New Investment: ROLI

I am excited to announce our investment in ROLI, the inventor of the Seaboard.

The Seaboard is a beautiful redesign of one of the world’s most iconic instruments – the piano – for the modern digital world we live in.  It is the first in a line of digitally programmable, highly interactive, connected music products for ROLI that combine novel design aesthetics, proprietary touch interfaces, and powerful social elements.

continuous_touch

The degree of difficulty on executing a product like this is extraordinarily high.  It requires expertise in material design, fabrication, manufacturing, hardware, and software.  It has to satisfy the demands of the world’s leading artists, while incorporating social elements that appeal to the masses.  Getting to a shipping product was no small feat, and we believe ROLI is at the forefront of a transformation in the music creation, collaboration and consumption process.

We are delighted to partner with Roland Lamb, the founder/CEO of  ROLI, and welcome him to the FirstMark family!

New Investment: Gravie

Well, we foreshadowed we’d be doing more around the intersection of healthcare and technology.  On the heels of our BioDigital and Recombine announcements, I’m excited to publicly announce our newest investment in Gravie.

Gravie sits at the intersection of some profound changes in healthcare.  Consumers are becoming empowered (or forced) to take control of their healthcare decisions more than ever before.  Employers are struggling with the increasing cost curves in healthcare, and in many cases, as disinterested parties, are phasing out coverage.  Insurers and insurance remain incredibly complex to navigate and difficult for the lay person to understand, often times only figuring things out in their moment of greatest need.  And finally a regulatory backdrop that is forcing major change on the system in the form of the ACA (“Obamacare”). 

Gravie emerged to bring simplicity and transparency to this new world order.  An intelligent, easy to use platform to navigate all the complex decisions in terms people can understand and a single place to consolidate all the information around health in one’s lives.  Gravie also offers advocacy to consumers, acting as a voice for individuals and offering help when questions or problems arise.  In short, Gravie is one place to go for peace of mind around your family’s health. 

The company was founded by three fantastic entrepreneurs who have a long history together and in the space.  Abir Sen, Jill Prevost and Marek Ciolko all worked together at Bloom Health, a company they started to bring Private Exchanges to employers, and successfully acquired by Wellpoint.  Abir has also been part of the founding team at Definity (acquired by United) and Red Brick Health (pioneer of corporate health & wellness plans).

We seeded the company in the summer of 2013, and have witnessed swift execution on both product, launch and adoption.  We are delighted to announce the close of a $10.5MM Series A, in which we participated heavily.  We are quite excited to continue our partnership with the team at Gravie and welcome in Mo Kaushal and the Aberdare team!

New Investment: BioDigital

I am excited to announce one of our latest investments, BioDigital.  BioDigital is one of several investments we have made at the intersection of healthcare and technology.  I laid out our rationale at a high level here.

BioDigital is based in NYC and has built a powerful platform around 3D visualization and immersion of the human body.  Our short hand for BioDigital is “Google Earth for the human body”.  Their team sits at the intersection of 3D / CAD software, web technologies (HTML5/WebGL), human anatomy and physiology, bio mechanics and high scale back end infrastructure.  A rich, deep, powerful service made simply available via APIs.  If you want a wicked engineering challenge, apply here.

The team has been working on complex 3D human modeling for the last several years, but with the introduction of WebGL and HTML5, saw a profound opportunity to instantiate all of their models into a Web based platform called the Human.  In the brief period of time since launch, the company has surpassed over 1 million registrants.  Even more exciting to us was the breath of use cases for the product.   Frank Sculli, founder and CEO, details some of them here.

There will be a number of ways to access the Human.  Their web, mobile and tablet apps will appeal to the millions of consumers interested in learning what’s inside our body and how it works.  Consumer health sites will be able to easily use our widgets to offer much richer representations of health conditions that afflict us.  Search engines can embed physiology and conditions directly into rich snippets.  Content publishers can enrich the learning experiences for students across the globe.  Doctor offices and hospitals can use the Human as their front end UI, with patient records mapped to the Human’s ontology.  And more exciting are the ways we cannot think of via our APIs.

In addition, we also can’t predict the ways in which individual consumers will add to the platform  People will be able to append all sorts of information into the Human to improve it in a Wikipedia like model – MRIs, content, interactions, etc.  People will also be able to personalize the human to the things they care about and share them out to the people they love or groups they interact with.  It will be exciting to see how people engage with an experience that was never possible before.

We believe this will be a transformative project and we are at the very beginning.  We are delighted to partner with Frank Sculli, John Qualter, Aaron Oliker and the entire BioDigital team!  Frank’s announcement on the BioDigital blog is here.

Excited to Announce Artisan!

Sometimes the best journeys are the ones into the unknown.  I remember catching up with Bob Moul after he had left Dell late last year.  He had spent a lot of time focusing on Philadelphia’s startup tech scene, passionately working with the Mayor’s offices and programs like DreamIt.  The one area Bob kept coming back to was mobile – as a new frontier, a new challenge, and potentially a new opportunity.

He met Scott Wasserman, founder/CTO of AppRenaissance, and joined on as CEO.  It was a talented team of mobile developers building custom mobile apps for companies.  While the apps they built were really solid, to say it’s not an obvious venture investment was an understatement.  But we loved Bob and the great work he had done at Boomi (sold to DELL in November 2010), and were going to partner with him in whatever area he found interesting.  “Don’t worry, by working closely with customers we’ll find the product opportunity in here,” he said.  That was a few months ago.

Well, today I am thrilled to announce they found that product far more quickly than I anticipated.  Artisan aims to bring to the mobile app world the deep set of tools and infrastructure that exist on the web today.  The initial product is an A/B/n testing software, which allows companies to target specific users with a different look and feel, without requiring coding changes and resubmission to the app store.  Simple examples could be showing a Platinum color app for holders of an American Express Platinum card, while Gold for others, and Blue for those on that product.  One could test how button placements affect conversion.  Or explore user flows within an app.  Again, all areas marketers understand well, have done on the web, now available on mobile!

The best thing is that the platform will extend to a lot of different areas, ranging from advertising to personalization.  Lots more to come here, but I think Bob’s vision of building a large public software company out of Philadelphia is much closer to reality.  I’m delighted to partner with the team and sure as heck we took that journey into the unknown!

Democratizing Education Technology

Today, we’re announcing an investment in Schoology, a next generation collaborative learning platform that combines the elements of a learning management system, a social networking platform, and enterprise resource system all in one hyper-intuitive interface.

I’ve known the Schoology team for some time, having spent the last year getting to know them.  It’s a testament to the power of building enduring relationships.  We’ve had a clear set of mutual expectations of what we were driving towards and it all finally came together.  It is a fantastic team and I am amazed at the power and complexity of the system they have built in the short while they have been around.  The uptake has been tremendous for good reason.

Teachers can sign up for the platform in under a minute and have the best in modern technologies available to them, for free!  Teachers can easily invite students into the system using a unique access code.  From there, the sky is the limit.  Teachers can build a curriculum, create lesson plans, build tests and quizzes, have students submit homework into a dropbox, grade assignments, see classroom analytics, encourage students groups formation for peer learning, and much more.  In addition, teachers can collaborate with one another and share content.  Pushes us one step further towards the notion of Open Educational Resources.  Teachers can also add apps, such as plagiarism checks, directly into their workflow.  All this with a Facebook like interface that requires no training.

The best part of the system is that technology selection has been completely democratized to the actual users.  Schoology does not spend months and years convincing heads of a system as to whether the technology suits their needs.  Users simply adopt it.  Upon seeing users within a system grow naturally, Schoology has the privilege of notifying districts or universities about additional capabilities available to them with a few clicks of a button.  Schoology can also enable powerful integrations with existing legacy systems.  No more promises of what can be, no vaporware, no millions of dollars spent on configuration and changes.

The platform also has transformational capabilities.  Because it is social at its core, it benefits from powerful network effects.  With nearly 1 million users already on the platform across 18,000 K-20 and higher education schools, you can bring the power of a developer community to build on the platform.  Content can be built, shared and purchased directly from within.  Teachers can be given micro-credits to personalize the system for their needs.  Parents can be invited to participate in the educational process.  It is truly a radical shift.

And it’s not just schools that can leverage the technology.  Any institution that views training and learning critical is a potential customer.  In addition to schools, corporations have signed up to use it internally.  One of the largest corporate users is Groupon, which uses the platform for field sales training.  They have their proprietary materials that need to be mastered and tested and revisted regularly to ensure a well trained team.

The next generation of education will bring stark changes: transition to digital textbooks and content, movement towards adaptive learning, advancement of the flipped classroom.  But most powerful of all is potentially the technology platform that connects it and us all together.  Schoology represents just that.  We’re thrilled to be involved with the team.

Education: A Call to Arms

Busy days at FirstMark, on the heels of announcing a seed investment earlier in the week, I am very excited today to announce our investment into StraighterLine.

StraighterLine is an online, low cost, subscription based provider of general education courses that many take in their  first two years of college (Algebra, Biology, Calculus, US History, etc). The courses are ACE Credit recommended and can be transferred for credit to various degree granting institutions (25+ automatically transfer today, over 200+ universities around the country that have accepted post review, and growing). What does that mean in lay terms? Well, you can flexibly and cheaply take a variety of high quality courses at a much lower cost than anywhere else, transfer into institutions that accept StraighterLine’s courses for credit, and bring your blended cost of a degree down dramatically.

The two charts below summarize well the drivers for an investment like StraighterLine:

  

Costs have skyrocketed faster than healthcare over the last few decades. Student debt has ballooned to over $1 trillion, surpassing credit card debt according to the Federal Reserve Board of New York. StraighterLine’s students pay $99/month and $39/course for their pay as you go service or $999 undiscounted for a Freshman Year equivalent. Against even public two year institutions, StraighterLine offers very significant savings for the student.

In addition to pricing, there are other issues lurking beneath the surface. Funding for public education is getting slashed. California’s 112 community colleges are having their budgets slashed by hundreds of millions of dollars. The system is having to turn away students because it is no longer able to find enough space to service them. The unfortunate incidents at Santa Monica College — where the school tried to create a higher priced system for the most in-demand courses in an attempt to balance with supply instead led to riots and maced students/children — underscore this point.

Taxpayer funding aside, the federal government is looking much more closely at graduation rates and successful job placements at institutions that accept students with federal aid.  As institutions begin to trim enrollments and focus on academic quality, their acceptance criteria will continue to grow more selective.  An institution like StraighterLine can be an effective partner in preparatory coursework to ease the transition and improve a student’s chances of success prior to formal enrollment.

Finally, as we think about structural unemployment challenges, the ability to easily access new learning, complete coursework in a flexible manner, and base competency on outcomes of learning and not on time spent in a course (ie, “credit hours”) will be a key part of solving the country’s labor issues.  The influx of non-traditional students (older, single mothers, workers retraining) is expected to grow at a much faster rate than traditional college students, and we will need institutions that can cater to this class.

StraighterLine offers a scalable solution to these challenges, where all parties benefit – easing the burden on taxpayers who fund institutions, saving money for students seeking to improve skills, improving student selection for institutions seeking to raise academic performance, and democratizing access to education for a newly mobile work force.  The ambitions of StraighterLine do not end there. Burck Smith, founder & CEO of StraighterLine, has been a passionate advocate and visionary in the education space for many years. His last company, SmartThinking, pioneered post secondary online tutoring and student support services and was acquired by Pearson.

With the round, we will invest heavily in building out a unique platform and set of services that innovate on behalf of students, embracing all of the things an online, data driven platform can do. We are working with a number of providers to build assessments to help the industry shift towards a competency based view of learning.  And we are also engaging the employer community, to create better linkages between the education students receive and the more tangible successful outcome of employment.

Stay tuned for more, but suffice to say there is a fantastic opportunity to use technology and innovation to leapfrog America once again to the head of the global class! We are delighted to play a small part and partner with a great team in doing so.

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1 [Source: New York Times, Lewin, Tamar.“Higher Education May Soon Become Unaffordable for Most in U.S.”]

2 [Source: LiveScience]

What Changes the Second Time Around?

It’s been a while since I’ve blogged but I’m trying to get myself back on it again. I thought I’d kick off on the backs of our seed investment into appRenaissance announced today.

The CEO of appRenaissance is Bob Moul, whom I had backed in his last company Boomi in 2008. They were a pioneer in the cloud based integration market and Bob led the business to a great exit in 2010 to DELL. Bob left DELL a year later to jump back into the startup world. He eventually caught the mobile bug and joined appRenaissance as CEO earlier this year. When I got the call, it was a no-brainer and we were delighted to partner together again. It got me thinking, what changes the second time around?

  1. Price and terms get figured out quickly. Seasoned entrepreneurs know the game; they know the pros and cons of too high/too low; they know the danger of running out too quickly or overcapitalizing; they don’t get sucked in by the hype in the echochamber; you don’t have to unwind all the misconceptions that exist out there. There is a tremendous clarity that allows us to virtually waste no time in coming to a handshake. Whether it was Bob Moul at appRenaissance or Chet Kanojia at Aereo, the conversation took a total of 10 minutes and we were onto building something great.
  2. Don’t need proof because the trust is there. For first time entrepreneurs, generally people like to see some evidence of execution. We want to see what you’ve been able to accomplish, before and now. The relationship is so new that it’s hard to take people simply on their word. We want to see it in some numbers somewhere. The second time around, we already know what you can do and have done before. We’re glad to take early risks blindly because the trust is there.
  3. Neither side worries about protecting outside case scenarios. You know the ones I mean… Spending a few weeks defining “Cause” and how to get a ladder of severance lengths based on that. Taking great pains to ensure you approve budget because someone might set one at zero and pay themselves insanely. Having to define exit thresholds and multiples because both sides worry about blocking (or not accepting) an exit because someone didn’t think they made enough money. In general, we never get hung up on the above, but they are real and these are the outside cases that strangers might try to protect. The second time around everyone focuses on the core issues, dealing with things that set up good governance and good mutual accountability, and knock them down easily.
  4. It’s a lot more fun. If you’ve had a good outcome with someone, it’s likely the second time, an entrepreneur will be thinking bigger, focused more clearly and will want to build longer. Bob’s goal now is no less than to build a big public software company based in Philadelphia. We love BHAGs like that – it clarifies the mission and energizes all around.

Since starting FirstMark in 2008, I am getting my first wave of entrepreneurs coming back for our second time together, and it’s fantastic. We’ve made it a point to build early, deep and longstanding relationships that make us a place to go again and again. They serve as the best references for new entrepreneurs (first time or repeat) we endeavor to work with. And I look forward to doing so in the future with the many incredible first time entrepreneurs I’m so privileged to be involved with now.

Lot18, Wine, And Next Gen Retail

It’s been a busy 2011 for FirstMark.  We’ve had some big exits, some great new investments, and seed companies blossoming into market leaders.  On that last theme, I’m excited to congratulate the Lot18 team for closing their $10MM Series B round of capital, led by NEA with substantial participation by FirstMark.

Lot18 is a next generation wine e-commerce company, initially leveraging a membership driven engagement model.  What excited us in October 2010 when we first seeded the company was how Lot18 took an incredibly complicated category, and created a beautiful site where wineries’ products were showcased to consumers.  Though it leverages a membership driven model, this is not about distressed goods or deep discounting as is commonly confused with the space.

Wine has a complex distribution chain of wholesalers and distributors before getting to the retail store.  Lot18 allows wineries to bypass that distribution, while protecting their brand and introducing them to a much broader audience.  Value gets passed directly to the end customer, enabling outstanding prices on great wines.  Frankly, as a “non-wine” person, I find the discovery and education that Lot18 offers to be far superior to any in store retail experience.  I can buy a great wine at a great price (because it’s direct) and know that it’s a wonderful product to bring out while having guests over, give as a housewarming gift, or enjoy on a special occasion.  For people who love wine, you’ll find product that has never been released from cellars, or offers from wineries that have 3 year long wait lists, and benefit from their Select service, which calls our top buyers with offers that could make anything in their cellars blush.

The company has grown more rapidly than anything we could have predicted.  It helps that it is led by serial entrepreneurs Kevin Fortuna and Philip James, who have built some very large businesses in their past (and have a few unique experiences to boot).  They have executed extremely well.

We’ve had a long standing thesis in E-commerce, from Stubhub to Shopify to Lot18 to AHAlife and many more.  Retail is changing faster than we can imagine.  We’re delighted to invest behind this team, and look forward to working with our new partners in NEA.

If you’d like to become a member of Lot18, simply click here to get an invitation.

Here’s to Bamboom (now Aereo)!

We are very excited today to announce our investment in Bamboom Labs (now Aereo).  This opportunity brings together all things one could ask for in a venture investment – a great team, a big, disruptive idea, a large market, and a cool web site.

Bamboom was started by Chet Kanojia, an entrepreneur I had the great fortune to invest in and get to know for many years at Navic Networks.  Navic was an outstanding company bought by Microsoft in 2008 in a very successful outcome.  They were one of the few positive, large exits in the interactive television space, and Chet’s leadership was a big part of that.  Chet’s last round of capital came just after the bubble burst in 2001, and he managed it brilliantly until our ultimate exit.  Joining Chet at Bamboom as CTO is Joe Lipowski.  Joe is a brilliant technologist and RF engineer we’ve known for a long time as well.  We backed the spin out of Celiant from Lucent, and Joe was the CTO at Celiant (acquired by Andrew for $470MM).  When Chet began to talk to us about his idea, it was a no-brainer to put the two together.  The team around these guys is equally talented and truly best in class.

The idea is quite simple yet technically complex and brilliant.  Bamboom wants to enable customers to experience broadcast TV, over the Internet, to any device, without all of the headaches associated with accessing it today.  They have combined brilliant RF engineering with wonderful software design to create an incredible consumer experience.  More details will emerge as we roll out of closed beta, but suffice to say it looks fantastic.  This is what a next generation television experience should look like.  Fully integrated, portable, native social integration, rich interactivity.  As consumers shift television consumption online, we will see new content, commerce and advertising opportunities that we can only begin to imagine.

We are delighted to partner with Chet and our co-investors on the journey!

New Investment: Shopify

One of the key trends we have been following at FirstMark is next generation retailing and e-commerce.  We’ve seen rapid adoption of consumers buying online across categories, and it’s no longer controversial that people are willing to buy even complex items physical sight unseen.  We’ve seen new business models like flash sales, Netflix-style rentals, and direct producer to consumer relationships blossom.  The Internet allows for sourcing, curation, and selling on a level unparalleled.  All in all, we are in a golden period for retailing online. 

With this renaissance in e-tailing, we noticed most of the e-commerce platforms out there were significantly dated.  Many had not changed for over a decade, offered very little flexibility, and did not take advantage of the incredible advances in software we have seen in that period of time.  But we found one – Shopify – which we are extremely excited to announce as our latest investment

Shopify is a unique retail platform company that allows merchants to have an online store up and running in 20 minutes, but with a unique app store model that allows it to also service the highest end commerce providers.  There are some interesting applications on the platform today, but the goal is to rapidly build out the ecosystem so a retailer can find everything they need to run their business – online marketing, billing, inventory, logistics, supply chain, mobile, etc.  With this approach, we should satisfy any retailer from small to large with a consistent platform and a best of breed set of options.

Shopify was founded by Tobi Lutke several years ago as he and his friends wanted to launch their own snowboarding store.  They found most of the alternatives out there very kludgy.  Fortunately for the rest of us, they are renowned Ruby On Rails core contributors and developers, and so they decided to build their own store.  They opened the platform for others in 2006, and have surpassed $100MM in Gross Merchandise Value with over 10,000 active stores on the platform a few years later.  It’s a real business that is poised to power the next generation of retail.

We are excited to partner with Tobi, the Shopify team, Bessemer and Felicis on this investment.

Learning in the Internet Era

One of the most exciting areas where the impact of technology and the Internet will be felt is in education.  In a world where many students will leverage the Web for content consumption, where textbooks will become rich interactive experiences, and where the iPad or Kindle will become a standard part of the learning platform, education will begin its inevitable march from being an imprecise art optimized for the “averages” to a highly measured science designed for the individual.  Concepts such as “Assessment for Learning” are advancing the notion of regular feedback as a critical element of curriculum for both teachers and students.  There is no better platform than the Web to transform the student experience.  And many would suggest it couldn’t come at a better time.

Today, on the heels of that notion, I am excited to announce our investment in Knewton.  On the surface, Knewton is the leading online provider of test preparation services such as the GMAT, SAT, and LSAT.  Underneath the hood, the Company’s service is powered by a groundbreaking adaptive learning engine that takes the myriad of data a Web-based platform generates and optimizes curricula down to the concept level for an individual.  It allows the Company to make performance improvement guarantees no one else is willing to offer, and leads to its customers giving as high a net promoter score as respected brands such as Apple and Google receive. 

To accomplish their ambition is very technically complex, which is why the team at Knewton includes some of the foremost researchers and creators of computer adaptive testing.  Knewton has taken this engine powering their own direct to consumer service and is now opening it up for third parties to instantly bring adaptivity to their content.  “Just add Knewton”.  Over the coming twelve months, Knewton will begin partnering with leading content providers in the market to supercharge their offerings. 

While test prep alone is a multi-billion market, education is a multi-trillion dollar market.  At FirstMark Capital, we look for ideas that can transform large marketplaces and there are few as gigantic and meaningful as this.  NYC is the home of the largest school system in the US and the base of the education industry’s leading content providers.  As we have seen across other vertical industries being disrupted, it’s no surprise that this startup was born here.  We are delighted to partner with the founder, visionary, and CEO Jose Ferreira and the rest of the NYC-based Knewton team as they seek to change the world!