Cambridge Analytica Crisis: Why Vilifying Facebook Can Do More Harm Than Good

Throughout the week, I've been following Facebook and Cambridge Analytica scandal as it's been raging on, growing more and more incredulous. Yes, this is a pretty bad crisis for Facebook (which they inadvertently made even worse by their clumsy actions last week). But it still felt to me that the public outrage was overblown and to a significant degree misdirected. Here are the key things that contributed to those feelings:

1. Don't lose sight of the actual villains. Aleksandr Kogan and Cambridge Analytica are the ones truly responsible for this, not Facebook. Facebook practices for managing users' data might have been inadequate, but it was Kogan who passed the data to Cambridge Analytica in violation of Facebook policies, and then Cambridge Analytica who chose to keep the data instead of deleting it to comply with Facebook requests.

2. Nobody has a time machine. It might seem almost obvious that Facebook should have reacted differently when it learned that Kogan passed the data to Cambridge Analytica in 2015 — e.g. extensive data audit of Cambridge Analytica machines would have certainly helped. The problem is, it's always easy to make such statements now, yet nobody has a time machine to go back and adjust her actions. Was Facebook sloppy and careless when it decided to trust the word of the company that already got caught breaking the rules? Sure. Should it be punished for that? Perhaps, but rather than using the benefit of hindsight to argue that it should have acted differently in this particular case, it seems more worthwhile to focus on how most companies dealing with users' data approach those "breach of trust" situations in general.

3. Singling out Facebook doesn't make sense. To the previous point, Facebook isn't the only company operating in such a fashion. If one wants to put this crisis to good use, it makes more sense to demand for more transparency and better regulatory frameworks for managing users' data, rather than single out Facebook, and argue that it needs to be regulated and/or punished.

4. Don't lose sight of the forest for the trees. It's also important to remember that the data privacy regulation is a two-way road, and by making the regulations tighter, we might actually make Facebooks of the world better, not worse, harming the emerging startups instead. This is a topic for another post, but in short, strict data regulation usually aids the incumbents while harming the startups that find it more difficult to comply with all the requirements.

5. Data privacy is a right — since when? Finally, while the concept of data privacy as a right certainly seems attractive, it's not as obvious as it might seem. Moreover, it raises an important question — when exactly did the data privacy become a right? This isn't a rhetorical question either. It certainly wasn't so in the past: many of the current incumbents have enjoyed (or even continue to enjoy) periods of loose data regulation in the past (e.g. like Facebook in 2011-2015, or so). So if we pronounce the data privacy to be the right today, we are essentially stifling the competition going forward by denying the startups of today similar opportunities. Does this sound nice? Of course not, but that's the reality of the market, and we have to own it before making any rash decisions, even if some things seem long overdue.

Overall, this crisis is indicative of multiple issues around data management, and can serve to launch a productive discussion on how we might address the data privacy concerns going on. At the same time, it doesn't do anyone any good to vilify Facebook beyond necessary (and some of the reporting these days was utterly disgusting and irresponsible), the #deletefacebook campaign doesn't really seem to be justified (again, why not get rid of the vast majority of the apps then, given that Facebook isn't that different from the rest) and any further discussion about data privacy should be carefully managed to avoid potentially harmful consequences - most of us have no desire to find themselves in the world where we have perfect data privacy, and no competition.

The Future Of Online Education: Udacity Nanodegrees

In its 20+ year history, the online education market has experienced quite a few ups and downs. From the launch of way back in 1995 (back then, it wasn't even an EdTech company yet, strictly speaking; it only started offering courses online in 2002), to Udemy, with its marketplace for online courses in every conceivable topic, to the MOOC revolution, which promised to democratize higher education — I guess it would be fair to say that EdTech space has tried a lot of things over the years, and has gone through quite a few attempts to re-imagine itself.

On the last point, while MOOCs (massive open online courses) might not have exactly lived up to the (overhyped) expectations so far, the industry continues to live on and evolve, with the startups like Coursera, edX and Udacity continuing to expand their libraries, and experimenting with new approaches and programs.

Most recently, Udacity has shared some metrics that allow us to get a sense of how the company have been doing so far. And, in a word, we could describe it as "not bad at all". Apparently, in 2017 the company had 8 million users on the platform (that includes the users engaged with Udacity free offerings), up from 5 million the year before. Udacity also doubled its revenue to $70 million, which constitutes an impressive growth rate for a company at this stage.

Now, the reason why I believe those numbers are particularly interesting is because of the monetization approach Udacity took a few years ago, when it first introduced its Nanodegrees, a 6-12 month long programs done in collaboration with the industry partners, such as AT&T, IBM and Google, that should presumably allow the students to build deep enough skillset in a specific area in order to be able to successfully find jobs.

While this idea itself isn't necessarily unique - other companies have also been trying to create similar programs, be it in the form of online bootcamps, as is the case for, or the Specializations offered by Coursera, I would argue that Udacity's Nanodegrees offered the most appealing approach. Nanodegrees are developed in a close partnership with industry partners (unlike Coursera's Specializations that are university-driven), and require lower commitment (both from the financial perspective and time-wise) compared to online bootcamps. Finally, the marketing approach of Udacity is vastly superior to that of its key competitors, especially when the Nanodegrees were first launched (they announced it in partnership with AT&T, with AT&T committing to provide internships for up to 100 best students, which was a great move).

Some of the metrics Udacity shared this week were specifically related to Nanodegrees, and provided a glimpse into how they were doing so far. In particular, Udacity has reported that there are 50,000 students currently enrolled into Nanodegrees, and 27,000 have graduated since 2014.

The price per Nanodegree varies quite a bit, and it can also depend on whether the program consists of a single term, or several of those, but with the current pricing, it seems reasonable to assume that the average program probably costs around $500-700. With 50,000 students enrolled, that should amount to $25-35 million in run-rate revenues (strictly speaking, that's not isn't exactly run-rate, but that's unimportant here). The actual number might be a bit different, depending on a number of factors (the actual average price per course, the pricing Udacity offers to its legacy users, etc.), but I'd assume it shouldn't be off by much.

Those numbers ($25-35 million, give or take) are interesting, because they clearly show that Udacity must have other significant revenue streams. There are several possibilities here. In addition to offering learning opportunities to consumers, Udacity also works with the businesses, which theoretically could amount to a hefty chunk of the money it earned last year. Besides that, Udacity also runs a Master in Computer Science online program with Georgia Tech, which is a fairly large program today, and offers some other options to its users, such as a rather pricy Udacity Connect, which provides in-person learning opportunities. and a few Nanodegrees that still operate under its legacy monthly subscription pricing model, such as Full Stack Web Developer Nanodegree. All of those could also contribute to the revenue numbers, of course.

And yet, if you look at Udacity website today, and compare it to how it looked like a couple years ago, everything seems to be focused around the Nanodegrees now, whereas in the past, Udacity felt much more like Coursera, with its focus on free courses, with the users required to pay only for the additional services, such as certificates, etc.. The obvious conclusion to be made here is that apparently Udacity considers Nanodegrees to be a success, and believes that there is a significant potential to scale it further.

One last interesting thing to consider is the number of people who have completed at least one Nanodegree since its introduction in 2014. According to Udacity, only 27,000 people have graduated so far, which is curious, given that it reports 50,000 people are currently enrolled in at least one degree, and most degrees are designed to be completed in 6 to 12 months.

This can only mean one of two things: either Udacity has recently experienced a very significant growth in the number of people enrolling in Nanodegrees (which would explain the existing discrepancy between those two numbers), or the completion rates for the Nanodegrees historically have been relatively low.

Now, the completion rates were one of the key issues for MOOCs, where they proved to be quite dismal. However, the situation for Udacity is somewhat different: here, the users have already paid for the program, so in a way, completion rates are less of a concern (and with the legacy pricing model, where Udacity charged users a monthly subscription, the longer times to completion could have actually benefitted the company). On the other hand, low completion rates might ultimately contribute to the poor reviews, negatively affect user retention, and damage the company's brand, so this issue still needs to be managed very carefully.

Would Udacity's Nanodegrees prove to be a success in the long run? That remains to be seen, but so far, it looks like the company has been doing a pretty good job with those, so the future certainly looks promising.

The Benefits Of Raising Less Money

A couple of weeks ago, TechCrunch published an essay called "Raise softly and deliver a big exit" by Jason Rowley. In this essay, he set to explore the relationship between the amount of funding startups raise, and the success of the exits, measured by the ratio of exit valuation to invested capital (VIC).

The analysis, unfortunately, doesn't provide a breakdown by space the startups operate in, and thus is relatively high level. It also raises some questions about the validity of using VIC as a metric to compare to the amount of capital raised or the valuation: as both of those are in fact used in the calculation of VIC, any inferences about the correlations between either of them and VIC aren't really meaningful.

Still, even if the conclusions aren't statistically meaningful, the analysis itself raises some interesting points, all of which can be summarized in a single phrase: "raising a lot of money makes getting high return on investment less likely".

One could argue that this is a fairly obvious conclusion that doesn't require looking at any specific data, and she'll be right about that: making high returns (meaning a percentage of capital invested, not absolute numbers) at scale is often harder compared to a situation when you invest relatively small amounts of money.

For the startups raising venture capital funding, that appears to be particularly true. Selling your company for $50 million is a success, if it only raised $5 million in funding; it becomes much more complicated if it attracted $100 million in funding - in this case, to deliver the same multiple you'll need to sell it for at least $1 billion, which drastically limits the number of potential buyers (and also the chances that the company would be able to get to the stage when it could be solved for such an amount of money).

So why are we so focused on the huge rounds raised, "unicorn" startups and the outsized exits?

Part of the story is tied to the business model of the VC firms: most of them receive a fixed percentage of the assets under management (AuM) as a management fee (typically, 2% per year), plus carry (say, 20% of the overall proceeds from exits, once the investors in the fund are paid the principal back). Both of those pieces are directly tied to the AuM, creating the incentive to raise more money from the limited partners.

What that means is that there is a misalignment between the interests of limited partners (who care about returns as a percentage of capital invested), and those of general partners (whose compensation, and especially their salaries, is to a significant extent determined by the AuM size, followed by the absolute returns).

This compels the general partners to raise larger funds, which in turn means that they need to pour more money into each startup (or do more deals per fund, which brings the risk of spreading your resources too thin). And investing more money per startup creates the obvious pressure for larger exits.

While VC piece is relatively straightforward, the situation for the startup founders is more complicated. Unlike the general partners of VC firms, the founders do almost exclusively care about the returns: the founders' compensation isn't really tied to the amount of money they raise, only to the proceeds from selling their companies. Another interesting point to consider is that for the vast majority of individuals, the amount of money required to completely change their lives is much lower than the amounts that might be deemed satisfactory for the VC firms, especially the larger ones.

To illustrate this point, for a firm with $1 billion under management, selling a company they've invested $5 million in at $10 million pre-money valuation, for $50 million, isn't really attractive: even though they'd make a decent return on this investment, the absolute gains are too small to make much of a difference.

For the founders of that same company, however, such a deal can be very attractive: if there were 3 of them, it would yield them more than $11 million apiece - a huge sum of money for any first-time entrepreneur. Accepting a deal like that would also leave them free to pursue their next ventures, knowing that they can now take bigger risks, with their financial security already established.

So again, why does the entire industry pay some much attention to the largest deals and exits?

Well, for once, it's just more interesting for the public to follow those deals - they create a rock-star aura around the most prominent founders and VCs, something that is obviously lacking for the smaller investments and exits. Next, some of the more exciting ventures do require outsized investments: that is often particularly true for some of the most well-known B2C startups (e.g. social networks, or on-demand marketplaces) - that, however, certainly isn't the case for a lot of companies out there. Finally, the VC agenda certainly plays a role there as well.

And yet, while all those reasons might be legitimate, it's worth remembering that for every $1 billion exits there could be dozens of $50-100 million sales, and while such deals don't always sound as cool, there surely do have the potential to change the lives of the entrepreneurs involved in them.

Airbnb's Latest Announcements: Hassle-Free Travel And Luxury Properties

Yesterday, Airbnb hosted a large keynote presentation, announcing two important additions to its product: Airbnb Plus and Beyond, as well as a number of smaller additions and changes.

According to the company, "Airbnb Plus is a new selection of only the highest quality homes with hosts known for great reviews and attention to detail. Every Airbnb Plus home is one-of-a-kind, thoughtfully designed, and equipped with a standard set of amenities — whether you’re in a private room or have the entire place to yourself.” At the launch, Airbnb Plus features 2,000 listings across 13 cities, with more to follow. To join Airbnb Plus, the hosts would need to submit an application, which requires paying $149 fee, and then satisfy the company's 100-point quality checklist.

Another service announced yesterday was Beyond, although it won't be launched till late spring, and the amount of information available so far is limited. As Airbnb puts it, Beyond will bring "extraordinary homes with full service hospitality" to the platform.

Besides that, Airbnb is now formally recognizing boutique hotels for the first time: while some hotels have been represented on its platform for years now, Airbnb never paid much attention to those. That is about to change, with the inventory now being separated into several categories that will include vacation homes, unique spaces, bed & breakfast ones and boutique hotels.


In my opinion, those changes are extremely significant. They also provide us with the glimpse into the direction Airbnb want to head in the future. While it was the idea of a marketplace for people to rent their apartments to other travelers that made Airbnb into the company it is today, at some point it had to find a way to transcend the limitations of this niche, while also utilizing its strengths to expand into additional areas.

One of the key challenges for Airbnb to solve at the beginning was to convince people to put their trust into the platform, allowing the strangers to stay in their homes. Once Airbnb managed to overcome this initial mistrust, the ratings system allowed it to quickly scale the platform, with both the untrustworthy guests and hosts being filtered out by the market.

With Airbnb Plus, it's now taking this further, using its already established ratings system for the hosts (as well as the statuses of "superhosts", possessed by some of them) to identify the most promising rentals, and then work with their owners to ensure even higher level of comfort for the guests. This seems very smart, as it fully utilizes the existing advantages that come with Airbnb scale and its crowdsourced ratings, thus allowing the company to scale it fast, while also providing the guests with enhanced convenience.

The same goes for the idea of recognizing boutique hotels. In many ways, Airbnb is better positioned to serve this niche that the regular hotel booking systems, not to mention the fact that Airbnb only charges the hosts 3%, charging the guests with the rest, and doing that in a transparent way, while platforms like charge the hotels 15 to 20% of the booking value. However, before now, finding the boutique hotels on the platform was slow and inconvenient, damaging the experience for the users. The introduction of separate categories for different types of inventory should allow to improve the user experience, and potentially help to attract additional hotels to the platform.

It's harder to make any definitive conclusions about Airbnb Beyond at this point. On the one hand, judging from the way Airbnb positioned it in the announcement, it represents a long awaited move for the company directly onto the hotels' turf, which significantly expands its total addressable market, and should also potentially allow it to better serve the entire spectrum of their clients' needs.

On the other hand, unlike with the Plus and boutique hotels, the expansion into the full service hospitality doesn't necessarily utilize the existing strengths of the platform, and it's also not a space the company has much experience in. In order to leverage its scale, Airbnb would most likely need to find local partners in each geography, and then figure out a way to ensure that it can provide a consistent and high quality experience the guests are accustomed to with the traditional luxury hotels. This can be a very difficult challenge to tackle, but at the same time, the sheer size of the hospitality industry makes the attempt worth the effort.

The Struggle Over Snapchat's Controversial Redesign

When a tech company rolls out a major update for a b2c product that's been in use for years and has an army of loyal followers, it is fairly reasonable for it to expect to see a certain amount of backlash, especially if the changes affect the way the users interact with the app. After all, we tend to heavily rely on the acquired habits when dealing with a lot of tech products, and when those habits are being disrupted, even for good reasons, we become frustrated.

Still, when Snapchat introduced the redesigned version of its app back in November, I doubt that the company expected the backlash to turn out to be so severe. Since then, the complaints have never stopped, with an incredible number of users weighing in to demand the reversal of the redesign.

In the tech world today, reversing updates is not entirely unheard of, but it can be exceedingly tricky, especially for a major redesign like this: nobody wants to cave in to the public opinion and admit failure. However, what's more important is that in the world of continuous deployment and constant A/B testing, the decision to introduce major changes is never made blindly. Chances are, Snap had some sound reasons to go forward with this redesign (which, as they were most likely aware of, wouldn't necessarily be taken kindly by the users) - such as, for example, the expectations that the new design would help the company to better monetize the app. The fact that the recently released earnings beat the expectations, sending Snap's share price soaring, only confirms this hypothesis, as many observers connected the improved performance to the redesign.

So, it didn't came as a surprise when earlier this month Evan Spiegel (Snap CEO) defended the redesign, and announced that it's here to stay. That, however, wasn't the end of the story. As it turns out, a month ago, a user from Australia started a petition on, demanding Shap to reverse the update. Well, as of today, more than 1.2 million (!) people signed it. As a result, yesterday Snap responded to the petition, promising some changes to the app that, according to Snap, would help to alleviate at least some of the issues that the users were complaining about.

This is an interesting development, and definitely not a very common one: even though Snap haven't actually agreed to reverse the redesign (which, again, is totally unsurprising), the amount of backlash they received has ultimately forced them at least to try and communicate the upcoming change to the user community in a more transparent way, and possibly to make some concessions along the way as well (we don't really know whether the announced upcoming changes were planned in advance).

And while I personally don't agree that using to make such a demand was justified - in order for it to remain an effective vehicle to drive change, the users need to be cognizant of the social significance of the petitions they start - it certainly proved to be effective in this case, which might set an interesting precedent for the future battles between tech companies and their users.

Why ICOs Probably Aren't The Future Of Early Stage Financing (At Least, Not Yet)

While catching up on the recent posts on, I came across this video from the Upfront Conference, in which a number of VCs and entrepreneurs discuss the pros and cons of ICOs and tokens in the context of early stage funding.

For those of you who don't have time to go over the entire video (although I'd still recommend watching it, as it last only 7 minutes and is highly educative), here are a few quotes from it that I found particularly insightful:

Adam Ludwin, Chain:

"It's not surprising that you see the number of ICOs you see, because of the temptation to raise capital that's not equity, so there is no dilution, and is not debt, meaning you don't have to pay anyone back, so people are just giving you money, and all you give them is the hope that the thing they have will appreciate in price. That's a very tempting deal for any entrepreneur to take."

Jim Robinson, RRE:

"What I have to get right to win is I have to have a company actually work. It has to build what it's supposed to build, it has to find an audience, it has to have sales and repeats. What I have to get right if I'm speculating or investing in tokens is not whether or not they'll actually ever work, it's whether or not I timed it correctly."

Fred Wilson, Union Square Ventures:

"We're gonna invest in the sector for the long term, you know, we're thinking about it as a 10-year or 15-year investment opportunity, and so we try really hard not to get caught up in near-term price speculation... There is not enough reporting and accountability, there's not enough governance, there's too much early liquidity, there's misalignment between potentially the investors in the platform and the developers of the platforms..."

Tom Loverro, IVP:

"This is sort of constitutional democracy in 1776, like nobody really knows how to make this stuff work."

I believe those opinions offer a great perspective on why ICOs should be viewed with caution, and also why they probably aren't going to replace the traditional ways to fund early-stage companies anytime soon.

To be fair, I'm not going to argue with the fact that the cryptocurrencies and blockchain are creating some very exciting possibilities, allowing to rethink the way some things were typically done in the past. And, in case of ICOs, the idea of bypassing the intermediaries, such as VC funds, and the costs associated with them, and investing directly into the promising companies at the early stages (thus leaving potential for a huge upside, if the startup is to succeed) is certainly luring. However, the mechanisms governing such investments were put in place for a reason, and people willing to participate in ICOs need to have a very clear understanding of what they're getting themselves into.

Below is the summary of some of the good reasons to use ICOs to fund companies:

  1. For people who possess deep expertise in a certain field (thus allowing them to figure out what the most promising opportunities are) and at the same time are unwilling, or unable to invest through traditional channels, ICOs might represent an sensible (and cost-effective) investment option
  2. Some might be less interested in the long-term prospects of the companies having ICOs, and rather are hoping to earn high returns by trading tokens - for those, the speculative nature of ICOs, the lack of regulation around it and the low transaction costs can make ICOs quite attractive
  3. Also, in theory, there is nothing preventing the companies that have already gained significant traction from doing ICOs for some very valid reasons, the most famous example of that being Telegram with its huge ICO of $1.2 billion - given Telegram's ambitions to create an ecosystem of decentralized apps that won't be subject to regulation by any government, ICO appears to be exactly the right tool to raise funding; moreover, such later-stage ICOs are obviously less risky than investments made in very early-stage companies, and thus might represent a great niche for ICOs as an investment mechanism

At the same time, there are plenty of reasons for investors to be beware of ICOs (even after we exclude the obvious scams, such as pump and dump):

  1. The protections for the investors are often limited or non-existent: most ICOs today are much more similar to crowdfunding than to public offerings, thus leaving the investors vulnerable from the legal standpoint
  2. Pretty much anyone can invest in ICOs, which is not the case for most of the regulated investments that are typically considered high risk: the concept of accredited investor exists for a reason
  3. The governance structure of many companies having ICOs is often questionable at best, leaving the investors with limited say on the direction of the companies' strategy
  4. The fact that the tokens acquired in ICOs can be traded can be great in a sense that it provides the investors with liquidity; however, that also creates a conflict of interest between the founders and the backers
  5. To build off the previous point, given that the vast majority of the companies doing ICOs these days are early stage, there are often no objective ways to value them, which in turn means that the price of the tokens is subject to huge swings, often based on rumors or the quickly changing sentiments of the public

So, will ICOs evolve in a mature investment mechanism that'll revolutionize early-stage financing? To me, at this point the answer remains unclear: while ICO as a mechanism most certainly has a great potential, I think it'll most likely take years before it evolves into a more reasonable investment tool that the public can truly benefit from.

Assessing The "Worthiness" Of Companies' Missions

Recently, I've stumbled upon a discussion somewhere (I believe it was on Quora) about whether people who state that they'd only work for companies with whose missions they can strong empathize are mostly being hypocritical. The author of this argument used Uber as an example, stating that it seemed highly unlikely that so many people had suddenly found themselves so interested to work for a company that at its core remained a taxi hailing business.

While I believe that Uber and its competitors are so much more than just taxi hailing services, I found the question itself rather intriguing. How much does the company's mission actually matter to most of us? Should it even matter? And how might we approach assessing this mission in the first place?

Those are, of course, deeply philosophical questions, and I don't entertain any illusions regarding my abilities to provide the answers that would be universally applicable to everyone. I also don't have any desire to argue whether people have to care about the mission of the companies they work for. Rather, I wanted to share my take on the second half of this question - how we might approach thinking about the companies' missions and values - in the context of the tech industry today.

First, it's useful to consider how the nature of the tech products we use has evolved over the last 10-15 years. In the past, we often evaluated the products and services we used based on the new features or functionality they offered us. Today, however, that's not the case anymore: we would often be hard pressed to name even a few new features the new generations of the apps and services we use bring us, and not because we don't care for that additional functionality, but rather because what we really value today above everything else is convenience.

The New York Times has just published an essay called "The Tyranny of Convenience" on exactly this topic, which I found rather entertaining. Still, the reason I believe the change in our priorities matters in the context of this post is that it actually makes so much more difficult to answer the questions asked in the second paragraph in any reasonable fashion.

In the world that valued features, assessing the importance of the work done by many tech companies was relatively easy: the users typically had a certain type of problem, or pain point, they required solving, which in turn created an opportunity for the companies to come with a software product, a hardware device, or some combination of both, that would allow to solve that issue. Of course, it was still entirely possible that the users didn't realize that they actually had a problem, but most of the time, at least some indicators were there: the office workers of the early 1980s probably didn't know that they desperately needed spreadsheets, but someone who decided to pay close attention to the work they were doing for a reasonable amount of time, might have noticed that there was a huge potential to digitize their activities, in one way or the other.

In the world of convenience, however, the situation seems remarkably different. First of all, the users often might not even realize that they have a problem to begin with. Did most of us know that we actually need that 2-hour guaranteed delivery? What about those sophisticated algorithms that allow us to create discover new compositions based on what we listened to in the past? Or the opportunity to upload the photos to the cloud on the PC, and immediately access them from our phones? There are a thousand things we can't imagine our lives without that we would have a really hard time even dreaming of 10 or 15 years ago.

Next, in this strange new world, there is no way to solve the problem once and for all, as there is often no limit to how much something can be improved upon. Getting a guaranteed 1-day delivery from Amazon is nice, but why not focus on 2-hour delivery next? Uber and Lyft might be so much more convenient that the traditional taxi services, but the cars could still arrive even faster, and, by the way, wouldn't it be nice if it cost less? And while Amazon Echo is helping us to make some of our routines so much more efficient, it can definitely be further improved by integrating with additional services, and employing more sophisticated machine learning capabilities.

All of that implies that there is no task or problem that isn't worth solving, as long as it improves the experience for the end users (not to mention that the large advances can sometimes start as minor efforts to solve a particular issue). By extension, this also means that the true complexity of the systems aiming to provide the users with a more convenient way of doing something is often hidden from the eyes of those users. Most of us have no idea of the amount of efforts behind Spotify recommendation engine we take for granted nowadays, or the cloud infrastructure that the majority of the services we interact with today are built upon, or Amazon 1-day guaranteed delivery. Moreover, we don't care: the entire point of convenience is that the users don't need to concern themselves with all of that to benefit from those services.

Now, going back to the initial argument, if we look at the Uber from the perspective of feature-driven world, it undoubtedly is just another taxi hailing service, albeit a much more convenient one compared to the traditional taxi services, where you had to call a local company on the phone. However, in the world of convenience, Uber and the likes of it are so much more than that: they help us save time and money, while also feeling more secure and experiencing a nicer way to travel. Moreover, they hold promise of bringing us an entirely new level of convenience in the years to come, once the self-driving cars hit the roads. And when you frame the problems Uber is trying to solve like that, it seems unsurprising that they might want to recruit some of the best engineers or businesspeople, or that those people would be genuinely interested to come work for Uber and its peers.

That, obviously, doesn't mean that everyone out there does (or even should) care for the mission of the companies they work for. Rather, I'd like to argue that the question itself is somewhat flawed, at least in relation to the tech companies, given the realities of the world today.

Uber International Growth Strategy


On February 16, the news leaked that Uber is reportedly preparing to sell its Southeast Asian business to Grab, in exchange for the stake in the company. This is the third time that Uber decided to abandon the efforts to establish itself as a leader in the region, choosing to join forces with the strongest regional players instead: in 2016, Uber China was acquired by Didi Chuxing, and then in 2017, Uber merged its Russian assets with Yandex.Taxi.

In both cases, Uber hasn't actually fully exited the markets, but received significant minority equity stakes in the newly formed entities. This allows it to benefit from future growth in those regions, while also freeing the resources to be invested elsewhere. Still, the fact that Uber is now about to abandon another market that was long considered to be one of the most promising in terms of its long-term potential, is telling: the war of attrition can become too costly even for the most well-funded companies, especially if they have to compete against the strongest regional players in multiple geographies simultaneously. And the fact that those players are often very well funded themselves, have a significant head start and a much better understanding of the local specifics, doesn't help.

To be fair, I don't think that it's all doom and gloom for Uber: merging with the leading regional players, instead of continuing to wage the often doomed war actually makes total sense. However, it also raises a couple interesting questions. First, Uber might find itself effectively locked in some of those entities, unless those companies become large enough on its own to make public offerings an attractive option to achieve liquidity. If, for some reason, an IPO isn't an option, the only viable buyer for those companies will most likely be Uber itself. Second, there is a very real possibility that Didi would soon emerge as a truly global player, with its latest acquisition of 99 in Brazil only strengthening the case for it. If, or rather when, that happens, Uber will face a significant conflict of interest, being at the same time a major shareholder and a key competitor to Didi. This is, of course, not the first time in history such a conflict would emerge, but still, it would be curious to see how Uber would choose to deal with it.

The Unicorn Club: Revisited

The Unicorn Club: Revisited

In 2013, when Aileen Lee of Cowboy Ventures first coined the “unicorns” term describing startups valued at $1 billion or more, she named 39 companies in the U.S fitting the definition.

In the spring of 2014, when I first set to compile a list of unicorns from around the globe as part of my work at InVenture Partners, the final list consisted of 83 companies, 56 of them in the U.S.

Over the next few years, this number continued to increase at an alarming pace, with CB Insights now highlighting 186 companies, and CrunchBase Unicorn Leaderboards listing 224 unicorns and 43 exited unicorns as of February 25th, 2017.

Still, those lists, while highly interesting, don’t necessarily provide the depth of insight offered in the original article by Aileen Lee. I thought it might be interesting to revisit the topic today, and explore what unicorns from around the world have in common and what differentiates them from each other.

To do that, I set to compile a list of companies that qualify to be called “unicorns” that carries as much information as possible. This list includes all startups co-founded since...

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The Benefits Of Integrated Offering Model

A few days ago, TechCrunch published a list of 10 largest Series B rounds of 2016. The 10th place on the list went to Juicero, a juice making machine company, which raised $70 million in Series B. I’ve missed this deal earlier this year, but it still seems worth digging into, as I believe it provides some food for thought on the topic of building businesses that have hardware at their core.

An important note here is that I’m less interested in trying to predict whether or not Juicero will be a success, or defending the company’s strategy, and more interested to try to see the logic behind certain strategic decisions the company made so far.

Introducing Juicero

Juicero was founded in 2013 by Doug Evans, the founder and former CEO of Organic Avenue, a chain of stores selling organic juices. Until 2016, the startup remained in stealth mode, raising over $20 million of funding in Series A and Seed rounds. Shortly after closing $70 million round in March this year, the company announced another cash injection of $28 million, bringing its total funding close to $120 million.

Juicero sells a cold-press juicer of its own design, that fits the countertop and costs $699. Yes, you heard that right, it costs 700 hundred bucks. Sure, it looks nice, is small enough, and even has wi-fi for some reason (what device in 2016 doesn’t have it, after all?) It’s still a lot of money for a juicer, though. But that’s not all. After you buy the device itself...

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