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“This is Not Just for the Menlo Mom”

I read an article by Nick Bilton this week in the New York Times entitled “Disruptions: The Echo Chamber of Silicon Valley.” I think he makes some solid points, and it reminded me of my first meeting with Mauria Finley, founder and CEO of Citrus Lane.

Citrus Lane FBOne of the first things Mauria told me when we met was “Citrus Lane has to be about products and a community that is not just for the ‘Menlo Mom.’  We have to reach the Nebraska Mom, the Tennessee Mom – the broader audience of moms around the country and eventually the world.”

Mauria and her team had spent a ton of time talking to moms around the country as well as the brands behind the products they buy. They learned a ton, and applied it towards their business strategy and business model. There are 10,000 babies born every day in the US, and the average first time mom spends more than $12,000 on her child in the first year (think diapers, baby food, strollers, etc.). If Citrus Lane had started out with a product mix focused on moms from Silicon Valley (or the “Menlo Mom”), chances are the company would end up reaching a very small percentage of those 10,000.

Everything the company does reflects this thinking. I won’t give away all the secrets, but the company’s $25 price point, the product mix, the content and engagement models (heavy on mobile and Facebook, for example, given that many moms spend their days out and about – not sitting in front of a desk) are all designed in the context of how the majority of moms throughout the US think, not just those based in Silicon Valley.

Citrus Lane Sold Out Tweet

The results speak for themselves. The company has grown more than 10X from when we invested a year ago, and has sold out 6 months in a row. Click here to view a recent presentation from Mauria on how she’s building Citrus Lane and why “Social is the Very Essence of our Brand.”

In contrast to the data points in Nick’s article, Mauria and her team launched with a product offering that appeals to the market at large, avoided getting overly focused on the early adopter crowd in Silicon Valley, and they nailed it. Maybe a good topic for Nick’s next article :).

The Best Ecommerce Company You’ve Never Heard Of (Until Now)?

Sam ReebonzIt’s always a lot of fun for us when an entrepreneur who has worked for many years to build an awesome company finally starts to receive well-deserved recognition. The latest example is Sam Lin at Reebonz, which announced its new $40 million financing round yesterday (read the article in TechCrunch).

Sam founded Reebonz in 2009 with a clear focus on the $200 billion+ market for luxury goods, about 30% of which is in Asia – Reebonz’ core market focus. A two-time entrepreneur, Sam has an intuitive understanding of the Asian consumer and her shopping preferences. GGV Capital was fortunate to invest in Reebonz in 2010 along with Vertex and Matrix China, and we’ve since watched Sam build Reebonz into one of the fastest growing e-commerce businesses on the planet.

I won’t go into too much detail because there are some elements of Sam’s business that we haven’t seen anywhere else, but will highlight a few things we see Sam doing that have been critical to Reebonz’ success:

1) Maniacal focus on customers and the customer experience. Packaging, design, product, delight. Every detail has Sam’s touch (see my photo above with Sam in front of a packaging display).

2) Extreme focus on quality. The best brands, the best products – backed by Reebonz and its world-class level of customer service.

3) The element of surprise. There is always something unique, something hard to find, something amazing about a limited offering from Reebonz – and customers love it.

4) Get local. Sam has country managers in each core market who have a tremendous amount of autonomy and are able to cater to local preferences.

5) Market online and offline. Reebonz does a terrific job of creating unique experiences and events offline, building its brand and relationship with customers in a very personal way.

Very fired up for Sam and his team. Well deserved recognition for a category leader like Reebonz and a terrific entrepreneur like Sam.

Really Proud

App class grads April 2013

This past weekend, 10 kids gave up their Saturday and Sunday mornings (8:00 – 1:00 each day) to learn the basics of building apps(“coding”) for mobile devices. I am so proud of these kids – as well as our instructor, Jateen Bhakta.  More information and thoughts below, but this is just the beginning for our new organization, Tri Valley YEAH! and our partnership with the Menlo App Academy.  Click here for more photos from this past weekend’s class.


The broader story:

In early 2011, my friend Jason LaBarbera and I started discussing the topic of kids, education, and technology. We both a) have kids and b) are in careers focused on Silicon Valley and the technology industry (myself as an entrepreneur and venture capitalist and Jason as owner and CEO of a successful recruiting firm focused on the tech industry).

Over the past 24 months, we met many times for breakfast, coffee, etc. and kept focusing on a basic question: Why aren’t our schools teaching kids the basics of computer science (CS) at an early age?

The background for our conversation is simple. Many of the best-paying jobs in America are in Engineering in Silicon Valley. Companies have hundreds of thousands of open positions for Engineers (not just in SV). Many kids graduating from college today do not have the CS skills to apply for these jobs. Many of the wealthiest entrepreneurs in the world started as Engineers (see: Mark Zuckerberg, Bill Gates and many more).

So why aren’t our schools starting to teach CS at an early age – just like they teach English, Math, History, Science and other subjects?

We did some research on the subject and found a host of reasons, but the primary ones center around a) state requirements & testing on existing curriculum, b) lack of teachers to teach the courses and c) inertia. Our sincere hope is that the rising press coverage on this subject, support from leaders like Michael Bloomberg and President Obama, new platforms like CodeAcademy and Code.org, and growing awareness among parents of the value of Computer Science will move the ball forward.

Until that time comes…

We’re moving forward with a grass-roots solution.

Jason, his colleague Mitch Eason and I were fortunate to connect last year with the founders of the Menlo App Academy (an amazing group of parents and kids – read more about them in Forbes), who have developed an awesome, basic curriculum to teach kids to build mobile apps using the Corona SDK. Via the MAA team, we met up with  Jateen Bhakta, a passionate part-time teacher and game developer. After a few months of work and collaboration with the Menlo App Academy team, this past weekend we officially launched the local program for kids in the Tri Valley (East Bay, CA) area – Tri Valley YEAH! (Youth Empowered Apps Happening!).three girls at TVY April 7

Our goal is not to turn 10 year-olds into Ruby engineers. Rather, it is to introduce kids to the concepts of coding, quickly get them to a point of “instant gratification” (building an app), and provide ongoing resources and encouragement to learn more. Ideally over time we’ll partner with educational institutions to try to scale this throughout the Tri Valley area (300,000 residents). If some percentage of the kids in our programs go on to learn more about CS and eventually become Engineers, we’ve succeeded.

For now, as I said above, I’m just really proud of our team and the kids. We had a ton of fun this weekend, and it was awesome to see the kids faces light up as they made modifications to their apps. And thankful to Max Colbert, Matt Dillabough and their parents who pioneered this model and came up with the core curriculum.


Content, Community and Commerce: Why Verticals Win

Houzz1When it comes to the three C’s – Content, Community and Commerce – we have a very basic thesis we have been investing around for several years now: vertical platforms win.

What do I mean by “win?” Deliver a (much) better experience for users. Create value for brands and advertisers. Deliver higher monetization rates (and thus value) for management and investors. Win for consumers, win for brands, win for management. And they can do it at scale, which is where we believe many of the horizontal platforms start to degrade.

How do they do it?

Content. By focusing their efforts on a specific interest area, vertical sites can deliver the best user experience around content. Images, text, search and sharing are all tailored to the area of interest. Don’t believe me? Look up “kitchen” or “kitchen remodel” on Pinterest, then go to the “Kitchens” section on Houzz. For someone who is interested in architecture, design or remodeling kitchens, the experience on Houzz is dramatically better (unless you want a random picture of a naked woman in a kitchen, which did pop up in my search on Pinterest).

Community. If in a large enough category (think: home improvement, music, fashion, travel), a vertical platform can amass a big enough audience to truly create a thriving community. Yelp has done this exceptionally well in a giant vertical, and now has more than 100 million unique monthly users. Google, Foursquare and startups like Ness are challenging (especially using mobile as a trojan horse), but Yelp has the largest and most focused community, and it’ll be tough to beat Yelp if it continues to innovate. Another great example is Zillow, where users are encouraged to “claim” their home and input their own data and photos. It’s working – Zillow has more than 45 million unique visitors every month, and more than half are on a mobile device. Last year we invested in an e-commerce business called Citrus Lane which is focused on building a large community of moms around its brand; a community opportunity we don’t see with many other e-commerce businesses. Given that moms spend more than $45 billion each year on their babies (first time moms spend $16 billion alone), and more than 100,000 babies are born every day in the U.S. alone, we think this category is not only large enough to support a vertical winner but also emblematic of a “mobile first” opportunity. More and more moms spend the majority of their time on their iPhone or Android device and very little in front of a PC.

Commerce. The beauty of nailing content and community in a vertical platform is your users actually want a commercial experience. And when I say “commercial experience,” I don’t just mean “ads” (which tends to be the de facto model for horizontal platforms). Meilishuo, the top vertical platform in China for women’s fashion has more than 4 million daily active users, almost all of whom are females between the ages of 20 and 35. It’s a highly focused, engaged and active community. When you utilize Meilishuo (best on iPad), one of the first things you’ll notice is it’s intentionally commercial – you can click to purchase more than 95% of the content on the site. You don’t see that on horizontal platforms like Instagram or Pinterest. As a result, Meilishuo is driving hundreds of millions of dollars of GMV (gross merchandise volume) in the fashion category. (Funny anecdote – when I was in NY with Meilishuo CEO Xirong Yu, I showed him Instagram. He kept clicking on images and saying “Why can’t I buy it?”)

Perhaps the most important point is this last one: these vertical sites are intentionally set up to drive commerce. It’s part of the core user experience. Upon introducing several friends to Houzz last year, more than one came back to me and said “I’d like to see more tags!” The products are part of the user experience and – done in a tasteful manner – play an integral role in the consumer’s engagement on the site.

The biggest challenge with vertical platforms – historically – has been getting enough critical mass to matter.  There are vertical sites all over the web for almost every niche interest you can think of. Many of these are in fact small, thriving communities with no venture capital backing and a highly profitable business model. Others – like those mentioned above – are already big and getting bigger (think Spotify, in music). Given the commercial aspect of these vertical platforms, they tend to monetize at a much higher rate per user than their horizontal peers. As Xirong from Meilishuo put it to me: “I don’t want a billion users. I want the most valuable 200 million users.”

Horizontal platforms play an important role in the Internet ecosystem, and my bet is Facebook and its social graph will play a really important role for a very long time. But – it will be very hard for other vertical platforms to gain prominence, and few (if any) will monetize as well as the rising vertical platforms. These new vertical platforms are also the most likely to develop innovative forms of monetization as we move to a “mobile-first” environment (phone & tablet).

A few questions we’ll be watching closely over the next year or so (that this post doesn’t attempt to answer):

– Will the horizontal platforms (Facebook, Google, Tencent, Baidu, etc.) eventually “win” in these large categories, despite early leads from the upstart innovators?  Seems unlikely, unless… (see next point)

– Will the big horizontal platforms acquire the new vertical leaders in the interest of garnering eyeballs and also alternate / non advertising-based models of monetization?

– Will the emerging vertical platform leaders be able to go global – as the horizontals have (more than 75% of Facebook users are from outside the U.S.)? As they do, will they be beaten to the punch by local vertical leaders?

– Will we see many, valuable vertical players (sort of like the SaaS space in enterprise), or consolidation and just a few winners?

Many unanswered questions, but a battle that will be fun to watch with billions of dollars at stake.

Disclosure: my firm, GGV Capital, invests across the US and China, and is an investor in Houzz, Citrus Lane and Meilishuo.

The Business of “You” Is About to Win, Big Time

nest 2I recently installed a Nest thermostat.  It was so easy and such an upgrade over my prior thermostat that it literally made me say “wow.”

And it got me thinking: we are in, or entering, a golden age of technology for consumers.  And I love it.  It’s one of the reasons I think so many of us in the VC community are thrilled to be investing right now.  We can see the revolution taking place around us every day.  It’s not hidden in some corporate data center or a manufacturing plant in Taiwan.  It’s in our homes, on our wrists and impacting our lives every day.

A lot of the credit for this revolution is no doubt due to Apple, as the iPhone has unlocked entirely new economies and capabilities on both an individual and global scale.  Remember carrier “music services” on your RAZR just 6 years ago?  Now you have millions of songs at your disposal via Pandora or Spotify.  Not to mention games, movies, TV, photos, video chat – the list is long.

What’s so cool about this new era is it’s focused on you, the individual.  Yep, you win.

In the 90’s much of the innovation in technology was around enterprise technology – think SAP, Siebel, OracleHP.  Great for big business, but not a huge direct impact on day-to-day quality of life for consumers.  In the late 90’s and 2000’s, the Internet changed the way we shop (Amazon, eBay, etc.), get news (Yahoo, ESPN, etc.), trade stocks (ETRADE) and connect with each other (Hotmail, Skype, Facebook).

Very cool and industry-changing stuff, but did it impact your quality of life as an individual?  Perhaps to a certain degree.  But not like this new era will.

My Jawbone UP gives me daily readouts on my sleep and exercise habits.  My plug-in Prius gets over 80 MPG in city driving (65 highway).  I see the Tesla Model S and Nissan Leaf everywhere in Silicon Valley.  My Nest has already learned our family’s temperature habits and is eliminating wasted energy usage (for more on how it does this, see the Nest website).  Not to mention the bazillion apps on my phone that make life better every day.  And all of these devices and apps will soon be connected – enabling the “smart” world we’ve all been talking about for decades.  They’re helping me be healthier, save money, and spend more quality time with family and friends.

The innovation happening around “you” is incredible.  As venture capitalists, we see things that are years away from hitting the mainstream, and so many of them are truly amazing.  The best and brightest entrepreneurs coming out of Stanford and MIT want to build killer applications and devices that are focused on actually improving people’s lives, not just selling standard IAB ad units (and lots of them).

I know the prevailing sentiment right now in the tech community is that “enterprise is hot, consumer is not.”  But trust me, there is a ton of innovation and funding happening around the business of “you,” and it is going to change your life in meaningful ways.  The Jawbone, Prius and Nest are just the start of what I anticipate to be a massive wave of devices and apps that impact consumers in game-changing ways.

And yes, I realize these are currently “early adopter” technologies.  But they are a big flashing sign of “things to come,” and I expect all three represent technologies that will become mainstream very quickly.  Don’t agree?  A company I sit on the Board of recently received a $20,000 credit from its insurance company to give employees wearable devices like the UP – simply because they believe it will make them healthier (and thus the company a more attractive one to insure).  With incentives like that, it won’t be long before these devices are mainstream.

This new golden age of consumer technology, the business of “you,” is still in its infancy, but it’s accelerating and happening before our very eyes.  Pretty cool.

Note: GGV is not an investor in Nest, Jawbone or Toyota (but I wish we were!).

Congratulations to the team at YY

A big congratulations to our friends at portfolio company YY on their IPO!

Edit: Additional articles on the YY IPO:

PandoDaily: “YY Soars on Opening. Is the Curse of the Chinese IPO Over?”

Forbes: “Chinese Billionaire Sees Hundred Fold Return on YY IPO”

ChinaDaily: “Social Platform YY Breaks IPO Dry Spell in US”

Wired: “Facebook is All Smiles in China Now, But YY is Coming”


Percolate Raises $9M from GGV and First Round Capital

Today social content creation SaaS platform Percolate announced its $9M Series A round of financing from GGV CapitalFirst Round Capital, and existing angel investors.  Read PandoDaily’s coverage of the financing here.

Social media is a category we have been investing in aggressively for several years now (examples include Buddy Media, YY, Social Touch and Meilishuo), and although the market has already seen some big outcomes (Facebook IPO, Buddy Media acquisition, Instagram acquisition), it is still very early in the market’s development.

So, why Percolate?

At a high level, the basics.  Terrific team; the founders (Noah and James) are deeply respected as emerging thought leaders in the space, and have spent many years working with top agencies and brands around the world.  They’re smart, hungry and have an amazing reputation in the industry.  Awesome business; Percolate has a unique software (SaaS) platform utilized by 30 of the world’s leading brands – companies like American Express, General Electric, Diageo and Samsung.  Many of Percolate’s users are fanatical about the platform – it is not uncommon to hear quotes like “I couldn’t scale our social presence without it.”  Enormous market; Gartner famously projected earlier this year that CMOs will spend more on technology than CIOs by 2015, noting that IT budgets make up 3.6% of revenue in large corporations while Marketing budgets are roughly 9%.  While social media makes up a relatively small percentage of spend today (<10% for most marketers, according to AdAge), it is highly likely to increase in the next few years.

At a more micro level, a few thoughts specific to Percolate:

1) The traditional model of brand advertising is being turned on its ear by social media.  Before social media, brands were content to create ad campaigns a few times per year and push those campaigns in front of consumers on a regular basis across a variety of mediums (print, tv, billboards, etc.).  That model doesn’t work across social media.  Consumers simply won’t tolerate a brand Tweeting the same message 7 times per day (or Instagramming the same photo, etc.).  Social requires constant creation of new and engaging content.  Marrying traditional brand content with social is known as “stock & flow,” and Noah, James and the Percolate team are all over it.

2) The market is evolving quickly.  It took social media pioneers Facebook and Twitter roughly 5 years to reach 100 million users (4.5 and 5, respectively).  It took Instagram 2 years.  In markets like China, we see companies like YY growing even more rapidly.  In markets that change rapidly, conditions favor the smaller, more nimble players.  Companies like Percolate are able to launch products, iterate, and embrace new areas like mobile before the large incumbent technology vendors (Oracle, SAP, etc.) have even begun to understand customer demand – much less build these capabilities into their legacy platforms.

3) The upstarts are garnering real budget.  We’ve met with quite a few marketing software providers in the past 6 months, and are continually amazed at the amount of money being spent by Marketing organizations (not IT) on technology – validating Gartner’s hypothesis.  I asked one top 10 global brand marketer how he justified the dollars being spent ($10K+/mo. in that case).  “It’s an impulse buy,” he responded.  “We spend hundreds of millions of dollars each year on marketing.   An extra hundred thousand for technology that improves our performance dramatically is a no-brainer.”  $100K per year won’t get Oracle excited, but for the upstarts it’s meaningful, and when that customer expands to additional brands and additional geographies, the annual contract value (ACV) can rise significantly.

We’re excited to back Noah, James and the team at Percolate.   Social media is a massive shift in the way brands engage with consumers – on a global basis.  Given the trends I outlined above, we think Percolate has a strong chance to create a terrific company that will make waves in the industry for years to come.

By the way – Percolate is hiring great people all over the country!

Updated 11/16 – financing coverage:

GigaOM “Percolate Helps Brands Act Like They’re People on Social Media”

Business Insider “Now THIS is the Right Way to Start a Company”

PandoDaily “Percolate Goes Big With Series A”

AdAge “Percolate Raises $9M Series A to Help Brands Create Content”

BetaBeat “Turning Brands Into Microbloggers”

AllThingsD “Twitter Tutorials for $10,000 a Month”

On BloombergWest Talking China E-Commerce

Last Friday I had the opportunity to chat with Nicole Lapin on Bloomberg TV about China’s e-commerce market.  You can watch the video here.

Why So Few Blog Posts?

Simple – a lot of the topics I used to cover on this blog are now covered (in much shorter form) on Twitter and FB (mostly Twitter).  Follow me on Twitter @jrichlive.  Still blogging, just not as frequently.

GGV Capital Raises $625 Million for Fund IV

Today we announced the closing of GGV Capital’s new $625 million Fund IV.  This new venture capital fund is composed of roughly $520 million in US dollars and $105 million in Chinese RMB, for a total of $625 million (GGV Fund III was $610 million).  Read Tomio Geron’s article about the new fund in Forbes here.

Since the firm’s founding in 2000, we have pursued a consistent strategy – one team investing out of one fund, seeking to back great entrepreneurs and management teams in the US and China.  With Fund IV, we plan to do more of the same.  We couldn’t be more thrilled, and I thought I would share two personal thoughts:

First, our responsibility to entrepreneurs and management teams.  We could not have raised this new fund without the exceptional performance and returns generated by the entrepreneurs we’ve backed.  13 of these teams have taken GGV portfolio companies public since 2010, and several have been involved in some of the technology industry’s largest M&A transactions in the last year (including hiSoft, Buddy Media, Endeca, SuccessFactors, Tudou and Qunar).  The quotes from Lars (Founder/CEO of SuccessFactors) and Gary (Founder/CEO of Tudou) in our press release mean a lot to each of us personally, as they reflect the kind of relationships we seek to build as we invest our capital, our time and every other resource we can bring to bear to try and help drive success.

“GGV Capital was a tremendous growth stage investment partner for SuccessFactors. In an extremely competitive situation, GGV had the foresight to be decisive when others waivered.  It’s that killer instinct that stands out for me,” said Lars Dalgaard, SuccessFactors founder and CEO.  “The GGV team played a major role in our growth, from IPO to expansion into Asia to our ultimate $3.4 billion acquisition.”

Second, our responsibility to our Limited Partners (“LP’s”).  Just like entrepreneurs and CEOs do, we take our responsibility to our investors very seriously.  They are investing with us because they expect GGV to continue to deliver the above-market returns we have since the firm’s founding in 2000.  I won’t go into a tremendous amount of detail here, but suffice it to say that we appreciate our investors’ commitment to GGV (many of whom have been with us since 2000, across four funds) and we clearly understand our mandate.

Thomas, Hany, Scott and Joel founded the firm in 2000 with a unique idea and operating model – one team investing out of one venture capital fund across the US and China.  Twelve years later, we couldn’t be more excited to be investing Fund IV at a time when technologies like mobile, social and cloud computing are creating massive disruption – and the world’s #1 (US) and #2 (China) economies are increasingly intertwined.

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