Category Archives: Peter Thiel

Facebook raised $100M more, total is now at $493M

Facebook keeps on growing so does its expenditures. The latest news from the company is that they have raised yet another $100M round of funding. The company says this time all the money will go for buying servers, lots of servers. BusinessWeek has estimated they are going to scale things up with 50,000 new servers on top of their 10,000 they are currently running on. Total amount of money raised by Facebook is now $493M (we did the math and it seems $438M in total, but other more reliable sources claim it is $493M) according to several sources. This time, however, the founding is not against equity, but is a venture lending deal with TriplePoint Capital, a Menlo Park, Calif. based company that specializes in lending money to startups. Facebook already claims 109M monthly unique visitors and many people say the site is at times very slow.

Venture lending peaked during the dot-com bubble of the late 1990s and early part of this decade, but is making a comeback as startups use debt to pay for computer servers, telecom gear, and software. “The last thing the entrepreneur wants to do is see those precious equity dollars flowing into equipment purchases,” says TriplePoint CEO Jim Labe. “It’s a very unproductive use of equity to plow it into fixed assets.”

Forrester Research’s Gillett estimates that Google is buying half a million servers each year, while Microsoft’s annual consumption is as much as 200,000 servers.

Executives at Facebook declined to say which vendors will provide the servers. But the social network is already a big customer of Rackable Systems, which said in a recent financial statement that it derived $11.5 million, or 17% of $68 million in first-quarter revenue, from Facebook. This puts the total server expenditures of Facebook at $46M per year. With the new round this amount will significantly increase.

Facebook is hugely popular social networking site, second only to MySpace in terms of users. Other popular social networking sites are Bebo and Friendster, the second one tried to acquire Facebook in 2004 for just $10M.

The latest comScore metrics, we have seen, revealed that Facebook is actually havingo ver 100M unique visitors per month.

Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.

The next year [2006], Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.

Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom  and the mighty Google a few months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.

More

http://www.facebook.com/
http://www.tpcp.com/
http://www.rackable.com/
http://www.techcrunch.com/2008/05/10/facebook-raises-another-100-million/
http://www.businessweek.com/technology/content/may2008/tc2008059_855064.htm
http://mashable.com/2008/05/09/facebook-triplepoint-funding/
http://venturebeat.com/2008/05/09/facebook-borrows-100m-to-build-out-its-infrastructure/
http://gigaom.com/2008/05/11/the-rising-cost-of-facebook-infrastructure/
http://www.marketwatch.com/news/story/hong-kong-tycoon-li-raises/story.aspx?guid=%7BE4097AA2-9EA3-4773-9100-456E68EE1C9A%7D
http://www.allfacebook.com/2008/03/facebook-gets-another-40-million/
http://www.techcrunch.com/2008/03/27/hong-kong-billionaire-puts-another-40-million-into-facebook/
http://mashable.com/2008/03/27/facebook-hutchinson-investment/
http://web2innovations.com/money/2007/11/30/hong-kong-billionaire-li-ka-shing-invests-60m-in-facebook-funding-totals-33820m-to-date/
http://gigaom.com/2008/03/27/facebook-soon-to-appear-in-3g/
http://www.facebook.com/apps/application.php?id=2915120374&b
http://gigaom.com/2008/03/13/lets-justify-facebooks-300-per-user-valuation/
http://www.crunchbase.com/company/facebook
http://www.techcrunch.com/2007/11/30/another-60-million-for-facebook/
http://kara.allthingsd.com/20071130/facebook-nabs-60-million-investment-from-li-ka-shing/
http://www.hutchison-whampoa.com/eng/about/chairman/chairman.htm

Li Ka-shing invests $40M more in Facebook; total funding is now $378M from $338M before

The Hong Kong billionaire Li Ka-shing has reveled in a recent conference call that he raised his stake in the social networking site Facebook with some $40M more. That amount comes on top of his previous commitment of $60M, which brings his total investment in the popular site to $100M. What is his actually equity position in the Facebook, however, remains mystery to date, but considering what Microsoft has bought for their $240M (1.6%) it might turn out that Li Ka-shing’s ownership is perhaps below 1%. For Microsoft it might be quite clear what is the driving force behind such pity deal (locking down some advertising inventory and keeping Facebook away from the rival Google), but what the benefits for the Honk Kong billionaire are is very unclear for us. May be everything comes down to a potential IPO, which as we understand is not going to happen any sooner than 2010, despite some recent rumors for a possible IPO in as early as 2009. We think there is no other viable exit for your investors than going public if you have already taken more than $300M funding money off little to no steady revenues. There was no word on today’s Facebook pre-money valuation.

Here is what Li, who is chairman of telecom company Hutchinson Whampoa, told reporters on his company’s conference call:

“Facebook is doing very well and we could have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones.”

The combination of the social network and 3G networks is seen by Stacey Higginbotham from GigaOm as the most logical reason why Li Ka-shing was so eager to increase his stake in Facebook. Facebook users can already access the site on their mobile phones through the Facebook mobile page

Well, this might be the answer of our question from above what are the benefits for the Li Ka-shing in the context of Microsoft’s deal with Facebook.
A little more Facebook history and facts.

Facebook is hugely popular social networking site, second only to MySpace in terms of users. Other popular social networking sites are Bebo and Friendster, the second one tried to acquire Facebook in 2004 for just $10M.

The latest comScore metrics, we have seen, revealed that Facebook is actually havingover 100M unique visitors per month.

Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.

The next year [2006], Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.

Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom  and the mighty Google a few months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.

Mr. Li Ka-shing is the Chairman of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited. Cheung Kong (Holdings) Limited is the flagship of the Cheung Kong Group which has business operations in 55 countries around the world and employs about 250,000 staff. In Hong Kong alone, the Group includes eight listed companies with a combined market capitalization of approximately HKD981 billion (31 October 2007). Hutchison Whampoa Limited is a Fortune Global 500 company.

It would be interesting to find out what’s the equity position Mr. Li Ka-shing has secured for his $60M considering what Microsoft has bought for their $240M. 

More

http://www.marketwatch.com/news/story/hong-kong-tycoon-li-raises/story.aspx?guid=%7BE4097AA2-9EA3-4773-9100-456E68EE1C9A%7D
http://www.allfacebook.com/2008/03/facebook-gets-another-40-million/
http://www.techcrunch.com/2008/03/27/hong-kong-billionaire-puts-another-40-million-into-facebook/
http://mashable.com/2008/03/27/facebook-hutchinson-investment/
http://web2innovations.com/money/2007/11/30/hong-kong-billionaire-li-ka-shing-invests-60m-in-facebook-funding-totals-33820m-to-date/
http://gigaom.com/2008/03/27/facebook-soon-to-appear-in-3g/
http://www.facebook.com/apps/application.php?id=2915120374&b
http://gigaom.com/2008/03/13/lets-justify-facebooks-300-per-user-valuation/
http://www.crunchbase.com/company/facebook
http://www.techcrunch.com/2007/11/30/another-60-million-for-facebook/
http://kara.allthingsd.com/20071130/facebook-nabs-60-million-investment-from-li-ka-shing/
http://www.hutchison-whampoa.com/eng/about/chairman/chairman.htm

The Founders Fund creates Founders Fund II

Founders Fund, a non-traditional investment group, has raised an institutional fund in the amount of $220 million. The new fund, Founders Fund II, will allow this team of four managing partners, who themselves are founders and entrepreneurs, to leverage their individual expertise and deliver their unique business model, which puts the entrepreneurs first. Founders Fund has developed a comprehensive package designed to create near perfect alignment of interests between founders and their investors.

Founders Fund II will be invested in approximately 15-20 innovative early-stage start-up companies. This is the first institutional money raised for the Founders Fund, representing a significant increase over the original fund of $50 million, which was raised from personal investments by the managing partners and select outside investors.

San Francisco based Founders Fund launched in 2005 with a $50 million venture fund. They’ve had two liquidity events since then, and a number of other very high profile participations like Facebook, Powerset, Ooma, Quantcast, Slide, Geni and Causes.

“We believe entrepreneurs are looking for people like themselves, people who also have taken ideas and made them a reality. This second fund allows us to invest in areas for which we have deep insight, personal experience and passion for seeing the companies succeed,” said Luke Nosek, a Founders Fund managing partner. “Our collective experience starting companies and funding innovative start-ups positions the Founders Fund as a unique, valuable resource at the early investment stage.”

The Founders Fund will continue to offer Series FF stock, which is being adopted across the industry adding to the unique approach to funding entrepreneurs. The stock is offered to start-up founders who can convert Series FF stock to preferred stock during subsequent rounds of funding. This allows Series FF stock holders to sell a portion of their stock and aligns their interests with their investors.

“The traditional venture capital model is broken,” said Sean Parker, a Founders Fund managing partner. “By offering tools like the Series FF stock, we are helping create a new model of investment and alignment of interests, confirming our commitment to the founders of our companies. This fund is truly for founders by founders.”

A couple of investments have been made out of the new fund, they say, but have not yet been disclosed.

The four managing partners have all started their own companies and between them have seen the process from inception to start up to IPO.

“Founders Fund was started to make a difference for companies looking for funding to execute on their big ideas. We believe the alignment of interests with our portfolio companies is the next step in the evolution of collaborative investments,” said Ken Howery, a Founders Fund managing partner. “Founders Fund II will give us the opportunity to continue to invest in the people and ideas that are truly bringing innovation to the Internet industry.”

Peter Thiel, one of four managing partners for The Founders Fund and an early backer and board member of the social network Facebook said, “This is one of the most innovative venture teams ever assembled. Our unique skill set, expertise and perspective support our shared desire to build and invest in great companies from the ground up.”

Parker says he learned a powerful lesson about the importance of taking time to build a business from observing the trajectories of some of the valley’s most successful businesses. What would have happened if the founders had sold those companies before fine-tuning them? PayPal started out as an encryption product that beamed money between mobile devices before hitting on the online payment business that it ultimately sold to eBay for $1.5 billion. Google didn’t strike Internet ore until the paid search market had time to fully develop.

“Largely because we were all founders ourselves, we’re inherently more interested in helping new entrepreneurs develop into successful leaders than we are in getting rich,” Parker said. “As someone who has started and run a few companies myself, my primary interest is in helping creative people build companies and run those companies over the long-term. I also happen to believe that this is the best way to create value for my limited partners, and by extension, for myself.”

However, some institutional investors were skeptical of the partners and passed on the opportunity to put in money. Parker confirmed that the fund-raising process turned out to be more time consuming than the firm had expected. But he also said limited partners had invested because their model — namely, a venture firm run by founders with experience — was needed in the industry. The firm originally sought to raise $150 million, but ended up raising $220 million.

More about The Founders Fund

Based in San Francisco, Calif. and founded in 2005, Founders Fund is a group of four proven entrepreneurs with a shared vision: to change the way venture investments are made. Founders Fund seeks to provide the capital, insights and support required to build a company from the ground up and sustain successful enterprises with a non-traditional, founder-focused approach. Their current portfolio includes Facebook, Geni, Powerset, Ooma, Quantcast, Slide and others.

The Managing Partners

Peter Thiel
Peter’s experience with venture finance began in the 1990s, when he ran Thiel Capital Management, a Menlo Park-based hedge fund that also made private equity investments. In 1998, Peter co-founded PayPal and served as its Chairman and CEO until the company’s sale to eBay in October 2002 for $1.5 billion. Peter’s experience in finance includes managing a successful hedge fund, trading derivatives at CS Financial Products, and practicing securities law at Sullivan & Cromwell. Peter sits on the Board of Directors of the Pacific Research Institute and on the Board of Visitors of Stanford Law School. Peter received his BA in Philosophy and his JD from Stanford.

Peter Thiel is a 39-year-old maverick money manager who in the past four years has turned his $60 million payout from the sale of the PayPal online payment service he co-founded into a growing financial fiefdom. He runs Clarium Capital Management LLC, one of the nation’s most successful and daring hedge funds with $3 billion in assets, and The Founders Fund, a tiny but increasingly influential venture capital firm with a laser-beam focus on consumer Internet startups.

In late 2004, Peter Thiel made a $500,000 angel investment in Facebook. Microsoft recently purchased 1.6 percent of the company for $240 million, which values Facebook at roughly $15 billion and Thiel’s stake at roughly $1 billion.

Ken Howery
Ken is a co-founder of PayPal and served as the company’s first CFO. While at PayPal, Ken helped raise over $200 million in private financing, worked on the company’s public offerings, and assisted in the company’s $1.5 billion sale to eBay. Ken has also been a member of the research and trading teams at Clarium Capital Management, a global macro hedge fund based in San Francisco with over $3 billion under management, and at Thiel Capital Management, a multistrategy investment fund, where Ken made venture investments beginning in 1998. Ken received a BA in Economics from Stanford.

Luke Nosek
Luke Nosek is a co-founder of PayPal and served as the company’s Vice President of Marketing and Strategy. While at PayPal, Luke oversaw the company’s marketing efforts at launch, growing the user base to 1 million customers in the first six months. Luke also created “Instant Transfer,” PayPal’s most profitable product. Prior to PayPal, Luke was an evangelist at Netscape. Luke has also co-founded two other consumer Internet companies, including the web’s first advertising network, and has made a number of venture investments since 2000. Luke received a B.S. in Computer Science from the University of Illinois, Urbana-Champaign.

Sean Parker
Sean Parker is the co-founder and Chairman of “Project Agape,” a new network that aims to enable large-scale political and social activism on the Internet. Previously, Sean was the co-founder of the category defining Web ventures Napster, Plaxo, and Facebook. At Napster, Sean helped to design the Napster client software and led the company’s initial financing and strategy. Under Sean’s leadership, Napster became the fastest adopted client software application in history. Following Napster, Sean co-founded and served as President of Plaxo, where he pioneered the viral engineering techniques used to deploy Plaxo’s flagship smart address book product, ultimately acquiring more than 15 million users. In 2004, Sean left Plaxo to become the founding President of Facebook, one of the most rapidly growing sites on the Internet today. Sean sits on the boards of several private companies.

More

http://www.foundersfund.com/
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/12/13/MNGECMUMRE1.DTL
http://www.techcrunch.com/2007/12/17/founders-fund-closes-220-million-second-fund/
http://www.businesswire.com/news/google/20071217006220/en
http://en.wikipedia.org/wiki/Peter_Thiel
http://www.latimes.com/business/investing/la-fi-founders18dec18,1,6840237.story?coll=la-headlines-business-invest&ctrack=2&cset=true
http://venturebeat.com/2007/12/18/founders-fund-raises-new-fund-aims-for-more-vc-disruption/

After Samwer brothers Nokia is also going to invest in Facebook

It has been deal time for Facebook over the past months, or year? After Microsoft, the Honk Kong billionaire Li Ka-shing  and the Samwer brothers Nokia is now rumored to be in talk to invest in Facebook. Let’s however first take a look at what the Samwer brothers have gotten last week for their money.

The Samwer brothers, Marc, Oliver, and Alexander, have reportedly taken a stake in the social networking site, according to online sources including Reuters. The three German Internet entrepreneurs, the Samwer brothers, have taken a stake in the social networking site Facebook, Alexander Samwer said. Mr. Samwer, who declined to reveal the size of the stake, said the brothers would now become Facebook’s strategic partners in Europe. “We are going to support the expansion of Facebook in Europe,” It has also been disclosed that the Samwer brothers have offered up less than the $240 million that Microsoft paid for a 1.6% stake in Facebook, but the Samwer brothers’ investment amount, was rumored, is still sizable. Samwer have basically given the following comment: it was a “significant” amount, and less than the $240 million Microsoft paid for a 1.6 percent stake in Facebook in October, which valued the site at $15 billion. Analysts are left to speculate on the exact numbers.

“We think Facebook is, after Google, the most innovative company to have emerged in the last few years. We think it will be the phenomenon for the Internet that Windows was for the desktop,” Samwer said. Pretty serious claim, but it has to be taking into consideration the huge amount of money being poured in Facebook on reportedly less than $200M in revenues for 2007.

More about Samwer brothers

After selling the German Internet auction site Alando.de to eBay for $50 million in shares, the brothers have made names for themselves and have become even more involved with startups since. After a brief spell working for eBay, they then set up ringtone firm Jamba, which they sold to the U.S. company Verisign for $273 million in shares and cash in 2004. Little later they have also invested in the German Twitter clone, Frazr, and a handful of other startups. Interestign fact to note is that the Samwer brothers also invested in the Facebook clone StudiVZ, which was sold about a year ago for $112 million. Taking these facts and achievements into consideration we would not be that far in our conclusions if we say the guys are successful serial entrepreneurs and they have something to do with the social networking, at least in Europe. It already comes as no surprise they are interested to bring the most popular social site into Europe and lock down exclusivity for the market.

As the Samwer brothers are becoming the strategic partners for Facebook in Europe means that Facebook is getting even more serious about its European expansion. With the Samwer brothers having a large, vested interest in the success of Facebook’s growth across Europe, this seems like a pretty good fit considering the interests for all parties involved.

Just a week later and we are seeing today Nokia is also ready to jump the bandwagon of Facebook investors. However, this deal seems to be structured/offered in a little bit different way than pure investment where Nokia is rumored to be in talk for a deal with Facebook to bring the social site on to Nokia handsets in a major way. The Facebook placement could be as prominent as the YouTube button on the main screen of iPhone, online sources indicate. In addition, the deal is said to involve giving Facebook a major slot within Nokia retail products’ displays.

Nokia purchasing a stake in the company was said on several news sites and professional blogs is something yet to be confirmed. This now makes a little more sense in the light of Facebook’s recent strategic funding by Sawmer Brothers, in an effort to expand in Europe. The Nokia-Facebook deal would probably give the social network instant big-time mobile distribution: Nokia is the world’s largest maker of mobile phones after all.

A senior Nokia executive, speaking on background, declined to go into details about the pact with Facebook: “There is talk of a partnership in the works… it’s safe to say we’re testing the waters and things still have to be worked out.”

Nokia has of late been working on a number of services for the mobile, including its mobile web service Ovi, its mobile social network Mosh, and its most recent acquisitions in the larger media applications space. In October last year, it bought digital mapping provider Navteq for $8.1 billion to eventually offer customers location-based services. Also in October, it announced a deal to provide a year’s free access to Universal’s music catalog on certain Nokia phones. Also, it bought three other smaller companies last year: Avvenu (file sharing on mobiles and between mobile-PC); Twango (media sharing service for the hefty amount of $100 million); and Enpocket (mobile advertising and marketing services). 

On the content side, the potential deal with Nokia could be seen in very positive light for Facebook to drive the site’s usage on the mobile web.

The investment side, although nothing is for sure yet, isn’t that surprising given how many companies and high profile investors have already bought stakes into the Facebook over hyped site. “The remarkable part is how many companies are willing to invest in Facebook at a $15 billion valuation. At best Facebook may be worth even more than that, particularly when you consider sites like Baidu have a market cap in excess of $9 billion.”  Said Duncan Riley, who is an author at Techcrunch.

We don’t know when Facebook may move to an IPO; in his 60 Minutes interview a week ago Mark Zuckerberg said that it might be this year, or next year, or even 2010. What we do know is that an IPO in the current market will unlikely provide a strong valuation for Facebook.

Taking into serious considerations the current stock market conditions and all the US recession talk lately Facebook is highly unlikely to IPO this year. 2009/ 2010 are spoken out as the earliest dates for the Facebook’s IPO, presuming that the market eventually recovers.

Other less optimistic people are commenting that an investment at that $15B valuation is nothing less than idiotic and give the following details in support of their claims.

  1. When MSFT made investment in FB, YHOO was trading at $25/share. That is 20% higher than todays price. No way is FB worth 55% of Yahoo’s valuation of $27B today.
  2. Yahoo has revenue of over $6.5 Billion. FB generated $150M.
  3. Yes, FB is growing. But, YHOO has a real business and FB is trying to figure out how to make money.
  4.  Competition: FB has more competition than YHOO. YHOO has to deal with GOOG, MSFT and ASK. FB has to deal with the 15+ social networking sites plus GOOG and ASK (expected soon!?). 

In opposition to these claims and comparisons, other people find it quite shocking that this isn’t apparent to most people why FB is put at such high valuation and is being chased by major companies.

A stake in FB to certain companies is a priceless gamble. They are not trying to own a stake so that if/when FB becomes a revenue source they too can share in the benefits and see an incredible ROI. What they are doing is trying to solidify a relationship (as exclusive as possible) so that as FB carves out their experimental business model these companies will be able to couple themselves to it somehow. It’s more of a bribe than an investment, sources claim.

Companies like Microsoft and Nokia are essentially saying “We will pay you a few hundred million to establish the beginnings of what will be a mutually beneficial and exclusive relationship. A small portion of your company will be an added benefit and you can use that to broadcast a large valuation to the world to further legitimize your business despite an unproven and incomplete model”.

Facebook would like to continue to own and exploit their users’ private data without sharing in these profits and simply providing a useful service. Unfortunately, consumers are quickly learning that this may be something to be concerned about. There is a fast growing demand for openness that will hurt their walled garden philosophy. At some point an open and selfless alternative will arise and Facebook will shrink in order to remain a viable player for the long run. The catch 22 will lead to the inevitable deflation of Facebook.

Facebook is hugely popular social networking site, second only to MySpace in terms of users. Other popular social networking sites are Bebo and Friendster, the second one tried to acquire Facebook in 2004 for just $10M.

The latest comScore metrics, we have seen, revealed that Facebook is actually site #16 (others claim it is #6 today) in US with nearly 70M unique visitors per month and more than 50M registered and active users.
 
Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.

The next year [2006], Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.

Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom  and the mighty Google a couple of months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.

Total funding for the company is now exceeding $400M as this number is highly speculative given the fact no public information is available for both the Samwer brothers’ investment and the Nokia’s eventual equity purchase.

It would really be interesting to find out what’s the equity position Mr. Li Ka-shing, Samwer brothers have secured and eventually Nokia will have for their money considering what Microsoft has bought for their $240M.

More

http://www.facebook.com
http://www.nokia.com/
http://mashable.com/2008/01/15/facebook-samwer-brothers/
http://www.techcrunch.com/2008/01/20/nokia-to-invest-in-facebook/
http://www.paidcontent.org/entry/419-nokia-and-facebook-working-on-mobile-deal-could-involve-investment/
http://www.reuters.com/article/rbssTechMediaTelecomNews/idUSL1562367720080115
http://www.huffingtonpost.com/2008/01/16/facebook-hits-europe_n_81730.html
http://web2innovations.com/money/2007/11/30/hong-kong-billionaire-li-ka-shing-invests-60m-in-facebook-funding-totals-33820m-to-date/
http://www.crunchbase.com/company/facebook
http://www.techcrunch.com/2007/11/30/another-60-million-for-facebook
http://kara.allthingsd.com/20071130/facebook-nabs-60-million-investment-from-li-ka-shing
http://www.hutchison-whampoa.com/eng/about/chairman/chairman.htm
http://www.iht.com/articles/2006/12/03/business/brothers.php
http://venturebeat.com/2008/01/15/samwer-brothers-invest-in-facebook/
http://www.moconews.net/entry/419-nokia-to-buy-navteq-for-77-billion/
http://www.paidcontent.org/entry/419-facebook-gets-investment-from-german-online-entrepreneurs-samwer-brothe 
http://www.moconews.net/entry/419-nokia-buys-file-sharing-service-avvenu

Powerset – the natural language processing search engine empowered by Hbase in Hadoop

In our planned series of publications about the Semantic Web and its apps today Powerset is going to be our second company, after Freebase, to be featured. 

Powerset is a Silicon Valley based company building a transformative consumer search engine based on natural language processing. Their unique innovations in search are rooted in breakthrough technologies that take advantage of the structure and nuances of natural language. Using these advanced techniques, Powerset is building a large-scale search engine that breaks the confines of keyword search. By making search more natural and intuitive, Powerset is fundamentally changing how we search the web, and delivering higher quality results.

Powerset’s search engine is currently under development and is closed for the general public. You can always keep an eye on them in order to learn more information about their technology and approach.

Despite all the press attention Powerset is gaining there are too few details publicly available for the search engine. In fact Powerset is lately one of the most buzzed companies in the Silicon Valley, for good or bad.

Power set is a term from the mathematics and means a set S, the power set (or powerset) of S, written P(S) P(S), or 2S, is the set of all subsets of S. In axiomatic set theory (as developed e.g. in the ZFC axioms), the existence of the power set of any set is postulated by the axiom of power set. Any subset F of P(S), is called a family of sets over S.

From the latest information publicly available for Powerset we learn that, just like some other start-up search engines, they are also using Hbase in Hadoop environment to process vast amounts of data.

It also appears that Powerset relies on a number of proprietary technologies such as the XLE, licensed from PARC, ranking algorithms, and the ever-important onomasticon (a list of proper nouns naming persons or places).

  

For any other component, Powerset tries to use open source software whenever available. One of the unsung heroes that form the foundation for all of these components is the ability to process insane amounts of data. This is especially true for a Natural Language search engine. A typical keyword search engine will gather hundreds of terabytes of raw data to index the Web. Then, that raw data is analyzed to create a similar amount of secondary data, which is used to rank search results. Since Powerset’s technology creates a massive amount of secondary data through its deep language analysis, Powerset will be generating far more data than a typical search engine, eventually ranging up to petabytes of data.
Powerset has already benefited greatly from the use of Hadoop: their index build process is entirely based on a Hadoop cluster running the Hadoop Distributed File System (HDFS) and makes use of Hadoop’s map/reduce features.

In fact Google also uses a number of well-known components to fulfill their enormous data processing needs: a distributed file system (GFS) ( http://labs.google.com/papers/gfs.html ), Map/Reduce ( http://labs.google.com/papers/mapreduce.html ), and BigTable ( http://labs.google.com/papers/bigtable.html ).

Hbase is actually the open-source equivalent of Google’s Bigtable, which, as far as we understand the matter is a great technological achievement of the guys behind Powerset. Both JimKellerman and Michael Stack are from Powerset and are the initial contributors of Hbase.

Hbase could be the panacea for Powerset in scaling their index up to Google’s level, yet coping Google’s approach is perhaps not the right direction for a small technological company like Powerset. We wonder if Cuill, yet another start-up search engine that’s claiming to have invented a technology for cheaper and faster indexation than Google’s, has built their architecture upon the Hbase/Hadoop environment.  Cuill claims that their indexing costs will be 1/10th of Google’s, based on new search architectures and relevance methods. If it is true what would the Powerset costs then be considering the fact that Powerset is probably having higher indexing costs even compared to Google, because it does a deep contextual analysis on every sentence on every web page? Taking into consideration that Google is having more than 450,000 servers in several major data centers and Powerset’s indexing and storage costs might be even higher the approach Powerset is taking might be costly business for their investors.

Unless Hbase and Hadoop are the secret answer Powerset relies on to significantly reduce the costs. 

Hadoop is an interesting software platform that lets one easily write and run applications that process vast amounts of data.

Here’s what makes Hadoop especially useful:

  • Scalable: Hadoop can reliably store and process petabytes.
  • Economical: It distributes the data and processing across clusters of commonly available computers. These clusters can number into the thousands of nodes.
  • Efficient: By distributing the data, Hadoop can process it in parallel on the nodes where the data is located. This makes it extremely rapid.
  • Reliable: Hadoop automatically maintains multiple copies of data and automatically redeploys computing tasks based on failures.

Hadoop implements MapReduce, using the Hadoop Distributed File System (HDFS) (see figure below.) MapReduce divides applications into many small blocks of work. HDFS creates multiple replicas of data blocks for reliability, placing them on compute nodes around the cluster. MapReduce can then process the data where it is located.
Hadoop has been demonstrated on clusters with 2000 nodes. The current design target is 10,000 node clusters.
Hadoop is a Lucene sub-project that contains the distributed computing platform that was formerly a part of Nutch.

Hbase’s background

Google’s  Bigtable, a distributed storage system for structured data, is a very effective mechanism for storing very large amounts of data in a distributed environment.  Just as Bigtable leverages the distributed data storage provided by the Google File System, Hbase will provide Bigtable-like capabilities on top of Hadoop. Data is organized into tables, rows and columns, but a query language like SQL is not supported. Instead, an Iterator-like interface is available for scanning through a row range (and of course there is an ability to retrieve a column value for a specific key). Any particular column may have multiple values for the same row key. A secondary key can be provided to select a particular value or an Iterator can be set up to scan through the key-value pairs for that column given a specific row key.

Reach

According to Quantcast, Powerset is basically not popular site and is reaching less than 20,000 unique visitors per month, around 10,000 Americans. Compete is reporting the same – slightly more than 20,000 uniques per month. Considering the fact the search engine is still in its alpha stage these numbers are not that bad.

The People

Powerset has assembled a star team of talented engineers, researchers, product innovators and entrepreneurs to realize an ambitious vision for the future of search. Our team comprises industry leaders from a diverse set of companies including: Altavista, Apple, Ask.com, BBN, Digital, IDEO, IBM, Microsoft, NASA, PARC, Promptu, SRI, Tellme, Whizbang! Labs, and Yahoo!.

Founders of Powerset are Barney Pell and Lorenzo Thione and the company is actually headquartered in San Francisco. Recently Barney Pell has stepped down from the CEO spot and is now the company’s CTO.

Barney Pell, Ph.D. (CTO) For over 15 years Barney Pell (Ph.D. Computer science, Cambridge University 1993) has pursued groundbreaking technical and commercial innovation in A.I. and Natural Language understanding at research institutions including NASA, SRI, Stanford University and Cambridge University. In startup companies, Dr. Pell was Chief Strategist and VP of Business Development at StockMaster.com (acquired by Red Herring in March, 2000) and later had the same role at Whizbang! Labs. Just prior to Powerset, Pell was an Entrepreneur in Residence at Mayfield, one of the top VC firms in Silicon Valley.

Lorenzo Thione (Product Architect) Mr. Thione brings to Powerset years of research experience in computational linguistics and search from Research Scientist positions at the CommerceNet consortium and the Fuji-Xerox Palo Alto Laboratory. His main research focus has been discourse parsing and document analysis, automatic summarization, question answering and natural language search, and information retrieval. He has co-authored publications in the field of computational linguistics and is a named inventor on 13 worldwide patent applications spanning the fields of computational linguistics, mobile user interfaces, search and information retrieval, speech technology, security and distributed computing. A native of Milan, Italy, Mr. Thione holds a Masters in Software Engineering from the University of Texas at Austin.

Board of Directors

Aside Barney Pell, who is also serving on the company’s board of directors, other board members are:

Charles Moldow (BOD) is a general partner at Foundation Capital. He joined Foundation on the heels of successfully building two companies from early start-up through greater than $100 million in sales. Most notably, Charles led Tellme Networks in raising one of the largest private financing rounds in the country post Internet bubble, adding $125 million in cash to the company balance sheet during tough market conditions in August, 2000. Prior to Tellme, Charles was a member of the founding team of Internet access provider @Home Network. In 1998, Charles assisted in the $7 billion acquisition of Excite Network. After the merger, Charles became General Manager of Matchlogic, the $80 million division focused on interactive advertising.

Peter Thiel (BOD) is a partner at Founders Fund VC Firm in San Francisco. In 1998, Peter co-founded PayPal and served as its Chairman and CEO until the company’s sale to eBay in October 2002 for $1.5 billion. Peter’s experience in finance includes managing a successful hedge fund, trading derivatives at CS Financial Products, and practicing securities law at Sullivan & Cromwell. Peter received his BA in Philosophy and his JD from Stanford.

Investors

In June 2007 Powerset has raised $12.5M in series A round of funding from Foundation Capital and The Founder’s Fund. Early investors include Eric Tilenius and Peter Thiel, who is also early investor in Facebook.com. Other early investors are as follows:

CommerceNet is an entrepreneurial research institute focused on making the world a better place by fulfilling the promise of the Internet. CommerceNet invests in exceptional people with bold ideas, freeing them to pursue visions outside the comfort zone of research labs and venture funds and share in their success.

Dr. Tenenbaum is a world-renowned Internet commerce pioneer and visionary. He was founder and CEO of Enterprise Integration Technologies, the first company to conduct a commercial Internet transaction (1992), secure Web transaction (1993) and Internet auction (1993). In 1994, he founded CommerceNet to accelerate business use of the Internet. In 1997, he co-founded Veo Systems, the company that pioneered the use of XML for automating business-to-business transactions. Dr. Tenenbaum joined Commerce One in January 1999, when it acquired Veo Systems. As Chief Scientist, he was instrumental in shaping the company’s business and technology strategies for the Global Trading Web. Earlier in his career, Dr. Tenenbaum was a prominent AI researcher, and led AI research groups at SRI International and Schlumberger Ltd. Dr. Tenenbaum is a Fellow and former board member of the American Association for Artificial Intelligence, and a former Consulting Professor of Computer Science at Stanford. He currently serves as an officer and director of Webify Solutions and Medstory Inc., and is a Consulting Professor of Information Technology at Carnegie Mellon’s new West Coast campus. Dr. Tenenbaum holds B.S. and M.S. degrees in Electrical Engineering from MIT, and a Ph.D. from Stanford. 

Allan Schiffman was CTO and founder of Terisa Systems, a pioneer in communications security Technology to the Web software industry. Earlier, Mr. Schiffman was Chief Technology Officer at Enterprise Integration Technologies, a pioneer in the development of key security protocols for electronic commerce over the Internet. In these roles, Mr. Schiffman has raised industry awareness of role for security and public key cryptography in ecommerce by giving more than thirty public lectures and tutorials. Mr. Schiffman was also a member of the team that designed the Secure Electronic Transactions (SET) payment card protocol commissioned by MasterCard and Visa. Mr. Schiffman co-designed the first security protocol for the Web, the Secure HyperText Transfer Protocol (S-HTTP). Mr. Schiffman led the development of the first secure Web browser, Secure Mosaic, which was fielded to CommerceNet members for ecommerce trials in 1994. Earlier in his career, Mr. Schiffman led the development of a family of high-performance Smalltalk implementations that gained both academic recognition and commercial success. These systems included several innovations widely adopted by other object-oriented language implementers, such as the “just-in-time compilation” technique universally used by current Java virtual machines. Mr. Schiffman holds an M.S. in Computer Science from Stanford University.

Rob Rodin is the Chairman and CEO of RDN Group; strategic advisors focused on corporate transitions, customer interface, sales and marketing, distribution and supply chain management. Additionally, he serves as Vice Chairman, Executive Director and Chairman of the Investment Committee of CommerceNet which researches and funds open platform, interoperable business services to advance commerce. Prior to these positions, Mr. Rodin served as CEO and President of Marshall Industries, where he engineered the reinvention of the company, turning a conventionally successful $500 million distributor into a web enabled $2 billion global competitor. “Free, Perfect and Now: Connecting to the Three Insatiable Customer Demands”, Mr. Rodin’s bestselling book, chronicles the radical transformation of Marshall Industries. 

The Founders Fund – The Founders Fund, L.P. is a San Francisco-based venture capital fund that focuses primarily on early-stage, high-growth investment opportunities in the technology sector. The Fund’s management team is composed of investors and entrepreneurs with relevant expertise in venture capital, finance, and Internet technology. Members of the management team previously led PayPal, Inc. through several rounds of private financing, a private merger, an initial public offering, a secondary offering, and its eventual sale to eBay, Inc. The Founders Fund possesses the four key attributes that well-position it for success: access to elite research universities, contact to entrepreneurs, operational and financial expertise, and the ability to pick winners. Currently, the Founders Fund is invested in over 20 companies, including Facebook, Ironport, Koders, Engage, and the newly-acquired CipherTrust. 

Amidzad – Amidzad is a seed and early-stage venture capital firm focused on investing in emerging growth companies on the West Coast, with over 50 years of combined entrepreneurial experience in building profitable, global enterprises from the ground up and over 25 years of combined investing experience in successful information technology and life science companies. Over the years, Amidzad has assembled a world-class network of serial entrepreneurs, strategic investors, and industry leaders who actively assist portfolio companies as Entrepreneur Partners and Advisors.Amidzad has invested in companies like Danger, BIX, Songbird, Melodis, Freewebs, Agitar, Affinity Circles, Litescape and Picaboo.

Eric Tilenius brings a two-decade track record that combines venture capital, startup, and industry-leading technology company experience. Eric has made over a dozen investments in early-stage technology, internet, and consumer start-ups around the globe through his investment firm, Tilenius Ventures. Prior to forming Tilenius Ventures, Eric was CEO of Answers Corporation (NASDAQ: ANSW), which runs Answers.com, one of the leading information sites on the internet. He previously was an entrepreneur-in-residence at venture firm Mayfield. Prior to Mayfield, Eric was co-founder, CEO, and Chairman of Netcentives Inc., a leading loyalty, direct, and promotional internet marketing firm. Eric holds an MBA from the Stanford University Graduate School of Business, where he graduated as an Arjay Miller scholar, and an undergraduate degree in economics, summa cum laude, from Princeton University.

Esther Dyson does business as EDventure, the reclaimed name of the company she owned for 20-odd years before selling it to CNET Networks in 2004. Her primary activity is investing in start-ups and guiding many of them as a board member. Her board seats include Boxbe, CVO Group (Hungary), Eventful.com, Evernote, IBS Group (Russia, advisory board), Meetup, Midentity (UK), NewspaperDirect, Voxiva, Yandex (Russia)… and WPP Group (not a start-up). Some of her other past IT investments include Flickr and Del.icio.us (sold to Yahoo!), BrightMail (sold to Symantec), Medstory (sold to Microsoft), Orbitz (sold to Cendant and later re-IPOed). Her current holdings include ActiveWeave, BlogAds, ChoiceStream, Democracy Machine, Dotomi, Linkstorm, Ovusoft, Plazes, Powerset, Resilient, Tacit, Technorati, Visible Path, Vizu.com and Zedo. On the non-profit side, Dyson sits on the boards of the Eurasia Foundation, the National Endowment for Democracy, the Santa Fe Institute and the Sunlight Foundation. She also blogs occasionally for the Huffington Post, as Release 0.9.

Adrian Weller – Adrian graduated in 1991 with first class honours in mathematics from Trinity College, Cambridge, where he met Barney. He moved to NY, ran Goldman Sachs’ US Treasury options trading desk and then joined the fixed income arbitrage trading group at Salomon Brothers. He went on to run US and European interest rate trading at Citadel Investment Group in Chicago and London. Recently, Adrian has been traveling, studying and managing private investments. He resides in Dublin with his wife, Laura and baby daughter, Rachel.

Azeem Azhar – Azeem is currently a technology executive focussed on corporate innovation at a large multinational. He began his career as a technology writer, first at The Guardian and then The Economist . While at The Economist, he launched Economist.com. Since then, he has been involved with several internet and technology businesses including launching BBC Online and founding esouk.com, an incubator. He was Chief Marketing Officer for Albert-Inc, a Swiss AI/natural language processing search company and UK MD of 20six, a blogging service. He has advised several internet start-ups including Mondus, Uvine and Planet Out Partners, where he sat on the board. He has a degree in Philosophy, Politics and Economics from Oxford University. He currently sits on the board of Inuk Networks, which operates a IPTV broadcast platform. Azeem lives in London with his wife and son.

Todd Parker – Since 2002, Mr. Parker has been a Managing Director at Hidden River, LLC, a firm specializing in Mergers and Acquisitions consulting services to the wireless and communications industry. Previously and from 2000 to 2002, Mr. Parker was the founder and CEO of HR One, a human resources solutions provider and software company. Mr. Parker has also held senior executive and general manager positions with AirTouch Corporation where he managed over 15 corporate transactions and joint venture formations with a total value of over $6 billion. Prior to AirTouch, Mr. Parker worked for Arthur D. Littleas a consultant. Mr. Parker earned a BS from Babson College in Entrepreneurial Studies and Communications.

Powerset.com is the 2nd Semantic App being featured by Web2Innovations in its series of planned publications where we will try to discover, highlight and feature the next generation of web-based semantic applications, engines, platforms, mash-ups, machines, products, services, mixtures, parsers, and approaches and far beyond.

The purpose of these publications is to discover and showcase today’s Semantic Web Apps and projects. We’re not going to rank them, because there is no way to rank these apps at this time – many are still in alpha and private beta.

Via

[ http://www.powerset.com ]
[ http://www.powerset.com/about ]
[ http://en.wikipedia.org/wiki/Power_set ]
[ http://en.wikipedia.org/wiki/Powerset ]
[ http://blog.powerset.com/ ]
[ http://lucene.apache.org/hadoop/index.html ]
[ http://wiki.apache.org/lucene-hadoop/Hbase ]
[ http://blog.powerset.com/2007/10/16/powerset-empowered-by-hadoop ]
[ http://www.techcrunch.com/2007/09/04/cuill-super-stealth-search-engine-google-has-definitely-noticed/ ]
[ http://www.barneypell.com/ ]
[ http://valleywag.com/tech/rumormonger/hanky+panky-ousts-pell-as-powerset-ceo-318396.php ]
[ http://www.crunchbase.com/company/powerset ]

Hong Kong billionaire Li Ka-shing Invests $60m in Facebook. Funding totals $338.20M to date

Hong Kong billionaire Li Ka-shing Invests $60m in Facebook. Facebook now has $338.20M in cash to play with. Plans are the company to go public in 2008 or 2009 according to some rumors within the sector.

Facebook is hugely popular social networking site, second only to MySpace in terms of users. Other popular social networking sites are Bebo and Friendster, the second one tried to acquire Facebook in 2004 for just $10M.

The latest comScore metrics, we have seen, revealed that Facebook is actually site #16 (others claim it is #6 today) in US with nearly 70M unique visitors per month and more than 50M registered and active users.
 
Peter Thiel, cofounder of PayPal and managing partner of the Founders Fund was the first angel investor in the company. He invested $500,000 into Facebook in early 2004. Later Accel Partners poured $12.7 million more in funding, at a valuation in the $100 million range.

The next year [2006], Facebook received $25 million in funding from Greylock Partners and Meritech Capital, as well as returning investors Accel Partners and Peter Thiel. The pre-money valuation for this deal was in the $525 million range.

Facebook is reported to have turned deals down from Friendster, Yahoo, Viacom  and the mighty Google a couple of months ago when Zuckerberg has chosen Microsoft to partner with. Microsoft de-facto has invested $240 million into Facebook for just 1.6 percent of the company in October 2007. This put the company’s valuation at over $15 billion on just $150 million in annual revenues.

Mr. Li Ka-shing is the Chairman of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited. Cheung Kong (Holdings) Limited is the flagship of the Cheung Kong Group which has business operations in 55 countries around the world and employs about 250,000 staff. In Hong Kong alone, the Group includes eight listed companies with a combined market capitalization of approximately HKD981 billion (31 October 2007). Hutchison Whampoa Limited is a Fortune Global 500 company.

It would be interesting to find out what’s the equity position Mr. Li Ka-shing has secured for his $60M considering what Microsoft has bought for their $240M. 

Via

[ http://www.crunchbase.com/company/facebook ]
[ http://www.techcrunch.com/2007/11/30/another-60-million-for-facebook/ ]
[ http://kara.allthingsd.com/20071130/facebook-nabs-60-million-investment-from-li-ka-shing/ ]
[ http://www.hutchison-whampoa.com/eng/about/chairman/chairman.htm ]