A VC in Vacationland

Managing Start Ups: Measure twice; Cut Once

English: tape measure from Sweden. (Photo credit: Wikipedia)

My grandfather was a carpenter, and a good one. Grandpa Anderson immigrated from Sweden when he was 16. He had no choice. The family needed money and he had to go to America to earn it.  No matter he did not speak the language and had no skills. He had to make it as the family was depending on him. He built a house by himself in his late 70's and worked up until a few weeks before he died. 

He taught me a valuable life lesson from his carpentry work--measure twice; cut once. When you are working with expensive woods, which he did often, it saved a lot on waste and money.

It also applies to life. I have learned that thinking about something for a while, rather than giving a quick reply gives me more time to "measure" my response and not "cut" to an answer too quickly. And I have learned that your "measured" repsonse may be different in the morning, or a few days later, so no need to rush a reply if timing is not critical. 

There's something to be said for "quick and dirty" decisions, but considering all the angles is not a bad way to reach a more optimal choice.

Supply Chain Innovators: Update- uShip goes big time with $18M from Kleiner

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PRESS RELEASE
uShip.com, the largest and most trusted transportation marketplace, announced 20 December that it has closed an $18M round of Series C financing with Kleiner Perkins Caufield & Byers (KPCB). Funds will primarily be used to extend the development, sales and marketing of uShip’s commercial freight platform, mobile platform and global presence. Maritza Liaw, Partner at KPCB, will join uShip’s Board of Directors.

“They are truly a disruptive player in shipping logistics, reducing friction for both shippers and transporters. We see a huge opportunity for growth in the commercial sector.”

“Kleiner Perkins funding and resources will propel uShip’s next phase of growth. Commercial freight is trending toward complete automation and greater efficiency, meaning uShip’s PRO platform has the opportunity to impact the entire industry, from enterprise shippers to freight brokers to carriers,” said Matt Chasen, CEO and founder of uShip. “We’ve already built an online shipping marketplace of over 1.6 million shipping customers and 325,000 registered carriers, a key distinction between our efforts and those of our competitors. KPCB’s funding and support will allow us to continue our global expansions plans and further develop our innovative shipping platform.”

“uShip is a proven marketplace model with fantastic traction across a number of transport categories,” said Liaw. “They are truly a disruptive player in shipping logistics, reducing friction for both shippers and transporters. We see a huge opportunity for growth in the commercial sector.”

uShip PRO

This round of funding will also enable uShip to further develop its new “PRO” platform (currently in private beta), which allows business shippers and freight brokers to build their own carrier networks, as well as efficiently manage and automate their shipping operations. uShip PRO is primarily aimed at the $300B truckload freight market in the U.S., and complements uShip’s consumer-oriented marketplace that helps people more efficiently and affordably move hard-to-ship, large items such as cars, boats, household goods and motorcycles.

Mobile Development

Perhaps no other segment in today’s workforce is more reliant on mobile devices than truckers – and 70 percent say their dependence is only growing stronger, according to a recent uShip mobile usage study. uShip is further developing its mobile applications and platform to better meet the needs of both transporters and shipping customers.

Global Expansion

Since 2009, uShip has been expanding its global footprint, now localized in 18 countries and regions on five continents, and plans to expand its marketing and development efforts in Latin America and Europe.

Shipping Wars, Season 3

Season 3 of Shipping Wars, the A&E real-life series that features uShip, premiered Dec. 12 and airs Wednesdays at 10/9c. The show follows six independent truck drivers who use uShip to competitively bid to transport oversized loads found on the marketplace. Seasons 1 and 2 attracted 2-3 million viewers per episode, placing it among cable’s top 10 shows (Nielsen).

This financing brings the total capital raised by uShip to $28M. KPCB joins institutional investors Benchmark Capital and DAG Ventures, each of which participated in earlier rounds.

Supply Chain Innovators: PCH International Goes After Sustainable Packaging Market

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Imagine opening a beautifully-packaged iPad, whose very box is aesthetically pleasing and minimally wasteful.

Now imagine unpacking an appliance from Costco that’s swathed in ugly, non-recyclable styrofoam and plastic wrap.

Which company’s product are you going to be happier about in your first few minutes of using it? Probably not the one that forces you to figure out how to deal with several cubic feet of non-crushable plastics that are likely to fill up your garbage can and then live on for centuries in a landfill.

According to Xconomy,  PCH International, a 3,000-person global company with $80 million in funding from a wide range of venture capital firms, is opening a new sustainable package design center in San Francisco.

The company’s Sustainable Packaging Design Centre of Excellence will include a material library, a structural design engineering and quality test lab, and will be based in Shenzhen, China. The company will also open a  showroom and material library in San Francisco early in 2013, placing its services in closer reach of Silicon Valley companies — those that still make hardware products, that is, rather than Facebook games or iPhone apps.

Sustainable packaging can be good for the bottom line, too — not just good marketing and customer experience. In one case study, the company claims it helped reduce packaging time from 180 seconds to 15 seconds, eliminate the use of PVC plastic, reduce card stock usage from 90g to 50g, and more than double the number of units that could fit on a single shipping pallet, reducing the client’s packaging costs by 91 percent.

PCH is a services company that helps companies set up their manufacturing supply chains, primarily through its relationships with manufacturers in Shenzhen, China. Based in Cork, Ireland, PCH was founded in 1996 by Liam Casey. Its backers include Cross Creek Capital, Focus Venture Partners, J. Christopher Burch, Lightspeed Venture Partners, Fung Capital, Northbrooks Investments, Norwest Venture Partners, and Triangle Peak Partners.

 

Supply Chain Innovators: USPS Same Day Service SF pilot worth the expense?

USPS service delivery truck in a residential area of San Francisco, California (Photo credit: Wikipedia)

According to Storefrontbacktalk, The U.S. Postal Service's same-day delivery trial for retailers is scheduled to begin on December 12 in San Francisco, but the service will launch with major limitations, according to the regulatory filings that allow the USPS to do this at all. The most significant limit: Each retailer will be allowed to send only 200 packages per day.

The mail agency also won't be allowed to do more than $50 million in business in the trial or expand it without more regulators' approvals, which rules out a rapid ramp-up to other cities. The last thing same-day needs is a regulatory straitjacket—but that's exactly what the USPS' service and the chains that use it will be saddled with.

My cynical side says that this pilot is maybe 5 years too late, as numerous big city same day delivery startups are already underway. My less cycnical side says that the USPS already possess the infrastructure to do this

Managing Start ups: Software companies build business on the model of free

Aras Corp (Photo credit: Wikipedia)

Image via CrunchBase

According to a 24 September 2012 article by D.C. Dension in The Boston Globe, the profits from freemium business models lie in related support services. 

In its first seven years, Aras Corp. grew slowly, with a handful of sales people selling its proprietary software to manufacturing clients.

Frustrated by the slow pace of business, founder Peter Schroer had a realization: “Selling corporate software was not profitable, and the scalability of the business was limited to the number of feet on the street.”

So, in 2007, Schroer took a gamble and embraced the open-source model of software that was sweeping corporate computing. He fired the sales teams and started giving away Aras’s software; the company would make money through services, such as technical support, security updates, training, and related consulting work.

Clients could use, modify, and share the software as they saw fit, while buying from Aras the kind of 24/7 support that services manufacturers expect from vendors.

Since then, Aras’s revenues have increased 50 percent each year, on average; client downloads of Aras ­software are up tenfold, to more than 1,000 companies each month, from 100 in 2007.

Open source software is now ‘absolutely mainstream,’ an analyst says.

 

The workforce has quad­rupled to 68 employees.

“The difference has been night and day,” said Schroer, Aras’s chief executive.

Aras, of Andover, is among a number of Massachusetts companies following the pioneering path of Red Hat Inc., and basing their businesses on open source software, where the underlying source code to run ­applications is available for free.

Another is Acquia Inc., of Burlington, which provides support for an open source content-management system developed by its cofounder.

Moreover, the trend of migrating corporate computing systems to offsite “cloud” systems could accelerate the use of open source products, creating even more business for those firms.

“If you have an open source system in the cloud and it needs to grow, you just add another server,” said Jeffrey Hammond, principal analyst at Forrester Research Inc., in Cambridge. “You don’t have to worry about adding another license, because it’s free. That’s very appealing.” He said open source software has become “absolutely mainstream” and that Forrester’s survey of software developers indicated 80 percent use of it in some form.

Though based in Raleigh, N.C., Red Hat maintains a ­research and development operation in Westford, with more than 400 employees.

The company distributes and supports versions of the open source Linux operating system, which is at the heart of many corporate computer systems. The company is expanding in Westford, to more than 700 employees over the next few years, largely because of the growing use of open source software in cloud computing.

“Open source is free, which is very attractive,” said Brian Stevens, chief technology officer. “But companies still need a relationship with someone who can help make it work, because software is very complex and constantly moving.”

Acquia’s product is Drupal, a content management system used to manage websites. Drupal was launched in Belgium as a free, open source project in 2001 by Dries Buytaert. It now has more than 870,000 registered community membersin 228 countries, who use it to create websites and develop related tools and applications.

In 2007, Buytaert and a cofounder launched Acquia in Massachusetts; its customers include Twitter, Warner Music Group, Turner Sports, World Economic Forum, Stanford University, Mercedes-Benz, and NPR. Revenue in 2011 was $21.7 million, a 150 percent ­increase from the previous year.

The company has 230 employees.

The trick to building a company in the open source business, said Acquia chief executive Thomas Erickson, is “to identify your value-add.”

In Acquia’s case, Erickson said it is serving as a guide to corporate customers through the sprawling Drupal community, which is constantly adding tools, fixing bugs, and creating applications, called modules, that extend and customize what Drupal can do.

“There are more than 16,000 modules available to use with Drupal,” he said. “People need to know where to start, whom to trust, how to put these things together. They also want someone to call when something doesn’t work as expected.”

Acquia’s business model is similar to Aras’s and Red Hat’s: It sells support services and products that are related to Drupal, such as Web hosting and training.

One client is Maxim, the monthly men’s magazine, which uses Drupal for its website.

“We wanted to go the open source route,” said Michael Le Du, Maxim’s chief technology officer, “but we needed expertise when we hit a wall. That’s what Acquia gives us.”

Meanwhile, among Aras clients is Carestream Health, a provider of medical imaging technologies.

Its chief information officer, Bruce Leidal, had conducted a “bake-off” among Aras software and similar proprietary programs, and chose Aras for the lower cost: under $200 per user, with Aras support, versus $350 per user for the proprietary systems.