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The Ebay Veteran Cashing In On The $369 Billion Returns Boom

He raised $1.2 million from friends at VC firms True Ventures and Harrison Metal in 2009 and has collected a total of $73 million from investors. “They’re just scratching the surface of what we think is a massive market,” says Pete Jenson, a partner at Spectrum Equity, which led a $65 million Series C round in 2018. Neither he nor the company would discuss the company’s valuation or their ownership stakes other than to confirm that Rosenberg has a minority stake. Based on the one publicly traded competitor, Liquidity Services, the company is likely worth at least $130 million, but that is likely low, given how fast it is growing.

“That is why Spectrum wrote us a check for $65 million. They like big markets,” agrees Rosenberg.

B-Stock isn’t the only option, of course. Washington, D.C.-based Optoro operates one warehouse but these days mostly sells software that helps chains identify the best way to offload unwanted inventory, whether by restocking merchandise, returning it to a vendor, refurbishing, donating or sending it to a secondary marketplace. It also operates Blinq.com, which sells one-off returns to consumers, and Bulq.com, a smaller B2B competitor to B-Stock. Happy Returns installs pop-up receiving sites for chains that have limited brick-and-mortar presence, and Liquidations.com similarly sells excess inventory via auction.

Rosenberg has taken a different tack, putting all of the burden back on the original sellers, who deal with sorting, packing and shipping items to buyers. No inventory risk, no shipping costs and all the pricing decisions are made by the buyers and sellers. Even the warehouses where all that stuff sits in are the domain of retailers or third-party logistics companies. Sellers pay an estimated 5%-to-10% transaction fee based on the amount of merchandise they move through some 175,000 auctions every year. That keeps overhead low–85% of Rosenberg’s costs consist of doling out paychecks–and that, he claims, has helped him produce net profits since the day he started in 2009.

To help retailers get the best price, B-Stock tinkers with things like whether to sell stuff together or separately, how big a lot should be, how long an auction should run, what pictures to use and what day it should close. It also helps leverage the power of brands–trusted retailers can command a 15% premium–with separate marketplaces for each customer.

“There are times when we get bogged down with returns,” says a manager at a Fortune 500 company that has worked with B-Stock for six years and declined to speak on the record. “We needed someone to help us find homes for product that might beforehand been thrown away.”

Who’s buying all this? People like Clayton Cook, 33, who runs three discount stores in Salt Lake City. He spends an hour every morning browsing B-Stock and typically places about 150 to 200 bids for toys, apparel and other items sold by Walmart, Target and Costco. He doesn’t have time to haggle, so he lowballs his bids and figures he will only win a fraction of them. “The biggest plus is that I get it directly from the source. Because of that I get a better variety and a better product,” says Cook, who expects sales of $8 million in 2019. The site has also attracted a lot of eBay and Poshmark sellers, although the company doesn’t keep track of just how many.

That’s not to say the business is hassle-free. The company’s Better Business Bureau page is littered with complaints from unhappy buyers, most of them upset by the actions of a retailer but blaming the middleman as the face of the transaction.

Rosenberg says the marketplace model has allowed him to build the biggest online liquidation business in town, yet he still only lays claim to less than 2% of a liquidation market that totals $100 billion. To continue cashing in on the returns boom, he wants to bring on outside companies who can offer various logistics services, including sorting and shipping, for an extra fee. He also has plenty of new business to chase: Only 18 of the top 100 retailers in the country are working with B-Stock, plus his current customers could be liquidating even more stuff through his platform.

“It’s a huge opportunity,” says Rosenberg. “And a really, really big market.”

COVER PHOTOGRAPH BY AARON KOTOWSKI FOR FORBES.

Get Forbes’ daily top headlines straight to your inbox for news on the world’s most important entrepreneurs and superstars, expert career advice and success secrets.

I am a staff writer at Forbes covering retail. I’m particularly interested in entrepreneurs who are finding success in a tough and changing landscape. I have been at Forbes since 2013, first on the markets and investing team and most recently on the billionaires team. In the course of my reporting, I have interviewed the father of Indian gambling, the first female billionaire to enter the space race and the immigrant founder of one of the nation’s most secretive financial upstarts. My work has also appeared in Money Magazine and CNNMoney.com. Tips or story ideas? Email me at ldebter@forbes.com.

Source: The Ebay Veteran Cashing In On The $369 Billion Returns Boom

 

 

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This London Tycoon Harbors A Surprisingly Shady Past

Tej Kohli’s name is up in lights in Paris, flashing on the walls in giant, bold type inside the new high-ceilinged headquarters of French e-sports Team Vitality, a 20-minute walk from the city’s Gare du Nord train station. Some of Europe’s top video game players, influencers, journalists and sponsors have arrived on this November day to buoyantly pay tribute to Kohli, a U.K.-based, Indian-born entrepreneur, now heralded as the lead investor in the e-sports team. Team Vitality has raised at least $37 million and scored partnership deals with Adidas, Renault, telecom firm Orange and Red Bull, with a stated goal to become the top team in European competitive gaming.

E-sports, Kohli proudly tells Forbes, “encompasses the entire spectrum of business … [and is] not very different from other things we do in technology.” His wavy mane of dark hair stands out in the room like a beacon, as he beams amid the buzz and recognition.

London is home to 55 billionaires, with more on the outskirts, and they generally fall into two camps: those who completely shun publicity, and those, like Richard Branson and James Dyson, who enthusiastically embrace it. Kohli, who lives in a multimillion-dollar mansion in leafy Henley-on-Thames, aspires aggressively to the latter. In April, Kohli told the FT’s How To Spend It supplement that, “Sometimes in business it’s important to show you can sell yourself by way of your lifestyle.” His website describes him as “Investor, Entrepreneur, Visionary, Philanthropist,” with photos of an apparent property portfolio, with about half a dozen apartment buildings in Berlin, one in India and an office tower in Abu Dhabi. He claims to be a member of two exclusive London private clubs, 5 Hertford Street and Annabels, and publicly gives tips on “foie gras … roast chicken” and places where “the steaks are huge.”

Kohli has employed a large coterie of PR consultants and actively courts the media, pushing grand visions that back up this image. In a 2013 article he wrote for The Guardian, he offers advice on how to get a job in the tech industry (“Learn to code”). In 2016 he told a Forbes contributor: “The one mission that every entrepreneur has, as a person rather than as an entrepreneur, is to extend human life.” And his Tej Kohli Foundation Twitter bio brags that “We are humanitarian technologists developing solutions to major global health challenges whilst also making direct interventions that transform lives worldwide.” A press release issued in mid December boasted of more than 5,700 of the world’s poorest receiving “the gift of sight” in 2019 at Kohli’s cornea institute in Hyderabad, India.


Kohli also aspires to be validated as a billionaire. Over the past two years, his representatives have twice reached out to Forbes to try to get Kohli included on our billionaires list, the first time saying he was worth $6 billion—more than Branson or Dyson—and neither time following up with requested details of his assets. (Kohli’s attorneys now claim that “as a longstanding matter of policy,” Kohli “does not, and has never commented on his net worth,” suggesting that his representatives were pushing for his billionaire status without his authorization.)

There may be good reason for his reticence. It turns out that Kohli—who in a July press release describes himself as “a London-based billionaire who made his fortune during the dotcom boom selling e-commerce payments software”—has a complicated past. Born in New Delhi in 1958, Kohli was convicted of fraud in California in 1994 for his central role convincing homeowners to sell their homes to what turned out to be sham buyers and bilking banks out of millions of dollars in loans. For that he served five years in prison.

Kohli then turned up in Costa Rica, where he found his way into the world of online gambling during its Wild West era in the early 2000s. He ran online casinos, at least one sports betting site, and online bingo offerings, taking payments from U.S. gamblers even after U.S. laws prohibited it, according to seven former employees. He was a demanding, sometimes angry boss, according to several of these employees.

A spokesman for Kohli confirmed that he ran an online payments company, Grafix Softech, which provided services to the online gambling industry, between 1999 and 2006—and that he acquired several distressed or foreclosed online gaming businesses as a limited part of the company’s portfolio. “At no point was any such business operated in breach of the law,” Kohli’s representative said in a statement.                   

Though his representative claims that Kohli has had nothing to do with Grafix since 2006, Forbes found more than a dozen online posts or references (some deleted, some still live and some on Kohli’s own website) between 2010 and 2016 that identify Kohli as the chief executive or leader of Grafix Softech—including the opinion piece that Kohli wrote for The Guardian in 2013.                        

Even in a world of preening tycoons, this juxtaposition—the strutting thought leader who actively gives business advice while he just as actively tries to stifle or downplay any sustained look into his business past—proves eye-opening.

According to Kohli’s back story, he grew up in New Delhi, India, and he has told the British media that he’s the son of middle-class parents. Per his alumni profile for the Indian Institute of Technology, Kanpur (about 300 miles southeast of New Delhi), Kohli completed a bachelor’s degree in electrical engineering in 1980 and developed “a deep passion for technology and ethical and sustainable innovation.”

At some point, he wound up in California, and set up a “domestic stock” business called La Zibel in downtown Los Angeles. Kohli still uses the Zibel name for his real estate operations today. By the end of the 1980s, Kohli was presenting himself as a wealthy real estate investor who purchased residential properties in southern California to resell for profit. The truth, according to U.S. District Court documents, was that from March 1989 through the early 1990s Kohli, then reportedly living in Malibu, had assembled a team of document forgers and “straw buyers” to pull off a sophisticated real estate fraud.

Source: This London Tycoon Harbors A Surprisingly Shady Past

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… a scalable, accessible and affordable technology solution to end corneal blindness worldwide. VIDEO: Wendy & Tej Kohli Discuss The Mission And Purpose Of The Tej Kohli Foundation https://www.businesswire.com/news/hom…

Toxic Signs Of A Multifamily Investment

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When investing in multifamily properties, there are other factors outside the cap rate, P&L, rent rolls and cash on cash that you should consider. In fact, the numbers, although highly critical in your analysis, are only a portion of what should dictate the decision to proceed. As you begin your due diligence period, you may want to consider these other potential pitfalls before you seal the deal.

What To Look For

The pulse of a multifamily investment doesn’t always come from what the books are saying. In fact, if you fail to investigate the day-to-day culture of tenants and demeanor of the current property, you could be in for a big surprise.

Unless you have the privilege of being one of the few investors that can walk into a new property and completely clean house and not worry about cash flow, these indicators may be warning signs of a much deeper-rooted problem that may not be worth the investment.

• Excessive wear of interior of units: Normal wear and tear is one thing, but severe deferred maintenance found amongst a higher percentage of units could be a telling sign of trouble. Outside issues found in inspections, walking each unit is by far one of the most effective ways to determine if this is an issue.

• Consistent negative feedback from tenants: The key here is listing any repetitive, serious issues that keep coming up and being able to discern from the minor issues. Talking to tenants is a great resource for information, and you should capitalize on the opportunity while you are walking each unit. Understanding that tenants have no real incentive to speak anything but the truth typically makes the feedback more reliable and genuine.

• High traffic at night: How a property operates at night is another piece of the puzzle you may want to consider when analyzing a multifamily investment. Typically, during the day, people are at work and there is not much activity. A visit at night can give you the insight you may need to see if the safety of the property is adequate or not. Extremely high traffic at night could be a potential indicator of crime, but, more importantly, it can be a deterrent for future tenants.

• The unhappiness of tenants: Are the tenants unhappy or happy? It might seem like a silly question at first; however, the crux of the sustainability and future of the investment can lie within the answer. Do you see more positive feedback than negative? If this answer is no, you may want to find out why and see if the solutions are in line with the budget and the vision of the investment. Solutions to these issues could be as simple as a more secure entry room door or better lighting outside the walkways. However, if it’s due to criminal behavior or domestic issues in the complex, this can help open your eyes to the entire picture and consider factors the numbers fail to disclose.

As investors scream through the numbers, it’s easy to bypass the human side of the transaction. Where the human component of multifamily should be considered just as crucial to the decision, it’s not uncommon to be an afterthought or one of the lower priorities of the analysis. Focusing solely on the bottom line and not taking this factor into consideration is a recipe for disaster.

The damage that a toxic culture in a property can do is much more impactful because it not only affects the individual, it can spread to the entire community. You can fix a leaky sink, a broken heater or clean up the landscaping, but not addressing these issues can take a major strain on the investment if you’re not prepared.

Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?

Owner and Qualifying Broker at Rhino Realty Property Management and Rhino Realty B&B, entrepreneur, investor, advisor, author and speaker. Read Alex Vasquez’ full executive profile here.

Source: Council Post: Toxic Signs Of A Multifamily Investment

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http://www.biggerpockets.com – The 50% Rule is a great tool for quickly estimating the potential cash flow from a real estate investment. This video will walk you step by step through the math and show you how quickly and easily a cash flow estimate can be – for any size real estate investment.

Don’t Give Your Kids An Inheritance, Give This Instead

What Can Be Better Than An Inheritance? A Personal Matching Program

Getting an inheritance can be a good thing – or a bad thing.

While Millennials may wish their inheritance will someday pay for their retirement, that may or may not happen. According to a 2018 Charles Schwab Study, more than half (53%) of young people ages 16-25, “believe their parents will leave them an inheritance, versus the average 21% of people who actually received an inheritance of any kind.”

And, if they do receive an inheritance when they are close to retirement, that may not help them. It turns out that one out of three Baby Boomers who received an inheritance spent it within two years, according to research conducted by Dr. Jay Zagorsky, Senior Lecturer at Boston University Questrom School of Business, based on data from the Federal Reserve and a National Longitudinal Survey funded by the Bureau of Labor Statistics that studied the period 1985-2008.

A Better Option: A Savings Program With A Kick

Wouldn’t it be a better option to help youthful members of the family set up a savings program with a kick to it – a match that you arrange to ignite interest, leverage time and boost returns through compounding?

Let’s say your son “Steve” is a 20-year-old college student who lives at home with you. Steve has a part-time job during the school year and works full time over summer breaks.

Steve hasn’t developed a rule set for saving money. He is not eligible for a 401(k) at work. He is not thinking about a far-off retirement, but he believes he might benefit from a nice inheritance, probably just when he might need the money when he retires.

As Steve’s Mom or Dad, you know better. You’d like Steve to learn how to become financially secure in his own right.

Let’s Make A Deal

Here’s how you can help. You make a deal with Steve:

“For every dollar you save, I will match you dollar-for dollar for five years. But there is a catch. My match goes into a retirement plan for you, a Roth IRA, that you must agree not to touch until you retire someday in the far away future.” 

That gives Steve something to think about. If he saved, say $500 a month of his own money, he would have $30,000 of savings in five years. He would also have an additional $30,000 funded by his parents in a Roth IRA that he would agree not to touch. Nothing wrong with that deal. . . But what about the constraint on not using that Roth money until retirement?

Maximizing Roth Limits While Avoiding Gift Taxes

That $500 monthly ($6,000 yearly) figure is magical.

It is the maximum ($6,000) that can be contributed to a Roth IRA per year, the annual limit for funding a Roth, according to the IRS.

It also happens to avoid a gift tax obligation (the parents’ match is a gift). Since $6,000 is well under the $15,000 annual exclusion, Steve’s parents would not be subject to gift taxes for funding the Roth. (Read “IRS Announces High Estate And Gift Tax Limits For 2020.”)

Will Steve Accept The Offer?

For Steve to see the full potential of the matching program, you’ll want to show him what the Roth can accomplish over the decades between now (age 20) and age 65, a period of 45 years. The Roth will need to be invested for long-term capital appreciation potential. The best way to do that is through a simple S&P 500 Index Fund.

What If The 45 Years Turn Out To Be Terrible Markets?

This is where history comes in handy.

For skeptics, we can look at the worst performing 45 year market periods since the 1920s. For the optimists, we can review the best. While history will not repeat itself exactly, history does provide a frame of reference.

Let’s go back in time to see the worst outcome for a five year program of monthly investments in an S&P 500 Index Fund with a 45 year horizon.

That 45-year period ended with the Financial Crisis (1963-2008).

Had Steve started his five-year, $500 a month program ($30,000 invested) at the worst of times, his age 65 value would have grown to $1,192,643, an average annual return of 9%.

What If The Next 45 Years Turn Out To Be Terrific Markets?

If Steve had lucked into the best 45 year period (1946-1991), he would have had $4,368,046 at age 65 (highest 45-year holding period), an average annual return of 12.4%.

What If Returns Are Just Average?

What about the median return (1931-1976)? Steve would have had $2,421,743 at age 65, an average annual return of 10.9%.

What If Steve Wanted Safety Over Capital Appreciation?

If Steve had been very conservative, he may have considered the safest option, a money market fund that tracked 90 day T-Bills. The best 45-year period for money market funds (1956-2001) would given Steve an age-65 retirement nest egg of only $356,519, a 6% average annual return.

You can see these comparisons graphically in the chart below.

The point is this: Steve can’t control what type of market he will experience. But history can give him a frame of reference.

Is Steve Convinced?

To accept his parent’s matching proposal, Steve needs to see the benefit of investing in himself (and having others invest in him through the match). His interest needs to be ignited through the math behind the market, the math that leverages time and boosts returns through compounding.

Your Role As A Parent

As we approach the holidays, there will be opportunities to get together with young adults in your family. Why not impart some sage advice – in fact, not just once, but as often as possible.

Your Advice

Start saving now in a Roth IRA. Fund your 401(k) at work as soon as you become eligible; contribute each payroll period without stopping until you retire; maximize your match. Choose investments based on long-term capital appreciation potential. Take advantage of the math of compounding. And, if a parent or family member is willing to match your savings, go for it.

Survey Question

After reading this post, what is the likelihood that you will make a Roth matching proposal with your child, grandchild, niece or nephew? I’d like to know what you think. Click here to take a quick survey.

Look for my next post on what happens when someone in Steve’s position starts contributing to his 401(k) at work.

Follow me on Twitter or LinkedIn. Check out my website.

I got my start on Wall Street as a lawyer before moving to money management more than 25 years ago. My firm, Jackson, Grant Investment Advisers, Inc. (www.jacksongrant.us) of Stamford, CT, is a fiduciary high-net-worth boutique specializing in managing retirement portfolios. I approach investing with a blend of optimism (everyone can do something to improve their financial situations) and a dose of healthy skepticism (don’t invest unless you understand what can go wrong). These themes describe my “voice” whether on-air (NBC Nightly News, CNBC, NPR) or presenting (AARP, AAII, BetterInvesting) or in print. I began writing in earnest in 1996 (You and Your 401(k), an investor’s view of 401(k)s). Recent books are: Retire Securely (2018), offering concise action-oriented insights for retirees, pre-retirees and Millennials (Excellence in Financial Literacy Award “EIFLE”); The Retirement Survival Guide (2009/2017), a comprehensive tool chest for all financial levels and ages (EIFLE Award); and Managing Retirement Wealth (2011/2017), a guide for high net worth individuals (EIFLE Award). I’ve written over 1,000 weekly columns (Clarion Award, syndicated by King Features). When the time is right, I comment on SEC rule proposals.

Source: Don’t Give Your Kids An Inheritance, Give This Instead

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This is Stock Market For Beginners 2019 edition video! This video should help out all beginners in the stock market who want to know how to invest in the stock market in 2019. I try to do a stock market for beginners video each year and this is the 2019 edition. We will discuss how to buy stocks, where to buy stocks, how much money do you need to buy stocks, how to invest in the stock market, what is the best brokerage for buying stocks and so much more. I hope you get a tremendous amount of value out of this stock market for beginners video today. Enjoy! Learn How I pick Stocks in this course linked below. Enjoy! https://bit.ly/2DT5ER9 Learn How To Make Money From Trading Stock Options Here https://bit.ly/2QaHSX6 To join my private stock group click below. https://bit.ly/2OSUMDS * My Instagram is : FinancialEducationJeremy Financial Education Channel Sign Up to Get The Top 5 Investing Apps I Use And How I Use Them http://bit.ly/jeremystop5

3 Purchases or Investments You Can Make to Save Money on Your Business Taxes

With a little over one month to go in 2019, small business owners should think about purchases or investments that make good business sense and will give them a break on their taxes.

Owners with available cash and a wish list should consider what equipment they need. Or, do they want to create a retirement plan or make a big contribution to an existing one? If they have home offices, are there repairs or improvements that can be done by Dec. 31? But owners should also remember the advice from tax professionals: Don’t make a decision based on saving on taxes. Any big expenditure should be made because it fits with your ongoing business strategy.

A look at some possible purchases or investments:

Need a PC or SUV?

Small businesses can deduct up-front as much as $1,020,000 in equipment, vehicles and many other types of property under what’s known as the Section 179 deduction. Named for part of the federal tax code, it’s aimed at helping small companies expand by accelerating their tax breaks. Larger businesses have to deduct property expenses under depreciation rules.

There is a wide range of property that can be deducted under Section 179 including computers, furniture, machinery, vehicles and building improvements like roofs and heating, air conditioning and ventilation systems. But to be deducted, the equipment has to be operational, or what the IRS calls in service, by Dec. 31. So a PC that’s up and running or an SUV that’s already in use can be deducted, but if that HVAC system has been ordered but not yet delivered or set up, it can’t be deducted.

It’s OK to buy the equipment and use it but not pay for it by year-end — even if a business buys the property on credit, the full purchase price can be deducted.

You can learn more on the IRS website, www.irs.gov. Search for Form 4562, Depreciation and Amortization, and the instructions for the form.

Home Office Repairs

Owners who run their businesses out of their homes and want to do some repairs, painting or redecorating may be able to get a deduction for the work. If the home office or work space itself is getting a makeover, those costs may be completely deductible. If the whole house is getting a new roof or furnace, then part of the costs can be deducted.

To claim the deduction, an owner can use a formula set by the IRS. The owner determines the percentage of a residence that is exclusively and regularly used for business. That percentage is applied to actual expenses on the home including repairs and renovation and costs such as mortgage or rent, taxes, insurance and maintenance.

There’s an alternate way to claim the deduction — the owner computes the number of square feet dedicated to the business, up to 300 square feet, and multiplies that number by $5 to arrive at the deductible amount. However, repairs or renovations cannot be included in this calculation.

Owners should remember that the home office deduction can only be taken if the office or work area is exclusively used for the business — setting up a desk in a corner of the family room doesn’t quality. And it must be your principal place of business. More information is available on www.irs.gov; search for Publication 587, Business Use of Your Home.

Retirement Plans

Owners actually have more than a month to set up or contribute to an employee retirement plans — while some can still be set up by Dec. 31, plans known as Simplified Employee Pensions, or SEPs, can be set up as late as the filing deadline for the owner’s return. If the owner gets a six-month extension of the April 15 filing deadline, a SEP can be set up as late as Oct. 15, 2020, and still qualify as a deduction for the 2019 tax year.

Similarly, contributions to any employee retirement plan can be made as late as Oct. 15, 2020, as long as the owner obtained an extension. This means owners can decide well into next year how much money they want to contribute, and in turn, how big a deduction they can take for the contribution.

You can learn more at www.irs.gov. Search for Publication 560, Retirement Plans for Small Business.

–The Associated Press

By Joyce M. Rosenberg AP Business Writer

Source: 3 Purchases or Investments You Can Make to Save Money on Your Business Taxes

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Silicon Valley Investors Are Bonkers For European Startups

Index Ventures partner Danny Rimer always planned to move back to London from Silicon Valley. But when Rimer returned to England a year ago after seven years establishing Index’s U.S. foothold with stakes in companies like Dropbox, Etsy and Slack, he had company: investors from U.S. venture capital firms Benchmark, NEA and Sequoia were also appearing at startup dinners, leading deals and even looking to open offices.

“We’ve always been surprised at how our U.S. peers flew over Europe,” says the Canada-born and Switzerland-raised Rimer, 49, who opened Index’s London office in 2002. As a full-time European resident again, he debuts at No. 3 on the 2019 Midas List Europe, thanks to multi-national investments including Discord, Glossier, Farfetch and Squarespace. Rimer says he watched as investors flocked to pour money into India, China, and Latin American countries, instead. “A very successful Welshman talked about Europe being a museum,” says Rimer, alluding to billionaire investor Michael Moritz, the Sequoia partner and Google and Yahoo investor who moved from Wales to Silicon Valley decades ago. “Now his firm is all over the geo looking.”

More money is flowing into European tech than ever, and it’s increasingly coming from venture capital’s elite U.S. firms. European startups are likely to receive a record $34.3 billion in investments this year, according to investment firm Atomico, with 19% of funding rounds including an American firm, double the portion when Atomico started tracking in 2015. Those American investors will account for about $10 billion, or nearly one-third, of the total amount invested.

American interest in European companies isn’t new: Palo Alto, California-founded Accel opened a London office nearly twenty years ago, and other firms followed suit. But many retreated in subsequent economic down cycles, says Philippe Botteri, No. 6 on Midas List Europe. Botteri, a French citizen, started his venture career at Bessemer Venture Partners in San Francisco and joined Accel in London in 2011. The years leading up to the U.S. firms’ return witnessed a global economic crisis, while access to customers, engineering talent and programs like startup accelerator Y Combinator drove a host of European founders, such as Stripe’s Collison brothers, to relocate to the U.S. Considered a splintered market with regional regulations and languages, Europe faced a fresh hurdle with “Brexit,” when the United Kingdom voted in a 2016 referendum to leave the European Union, a process still ongoing. Its ruling body, the European Union, has made an anchor policy of challenging big tech companies on how they use data.

Blossom Capital founder Ophelia Brown says she was met with incredulity when, as a young investor at Index Ventures between 2012 and 2016, she visited West Coast counterparts and described the opportunity in European tech. “Everyone would push back: Europe was a little travel, a little ecommerce, a little gaming,” she says. “They felt there was nothing of substance.” In 2017, when she set out to raise Blossom’s first fund, many U.S. investors told her the opportunity for new firms seemed greater in the U.S. and China. Just two years later, Brown says she now hears from institutions asking how to get more exposure to Europe’s startup scene.

What’s changed: A mix of high-profile public offerings such as Adyen and Spotify and a maturing ecosystem that’s made it a much easier draw for U.S. firms, facing intense competition at home, to risk millions in Europe. Spotify, the Stockholm-based music streaming service that went public via direct listing in April 2018, and Adyen, the Amsterdam-based payments company that went public two months later, have created nearly $50 billion in combined market value. The IPOs of Criteo in Paris and Farfetch in London have also produced a network of millionaires primed to write “angel investor” personal checks into smaller tech companies. Today there are 99 unicorns, or companies valued at one billion dollars or more, compared to 22 in 2015, according to Atomico’s data.

“The question used to be, can Europe generate a $1 billion outcome, and then you had Spotify and Adyen creating tens of billions of market cap,” says Botteri, who notes that winners are also coming from a broader base of cities in Europe – 12 hubs, not all from London and Tel Aviv. (As on the Midas List Europe, European investors often include Israel’s tech-heavy startup scene.) “Now the question is, can Europe generate a $100 billion company? And my answer is, just give it a few years.”

For startups in far-flung places like Tallinn, Estonia, where Pipedrive was founded in 2010, or Bucharest, where UiPath got its start, the influx of U.S. venture capital counts for more than just money – it means access to former operators who helped scale businesses like Facebook, Google and Slack, introductions to customers in New York or executive hires in San Francisco. And with their stamps of approval comes buzz that can still kickstart a startup’s brand recognition, investors say.

But they also come with a risk: heightened pressure to deliver, board members who may be 5,000 miles away, and potentially overheated valuations that can prove onerous should a founder misstep. Sarah Noeckel, a London-based investor at Dawn Capital and the publisher of women-in-tech newsletter Femstreet, has tracked a number of recent seed-stage deals in which a U.S. investor swooped in with an offer too rich for local alternatives to match, for companies that sometimes haven’t sold anything yet. “I think there’s little validation at this point how it actually plays out for them,” she says.

For the U.S. investors, there’s a clear financial incentive to “swoop in.” On average over the past year, one dollar’s worth of equity in a European startup in a Series A funding round would have cost $1.60 in the U.S. for a comparable share, according to the Atomico report. Investors insist that for the most in-demand companies in Europe, such as London-based travel startup Duffel, which raised $30 million from Index Ventures in October, prices already match Silicon Valley highs.

All the more reason that as U.S. investors hunt in Europe like never before, they’re doing so quietly. Though Lightspeed Venture Partners announced its hiring of a London-based partner, Rytis Vitkauskas, in October, other U.S. firms have been on the ground without advertising it publicly. Leaders from NEA, with $20 billion in assets under management, passed through London in recent weeks on a venture capital tour as the firm plans to invest more heavily in Europe moving forward, sources say. Sequoia partners Matt Miller and Pat Grady, meanwhile, have been spotted around town meeting with potential job candidates. (Sequoia’s never employed a staffer in Europe before.) NEA and Sequoia declined to comment.

“Everyone would push back: Europe was a little travel, a little ecommerce, a little gaming. They felt there was nothing of substance.”

Blossom Capital founder Ophelia Brown

Many more U.S. investors now pass through London; some even stretch the meaning of what it means to visit a city through months-long stays. “I always used to have to travel to the West Coast to see friends that I made from the show,” says Harry Stebbings, who has interviewed hundreds of U.S. venture capitalists on his popular podcast, ‘The Twenty Minute VC.’ “Now, every week I can see three to five VCs in London visiting.” For the past several months, longtime Silicon Valley-based Accel partner Ping Li has lived in London with his family. Asked if he’d moved to the city without any public announcement, Li demurred – “I would argue that I’m spending a lot of time on British Airways,” he says – before insisting he plans to return to California in three to six months. “I don’t think you can actually be a top-tier venture capital firm without being global,” he says. Firms without plans for a permanent presence in London are creating buzz among local investors, too. Kleiner Perkins investors Mamoon Hamid and Ilya Fushman have been active in Europe recently, they confirm. Benchmark, the firm behind Snap and Uber, invested in Amsterdam-founded open-source software maker Elastic, which went public in 2018, and more recently London-based Duffel and design software maker Sketch, based in The Hague. “Europe’s just more in the spotlight now,” partner Chetan Puttagunta says.

Against the backdrop of Brexit, the inbound interest can feel like a surprise. London-based investors, however, appear to be shrugging off concerns and hoping for the best. “In and of itself, it means nothing,” says Index Ventures’ Martin Mignot, a French and British citizen investing in London and No. 7 on the Midas List Europe. “The only real question is around talent, whether it’s going to be more difficult for people to come and work in London, but how difficult that is remains to be seen.” Or as his colleague Rimer quips: “Having spent seven years in the U.S., I don’t exactly think the political climate of the U.S. was necessarily more welcoming.”

When Rimer attended the Slush conference, a tech conference of 25,000 in Helsinki in November, he brought along a guest: Dylan Field, the CEO of buzzy San Francisco-based design software maker Figma. If Field were European, Index would be leading him around Silicon Valley; instead, with 80% of Figma’s business outside of the U.S., Rimer wanted Field to experience the energy of Europe’s tech community first-hand. Explains Rimer: “It’s just a reflection of the reality today.”

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I’m an associate editor at Forbes covering venture capital, cloud and enterprise software out of New York. I edit the Midas List, Midas List Europe, Cloud 100 list and 30 Under 30 for VC. I’m a Fortune Magazine and WNYC alum. My tech focus would’ve perplexed my college self, as I studied medieval history and archaeology at Harvard University. Follow me on Twitter at @alexrkonrad and email me at akonrad@forbes.com. Securely share tips at https://www.forbes.com/tips/

Source: Silicon Valley Investors Are Bonkers For European Startups

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A interview with Venture Capitalist and Co-Founder of Andreessen Horowitz, Marc Andreessen In this interview, Marc discusses how Silicon Valley works and why it is so hard to replicate. Marc also talks about what he looks for in investments and gives advice to students. 📚 Marc Andreessen’s favourite books are located at the bottom of the description❗ Like if you enjoyed Subscribe for more:http://bit.ly/InvestorsArchive Follow us on twitter:http://bit.ly/TwitterIA Other great Venture Capitalists videos:⬇ Marc Andreessen: Venture Capital Investment Philosophy:http://bit.ly/MAndreessenVid1 Billionaire Chris Sacca on Investing, Venture Capital and Life:http://bit.ly/CSaccaVid1 Billionaire Peter Thiel on Entrepreneurship, Innovation and Competition: http://bit.ly/PTheilVid1 Video Segments: 0:00 Introduction 1:58 Something you really screwed up? 3:09 How does Silicon Valley work? 6:33 Why has Silicon Valley never been replicated? 10:24 Where does the value of cryptocurrency come from? 12:46 Is it going to disrupt governments? 14:26 What makes a fundable company? 19:23 What do you see in the future? 22:48 Advice to students? 24:52 How do you get rid of fear? Marc Andreessen’s Favourite Books🔥 Life: The Movie:http://bit.ly/LifeTheMovie Confessions of an Economic Hit Man:http://bit.ly/ConfessionsEconomic And the Money Kept Rolling In (and Out) Wall Street:http://bit.ly/MoneyKeptRolling Last Call:http://bit.ly/LastCallMA Startup Rising:http://bit.ly/Startuprising Interview Date: 29th March, 2018 Event: Udacity Original Image Source:http://bit.ly/MAndreessenPic1 Investors Archive has videos of all the Investing/Business/Economic/Finance masters. Learn from their wisdom for free in one place. For more check out the channel. Remember to subscribe, share, comment and like! No advertising.

Measuring The Total Economic Impact Of Unified Endpoint Management

Today, the average IT organization is spending at least 5% of their organization’s annual revenue on IT investments – and the cost of each investment spans far beyond its price tag. Each one needs to be deployed and maintained by IT staff that is grappling with more tools and software products than ever before. Of course, supporting an IT staff comes with its own set of costs and challenges. CIOs, CTOs, and their teams are human resource scarce and spread extremely thin, so the opportunity cost of focusing on one tool versus another has never been greater.

This complexity comes at a time where clearly defined IT strategies that bring about positive impact to the business are non-negotiable. According to IDG’s 2019 State of the CIO report, “62% of CIOs say that the creation of new revenue generating initiatives is among their job responsibilities.” 88% claim to be “more involved in leading digital transformation initiatives compared to their business counterparts.” Net-net, the onus is on IT leaders to streamline efficiencies, reduce total cost of ownership (TCO), and net a return on investment (ROI) for the business.

IT investment decisions driven by real customer data

Forrester has been instrumental in helping business decision-makers overcome their resource, budget, and investment challenges by introducing a Total Economic Impact™ (TEI) methodology. Not only does the TEI take costs and benefits into account, but also the time saved and economic impact of strategic decisions made. Forrester’s TEI assessments are drawn from real client experiences with vendor products and services. The team diligently documents customer outcomes to better understand their positive or negative business impact. Consulting this unique research methodology helps business decision makers justify and future-proof their investments.

Making the transition to unified endpoint management

If your organization is like most, it has a mix of devices that employees use to get work done – whether they’re corporate-liable or supported under a bring your own device (BYOD) program. With 464 custom apps deployed across the average enterprise, procuring a means to manage devices and everything on them (not just apps, but also content and data) has become mission-critical for businesses.

Traditionally, mobile device management (MDM), enterprise mobility management (EMM), and client management tools (CMTs) have been relied upon to get the job done. However, business use cases for devices have become more complex and wide ranging. These shifts are necessitating a tool that makes it possible to manage everything from one place. This is unified endpoint management (UEM).

Commissioned by IBM, Forrester Consulting recently conducted a TEI analysis of IBM Security MaaS360 UEM customers to determine whether they are reducing TCO and netting a quick break-even on their investment. The Forrester team took the time to glean feedback from 19 MaaS360 UEM clients representing financial services, nonprofit, utilities, manufacturing, and professional services industries. These individuals are responsible for managing anywhere from 500 to 100,000 devices for their respective businesses each day.

How UEM from IBM resulted in significant ROI1

Across the 19 clients that were interviewed, Forrester identified the following key benefits. These amount to a three-year 160% ROI and payback in less than 3 months:

  • Endpoint configuration: a 96% reduction in time spend provisioning devices
  • End-user setup: a 47% reduction in time spent getting employees up and running
  • Modern management: $22,960 saved from simplifying their management approach
  • Support ticket remediation: 50% fewer tickets and 55% less time taken to resolve them
  • Security breach remediation: 80% reduction in number of incidents experienced

Of course, these benefits were experienced by a composite organization used to represent the 19 customers surveyed by Forrester. Organizations considering UEM that are actively seeking their own customized TEI assessment can now work with IBMers to do just that. Request your own complementary assessment today to understand whether you can expect a return on your UEM investment, and if so, how quickly you can expect your payback period to arrive.

Request a custom Forrester TEI assessment now

1 The Total Economic Impact™ Of IBM MaaS360 With Watson, a commissioned study conducted by Forrester Consulting, April 2019

John Harrington is a Program Director at IBM Security, overseeing product marketing for data security and unified endpoint management (UEM). In this capacity, he works with product managers, product marketers, and account managers to provide guidance for businesses encountering modern cybersecurity challenges. He’s focused on helping clients learn how to establish digital trust and the various ways Guardium and MaaS360 can help them keep their data and endpoints protected. John is also working towards an MBA graduate degree at Villanova School of Business, and spends his spare time exploring the city of Philadelphia with his wife and their two beagles.

Source: IBM Security BrandVoice: Measuring The Total Economic Impact Of Unified Endpoint Management

Billionaire Investor Peter Thiel Is Doubling Down On Bitcoin – Here’s Why

Bitcoin and cryptocurrency investors have been struggling this year to both justify past crypto investments and make new ones.

The bitcoin price, under pressure from the likes of Facebook’s libra project and the ever-present threat of a regulatory crackdown, soared in the first six months of the year only to fall back again.

Some investors have not been put off by bitcoin’s roller-coaster year, however, with billionaire PayPal cofounder Peter Thiel among new backers of Layer1, a renewable energy-focused bitcoin mining operation based in San Francisco.

This week, Layer1 revealed it has raised $50 million at a $200 million valuation from Thiel, Shasta Ventures and other undisclosed bitcoin and cryptocurrency investors, adding to a previous $2.1 million seed round that included Thiel, as well as venture capital company Digital Currency Group.

Layer1 is aiming to challenge the perceived wisdom that bitcoin mining the in the U.S. will not be able to compete with regions such as China, where some 60% of bitcoin mining operations are currently located, with some research suggesting that number could be even higher.

Layer1, which has pivoted to renewable energy bitcoin mining from a previous focus on the development of programmable money and store-of-value applications, wants to bring wind-powered bitcoin mining rigs to West Texas by early next year.

“According to industry research, over 60% of bitcoin’s hash rate and 100% of bitcoin hardware production are located in China,” Layer1’s cofounder and chief executive Alexander Liegl wrote in a blog post announcing the fresh funding.

“Less than 5% of bitcoin’s hashrate and 0% of hardware production are located in the United States.”

China dominates not only bitcoin mining but also the manufacture of computer chips and other equipment needed for the process.

Bitcoin mining uses huge amounts of electricity to both fuel the powerful computers required and keep them cool, making hotter climates in developed nations less appealing.

“The future of bitcoin mining lies in the heart of the United States: Texas,” Liegl wrote.

“This is where world-class electricity prices, friendly regulation, and an abundance of renewable energy sources meet. It is here that we are rapidly scaling our mining operations to bring as much hash rate as possible back to the United States.”

Layer1 has been buying up land in Texas to build its own electricity substations and is creating its own processing chips with a Beijing-based semiconductor company as it puts together its mining machine infrastructure.

Renewable energy bitcoin mining is being used by others around the world, with Germany-listed Northern Bitcoin mining bitcoin and other cryptocurrencies deep within a Norwegian former metal mine using hydroelectric power and natural cooling.

However, there have been previous failed attempts to bring large-scale bitcoin mining to North America.

Earlier this month, Virginia-based bitcoin mining firm BCause Mining filed for bankruptcy after pledging to invest $65 million in to its U.S. business in 2018.

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I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

 

Source: Billionaire Investor Peter Thiel Is Doubling Down On Bitcoin—Here’s Why

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Recorded on September 5, 2019. Peter Robinson opens the show by asking Thiel’s views on his own essay “The Straussian Moment.” (Essay link: https://www.evernote.com/shard/s542/c… responds by saying that people today believe in the power of the will but no longer trust the power of the intellect, the mind, and rationality. The question of human nature has been abandoned. We no longer trust people’s ability to think through issues. Thiel notes that this shift began to take place in 1969, when the United States put a man on the moon; three weeks later Woodstock took place, moving the culture in the direction of yoga and psychological retreat. Thiel further adds that there was still hope that things would open up for the world in 1989, when the Berlin Wall fell and the Soviet Union collapsed, but that the leaders of China and other East Asian countries did not accept that openness would solve their problems. Instead they learned the opposite lessons from those events: that if you open things up too much, then things fall apart. Thiel ends the interview by noting that there is nothing automatic or deterministic about how history happens, and he expresses his views that economic growth plays a vital role in a country’s future. For further information: https://www.hoover.org/publications/u… Interested in exclusive Uncommon Knowledge content? Check out Uncommon Knowledge on social media! Facebook: https://www.facebook.com/UncKnowledge/ Twitter: https://www.twitter.com/UncKnowledge/ Instagram: https://instagram.com/uncommon_knowle…

Singapore Startup: This HR Tech Firm Worth $100 Million Is Ready To Conquer Asia

In the dizzying world of technology startups, it’s easy to get lost in the hype of hot trends such as AI, blockchain, VR/AR and machine learning. What is often forgotten is the fact that some of the best startups in the world solve the simplest of problems.

This is exactly the approach that Pascal Henry, who is the CEO and cofounder of HReasily, took when he identified the fundamental needs of rapidly growing SMEs–to manage their human resources more efficiently.

Henry launched his Singapore-based HR firm in late 2015 as a Software-as-a-Service (SaaS) business that enables companies to increase productivity by using technology to streamline traditional processes such as payroll processing, leave management and expense claims.

When I was running my first startup in Singapore, I had to do a lot of the manual processes myself. I felt the pain and the drain of it,” explains Henry. “It was taking up a lot of my time and energy, when I should have been focusing on building my business.”

Today In: Asia

 

Improving productivity and efficiency

HReasily’s mission is simple: To innovate and automate HR throughout the world. As one of the fastest-growing cloud-based HR SaaS companies in the region, their simple modules and features aim to transform many of the legacy HR processes and automate them to be accessible anytime and anywhere. Currently the company offers seven modules including payroll, staff leave, employee contracts and attendance. As HReasily grows, it continues to add product lines aimed at empowering companies to scale faster.

Previously, many businesses used solutions that each looked after a particular silo of an HR department. So you’d have one system to manage your payroll calculations, one for leave and others for other functions.

“What happened was you had to log in and out of many various systems, and these systems cost a huge amount of money,” says Henry. “What we’ve done is build a solution that is very affordable that integrates with all the functions on a unified platform.”

A simple but elegant business model HReasily runs a subscription-based revenue model. Starting with payroll, which is at the core of every traditional HR office, the company offers premium versions that run on monthly or yearly subscriptions, with add-on modules available such as staff leave and time attendance. This past summer at the RISE 2019 conference in Hong Kong, Henry and his team unveiled their latest benefits management module which will soon allow customers to acquire group level insurance, healthcare and even apply for credit cards or loans.

HReasily says its competitive advantage lies in its customer base, which is mostly SMEs. By initially focusing on the fundamental needs of this particular segment, the company has earned the support of larger banking and government agencies and has become known as an “SME champion.” Not surprisingly, as the company has grown it says that it began to attract larger corporations, publicly listed companies, multinational corporations and even payroll outsourcing firms.

“As we grew we acquired a more diverse customer base,” Henry says, “because a lot of larger companies are tired of the older and expensive solutions because they need to be installed on premise and they require a refresher every year when rules and regulations change.”

Partnerships are the key to rapid growth

Being based in Singapore has allowed HReasily to capitalize on the rapid growth in Southeast Asia. SME’s account for 97% of all the enterprises in the region, and employ half of the workforce, according to data from Asia-Pacific Economic Cooperation (APEC). HReasily’s growth has been nothing short of impressive. With nearly 30,000 companies on their platform and more than 100 new companies onboarding every day, HReasily is said to be growing rapidly in Singapore, Hong Kong, Malaysia, Indonesia, the Philippines, Thailand, Cambodia and Vietnam.

Some of HReasily’s notable customers include Love Bonito (in Singapore, Indonesia, Malaysia and Hong Kong), Sambat Finance (Cambodia), OnlinePajak (Indonesia) and TechInAsia. As the company looks to complete their coverage of Asia, the next major market they look to tackle is mainland China followed by Taiwan, Japan, Myanmar and Australia.

Investors have taken notice of the company’s growth as well. Fresh off a pre-series A funding round of $5 million from Envy Capital, HReasily is currently estimated to be valued at more than $100 million. Henry admits that the company’s rapid growth in the region has only been possible with the early support from their key strategic partners.

HReasily has been working with Citibank, Mazars and Stripe. The partnership with Mazars, which was a lead investor from the startup’s first round of funding, gives them access to a global audit, advisory and payroll outsourcing firm with 300 offices in 100 countries. Henry says it allows HReasily to localize its solutions to each individual market.

Today, building a solid ecosystem of strategic partners is very important because you come from different angles, but you all serve one customer, which is the SME or the business,” says Henry. “By coming together, we collectively create a great end-to-end experience for them. There’s strength in numbers.”

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Jay Kim is a full-time investor and the host of the popular podcast The Jay Kim Show, Hong Kong’s first dedicated podcast on entrepreneurship and investing in Asia. Inc. Magazine has named The Jay Kim Show one of the top three podcasts from Asia which are inspirational and useful to entrepreneurs. Jay is an avid supporter of the start-up ecosystem in Asia and frequently consults with leaders in local government on topics related to technology, entrepreneurship, early-stage investing and startups

Source: Singapore Startup: This HR Tech Firm Worth $100 Million Is Ready To Conquer Asia

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Is your administration work taking too much out of your time? HReasily provides HR solutions for payroll processing, leave and claims management, employee scheduling and time attendance, so that business owners can focus on growing their businesses.

 

Borderless Investing: Eduardo Saverin And Raj Ganguly Grow B Capital

Eduardo Saverin and Rajarshi “Raj” Ganguly are two of the three cofounders of B Capital Group, a venture capital firm with close to $800 million, split between a first and a second fund (still being raised). The third cofounder is legendary investor Howard Morgan. Brazilian Saverin, 37, is based in Singapore and best known for being the cofounder of Facebook – whose shares in it give him a net worth estimated at about $10 billion.

Americans Ganguly, 43, and Morgan, 73, come from diverse backgrounds. Ganguly, based in Los Angeles, spent his early career at Bain Capital, overseeing a number of investments. Morgan, based in New York, helped start ARPAnet, the internet’s precursor, in the 1970s, and later was president of hedge fund Renaissance Technologies.

B Capital has dual headquarters in Los Angeles and Singapore, as well as offices in New York and San Francisco, with a total of 40 full-time staff. B Capital focuses on companies already in series B or C rounds, generally over $10 million in revenue, and looks to invest roughly $20 million. The trio would like to keep the total number of companies in each fund to about 20.

The firm has the slogan “innovation without borders,” reflecting the founders’ belief that innovation can originate anywhere, not just in Silicon Valley. B Capital also uses global consultancy Boston Consulting Group (BCG) to help it grow startups and match them with larger firms. Saverin and Ganguly sat down with Forbes Asia in an exclusive interview in September at Singapore’s Shangri-La hotel to discuss their goals for B Capital.

Today In: Asia

Forbes Asia: How are you deploying your capital into startups?

Eduardo Saverin: Primarily we focus on companies that have an existing level of traction. There are a lot of places where you could invest in technology, but you need to have an edge and focus. For us, together with our relationship with BCG, it’s about accelerating growth. Most companies we invest in have a B2B angle. When the company is still an idea on a napkin, it’s hard for us to introduce them to some of the largest companies in the world. So we tend to invest where there’s a particular amount of value that we can bring through those corporate introductions and value acceleration, which means they tend to translate to series B and beyond. But frankly the staging is fungible. It’s about traction.

Raj Ganguly: As we build the firm we want to be really conscious of being able to invest into some companies really early, probably smaller amounts of capital, and as some of those companies scale and grow, we want to bring larger amounts of capital to those companies. Then finally for some of the companies that really continue to go into highly accelerated growth mode, we would actually not just double-down, but we would take outsized ownership stakes. As we’re growing the capital, we’re increasing our ability to invest across multiple stages. The best use of our capital, rather than finding a new investment, is finding a company in our portfolio where we can see the trajectory of the company before an outsider can see it.

What is the value-add you want to bring to your entrepreneurs?

Ganguly: We focus on doing three things really well ourselves and then partnering with BCG and others for everything else. We focus on helping make introductions and really helping get that growth flywheel going. The second part is we are focused on hiring key C-level talents into companies once we invest into them. We find that every single time we make an investment, if we can help them with one or two better hires on the margin, it fundamentally changes the direction of the company. And third, we help them raise strategic capital. We think, while it’s great to have other venture capital firms and folks like that, there are so many large enterprises sitting on over $1 trillion of capital and many of them want to invest and partner with startups. They could be much more strategic in the capital and the value that they bring.

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Juliana Tan for Forbes Asia

Can you give an example of this value-add to a portfolio company?Saverin: One of our early investments was in a company in the clinical trials space called Evidation Health. It’s a perfect example of a business where they can develop all the technologies that they would like. The truth is, success will come from adoption of virtual clinical trials from the largest pharma companies in the world. When we first met the business, it was working with a lot of smaller biotech firms, which are the traditional early adopters of such technologies. But leveraging our partnerships, including BCG, we had a chance to meet with some of the largest pharma companies in the world.

Through those discussions we understood that, unlike traditional tech innovation cycles where things over time get a little bit cheaper and faster, in the pharma world, you were seeing kind of a reverse innovation cycle where it was getting more expensive and taking longer to get to market.

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Juliana Tan for Forbes Asia

And one of the largest pharma companies in the world took one of their existing trials that they had already done, and then just replicated it through a virtual standpoint, and saw both the speed, the cost effectiveness, and the depth of the data. That gave us conviction to invest, because we knew there was a real appetite for experimentation. Today, that business has most of the largest pharma companies in the world as customers. Some of them have become investors.

Ganguly: It just announced, a few weeks ago, a landmark partnership in dementia with Apple and Eli Lilly. We’ve been a part of helping make some of those connections.

What’s unique about B Capital’s approach to investments?

Ganguly: There are four key parts of our model. It’s about global thematic investing, one single team leveraging global data. It’s about deep local expertise in each market that we invest in. It’s about being the single highest value-add investor in every company and having the capital through partnerships with our investors and through our own capital to fund the growth of these companies as they scale. Our risk model is a lower risk model than early stage, which is about investing in ideas on a napkin, and having one of 20 companies that you know will drive your whole returns. Our model is about backing companies that have customer traction, that have a founding team that has high potential. We are looking for large potential customers and large potential partnerships that further mitigate risks. We believe our approach has upside because we’re investing in companies that are growing at 100% plus a year.

Saverin: The VC game is an information edge game. You need to leverage it not just in the first investment, but across the lifecycle of the company. Our model is about rolling up our sleeves and getting deeply involved, where entrepreneurs want us to, and where we can tremendously add value.

You believe in innovation without borders, can you expand on that idea?

Saverin: Companies are becoming global increasingly by design. There’s no border to where innovation can be received and used. Whether you start a company in Silicon Valley or in Africa or any part of the world, there really is the increasing impetus to go beyond your existing borders. When you start thinking about the evolution of innovation, some of it is the enablers, including the engineering talent. When you go to Silicon Valley, that’s actually one of the hardest places in the world to get engineering talent because of the massive competition. In other parts of the world you can ask is there enough raw talent, even though it’s not as competitive? So we’ll see a broader equalization. It would be hard for me to believe that as tech enablement becomes a big part of much larger industries, that all that innovation will come from one place. If that were to happen, I’d do anything I can to change it because the truth is the whole world is consuming technology.

What opportunities do you see in Southeast Asia?

Ganguly: We understood early that e-commerce was being inhibited in the region because e-commerce companies had to do their own delivery. That’s what really convinced us that we wanted to invest in all the picks and shovels around e-commerce, but no longer invest in e-commerce, or at least not focus on e-commerce. So today we’re investors in Ninja Van, BlackBuck, Mswipe and Bizongo, all companies that enable e-commerce.

Given WeWork’s pulled IPO, have valuations gotten overdone?

Ganguly: Where we are in the cycle and when it changes, that’s not our business. We don’t time the market, but we fundamentally take a long-term perspective. There are times when you’re in a cycle and you have to pay a little bit more for that. But if you have the right time horizon, we think it’s still far better to do that than to be looking for value plays where you’re looking at the second- or third- or fourth-best company. We always say that you might sleep better if you have a value play, but you won’t sleep very well when you exit because the valuation differential is even more stark when you exit a lower-tier player. It used to be that you were forced to go public because you had to pay out early investors. That’s no longer the case. You can now continue to stay private, and have access to very large amounts of private capital. Your early investors can cash out because later stage investors are willing to buy them out. There’s a very active secondary market. What’s changed is I think there’s no longer this belief that going public is something that you have to do. There are a lot of questions about whether going public drives long-term value. While it’s worked for some companies, it hasn’t worked for others.

What would be the process if a portfolio company might fit with Facebook?

Saverin: We are trying to facilitate introductions with any enabler, hopefully a win-win on both sides. So Facebook of course would be part of that equation, and parts of its strategy that converge with some of our focus areas, especially in financial services. Many companies will already have some type of relationship with Facebook, given where Facebook is today, through WhatsApp or otherwise. The innovation ecosystem touches Facebook all the time, so it’s just a question of extent.

Where is B Capital going to be in 10 years?

Saverin: That’s an important question. I usually think about it in two ways. We are incredibly ambitious, and we want to have an institution that will outlive us, so we are always thinking of the very long term. One thing I say every single day, whether in our partner meetings, or when we speak to our entrepreneurs, is to always push focus. Focus on what you’re doing today, that’s how you’re going to get to a bigger vision ten years from now, and even a vision well past our lifetimes. But at a really top level what I want us to do is to enable technology to get into the hands of consumers faster by leveraging the existing distribution networks of the largest companies in the world. Push intrapreneurship, it doesn’t necessarily need that push, but enable them to not only think of disruption but a positive win-win transformation. It’s not about the top ten tech companies that will take over a market by themselves, but the enablement of every company in the world with technology in collaborative innovation.

What do you mean by collaborative innovation?

Saverin: This is a really high-level idea, that can be seen in the platform technologies, such as Facebook, WeChat and others. They have created massive innovation acceleration by enabling other businesses to come on top of their platforms to gain distribution and engagement. What we are looking for is a win-win using the distribution assets of the largest companies in the world to ultimately get API-ed to the innovation ecosystem. If we get even 0.5% of the way in driving that, we will be doing the right thing for ten years from now. I think it’s not always a success when a startup out-innovates and massively disrupts a big company, when it could have leveraged a big company’s distribution, the licenses, the regulatory know-how, and so on, so that consumers could get the advantages of technology much faster.

This conversation has been edited and condensed for clarity.

Pamela covers entrepreneurs, wealth, blockchain and the crypto economy as a senior reporter across digital and print platforms. Prior to Forbes, she served as on-air foreign correspondent for Thomson Reuters’ broadcast team, during which she reported on global markets, central bank policies, and breaking business news. Before Asia, she was a journalist at NBC Comcast, and started her career at CNBC and Bloomberg as a financial news producer in New York. She is a graduate of Columbia Journalism School and holds an MBA from Thunderbird School of Global Management. Her work has appeared in The New York Times, Washington Post, Yahoo, USA Today, Huffington Post, and Nasdaq. Pamela’s previous incarnation was on the buy side in M&A research and asset management, inspired by Michael Lewis’ book “Liar’s Poker”. Follow me on Twitter at @pamambler

Source: Borderless Investing: Eduardo Saverin And Raj Ganguly Grow B Capital

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Eduardo Saverin, Co-Founder, Facebook & Co-Founder at B Capital Group alongside Raj Ganguly, Co-Founder at B Capital Group discuss how global trends in innovation and venture capital can be leveraged to benefit entrepreneurs beyond Silicon Valley. Fore more news and insights visit SuperReturn365: https://goo.gl/9nEbXA

 

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