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Andreessen Horowitz

We are delighted to announce that the six General Partners of Andreessen Horowitz, with our families, are all committing to donate at least half of all income from our venture capital careers to philanthropic causes during our lifetimes.

The reason is simple.  We are fortunate to work with some of the best entrepreneurs and technologists in the world, and in the process help create great and valuable companies.  That activity, done well over decades, can generate a lot of money that can then be productively deployed philanthropically back into the society that makes it all possible.  We love participating in this process, and we hope that our philanthropy can, over time, help make the world a better place.

As an initial catalyst, we are making an immediate group donation of $1 million to a set of six vital Silicon Valley-related nonprofit organizations.  Those causes, and their respective sponsors, are:

Ben and Felicia Horowitz: Via Services
Jeff and Karen Jordan: Ecumenical Hunger Program
John O’Farrell and Gloria Principe: Second Harvest Food Bank
Marc and Laura Andreessen: Fresh Lifelines for Youth
Peter and Martha Levine: Canopy
Scott and Pamela Weiss: The Shelter Network

Signed,

Ben, Jeff, John, Marc, Peter, and Scott

“Necessity, who is the mother of invention”
—Plato, The Republic

As we evaluate investment opportunities, we like to dive deep into an entrepreneur’s background and story… What did he study in school? What were his important life choices or challenges? When did he demonstrate courage? How did he come up with the need for creating the company? We typically spend the first 20 minutes of a one-hour pitch meeting asking questions that draw out personalities and motivations.

Some of the most compelling company formation stories stem from a quest to solve an intractable problem that the entrepreneur has encountered personally. Like finding a place to sleep when all the hotels were booked (Airbnb), stopping fraud at eBay (Silver Tail Systems), or the frustrations associated with transferring files (Box).

Daniel Mattes has one of these compelling stories. Daniel was formerly the CEO and founder of Jajah, the main competitor to Skype in the Voice over IP (VoIP) market. Of all the challenges Daniel faced when building Jajah, the one that stood out as the most vexing was combating online fraud. As it turns out, VoIP services, online travel sites, online gambling and virtual goods economies—primarily games—have incredibly high fraud rates. Since hotel vouchers, VoIP minutes and gaming credits require no physical shipment or delivery address, they can be easily transferred around the world as currency. Unfortunately, the situation has gotten so bad that many of these companies will decline credit card numbers from an entire country. Let’s take Afghanistan as an example: Fraudsters use stolen credit cards to create thousands of Skype accounts with $100 credits and then have street teams that sell them for $20 apiece at coffee shops and airports.

The credit card companies are well aware of this problem and end up charging these digital goods companies higher rates and make them liable for all chargebacks. As Daniel recounted the battle to me, you could feel his desperation: “Everything I did to combat fraud resulted in significantly lower revenue. I knew every additional verification, screen and decline path was frustrating and trapping millions of legitimate customers.” Couldn’t there be an easier way to tell apart the people who were holding real cards from the fraudsters? The credit card companies know a really simple way: seeing the actual card. So-called “card present” rates are five times cheaper than typing in a credit card on a website for the reason that if someone steals your credit card number, they can use it for years, but if they steal your actual card, then you usually cancel it immediately.

What if there was a technology that could eliminate the fraud AND increase these companies’ revenue? That’s exactly what Daniel’s new company, Jumio, has solved.  Here’s how it works: Jumio’s flagship product, Netswipe, uses a PC webcam or a smartphone video camera to identify, read and process the actual credit card.  Instead of typing in your card details, you hold the card in front of the camera and the software analyzes the encrypted video stream to read the numbers and identify the logos. It can also tell the difference between a plastic card and a paper copy. All of Jumio’s customers have experienced nearly zero fraud and have actually increased their total revenues after implementation.

We are announcing today that Andreessen Horowitz has completed Jumio’s Series B financing totaling $25.5 million. Here’s why we invested:

  • Daniel Mattes is an impressive and determined serial entrepreneur with a track record of attracting top talent and making great products.
  • The company secured strong patents and intellectual property protection up front.
  • During our reference calls, we heard sentiments along the lines of, “This is wonderfully elegant and Apple-esque. You just hold up the card and the transaction is done!”
  • The customer uptake has been spectacular: The company is on track to exceed a $100 million run rate this year.
  • One of my partners, Jeff Jordan (formerly the president of Paypal), exclaimed after meeting with Jumio, “I’m pounding the table on this one—I think it will be as revolutionary to online payments as PayPal!”
  • In addition to the Netswipe product line, Jumio is launching NetVerify, a solution that uses the same video streaming technology to verify IDs such as passports and driver’s licenses.

As part of the financing, I am thrilled to be joining Jumio’s board of directors and our entire team is looking forward to helping Jumio and Daniel win the market!

As data storage costs plummet, the world is storing data that would be impractical to keep just a few years ago. Think video camera feeds, web logs and GPS tracking information. We used to throw away or sample this data, but now we can store and explore it. In the network forensics market, for example, Solera Systems will store a history—a la Tivo—of all of a company’s network traffic. If the company is hacked, then they can actually recreate what happened. But cheaper and denser disks are only part of the solution. The rest of the answer comes from new approaches to harnessing this data as the last generation database and business intelligence (BI) solutions fail at the Big Data scale.

Internet companies saw this problem coming and invested in their own solutions. Google built MapReduce for its internal use to store and analyze data at massive scale. Hadoop then emerged from the open source community and is now used by Yahoo, Facebook, and eBay, and is spreading into leading finance and telco companies.

But even as Hadoop is fast becoming the de-facto data management platform for Big Data, it remains a low-level infrastructure tool incapable of being helped by traditional BI products – which can’t scale effectively – and isn’t intuitive enough for the average business user.

Our newest investment, Platfora, is aiming to overcome these issues. Here’s why we’re so excited about the company:

  • Incredibly strong founding team. Platfora founder and CEO Ben Werther was the head of product at Greenplum where he witnessed firsthand customer frustrations with analyzing Big Data (read more from Ben here). He has hired an amazing technical team with strong domain experience in Big Data and analytics.
  • As Hadoop gains adoption, it will need a robust BI platform that can make it accessible to the mainstream. The legacy BI vendors don’t have the product architecture for Hadoop or Big Data and we believe this opens the door for a new franchise to be built.
  • One barrier to Hadoop adoption is the difficulty of getting at the data. Platfora makes it easy for business users to leverage Big Data, and this may dramatically accelerate Hadoop adoption to the benefit of the whole ecosystem.
  • The team has a heavy user interface and user experience ethos. They are hiring a consumer-esque UI/UX team and partnered with Cooper, a well-known strategic user experience design firm, at the outset.

Platfora’s breakthrough is a combination of server technology, user experience innovation and data science. Read more here about how the platform works with existing Hadoop clusters to generate easy-to-understand dashboards, reports and insights.

We’re excited at Andreessen Horowitz to lead a $5.68 million Series A financing for Platfora, based in Palo Alto, Calif. Also investing in the round is In-Q-Tel, the independent strategic investment firm that identifies innovative technology solutions to support the missions of the U.S. intelligence community. While Platfora is primarily focused on commercial customers, U.S. intelligence agencies can benefit greatly from the power of Hadoop and IQT sees enormous need for the product that Platfora is building.

I am excited to be joining the Platfora board and can’t wait to help Ben and his team build a huge business.