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Email Is The Godfather Of Native Ads, So TellApart Makes AdStack Its First Acquisition
It’s dark days for email marketing. Gmail’s new tabbed filters are hiding messages from brands. Email promotions have to be highly personalized in order for opens to equal clicks and conversions. TellApart wants to sell that personalization, so today the four-year-old, big-data, ad tech player announced its first acquisition: email targeting, A/B testing, and personalization startup AdStack.
In cash and stock, buying AdStack and six of its employees cost TellApart in the single-digit millions, the company tells me. It can afford it, since TellApart is both profitable and has raised $17.75 million over three rounds from SV Angel, Greylock, Bain Capital Ventures, and angels including Twitter CEO Dick Costolo, LinkedIn founder Reid Hoffman, and ex-eBay VP Michael Dearing.
In fact it was mutual investor Dearing who introduced TellApart CEO McFarland to AdStack CEO Evan Reiser.
TellApart was launched in 2009 by McFarland and Mark Ayzenshtat who spent five years building the core infrastructure of Google’s ads business. They’d found Google’s weakness: it’s not sure of when you buy things online or offline; it has to guess. Meanwhile, McFarland says he discovered that “retailers are as scared of Google as they are of Amazon. It controls a lot of their traffic and a lot of their livelihood. They don’t want Google to know any more about their sales.
So McFarland and Reiser left to create an independent data platform to help retailers “tell apart” low-quality leads from people likely to buy something. By applying big data and machine learning to online and offline purchase data, TellApart devised a way to target personalized, relevant ads to high-potential customers.
When people came to a TellApart-powered site, it could analyze their browsing history and shopping patterns to optimize ads and offers. For example, if someone came to Neiman Marcus’ site, seemed to have been to expensive shopping sites before, and were browsing pricey items, TellApart could determine they had a high lifetime value to the business and were worth offering an initial discount.
TellApart learned to serve retargeted display ads and dynamic offers, was one of the first companies running on Facebook’s FBX retargeted ad exchange and putting those ads in the News Feed, and took advantage of Facebook’s CRM-based Custom Audiences ads.
The kicker is that TellApart doesn’t sell impressions or even clicks. Its business model only sees TellApart get paid when people delivered by its ads buy something from its clients. That’s helped it turn 50 of the top retailers into its clients, including Warby Parker, Brookstone, and One Kings Lane.
But there was still a big piece missing. Clients were using email to drum up traffic, not just ads. It’s a tough channel, though, because email has fallen victim to the tragedy of the commons. Anyone can send it, so everyone does, and overloaded recipients become fatigued and disinterested.
“Retailers, spammers, social networks, even my family forwarding jokes — the resource gets trampled and becomes much less valuable to everyone,” McFarland tells me. Brands need a way to stand out. That’s what AdStack does by making bulk emails less cookie-cutter. It figures out who the recipient is, fills the email with products they’ll actually want, and A/B tests designs and targeting. So TellApart bought it.
Together, they’ll use TellApart’s big data background to make email marketing even more effective. “Email truly is the godfather of native advertising — commercial messages designed to be consumed as content,” says McFarland. The combined company’s goal is to help businesses augment that one-size-fits-all content, like a “6 Reasons You Need A Juicer” email with suggestions of other appliances the recipient might want.
Personalization won’t necessarily help TellApart’s clients escape the Gmail Promotions filter. That could be a problem if the startup extends its “only pay when you earn” pricing model to email. The startup is also at risk as Google attempts to shift the industry away from standardized cookies to its own proprietary browsing tracking system.
At the same time, though, retargeted social advertising is growing fast thanks to Facebook and Twitter, and it’s one of TellApart’s specialties. As businesses come looking to optimize ads in our news feeds, TellApart could convince them to invest in one of our oldest feeds: the inbox.
DoorDash Raises $2.4M To Improve Food Delivery
DoorDash has raised a $2.4 million round led by Khosla Ventures’ Keith Rabois and Charles River Ventures’ Saar Gur. SV Angel’s David Lee, YC partner Paul Buchheit, Benchmark co-founder Andy Rachleff, and angel investor Pejman Nozad were also in on the round. Terms of the deal were not disclosed.
The company, which was in Y Combinator’s summer 2013 batch, delivers food from 70 restaurants in Palo Alto and Mountain View to nearby towns for $6.
The DoorDash team tells me they will use the capital to grow the engineering and operations teams.
The space is very crowded, even just in Palo Alto and Mountain View. Fluc, another startup that delivers food in the area for a $6 charge, announced last week that it is expanding to 140 restaurants, including service in San Francisco. Fluc told TechCrunch that its order volume and revenue were growing by 20 percent weekly.
While declining to get into specific numbers, DoorDash co-founder Andy Fang claims that DoorDash’s order volume and revenue are growing faster on a weekly basis.
He explains that by partnering with restaurants, DoorDash can shave up to 20% off delivery time and keep prices low for the customer (although he admitted that some prices on DoorDash are higher than those in the actual restaurant).
“We view ourselves as a logistics company,” Fang tells me. “Our goal is to deliver faster than any service out there.”
Fang argued that DoorDash’s biggest competitor isn’t Fluc or another food delivery startup, but non-consumption, or potential customers who don’t know about DoorDash and are just cooking or ordering Pizza. However, the company isn’t worried much about marketing and is relying a lot on word of mouth growth.
This past Saturday, a friend of mine was trying to order food as we watched a glorious day of college football, and we started talking about DoorDash and Fluc. He went to download the app to try it out, and got Door Dash, “a fun running game full of adrenaline rush that tickles the confused nerve of your brain.” He did not enjoy the game.
The DoorDash team says they plan to roll out an iOS app, pictured above, soon.
Defense.net Ensures All Your Base Are Not Belong To Them
If you’ve ever been on the business end of a denial of service attack, you know the sinking feeling you get when your servers fall to the enemy. Defense.net, a new project by cybersecurity expert Barrett Lyon is out to keep that from happening to their clients. Lyon also founded BitGravity and Prolexic and was featured in a book about his attempts to take down a Russian hacking group tied to the mafiya, Fatal System Error by Joseph Menn. So he’s legit.
Their first product is called DDoS SWAT and acts as a secondary DDoS mitigation service if your first one falls to the enemy. Because most financial and business organizations have their own servers in place, DDoS SWAT will pick up when those fail. The service provides “10 times as much bandwidth capacity” as most primary servers and they add in redundant data centers as well as a real anti-DDoS SWAT team that will handle things when they go pear-shaped.
The new company got $9.5 million in a round led by Bessemer Venture Partners.
“Every week, at least one major bank has an outage to all or some of their users even though every major bank is protected by traditional DDoS mitigation companies,” said Defense.net CEO Chris Risley. “As an overflow service, Defense.Net DDoS SWAT has to do a lot more than match the capabilities and capacities of the primary provider. We’re only asked to step in when the primary provider is not succeeding. By definition, we’re stepping into a bad situation.”
The whole thing is obviously pretty nerdy but it does have a few cool features that everyone can appreciate. For example, Defense.net offers something called AttackView that shows you how and where you are being attacked and includes traffic diagnostics, attack origins, and how the attack is progressing based on the countermeasures applied. It also uses something called IP Reflection to route “clean” traffic around the junk and reduces latency to and from the attacked server.
As a fan of Neuromancer Defense.net looks pretty darn cool. Because it’s aimed at big businesses, however, don’t expect to plunk down a twenty dollar bill and get some SWAT team action on your personal blog. Until you’re Fortune 500 you have to depend on the old “buckle up and pray” model of DDoS mitigation.
Extreme Reality, Which Gives Any Webcam Kinect-Like Powers, Opens Its Developer SDK
Extreme Reality, an Israeli startup backed by SV Angel, has been at work for eight years on building motion capture technology.
Now they’re opening up the kimono with a platform that can turn any basic webcam or laptop cam into something like a Kinect, with the power to capture a three-dimensional range of movement.
“We’re aiming to give people a console-like experience without the user having to buy additional hardware,” said Asaf Barzilay, who is Extreme Realty’s vice president of products and research and development.
They’ve launched a new developer zone and an SDK for developers to play and test out Extreme Reality’s motion control software. They say it will let developers easily add Kinect-like experiences to web-based games. Without asking consumers to buy hardware, they believe the market for motion-centric games could be orders of magnitude larger.
Their platform lets based laptop and mobile cams capture motion and gestures that are up to 5 meters or 17 feet away from the camera.
The Herzelia, Israel-based company says that other game makers like SEGA have already incorporated their SDK into games like GO DANCE for iOS. Then there are more indie titles like Side-Kick’s Top Smash Tennis for Windows 8, Indie Hero’s BeatBoxer+TM for Windows 7 and VTree Entertainment’s Pro Riders Snowboard for Windows 7 and 8.
The SDK is free at first, but then there’s a revenue sharing arrangement that the company works out on a case-by-case basis. The SDK supports Unity, C++ and C# and operating systems like iOS and Windows 7. But no Android yet.
The company has raised about $19 million in venture funding from SV Angel, Marker LLC, Texas Instruments and Crescent Point Lantern.
Extreme Reality was actually founded eight years ago, but didn’t really start putting out consumer or developer-oriented products into the market until about three years ago. During that time, they picked up about 14 patents.
“We were in a laboratory mode,” Barzilay says.
Anfacto Lets You Create Single-Purpose Android Devices For The Workplace, Restaurants, Events
While there are plenty of enterprise mobility and device management companies, they may not go deeply enough in controlling the end-user experience for an employee or a customer.
Many of these enterprise mobility startups use standalone apps that a tablet user can switch in and out of to the browser. That might be a security risk for restaurants that, for example, want to let their customers order from an iPad or a distraction for teachers that want to manage attention in the classroom.
Anfacto, a startup with talent from Google and an earlier company called 3LM that Motorola acquired, is building custom versions of the Android OS that let enterprises offer single-purpose devices for the workplace, conferences or the classroom.
“This is a level of control you can’t have with an application,” said CEO Hristo Bojinov.
Anfacto’s Android variant called FleetOS could let customers like UPS give their drivers Android tablets that can used exclusively for tasks like scanning packages.
“The idea is that we can lock down the experience from a user standpoint,” Bojinov said. “The customer can go in and decide what applications and features can be run.”
He said, a conference could give away tablets to attendees and push applications to them while they’re roaming around the event. Or a company like TaskRabbit or Uber could give their contractors phones specifically for managing errands or drives. Or they could partner with a hardware maker that wants to make tablets exclusively for kids, with only specific, child-friendly apps.
The company is already profitable through a few early contracts, and took some strategic funding from DoCoMo Capital. They say FleetOS competes against expensive legacy solutions in the older Windows PC market.
Bojinov said he got the idea for the company because so many hardware makers were asking for it. Their solution has a policy server where an IT administrator can set the rules for what’s allowed or disallowed on their devices. They can also manage graphical resources like wall papers to offer a more customized or personal experience.
The company has 12 people on its team, with most of them in Palo Alto. They’re also opening an office in Bulgaria, where Bojinov grew up.
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