Rakuten CEO On The $100...

Rakuten , the Japanese e-commerce giant leading a $100 million investment in Pinterest , valuing the company at $1.5 billion, will be making two major contributions to the image-based social network as it gears up for its next stage of growth: the funds to take the image-based social network into new international markets, and a business model. First up, Rakuten’s home market of Japan, where “Pinterest is growing very fast,” notes Rakuten’s CEO, Hiroshi Mikitani, in an interview with TechCrunch. He wants Rakuten to grow right there with it by using Rakuten’s services to become the basis for buying things off the site. There are already some building blocks in place for this. First of all, Rakuten already pins on Pinterest through at least a couple of official accounts: Rakuten Commerce and Rakuten Travel. On the other hand, there is Rakuten’s existing e-commerce presence in the country. Mikitani notes that 75 percent of Japan’s internet population — equivalent to about 80 million people — already have a Rakuten ID — this is similar to an Apple ID, or an Amazon ID, in that there are payment details associated with it. It is this ID that will pontentially become the lynchpin of a commercial service on Pinterest: “We want to enable our users to pin their own images with our ID,” he says. “Users can click and buy with it, and in the future we can create more new services.” He notes that the “rich, graphic social network” can be used for “so many interesting ideas using the Rakuten ID.” One other area, TechCrunch understands, is for users logged in with Rakuten IDs to pin images and then use those pins to buy items away from Pinterest, on Rakuten’s own Rakuten Ichiba site. And because Pinterest is so buzzy right now, it can be used as a way of reigniting some of Rakuten’s legacy business. The company has a lot of “sleeping customers,” as Mikitani calls them. These are people who have IDs but are not regular users of Rakuten’s services. “This is a good way of getting them to start using those Rakuten IDs again.” The other area where he would like to see more development is in the area of mobile commerce. Mikitani tells me that already, 25 percent of all Rakuten sales in Japan originate on a mobile device, and that proportion is growing. “There should be a huge synergy with Pinterest there,” he says. “We are going to promote their app using our presence here in Japan.” International growth . The $100 million investment, which was led by Rakuten with participation from Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital, as well as a number of angel investors, will also give Pinterest the financial muscle to extend its service into new international markets. Pinterest, perhaps above all social networks, has a lot of potential as an international product — one that can work across borders– because while sites like Facebook and Twitter are text-led, Pinterest is focused around images, and therefore less limited by language barriers. Of course, a lot of Pinterest’s growth today and in the future will be non-commercial, but the potential for commerce is very much there, too. (We wrote just the other day about another example, Curalate , which has created a social marketing service for brands to visually track how and where their images are getting used across the site.) Within that trend, Rakuten is looking at how to leverage its Pinterest investment in its international business outside of Japan, as well. Mikitani points out that while Facebook is an “extremely powerful social network”, when it comes to shopping and e-commerce, Pinterest’s image-led service “has stronger potential.” Facebook and Twitter, he says, are about connecting you with your friends and contacts, while Pinterest is about connecting people with the same interests via graphic images. Apart from the fact that products are put right there for you to see, you can also imagine how that social set-up can be developed into a commercial model (group buying is one that comes to mind here). Rakuten has holdings that extend well beyond Japan, and include properties like Buy.com in the U.S., Kobo e-reader and e-books, Priceminister in France — in all, operations based in 10 countries and extending to 17 countries in total. Mikitani says that he is hopeful that the kinds of groundwork it wants to lay in Japan will also be extended to the rest of its footprint. For example, Mikitani points out that Kobo already has a “great partnership” with Facebook to encourage people to post excerpts and read more using Kobo, which it would like to extend to Pinterest, too: “Facebook is why Kobo is growing so fast right now,” he says. “We will see more of Kobo in Pinterest, too, I think.” And buy.com — which is slowly, gradually, getting rebranded as Rakuten — is another site you could imagine could get linked up more closely with Pinterest. But this is not to rule out other partnerships with other e-commerce players. “We are totally open to other e-commerce partnerships,” he says. “Pinterest should work with them.”

Pearson Buys Certiport ...

Pearson , the educational publisher, today made a move to beef up its international professional IT testing business: it announced that it is buying Certiport , a developer, marketer and distributor of certification exams and practice tests for IT and digital literacy skills, for $140 million in cash from the private equity firm Spire Capital Partners. The deal will give Pearson’s VUE unit, where Certiport will sit, much further reach into the retail distribution of testing services in markets outside of the U.S. and UK: Certiport currently sells its certifications and assessments through a network of 12,000 testing centers operated by 70 partners in 150 countries, serving the range of skills in the world of IT. In all, it delivers 225,000 exams in 27 languages every month, and generated revenues of $48 million in 2011. Certiport, which was founded in 1997 in Utah, creates certification programs for software from companies like Microsoft, Adobe, HP and Intuit. With Certiport having 60 percent of its business currently outside of the U.S., the deal will mean not only a stronger profile in IT educational services for Pearson, but a window on to a wider geographic footprint, especially in Asia and the Middle East. The existing testing network will also become a channel that Pearson can use to distribute testing and certification content already in its portfolio. “Certiport is a high-quality company serving the significant demand for foundation IT skills. That need is growing fast and is truly international,” said Rona Fairhead, chief executive of Pearson’s professional education businesses, in a statement.”The combination of Pearson VUE and Certiport will strengthen both businesses and will give us a unique portfolio of technology assessments and certification, serving everyone from a basic word-processing users to technology experts.” Pearson notes that Certiport’s revenues have been growing at a compound annual rate of 20 percent in the last three years, with the integration costs for Certiport expensed in 2012 and the acquisition showing up in Pearson’s earnings from 2013.

Social Media Gurus Push...

This is a guest post by Roger Warner of Content and Motion . Here’s classic example of how badly some companies are screwing up on social media. Back in February this year Coca-Cola Australia invited its fans to some ‘banter’ or chat. Fans obliged. Much fun ensued. Coca-Cola looked stupid. What’s happening here? Coca Cola has invested tirelessly in its brand for the past 50 years. Now some bright social media spark is conducting inane ‘little experiments’ for social media ‘engagement’ that seem hellbent on killing it. Exactly the same thing can happen when young startups try to engage on social networks and think they have to “engage”. Sadly, Coca Cola’s approach to engagement is not the exception, it’s the rule. It’s the “Hi, how was your weekend?” approach to brand communications on Facebook, Twitter, and so on. Plenty of tech companies find themselves in this trap, not just consumer brands. This is classic conversational, open and ‘authentic’ dialogue that seems to satisfy the pervasive ethos of social media (make nice) but at the same time totally messes with any concept of a brand. It can vastly over estimate the average person’s appetite for holding conversations with the products and services they use and follow on Facebook. Startups, companies and brands that are following this path are getting it very wrong indeed. • People don’t use Facebook in order to forge a relationship with Coca-Cola (or any other brand). They use it to create and enhance relationships with other people and to tell their own life stories (via sharing). • People believe in brands. Some folks buy the Burberry label instead of Wallmart own brand and are very happy with the price tag. Bland conversations and banter undermine the strength of a brand (and price) because they’re reductive: they strip out the magic and create a level playing field. Any brand can play the ‘authenticity’ game. • Whichever way you look at it – entertainment, engagement, acquisition, etc – brand to fan conversations don’t scale well (whereas fan to fan conversations do). Resource runs thin and they revert to standard types. “Hi, how was your weekend?” • People are tuning out from mundane ‘experiments’ and boring, self-serving brand ‘conversations’. They simply don’t compete in a news stream that includes raunchy pictures from Friday’s drinks at the office. Further, it’s more fun to sabotage them than to play along. So what else should you be doing on Facebook? Great ‘social brands’ enhance the ‘personal brands’ of their fans. Put bluntly: You make them look better. They transform the average stuff of life into something more valuable and meaningful. They create stories to share by giving people great content and experiences that makes them feel smarter, cooler, more generous and generally more heroic. The will to empower creates the will to share. The winners in this game know that any given Facebook play must be geared to creating (relative) fame and/or thanks for others. And they understand that if they can do this, then good things will follow: shares, Likes, comments and, in turn, brand awareness, traffic and referrals. In the near term future, these brands will flourish in the Social sphere – they’ll generate a tangible benefit from their spend and their Social Media teams will earn more respect, industry awards and money. Their work will evolve around a firm but basic understanding of what people really want from their time on Social Media – kudos. They’ll be able to extend the brand in new engaging ways by creating lots of very personal missions on new platforms and devices, in all kinds of day-to-day environments that they don’t currently enjoy a presence – from the breakfast table to desk to couch and back again. Success – and a more powerful Social brand – comes via an understanding of how, why and where a brand can generate personal kudos in amongst the flux of daily life and leveraging the best technology available to make it easy and support the cause. Here are some great examples: • Create an email intervention in the workplace? Sure. I’m a smart working hero, I’m in . • Deliver a can of personalised chicken soup to a flu-bound spouse? I’m a progressive, caring husband with a sense of humour. Show me how . • Wage a war against over priced, over specced shave tech (and Roger Federer)? I’ve always thought seven blades was pointless. Where do I sign ? And, for those still bouncing around with the banter, here’s three closing tips for the immediate future: • Rewire for social. Your biggest ideas must be about them, not you. • Start trying to make your fans’ life stories more heroic. • The will to empower creates the will to share. Do this and you will win on Facebook and most other Social Media channels… and I guarantee it’s a hell of a lot more ‘engaging’ than banter.

As Earlybird Lands Link...

Lately a trend has emerged: European VCs putting down more roots in Silicon Valley to take advantage of the current scene and act as a bridge for European companies trying to form local partnerships, and of course as a mechanism for M&A or further funding with US-based VCs. One of the more recent firms to do this was Index Ventures , which a year ago put partners on the ground for the first time outside of its bases in the UK and Switzerland. The latest to join that trend is Earlybird Venture Capital out of Berlin which has brought on Valley-based Konstantin Guericke as a venture partner. Is this part of a developing theme? Guericke co-founded LinkedIn, where he was vice president of marketing, he took it to six million members and profitability. German born, he also served as CEO of jaxtr, a social communications start-up purchased by SabSe Technologies. He’s currently on the boards of several startups and mentors student entrepreneurs at Stanford University, where he graduated. Guericke says startups coming out of Europe, and particularly Berlin, that are highly viral and globally scaling from Day One can “compete with the best in Silicon Valley and reach a worldwide audience.” He’s basically correct: far too many European startups are not suited to the continent’s small fragmented markets, don’t realise it soon enough and need to look elsewhere to scale. Meanwhile, the VC trends in Europe continue. As we know, Accel, which has a good footprint in London, is a firm with a large US arm already. The other main player in Europe are firms like Balderton, but it prefers, as does Eden Ventures and others, to bridge with US-based VCs. The opposing view of course is that so long as you have contacts, you don’t need an office on the ground. The reverse is working in Berlin of course: VCs are flying in and out of the place (in some cases even just commenting from Munich or Hamburg) but few have felt the need to open full-blown offices. Perhaps the renowned Berlin winters are putting them off for now? Admittedly Wellington Partners is in Berlin so often it might as well have an office. Earlybird is the exception, moving its full operations to Berlin and raising $100 million for their new fund. But right now there is a debate raging about whether European Venture Capital has much of a future. Atlas’s Fred Destin has returned to that theme again recently saying Euro VC is too unwieldy, too in hock to governments and hide-bound by staff incentivised by management fees rather than exits. Are European VCs, like their political equivalents in Brussels, now viewing Europe as a burning building with not enough exits, as UK PM Cameron once said of the Euro? Is that why we are seeing this attempt to bridge with the U.S.? Conversely we’ve seen the rise of new entrants like Passion Capital and the soon-to-launch Hoxton Ventures . These guys are actually pretty optimistic about Europe and its ability to build companies outside the salary inflation (and the rest) of the Valley. You pays your money and you takes your choice I guess. Then there are quite different new entities like Blackbox VC where early stage startups literally live in a dorm in Atherton trying to catch the ear of the Valley. More on that later, but for now let us know your thoughts in the comments.

F.ounders Hits New York...

The are almost too many tech events in the calendar these days to mark any particular one out as being worthy of note. I say almost because, on the global stage at least, TechCrunch Disrupt (Ok, Ok, but still…) remains up there because of how much other media attend and, well, just it’s general awesomeness. Into this small basket you could also put, for instance, Le Web , Founders Forum in the UK, DLD, The Lobby Conference, the tech elements at Davos and maybe even TED. What few of them are doing however, is celebrating new blood. You tend to see the people who have made it, not the one’s about to make it (apart from Disrupt of course). To that end one rapidly emerging event which is doing a very good job of bringing together the Valley, New York, Asia, Europe and emerging global startups like South America is the simply named “ F.ounders “. And it’s coming to New York on June 14/15, and will be attended by our very own editor, Eric Eldon and co-editor Alexia Tsosis. They’ll make up around 150 of the world’s fastest growing tech company founders gathering in NASDAQ’s Market Site in Times Square. Paddy Cosgrave says he is moving founders to New York to bring together “high growth companies on track to IPO or otherwise in the next 24 months.” There’s that new blood coming through. Joining them will be tech stars including Dennis Crowley (Foursquare), David Karp (Tumblr), David Goldberg (Survey Monkey), Alexander Ljung (SoundCloud), Roger McNamee (Elevation Partners) Fred Wilson (Union Square Ventures) and Steve Case (AOL, Revolution). You might not have heard of F.ounders as it barely has a web site and you can’t apply for an invite. But it’s been described by Bloomberg as “Davos for geeks”. TechCrunch was more to the point: we called it badass. Perhaps because of that we managed to get a special concession: We got them to agree that TechCrunch readers can ‘apply’ to attend by emailing attendees [@] f.ounders.com. No guarantees, but good luck… Last year’s event was held in Dublin, Ireland. Bono lead a pub crawl, Riverdance put on a private performance and the Irish President hosted drinks in her residence in her last day in office. Rumours that a TechCrunch European editor led a few late party-goers in a 4am guitar-led rendition of Wonderwall in the lobby of the hotel have never been confirmed. F.ounders Dublin is held annually in October, alongside The Dublin Web Summit .