Category: Tech news

Coming on the heels of its $33 million series D financing last month, adaptive learning startup Knewton is announcing a very large deal with one of its investors, educational publisher Pearson. One of the largest education publishers in the world, Pearson is also one of the leading digital publishers, with 9 million students using its digital textbooks and course materials. It reaches an estimated 75 percent of the digital learning market in higher education.

Pearson will begin to use Knewton’s adaptive learning algorithms to power its digital textbooks and online course materials. Knewton will begin with Pearson’s MyLab and Mastering digital courseware, and become the adaptive learning engine behind all of Pearson’s titles. Adaptive learning uses software to present questions and educational content personalized to each student’s learning pace and abilities.

Knewton has shown some early success with test prep and online college courses, but the Pearson deal will give it access to millions of students for the first time. Knewton uses big data to personalize education, and it the Pearson deal will give it the massive adoption it needs to create the network effects necessary for its algorithms to work well.

So more than any financial return it may make from the deal, the real value to Knewton is all the data. The more it knows which combinations of learning modules and text help different types of students learn, the better it can tune its algorithms for the next batch of students.

For Pearson, adaptive learning points beyond the textbook as the main thing it sells. Knewton will have access to its entire library, which means that it may present passages from different textbooks and related courseware depending on the situation. The ability to mix and match lessons and chapters from different sources can potentially create more powerful learning experiences, but it also upends the traditional educational publishing model. The product being sold will no longer be the textbook, it will be the learning experience pulled from multiple textbooks on the fly according to each student’s needs at the time.

Qwerly originally pitched itself as a ‘DNS for people’, not dissimilar to About.me. But in May it pivoted, shutting profiles in favour of doubling down on its growing API business which integrated its social data into CRM suites, customer support systems, email clients and address books. Other companies then used the data to personalize communications.

Now Qwerly has pivoted again – in the form of a sale to social intelligence provider Fliptop, Inc, based out of the US. The latter was Qwerly’s its largest competitor in Europe. Financials details of the transaction were not disclosed.

He hoisted himself up a 500 meter-cliff at Grand Canyon, did his magic on the Le Mans 24 circuit in France, and traveled 500KM from Tokyo to Kyoto last year And now, he completed the Ironman Triathlon in Hawaii, too.

We covered Panasonic’s plan to let its EVOLTA battery-powered mini robot start at the 230km race back in September, and now the company announced the little guy finished it on October 30.

According to Panasonic, it took the robot (in three different configurations) a total of 166 hours and 56 minutes to swim 3.8km, bike 180.2km and then run 42.2km – powered by three rechargeable EVOLTA batteries.

After many months of planning and countless flights to the other side of the world, our first ever international TechCrunch Disrupt event has come to a close. 15 companies have launched new products to the world for the very first time in our Startup Battlefield, an on-stage, high stress battle for riches (50 grand!), glory (press coverage!), the much coveted Disrupt Cup, and all the open doors you could ever desire.

Without further ado, the winner is… OrderWithMe!

OrderWithMe is a group buying system meant to help Western small business owners by drastically simplifying the process of acquiring Chinese-made goods in bulk. By splitting orders (and simultaneously removing a vast majority of the middle men involved), OrderWithMe allows shops to acquire any size shipment of these lower-priced goods, as opposed to the usual minimum order of 100+.

This is no Alibaba; OrderWithMe hand-picks each product that they offer through the site, going so far as to do video walkthroughs with each product to offer up insight as to why it was selected. They’ll begin with fashion and home furniture items (as those are the highest margin items made in China), expanding into other verticals as time goes on.

Disrupt Beijing is an event intended to connect two otherwise distant worlds, to bridge the entrepreneurial spirit of Silicon Valley with that of Beijing. OrderWithMe really encapsulates that idea. While deliberation on who would walk away victorious stretched across a full day, OrderWithMe was clearly a strong contender from the moment they stepped on stage. By the time they stepped off, Alexia and I were duking it out over which of us would claim it as a favorite in our Battlefield predictions video. You can find our full writeup of OrderWithMe Here.

With that said, the race was by no means clear cut. Coming in as a close runner-up is Anquanbao, a cloud-based security service for websites and the admins who run them. Not unlike CloudFlare, Anquanbao acts as a fast-caching middle layer to protect websites from hacks, denial of service attacks, and general outages. You can find our full writeup of Anquanbao here

Congratulations to all of the Disrupt Battlefield competitors for their incredible work. I’ve been to every last one of these events, and this was honestly the most remarkably sound batch of companies to date.

Ben Huh presented his views on Internet culture at Disrupt Beijing, bringing a bit of the funny to the stage in our last presentation. Ben started out by describing how he bought ICANHASCHEEZBURGER, a site, that I’m led to understand, features critiques on the dissertations of linguistics graduate students at Harvard. He then described the 15 minute call he made to grab his first $30 million investment.

Now the site – and it’s multiple sister and brother sites – command 20 million users a month with half a billion pageviews.

“We’re the largest humor destination on all of the web,” said Huh.

Huh continued to discuss the democratization of content, noting that weird people now ruled when it came to popular Internet culture.

“Internet culture will produce the rock stars of tomorrow,” he said. “Being weird doesn’t mean you’re alone. Now, thanks to the internet, weird is exactly the thing that will get you famous.”

He closed with an interesting point: an entrepreneur is someone who doesn’t understand the word “no.” “Be the stubborn nail that refuses to be hammered down,” he said in closing. I CAN HAS STIRRING PEP TALK?, indeed.

Serial entrepreneur Brian Lee spoke with TechCrunch’s Sarah Lacy today at TechCrunch Disrupt Beijing about his latest startup ShoeDazzle. ShoeDazzle is so hot right now, just this summer raising $40M in funding from Andreessen and others.

ShoeDazzle monetizes by subscription, with users paying $39.95 a month for shoes that have been curated by Hollywood stylists and master stylist and co-founder Kim Kardashian.

Lacy pounced on the Kardashian thing immediately (she’s apparently been in the news today), referring to the fact that Silicon Valley goes through cycles of “celebrity du-jour” – this time around everyone from Hammer, to Leonardo Di Caprio has been dipping their fingers up in the startup pot. Lacy emphasized that these partnerships usually don’t work (while she did give props to Ashton for hanging in there).

Lee explained that the problem is that many startups think that they can get the traction they’re looking for by hooking up with just any ole’ big name celebrity – the completely wrong way to do it.

“A lot people think that they can have an idea, attach a celebrity to it and it will work,” said Lee, “When you start attaching Ashton Kutcher [or any random celebrity] to a travel site, it doesn’t work,” using Kutcher’s investment in Hipmunk as a paradigm. He emphasized that a startup interest in banking on the popularity of a celeb needs to have a “true” authentic partnership, like Kim Kardashian and sexy shoes for example.

“That’s why Robert Shapiro [who just happens to be Kim’s dad] worked,” Lee said, referring to his previous startup LegalZoom.

Later in the interview, Lee also brought up being inspired by another celebrity, fashion designer Valentino, in the initial idea for ShoeDazzle. Valentino’s secret to 40 year success was knowing what women want … Okay so what is it then?

“Women just want to feel beautiful,” Lee said (note: TRUE). “So if you can make women feel beautiful every month for 39,” he went on, “You’re going to win.”

The VC market is still strong in China, despite indications to the contrary. The old saying goes, here, that 99% of the returns come from 5% of the firms. This means big bucks for the winners – and some interesting investment opportunities for VCs in Asia and the US.

Sarah Lacy sat down with Steve Ji of Sequoia Capital, Rocky Lee of Cadwalader, Hugo Shong of Accel – IDG, and Hans Tung of Qiming Ventures.

“I feel bad for VCs in New York and California,” said Hans Tung. He explained that it was almost impossible to perform due diligence on a Chinese company by comparing it to an already existing company. The panel also agreed that most Chinese companies – when successful – are hard to displace.

“It’s a winner takes all environment,” said Rocky Lee. Chinese companies also are facing a different market. “They’re looking at content because of censorship, they’re looking at permits,” said Lee.

Sarah also discussed the notion that VCs in China will only handle copycats. The response? Yes… and no. The investors agreed that a few years ago that many sites were true copycats funded by folks who wanted China to have copies of Western sites. Now, however, VCs are interested in mobile Internet companies and ideas that are unique to the Chinese market.

Click to view slideshow.

I’ll admit it right off the bat: Phil Libin (CEO of Evernote) is one of my favorite entrepreneurs. I consider myself an actual “fan” of very few living business men, but he’s one of them.

Phil joined Sarah Lacy on stage today at Disrupt Beijing for a quick fireside chat, and, along with explaining why he plans to stay with Evernote for the long haul, offered up a bit of sage advice for the budding entrepreneurs of the world.

First: design for yourself, and love what you do. While Phil openly admitted that this wasn’t the most original advice, he dived a bit deeper into his logic:

“I’ve had three companies, and it took until the third to figure out some really basic things… My first company [Engine 5] did systems for retailers; we weren’t retailers. My second company [Core Street] built infrastructure for the government sector. With Evernote, we are the end-user. It feels like cheating. If I had to do it all over again, Evernote would be my first company.”

It wouldn’t just be his first company — it’d be his only company. Libin thinks of Evernote as a 100 year company, joking that he guesses he “has to be comfortable with the idea that [he] may not be the CEO in 100 years.” As for why he’s so open about this (and most things, really; Libin is often recognized for his transparency): “Evernote is asking you to trust us. If we’re going to do that, we have to tell you what we plan to do, how the numbers work, and how the technology works. If we didn’t do that, we wouldn’t get the trust we do.”

Next: don’t use crazy bidders to inflate valuations.

“Valuations in private companies are a really strange thing. In the public market, valuations are kind of the average of lows and highs across all sales. With a private company, you really only have one seller: the company. You base your valuation on the highest bidder. You can chase up your valuation by getting some crazy person to bid some insane amount — but then you have a crazy person as your boss.”

Finally: if you’re building a freemium product — as is all the rage these days — focus on the “free”, not the “emium”.

“People tend to highlight the ‘emium’ part. We value the ‘free’ part. The free version of Evernote IS the full product — but as long as you keep using it, the perceived value just keeps going higher and higher.”

In other words: make people fall in love with the free product, and they’ll be all the more willing to give your their money without you even having to ask.

Click to view slideshow.

Here are some of yesterday’s Gadgets posts:

iPhone 4S Battery Life Bugs Got You Down? Try This

Jawbone’s Fitness-Friendly Up Wristband Appears In Online Stores

Amtrak Adds WiFi To 12 New East Coast Routes, California’s Up Next

UPcload Uses Your Webcam To Help You Order Clothes That Actually Fit

Google TV Update Rolls Out Today, Already Hitting Select Sony Internet TV Devices

The latest session at TechCrunch Disrupt was a fireside chat between Sarah Lacy and accomplished entrepreneur Fritz Demopoulos — an expat who arrived in China in the late 90s while he was working at News Corp and went on to start (and sell) two very successful companies.

The conversation, which you’ll find a recording of above, focused largely on the issues facing Western companies as they try to make their way into China.

The issue, Demopoulos says, is that companies can’t simply look at China as an important market. CEOs and other executives have to be looking at China as a commitment, both from an organizational and financial perspective. Many companies, he says, scoff at the idea of putting several years or more into building a sustainable presence in China (in part, in some cases, because they’re public). But they need to be willing to do this.

Asked about the lack of acquisitions in China, Demopoulos said he’s hearing that more bankers and lawyers are actually working on M&A style transactions, so it looks like they’re picking up. He added that the shortage of M&A historically may step from a Romance of the Three Kingdoms scenario, where “everyone hates each other”.

Finally, the talk turned to what it takes to start a successful company in China. There’s a widely held perception that you need to ‘know someone’ with connections to the Chinese government to make it there, which Demopoulos addressed. To succeed, he says, you need to do one of four things:

• The first, is to be a broker or middle-man
• The second is to participate in the china information industry, or PR
• The third is to take advantage of government related opportunities
• And finally, the fourth is the find new markets or create great products

As for the government connections? Demopoulos didn’t dismiss that entirely (there are some times when they can help), but he said that when you think about it, there are probably tens of thousands of people with various connections. In some ways, it’s sort of a buyer’s market for those who need them.

Ecommerce in China is ready to take off and, more important, it’s ready to reach great heights on its own terms. Lu Dong of La Mui, Haifeng Ye of Mbaobao, and Fangfang Wu of Greenbox are three ecommerce pioneers who are, as we speak, redefining online sales in China.

“China is ready for ecommerce,” said Lu Dong. “People are moving to buying almost anything online.”

Haifeng Ye agreed. “We have a greater opportunity here in the Chinese market to make something new. In america the ecommerce market is quite established,” he said. “We can use ecommerce to build a new retail format.” He calls online sales a huge opportunity.

The three agreed that the biggest fish in the China ecommerce sea was Taobao and the importance of Taobao as a sales platform in China cannot be ignored. The company helps with settlement, logistics, and service and all three agreed that Taobao is “great.”

These entrepreneurs see things improving over the next few years and noted that ad rates have risen 30-50% while outside investment is down slightly but not enough to make these panelists worry.

Lu Dong said it best: “It’s important to raise money but it’s more important to make money.”

At this point, it’s no secret: Gaopeng (Groupon’s nascent effort in China) is a train wreck. By September of this year, the seven-month old endeavor had already accumulated $46.4 million in net losses with just $2.1 million in revenue. Meanwhile, a number of competitors in the region are predicting profitability within months.

In today’s “Attack Of The Clones” panel at Disrupt Beijing, a few of Groupon’s fiercest Chinese competitors took the opportunity to, well, attack. While obviously a bit subjective, their words do provide some insight on how a company so massive in the US could tank so dramatically on the other side of the world.

Panel guests Yinan Du (CEO of 24Quan) and Xing Wang (CEO of Meituan) agreed on at least two points: Groupon rushed their entry into China, and failed to embrace the culture (or hire people who could). According to Yinan Du, “Groupon didn’t have a chance from the beginning”.

“For any startup to be successful, there has to be a magic team behind it. They hired magic, but no one who understands both worlds. You have to be bi-cultural, you have to have someone who really understands how things work in America and how it differs in China.” Amongst the noted differences: margins. While Groupon happily pulls somewhere around 40% margins on deals in the US, no competitor in China is seeing anything above 14%.

Both panelists also harped on Groupon for their partnership with Tencent, calling it shortsighted and clearly not properly thought out. “They were focusing on PR rather than the business itself.”

Alas, Groupon was unable to send a representative as they’ve recently entered their quiet period in preparation for their impending IPO. Had they been on stage, however, there may not have been much they could have said to dampen the onslaught.

Click to view slideshow.

Memo to Chinese startups: You made for a late night of deliberations. We typically pick five finalists. There were a few companies that were clear picks, captivating everyone– from the judges to the staff to people we talked to in the hallways. Then there was another group that each had passionate advocates on staff, making for some tough decisions.

Ultimately, the staff got down to six we liked and couldn’t agree on which one to eliminate. So in the spirit of rule breaking, we decided to pick six finalists. Here they are in alphabetical order:

Anquanbao
Anquanbao’s presentation

8 Securities
8 Securities’ presentation

Moglue
Moglue’s presentation

OrderWithMe
OrderWithMe’s presentation

TouchPal Contacts
TouchPal’s presentation

UnitedStyles
UnitedStyles’ presentation

These companies will duke it out in front of our finalist judges just before lunch. You won’t want to miss the drama!

To kick off Day Two of TechCrunch Disrupt Beijing, our own Sarah Lacy interviewed Lei Jun — one of the most successful entrepreneurs in China, whose resume includes cofounding Joyo.com (sold to Amazon in 2004), sitting on the board of Kingsoft, and chairing the board of massively popular mobile web browser UCWeb (he’s also made numerous investments in successful Chinese startups).

Most recently, Jun is the founder of Xiaomi Tech, a startup with a very ambitious goal: it wants to take on the likes of Apple in the mobile phone industry, by producing a high quality phone that’s sold at prices significantly below the competition. You’ll find a video of the interview above, and here are some of the highlights:

Asked about the fact that his new company includes many former employees of tech giants, Jun recounted a joke — he said that if he could merge Microsoft, Google, and Motorola, he’d be able to take on Apple. So he went after employees from each of them as he builds a new mobile phone company.

Lacy then asked about the difficulty involved with launching a new phone, which isn’t something many (if any) startups in the US would attempt. Jun pointed out that the Chinese mobile phone market is more open that the US market — unlike the United States, where the phone you use is largely dictated by the carriers, in the Chinese market the phone manufacturer doesn’t need to maintain good relationships with carriers, as consumers can buy and use what they want.

Jun also discussed the long-term strategy for Xiaomi: they’re going to sell their hardware at around cost, then make money through the software, which gets updated every week. The phone sells for 1999 RMB, which is not cheap, but is less expensive than competitors — it’s around $240 in the US. The company has faced unforseen challenges in managing the supply chain (recent floods impacted some suppliers), but Jun says he’s confident they’ll push through them.

Asked whether Jun thought Chinese consumers would favor his phone over, say, Apple, Jun said that he thinks that there will be some sway, but that it won’t be a crucial factor. He points out that half of the OS’s users are international.

Asked about his success as an investor, Jun outlined his strategy. Five years ago, he identified three key areas to invest in: mobile internet, ecommerce, and community/social networks. Those twenty or so investments have proven to do quite well: Jun says that the companies now have over $1 billion cash combined.

Finally, to conclude the interview, Lacy asked Jun about his key advice to entrepreneurs. His answer?

“Do what you want to do. Do what you like to do.”

Instagram co-founder Kevin Systrom took the stage today at TechCrunch Disrupt Beijing to talk about the photosharing startup’s international efforts and how it plans to deal with the onslaught of clones, including over ten Chinese copycats.

During the talk Systrom revealed that the startup has now hit the 12 million user milestone, with 100K weekly downloads coming just from China, impressively. The app sees around one download per second worldwide, with that rate increasing on the weekends. “The amount of interest people have [in Asia] is huge,” Systrom said, “Japan is our second largest market.”

It seems like the international appeal of Instagram wasn’t that unexpected; The app was translated into 10 different languages four weeks after its launch, with two of those languages being simplified versions of Chinese.

Systrom also confirmed that the company was in contact with Chinese companies like Weibo, in order to better tailor the social app to the uniqueness of a market that has little access to Twitter and Facebook.

Again, these user engagement numbers are made even more poignant by the fact that Instagram still only available on iOS, with a promised Android version still in the works.