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I recently joined App.net’s board of directors and I’m really excited about Dalton Caldwell’s grassroots campaign to build an ad- and influence-free social network. I have contributed to Dalton’s quest and encourage everyone to read his blog and join.app.net! Dalton’s latest update is re-posted below.

App.net is not vaporware

We shipped an alpha version of App.net. You can browse the global feed at alpha.app.net. This is a webapp that we built in the last two weeks on top of our documented API. Think of this web application as a “proof of concept”.

We also released a dev API that allows 3rd party developers to begin building App.net applications. In the 12 hours since we released the dev API we have already seen several app developers start working on projects. Here is a screenshot of an iOS app that an alpha tester is building. We also have had an alpha tester successfully post messages from an Android app.

We’re opening up the alpha to all backers of join.app.net that want to be included. There are still some rough edges, but feedback has been positive.

Some thoughts on the funding goal

We are currently 43% of the way towards our goal, with 5 days left. A lot of folks think that we will never hit the goal. I disagree.

One of my friends that works at Kickstarter explained to me that projects succeed or fail based on the first and last 24 hours. For that reason, we are not making contingency plans. Rather, we are trying to put ourselves in the best position we can be for the last 24 hours of the project.

Additionally, if you take a look at Kickstarter’s official stats, it would appear that of 35,138 unsuccessful projects, only 2,026 of them ever reached 41% or more of their funding goal. In other words, only 5.7% of Kickstarter projects that don’t succeed ever manage to reach 40% of goal. That is not to say that join.app.net doesn’t need a great deal of support to succeed within the next 5 days, I am simply pointing out that the data would suggest this is not a “lost cause”.

If you have been considering backing App.net, but have stayed on the fence because you are afraid that App.net is “vaporware”, or because you think that backing us is a waste of time (because it will never succeed), I would encourage you to question those assumptions.

Thanks.

Loopt, Whrrl, Brightkite, Meetro and many other promising young startups have all ended up as casualties on the Hamburger Hill called social, mobile, local.  With the emergence of a critical mass of GPS enabled smartphones, it stands to reason that that there would be an important new social graph to be discovered. C’mon, don’t you want to know when your friends are near you? How about a serendipitous meeting at an airport?

As it turns out—not really.

Foursquare was first to crack the code… It was really the first killer mobile, social, local application and it, at first, had nothing to do with meeting up with your friends. It used clever game mechanics to get users to check into places they frequent. As a tech savvy old dude, I enjoyed my short reign as mayor of many of my Millennial-free establishments. When I checked in to a new place, I saw the picture and name of the mayor and immediately looked around to see if they happened to be there at the same time. Hmm… New person, near me, with a name and picture—imagine that?!

This was one of the key insights that Christian Wiklund and Niklas Lindstrom had when they were forming Skout—people actually want to meet people they don’t know. By focusing the product features around this phenomenon, Skout has exploded into the largest network for meeting new people—adding a million new users every month! Today, we are announcing that Andreessen Horowitz is leading Skout’s $22 million expansion round. Here’s why we’ve invested:

  • The founders, Christian and Niklas. are two of the most determined, creative, passionate and iterative entrepreneurs we’ve ever met. They traversed a long, hard road before figuring out the right combination of features that resonated with users.
  • The growth and engagement numbers are through the roof… The average Skouter checks in 8-9 times a day and spends an average of 45 minutes chatting, exchanging gifts and posting photos on the app.
  • Skout is obsessed about keeping the community fun and safe with a zero tolerance for bad behavior. They are over-investing in community management tools and people that monitor and eliminate inappropriate behavior.
  • Unlike most sites associated with dating, the application is inherently viral and doesn’t have the usual absurdly high marketing expenditures associated with filling the funnel.
  • Lastly, Skout is one of the few mobile apps that are monetizing at a high rate and are currently running at break even.

I’m thrilled to be joining Skout’s board of directors and can’t wait to help Christian and Niklas continue to grow the company into the premier global network for making connections and meeting new people, anywhere, anytime!

“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.