European VC Connect Ven...

Make way for another VC firm in Europe: Today sees the launch of Connect Ventures , a new London based fund that will focus on seed and Series A stages in European tech companies. It’s kicking off with €16 million ($22 million), which will be dispersed in investments of between €250,000 and €1.25 million ($330k-$1.7m). Led by co-founders Pietro Bezza and Bill Earner, Connect Ventures will be focused on early stage companies in the consumer web, digital media, e-commerce, entertainment and gaming sectors. The first recipient of money from the fund is the London-based private sales site SecretSales , which is getting a £300,000 ($487,000) investment on top of the £6.3 million ($10.2 million) round that it got in February from a consortium of investors that included Doughty Hanson, Pantech Ventures and others. And another two investments are close to completing: for an e-commerce company in Berlin and another London startup, focused around mobile apps. “One has revenue worked into its business model already, while the other is a bigger play that won’t have revenue for a while,” Earner says. Some believe that the venture capital world may be getting a little overcrowded and overheated, with firms doing battle to get in on funding rounds for the choicest startups. So why launch a new fund now? For one thing, says Earner, the situation is less hot in Europe, and he says there a “gap” in the market for funding in the seed and Series A stages in tech here to help them grow faster. “Not every startup has the privilege of going quickly from a few hundred thousand users to 20-30 million,” he says. “There are still opportunities to invest in really great companies that are not so hot that larger funds will get them automatically. We feel that those [smaller companies] could be attractive investments for us.” The goal is for this first fund to grow to €43 million from its current size of €16 million for such investments. Secret Sales, he says, is a good template for how Connect Ventures wants to approach investments in the future: CV gives financial help, but also expertise — Earner is ex- Amadeus Capital Partners and has also worked at a number of startups in engineering, product management and marketing roles. Bezza has built and sold two digital media companies of his own, Neo Network and Magnolia, now part of the Zodiak Media Group of content companies, and has been an active angel investor in companies that include Picklive, PlusPlugg and Dri Dri. “We invested in Secret Sales because we really liked the team and it has good investors backing it. We felt it would be good for us to be investing with quality investors like that,” Earner says. “Plus there are some specific skills that we are able to help out with, for example in areas like CRM and analytics. We see a valuable role for us there.” The first targets within Europe, says Earner, will be startups in London and Berlin, where there is already “a lot of energy and startup activity.” Further along, he believes that there is a lot of undiscovered startup talent out there, and at least in one case his partner’s own background may help them in this respect: “There is a surprising number of good companies in Italy,” says Earner. Italy, he notes, has no hub in terms of a city where they have all converged, and that’s made discovering them more challenging.

Square Competitor Sales...

SalesVu , the maker of a mobile payments service designed for business customers, is launching a major update with SalesVu 2.0, live now in the iTunes App Store . The company is somewhat similar to Square, in that it also includes a dongle that plugs into an iPhone or iPad and works alongside an accompanying mobile application. However, the company is focused on providing tools that address more complex business needs than simply taking credit cards via a mobile device. For example, SalesVu currently offers real-time analytics reporting and the ability for businesses to post offers directly to Facebook through social sharing mechanisms. With the release of SalesVu 2.0, a number of improvements have been added for business users, including things like receipt printing, barcode scanning, employee timekeeping, and online order processing, to name a just few. While competing in the same general space as Square, Austin-based SalesVu is different in that it has never gone after the market of individuals users who had always relied on cash-based transactions. Instead, its focus has been the business customer processing at least $1,500/month who was looking for a mobile payments solution with a specific emphasis on integration with other backend systems like order management, deals and discount management, and social marketing. With the release of SalesVu 2.0, the goal is to better improve on the feature set these customers need. For retailers, the company has now added receipt printing and barcode scanning functionality, which customers demanded. They also asked for the newly added employee clock-in/clock-out function, which is now tied to SalesVu’s online timekeeping solution. Plus, SalesVu 2.0 has improved the close-out process with new cash drawer functionality also new in this release. For restaurants, the company has added features like the ability to split checks, print orders to the kitchen, adjust tips at the end of shifts, and receive orders from the web. The online orders are also displayed in the SalesVu POS app for immediate processing, as opposed to being sent out as emails, as is typical with some online ordering integrations targeted towards the SMB market. This feature now also makes SalesVu a competitor to traditional POS systems, says SalesVu CEO Pascal Nicolas. “The online ordering feature is probably the most important one we’re adding in this release,” explains Nicolas, “because we’re going from a convenience app to a revenue-generating app. These are orders that they may not have received, if they had not received them online,” he says. The feature was heavily requested by restaurants, for obvious reasons, but the functionality is available to anyone, including retailers, Nicholas adds. Finally, for service businesses (think salons, spas, plumbers, etc.), SalesVu 2.0 has added the ability to route appointments from a business website to the app on the iPhone or iPad, and now supports the ability for the business to take a deposit at the time of reservation. Invoicing and recurring billing have been added, too. Despite these business-friendly features, SalesVu’s biggest challenge for now is brand recognition and awareness – even Square itself isn’t a household name yet. Plus, one of Square’s bigger draws is that free dongle it hands out to any who ask. SalesVu, meanwhile, only gives out the first dongle per location for free and then requires businesses to pay $99 for each additional one. However, it has now dropped the monthly subscription fee ($9.95/month) for use of its cloud system in order to be more competitive. SalesVu is also competing heavily on pricing, in terms of processing fees. To combat Square’s low 2.75%, SalesVu negotiated with its partner  Mercury Payment Systems  to take the risk and go even lower to a flat 2.7% in the U.S. In Canada, rates vary from 1.73% to 3.26% depending on card type, which means it’s (sometimes) lower than Intuit’s GoPayment . The company has a profit-sharing arrangement with Mercury which allows it to generate revenue from those fees. Currently, SalesVu’s mobile apps have been downloaded 15,000 times, and now nearly 6,000 businesses have signed up and are actively using the system. The company is iOS-only for now, but plans to release an Android version this summer.

Amazon’s Q1 2012: Reven...

Amazon just reported earnings for the first quarter of 2012. Net sales increased 34% to $13.18 billion in the first quarter, compared with $9.86 billion in first quarter 2011. Net income decreased 35% to $130 million in the first quarter, or $0.28 per diluted share, compared with net income of $201 million, or $0.44 per diluted share, in first quarter 2011. The company beat Wall Street expectations; analysts expected a profit of $0.07 per share on revenue of $12.9 billion for the quarter. “I’m excited to announce that we now have more than 130,000 new, in-copyright books that are exclusive to the Kindle Store – you won’t find them anywhere else. They include many of our top bestsellers – in fact, 16 of our top 100 bestselling titles are exclusive to our store,” said CEO and founder Jeff Bezos. “If you’re an Amazon Prime member, you don’t even need to buy these titles – you can borrow them for free – with no due dates – from our revolutionary Kindle Owners’ Lending Library. The Kindle Owners’ Lending Library is heavily used by Kindle owners, and it has extremely unusual features that both authors and customers love. Every time you borrow a book, the author gets paid – and we have an inexhaustible supply of each title so you never have to wait in a queue for the book you want. Kindle is the bestselling e-reader in the world by far, and I assure you we’ll keep working hard so that the Kindle Store remains yet another reason to buy a Kindle!” Unsurprisingly, we didn’t see any concrete number when it comes to Kindle sales. Amazon says that the Kindle Fire remains the best selling, most gifted, and most wished for product on the site. In the first quarter, 9 out of 10 of the top sellers on Amazon.com were digital products – Kindle, Kindle books, movies, music and apps. Operating cash flow increased 1% to $3.05 billion for the trailing twelve months, compared with $3.03 billion for the trailing twelve months ended March 31, 2011. Operating income was $192 million in the first quarter, compared with $322 million in first quarter 2011. North America segment sales were $7.43 billion, up 36% from first quarter 2011. International segment sales, representing the Company’s U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $5.76 billion, up 31% from first quarter 2011. Worldwide Media sales grew 19% to $4.71 billion. Worldwide Electronics and Other General Merchandise sales grew 43% to $7.97 billion. Q2 2012 net sales are expected to be between $11.9 billion and $13.3 billion, or to grow between 20% and 34% compared with second quarter 2011. After missing Q4 financial expectations, the company has been focusing on adding content to Amazon Instant Video, and expanding the Kindle Touch to new markets. Amazon also acquired order fulfillment company Kiva Systems for $775 million in cash.

Never, Ever Promote Fro...

Editor’s note:  Scott Weiss is a general partner at Andreessen Horowitz and the former co-founder and CEO of IronPort Systems, which was acquired by Cisco in 2007. He blogs at http://scott.a16z.com and you can follow him on Twitter @W_ScottWeiss . My father, Alfred “Bud” Weiss, owned a car dealership — “Bud’s Cadillacs” of Miami, Florida. When I’d drop by the office, he would usually pepper me with bits of business wisdom, but as a kid, I wasn’t very receptive. My head was usually buried in a comic book, only half listening. However, there was one story that stuck with me and I have struggled to make sense out of it throughout my business career: “Son, you never, ever promote your best salesperson to be the sales manager. This is a classic mistake that other car dealers make. A bunch of my top producers came from their failed attempts as sales managers at other places. You commit two wrongs with these promotions: First, you take your top producer — someone raking in two to five times the average salesperson — off the sales floor. Second, you put them in a new job that they are totally unqualified to do successfully. This usually ends in disaster for everyone involved.” His advice seemed to make sense until later in my career when I was actually faced with the problem. Some of our best salespeople and engineers at IronPort wanted to move into management and if we didn’t give them the opportunity, then it was clear they would go elsewhere. Of course, there’s not much of a dilemma when the high performer is a natural leader and people-person. Promoting great people from within is preferable on so many dimensions: There’s context, history, relationships and it all leads to a much better chance of success than hiring from the outside. The difficult corner case is the high-performing individual contributor that you can tell will likely fail in a leadership position. I’m talking about the sharp-elbowed, passive aggressive salesperson with little self-awareness. Or the my-way-or-the-highway, smartest-guy-in-the-room, workaholic engineer with horrific personal hygiene. How do you deal with that? If they were really that good and were hell-bent on being a manager, then I came to believe that you had to give them a shot. That said, in my own experience, only about 25% of these experiments succeed in leadership. However, if managed carefully, the majority of the failures can ultimately be coached back into individual contributor roles, which is still a win. The key to all of it is making sure that there’s a sponsoring executive that is willing to spend a boatload of time coaching the budding leader. Here are some specific suggestions: It all starts out with hard, raw conversation about the shortcomings you’ve observed and how they need to be grinded off for them to be a successful manager. E.g. “You can’t keep answering all the questions; leading is getting others to contribute.” The coach needs to meet weekly and do frequent check-ins with peers and subordinates in almost a constant 360 degree-feedback loop. Even if it isn’t working out, the constant coaching and feedback will ensure a soft landing back into their old role. It helps to have some great leadership training. In my experience, most leadership training courses suck. You get two hours of useful information spread out over two weeks of mind-numbing presentations. We put together a rapid fire, two-day course and had our leadership team teach it. Interviewing, performance reviews, 1:1s, career planning, holding staff meetings, etc. We all got together and boiled down the best practices for all the important areas into short, punchy presentations/role plays. Every new manager went through it to give them some tools that were culturally consistent with what we were doing. Develop a legit dual-career track. Bestowing a new title like Principle Engineer or Fellow along with a commensurate bump in salary and equity can help take the sting out of being removed from a leadership role. I know this all sounds like a ton of work but some people are just that special and totally worth it. Some of our best managers came out on the other side of these experiments and we had at least a handful of failures that we were able to retain as employees. My father built his business with castoffs from these experiments gone wrong at competitors. Perhaps because they had already failed elsewhere, his top performers didn’t aspire to try management again. Only in this context can I make sense of his guidance, as my experience has been quite the opposite.

Square Now Processing $...

Payments platform Square has released a number of new stats today, as well as good news for merchants using its mobile payments app to accept credit cards. According to a Bloomberg report, Square is now processing $5 billion in annual payments (or around $416 million in payments per month), which is up from $4 billion in annual payments in March. And payment volume is up 25 percent over the past month. Square also says that it will be making funds available in merchants’ bank accounts the next business morning (for any sales made before 5 pm), while other merchant processors can take 2 to 5 business days to get merchants their money. This is a big win for merchants, who now have access to their sales revenue immediately. And last week we heard that Square is looking to raise around $250 million funding at a $4 billion. Square’s CEO and co-founder Jack Dorsey and COO Keith Rabois just wrapped up the 10-day trip to the East Coast to meet with institutional investors, including Fidelity and Legg Mason.