions alike attempt to move money around the world, it typically requires a number intermediary stops along the way, not to mention manual human intervention and far too many pieces of paper for the year 2014.

The problem is that, maddeningly, each country and each financial institution creates its own rules and its own system for executing such transfers. As a result, transferring money can often take days, costing non-trivial sums of money in the process, and introducing significant risk of fraudulent or failed transfers. The second order effect of this system is that it’s impractical to make small transfers, such as sending $20 from the US to India, for example, because such a transaction will cost more than its value.

Ripple was invented to address this very problem, offering a decentralized order book relying on open-source peer-to-peer payment protocols that allow financial information to move as quickly and easily as other data.

That said, Ripple is not the only company looking to solve this problem. Former Ripple co-founder (and before that Mt. Gox founder) Jed McCaleb branched out to start a competing, open source platform called Stellar that promises a similar approach to settlements. Stellar has partnered with payments giant Stripe and secured the backing of former PayPal and Square exec and current Khosla Ventures partner Keith Rabois. It could be argued that competition is ultimately a good thing for spurring innovation, but by the same token it ratchets up the pressure on Ripple’s early integrations to go smoothly.

Ripple has a major head start on Stellar and the benefit of an active banking relationship with Fidor. Beginning next week, we’ll see whether the company is the first to prove that virtual currency settlements are the way of the future, or the first to prove that the financial technology of the future still needs more work.

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







Uber drivers in LA report spate of gunpoint assaults, allege taxi industry involvement

uber-assault

Uber drivers in LA say they’ve suffered a spate of serious assaults in recent months, including robberies at gunpoint. Speaking to PandoDaily, three Uber drivers claim either that they have been victim of attacks themselves or have friends who have been assaulted. None would speak on the record for fear of retribution from Uber.

According to these drivers, criminals (described by one driver as “thugs”) have been using Uber’s consumer app to locate the company’s drivers on a map – often late at night and typically in and around downtown Los Angeles. Once they find an Uber vehicle, they confront the driver, often at gunpoint. In some reports, the driver has his or her phone stolen, rendering them unable to pick up passengers until it’s replaced by the company, a process that can often take several days. In at least one case, we’re told an Uber drivers has been carjacked.

[Note: So as to protect the identity of the drivers, none of the above-mentioned conversations are related to rides taken under my personal Uber account.]

The nature of the attacks — which seem to be about preventing drivers from working — has lead some drivers to allege the involvement of members of the LA taxi industry. Sources at the LAPD confirm that there have been numerous incidents of attacks on Uber drivers in recent months, but say that they have yet to find any concrete evidence of a taxi industry connection — though many within the police department also subscribe to this theory.

To paraphrase one of these drivers (in an effort to keep the conversations casual, I elected not to take notes on the conversations in real-time):

Everybody knows we don’t accept cash and they give us an iPhone 4, so its not even the newest model. How much is that worth? We’re taking business away from the taxis. Of course they’re pissed. Plus the taxi unions are basically the mob. They’re just trying to scare us away.

One of the three drivers I spoke to had his phone taken, although the attacker made no mention of the taxi industry, nor did he warn the driver about encroaching on anyone’s turf. But like the other two drivers I spoke to this driver claims to have friends who have received more explicit warnings. The conclusion among all those involved appears to be that these attacks are courtesy of the taxi companies – effectively acting as messages, in not so many words, to “stay off our turf.”

That said, it’s entirely possible that these crimes are random attacks by criminals who have realized that the Uber app can pinpoint the location of extensive numbers of cars which definitely contain at least a cellphone. Cell phone theft is, after all, among the most prevalent crimes in California. Also, driving late at night in downtown LA is a dangerous proposition for anyone. This is particularly true for drivers who are waiting in parking lots or curbside for passengers, or who have iPhones mounted conspicuously on their windshield.

And then there are the usual risks of driving for hire. Taxi driving is considered to be among the most dangerous occupations in the US. According to a 2007 article in SeattlePI:

Since 1980, 1,030 taxicab drivers died on the job. They suffer the highest homicide rate of all occupations. In 2005, taxicab drivers were estimated to be 18 times more likely to die on the job than other working Americans. The Occupational Safety and Health Administration reported in 2000 that 183.8 taxicab drivers per 1,000 were injured from assaults or other violent acts.

Without more explicit evidence of a connection between these recent attacks and the taxi industry, this will remain little more than a popular theory. But it’s among the most scandalous accusations to come out of this already sordid battle.

We’ll continue to report on this developing story.

Multiple requests for comment from Uber went unreturned. If you have information regarding attacks on Uber drivers, please email tips@pandodaily.com.

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







Toms sells 50% stake to Bain capital, proving social entrepreneurship can be profitable

Toms

Toms Shoes may not have invented the social enterprise – a for-profit blend of business and philanthropy – but it surely popularized the concept among both consumers and investors. It even spawned a new name for the phenomenon called “compassionate consumerism.”

Thanks to the footwear company’s successful and highly visible “buy one, give one” campaign, the world now has dozens of other companies taking a similar approach to brand building and community development. Skechers followed Toms’ lead – a bit too closely for some – launching its BOBS (Benefiting Others By Shoes) label, while Urban Outfitters similarly launched its Threads for Thought apparel line. In the startup world, Warby Parker may be the next most visible example of this trend, but the list, and the impact of this movement, has a very, very long tail.

Today, Toms founder Blake Mycoskie finally cashed in on the success of this model, taking on the first outside equity capital in the company’s history (it has raised debt) with the sale of 50 percent of Toms to Bain Capital according to a report in Reuters. Mycoskie, who astonishingly was the sole shareholder prior to this deal, will retain 50 percent ownership in the eight-year-old Los Angeles company.

The deal, which Reuters describes as an auction among multiple interested private equity firms, reportedly values Toms at $625 million, inclusive of debt. Toms states that the new investment will help the company both accelerate business and also support its philanthropic endeavors.

“This partnership will enable Toms to grow faster and give to more people in more ways than we could otherwise,” Mycoskie said in a statement.

According to the Toms website, the company has donated more than 25 million pairs of shoes to needy children, and, through its eyewear line, helped restore sight to over 250,000 people. Through Toms Roasting Co, Mycoskie also donates a clean water for every every bag of coffee purchased.

If the fact that everyone from schoolchildren to celebrities can be found wearing Toms products wasn’t enough, today’s investment should offer further proof that social entrepreneurship can be highly lucrative and when applied thoughtfully, can actually make a business more successful than if it focused solely on the bottom line.

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.







Request granted: Unfavinator gives Twitter users a one click way to undo all their favorites

Unfavorite

With Twitter favorite-gate in full stride this week, a number of users have been looking for a way to reset their existing favorites and approach the “new Twitter” with a clean slate.

Perhaps the most influential and public of these figures was former Google and YouTube Director of Product Management and current Homebrew partner Hunter Walk. Yesterday at 7:28pm PST, Walk tweeted the following ironic message:

Just three hours and a few minutes later, Walk got the answer he was looking for, tweeting:

The goal of the newly launched Unfavinator service, built by Guild Launch and GameSkinny founder Stephen Johnston, should be self explanatory, but the website offers the following description:

Want to erase all the pesky things that you marked as favorites on Twitter but don’t want to have to open each and every tweet to do it? So did we.

Meet Unfavinator: the fastest way to delete all (or some) of your favorite formerly favorite tweets.

It’s a good bet that Twitter will be less than pleased by the emergence of a tool(s) like this which, if adopted in bulk, would wreak havoc on the company’s valuable user-data. There’s a good chance that the company will quickly block the service and/or update its API Terms of Service to prevent such activity. So, if you’re looking to bulk unfavorite, best to do so soon.

There you have it. It seems we’re living in an ask and you shall receive world. Assuming, that is, you have the right network and enough social “juice,” which Walk apparently does.

Update: Shortly after publishing Walk sent the following series of tweets:

Michael Carney

Michael Carney_PandoDaily
Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, the future of television, and a variety of other subjects. He has spent his career exploring the world of early stage technology as an investor and entrepreneur, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.