Before allegedly becoming part of the secret National Security Agency surveillance program PRISM, Yahoo fought against it in court, in what was until now a secret challenge. The company eventually lost and had to comply, according to new reports.

This revelation comes from newly leaked documents, obtained by The New York Times, that shed some light on how Yahoo became part of PRISM, the classified NSA snooping program that allows the government to retrieve foreign users’ data from tech giants, which reportedly include companies like Google, Facebook, Microsoft and Apple

Read more…More about Privacy, Surveillance, Prism, Us World, and Us

via startup news

Every day, we collectively spend 133,000 years of time on the internet. That’s the web according to Intel.

Intel executive vice president Tom Kilroy is giving a keynote speech at the Computex trade show in Taiwan. He just showed the slide above. It shows that more than 500 million people update their status on social networks each day. About 500 million photos are updated every day. And 56,000 Hollywood-length movies are uploaded to YouTube. And three times more video is watched on Hulu than movies viewed in theaters.

This data suggests how fast things have changed in the past few years and it also tells you why Intel is bullish about the future of computing, whether that computing happens on PCs, smartphones or tablets.

Filed under: Big Data, Business

via startup news

The latest version of Microsoft Office is the company’s best-selling edition to date, hitting the 1 million milestone just 100 days after its launch, Microsoft announced on Wednesday.

The company said Office 365 Home Premium — also known as Office 2013 — now has 1 million subscribers. The product, which was released in January and was designed for Windows 8, has been downloaded once every second, on average, since its debut.

In January, Microsoft made its new Office product available via subscription. Users can download it and install it on up to five computers and gain access to features including 20GB of SkyDrive storage, 60 minutes of Skype service and app updates. The option to download a standalone copy for just one machine (and no subscription) still exists, although Microsoft didn’t release any numbers about that. Read more…

More about Microsoft, Microsoft Office 365, Tech, and Apps Software

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Waze, the social navigation app that is reportedly an acquisition target for Google, among others, on Thursday unveiled an upgrade that includes integration with Facebook Events.

The upgrade, timed for the start of summer driving holidays, boasts one-tap navigation via the oft-overlooked Facebook Events. In theory, the app will remind you of planned events this summer and, when apt, will organize large groups driving to weddings, concerts or road trips in multiple cars. RSVPing to a Facebook Event will trigger directions at the appropriate time. In addition Wazers heading to an event can see which of their Facebook friends have already arrived. Of course, Waze will also use crowdsourcing to check the roads for the quickest, least-trafficked routes as well Read more…

More about Waze, Facebook Event, Facebook, Tech, and Mobile

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via http://www.startupbootcamp.org/blog/2013/may/where-should-you-start-your-startup.html

The shift to enterprise is a bit of the “tail wagging the dog.” The poor short-term performance of a few consumer IPOs like Groupon and Facebook coincided with the strong performance of software as a service IPOs such as LinkedIn, Workday and Splunk. Since IPOs have traditionally been the main method for VCs to find liquidity, these investors have shifted their focus. When this happens, entrepreneurs, ever pragmatic, adopt new passions.

That’s not to say there aren’t great things about the enterprise. Three of my favorite attributes of enterprise SaaS businesses are: 1) There is less business model risk; 2) It’s easier to identify pain-points to address relative to ephemeral tools for fighting boredom, and 3) Buyers are usually more rational than consumers – the better product tends to win.

Gartner forecasts that the SaaS market will grow 19.5% through 2016, from $13.5 billion in 2011 to $32.8 billion in 2016. This estimate might be conservative when you consider that Oracle and SAP alone did $58.5 billion in revenue last year, although to be fair both companies are more than SaaS.

That said, enterprise businesses are not easy to build. If you’re of the entrepreneurial blog reading crowd, you’re likely familiar with the refrain: “It’s become cheaper to start an enterprise business, but it’s still expensive to scale.” True that. But in an effort to create more actionable advice for budding Marc Benioff’s, I decided to analyze 12 recently IPO’d SaaS businesses to tease out more insights about what it takes to build a big enterprise software business.

You can start a successful enterprise business without an IPO but I’m focusing on businesses that have reached an IPO for two reasons: Data availability and the fact that an IPO is still the deus ex machina in people’s minds when they invest in SaaS businesses.

Here are the companies I looked at:

For this analysis, I used each company’s first S1 filing, the logic being that’s when everyone first feels that the company is ready for primetime. The business has reached a point where it’s comfortable sharing financials with potential public investors.

Here’s what I learned through this exercise. If you start a SaaS business you will not be Kevin Systrom; you will be Sisyphus. Because building a SaaS business takes a lot of time and money. In fact, the average time between founding and IPO was 9.5 years and the median was 8 years. At a minimum you’d have to expect to spend 7 years building your business, though it could take 13 years.

Meanwhile, raising money is painful, but if you start a SaaS business you should probably learn to love it because you’ll be doing a lot of it. On average, these companies raised 4.45 rounds of funding (not including seed rounds) with a median of 4. At a minimum, these companies raised 3 rounds and many raised 6 rounds (that’s a Series F, as in “F***, I need to do this again?!”)

The average amount of money raised by these companies was $109 million, with a median amount raised of $74.2 million. The lowest amount, by far, was Bazaarvoice at $19.9 million.

The most? More than $300 million.

So why does it cost so much to start a SaaS business? Feet on the street.

Enterprise software is competitive, so the need to have smart, savvy sales reps delivering insights face-to-face to potential buyers has not gone away. There’s no click-to-buy. You need real live, breathing, resource consuming human beings. As a result, 35% of the total employees at these companies, on average, were in sales and marketing at the time of the S1 filing, with a median of 37.6%.

Given the salaries commanded by talented sales reps, this translated into major expenses. As a percentage of revenue, sales and marketing expense was 45% on average, versus 20% for R&D and 15% for G&A respectively.

Here is another look at expenses as a percentage of revenue:

All of the investments in sales and marketing are there to accelerate and get to scale, but what is scale? Or at least enough scale to go public. Based on the companies I looked at, the average revenue for the most recent FY as of the S1 filing was $73 million with a median of $61 million. The smallest companies were at $36 million, the largest at $134 million.

In terms of employees, the average size was 532 and the median size was 363.

Generating the revenue needed to be at scale was not simply a matter of clicking a button to deploy software for these SaaS businesses. A significant portion of their total revenue came from professional services.

For the companies that broke out their revenue between “Subscription” and “Professional Services” the average percentage of total revenue derived from professional services was 20%, with a median of 17%. The implication is that SaaS businesses shouldn’t expect to be hands-off. Big companies demand great service, particularly from smaller vendors.

For those of you who haven’t read Valuation: Measuring and Managing the Value of Companies between Pacificos in Aruba, the central lesson of the book, and any corporate finance textbook, is that value is driven by cash flow, which springs from return on invested capital (ROIC) and growth. ROIC is simply operating profits adjusted for taxes divided by invested capital.

All of this comes together in a formula subtly titled the Zen of Corporate Finance: Value = (NOPLAT x (1-[growth/ROIC])) / (WACC – g)

Why does this matter? It matters because most SaaS businesses have little or no operating profit as they scale, so they need to grow with a capital “G” to command a good valuation.

For the companies analyzed, the average 1-year revenue CAGR as of their S1 filing was 59% and the average 2-year revenue CAGR was 75% (the medians were 55% 1-year CAGR and 85% 2-year CAGR).

These growth rates may not feel impressive, but keep in mind this growth is in dollars forked over by skeptical enterprise buyers.

Generally the more money these companies lost, the faster they grew.

There is of course some causation at play here. As I noted above, a SaaS business requires a lot of money to scale because scaling requires a big sales and marketing team, which is needed to achieve the rapid growth expected in the absence of cash flow, due in large part to sales and marketing costs. So these businesses are in a constant state of raising capital and scaling the sales team, in addition to building an awesome product and supporting it.

The circle looks something like this:

This approach is driven by two realities. These companies are pursuing large markets, with a lot of opportunity, and they are competing against behemoths and can’t show up to a gunfight with a knife.

So why go through the effort? Because SaaS business are great over the long-term. They yield powerful margins and recurring revenue. The average gross margin for these companies at their S1 filing date was 65% with a median of 66%.

The implication is that once these businesses have scaled, and more revenue is coming from renewals, the 45% of revenue spent on sales and marketing can be reduced. The result is a high margin business with predictability.

If you just spend 9.5 years raising $110 million dollars across five rounds of funding, and hire 530 employees, including a sales and marketing team of 160 people, while building a world-class product that can win in the hyper-competitive enterprise software business, to reach $70 million in annual revenue, you can create a high margin business with predictability.

Sure you don’t want to build a dating app?

via http://pandodaily.com/2013/05/21/memo-to-this-years-yc-class-its-damn-hard-to-build-an-enterprise-company/

SAN FRANCISCO – Your health is not solely in your doctor’s hands. As mobile technology improves and health care providers reach out to consumers, many apps are popping up to help people manage their own health.

The problem is that too many of these apps are useless.

At HealthBeat 2013 today, David Levin, chief medical information officer of Cleveland Clinic explained what he sees all too often when reviewing new technology: “CrApps,” or crappy apps.

Fortunately, not all apps are crappy. Here are some of the most promising new consumer health apps.

Pokitdok is a health marketplace with price transparency for health services, where consumers can shop directly from providers. Originally launched as a “Pinterest for healthcare,” the mobile app now offers tools for payers to facilitate transactions.

Coolness factor: Although it’s unclear whether consumers will actually purchase health services online, fully transparent cost data should facilitate better care decisions and value based judgments. The app also collects quality ratings data for providers so that patients can generate a match score based on their personal and clinical needs in order to locate their ideal provider. PokitDok makes it possible for patients to consider both efficacy and price when making healthcare decisions.

Caremerge is the first app that allows caregivers to communicate and coordinate with those living in senior  communities. Through their web and mobile apps, staff can connect with each other while offsite stakeholders (doctors, family members, etc.) organize timely care.

Coolness factor: As the population ages and baby boomer smartphone adoption increases, Caremerge will engage families in managing their elders’ health and help reduce hospital readmissions. But only 18 percent of consumers age 50 or older currently have a smartphone, and those are exactly the people who are generally caring for seniors, so this number will have to rise.

MangoHealth came out of RockHealth’s 2012 class and enables users to facilitate and track their medication intake. The app identifies potentially dangerous interactions with medications, supplements, or food and drink, provides medication reminders, and offers real-world rewards for taking medication on time.

Coolness factor: Over half of the U.S. adult population uses supplements and 40 percent of older adults take 5 or more prescriptions per day. As these numbers increase, a user-friendly app can prevent adverse health reactions and decrease medication non-compliance (estimated to be a $289 billion problem.)

The Asthmapolis sensor sits on top of an inhaler and automatically syncs data to a mobile app on your smartphone. The system provides personalized feedback and education to control asthma, which affects 25 million people in the US.

Coolness factor: Once the sensor is paired, the phone will automatically capture data from the sensor whenever it is nearby (I wish my Jawbone Up were this easy to use).

Allayo is a virtual health assistant that can save your family as much as 100 hours per year on health care activities. Members can send reminders, order and refill prescriptions, schedule appointments, arrange for tests and labwork, find help with insurance claims, and arrange home delivery. (The company also mentions gamification and loyalty, but we’re less excited about those buzzwords.)

Coolness factor: Allayo has created a new category of health care offerings; the virtual healthcare assistant. As our current system becomes increasingly difficult to navigate, this service provides  “certified medical assistants” who are available on the phone or through secure chat to take care of members’ health needs.

Photo credit: Michael O’Donnell/VentureBeat

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via VentureBeat