http://www.matrixpartners.com/index.php en tsgadmin@matrixpartners.com Copyright 2010 2010-03-16T13:02:29+00:00 http://matrixpartners.com/index.php/site/matrix_partners_expands_east_coast_team_adds_antonio_rodriguez_in_boston_an/ http://matrixpartners.com/index.php/site/matrix_partners_expands_east_coast_team_adds_antonio_rodriguez_in_boston_an/#When:13:02:29Z Matrix Partners Expands East Coast Team, Adds Antonio Rodriguez in Boston and Opens NY OfficeWALTHAM, Mass.—(BUSINESS WIRE)—Matrix Partners, a premier venture capital firm with a 30-year history, today announced a new partner in the Boston office and the opening of an office in New York City. Antonio Rodriguez, consumer technology entrepreneur, will join the firm as general partner. Most recently, Rodriguez was CTO of HP’s Consumer Imaging and Printing division where he led a wide array of projects in the areas of mass customization, e-reading, mobile platforms, and next generation web technologies for content consumption. Rodriguez joined HP through the acquisition of Tabblo, where he was founder and CEO. “Having worked with Antonio when he founded and grew Tabblo, we know he brings great entrepreneurial experience and deep consumer technology expertise to the team,” says Timothy Barrows, Managing Partner of Matrix Partners. In his new role at Matrix Partners, Rodriguez will be investing in young companies across a range of sectors including consumer Internet, mobile, software, and Internet infrastructure. “Matrix clearly has an incredible track record of making outstanding investments over many decades in the constantly changing world of technology. But more importantly, as a first-time CEO backed by Matrix, I got to experience the firm’s culture and values from the most important perspective— that of the entrepreneur. And because of that experience, I couldn’t imagine a better team to join in the venture business,” says Rodriguez. MATRIX NEW YORK OFFICE OPENED BY NICK BEIM In addition to adding Rodriguez to the Matrix team in Boston, Matrix Partners has also opened a new office in New York that will be headed by general partner, Nick Beim. “There is a very vibrant startup community in New York,” says Beim. “We’ve been increasingly active in New York over the past six years and continue to be impressed by the caliber of entrepreneurial talent here.” Matrix Partners’ investments in New York include the Gilt Groupe, TheLadders.com, Intent Media and Conductor. “New York is a leader in many industries that are being transformed by the Internet, including media, advertising, retail, recruiting and financial services,” says Beim. “Some of the most promising Internet startups in these industries are based in New York. I think New York will become an increasingly prominent hub of Internet innovation over the next 10 years as this transformation continues.” “Nick and Matrix Partners have been instrumental in nurturing and promoting the startup eco-system in New York, so I’m very excited that they are establishing an office here to further their work,” says Kevin Ryan, co-founder and Chairman of Gilt Groupe. “We have been fortunate to work with some extraordinary entrepreneurs in New York and are eager to establish a greater presence there,” says Timothy Barrows. “With the addition of Antonio in Boston and the opening of a new office in New York, Matrix Partners is strengthening our commitment to entrepreneurship on the east coast.” About Matrix Partners: Matrix Partners is a premier venture capital firm that has generated outstanding returns for over three decades. The firm has delivered several of the industry’s top performing funds of all time. Matrix Partners has offices in Waltham, MA; New York, NY; Palo Alto, CA; Mumbai, India; and Beijing and Shanghai, China. The firm has been fortunate to have invested in game-changing, industry-leading businesses such as Apple Computer, Sandisk, Veritas, Sycamore Networks, Phone.com, Starent Networks, JBoss and Gilt Groupe. Matrix Partner News 2010-03-16T13:02:29+00:00 http://matrixpartners.com/index.php/site/theladders.com_featured_in_the_economist/ http://matrixpartners.com/index.php/site/theladders.com_featured_in_the_economist/#When:00:47:43Z TheLadders.com featured in The EconomistFrom The Economist print edition February 25, 2010 The recession has accelerated big changes for firms that help people find jobs. “IN 2008 10m people came to us, and we placed 4m in jobs. In 2009 it was 11m, and we only placed around 3m. It’s been a tough year.” So says Jeff Joerres, the boss of Manpower, an employment-services firm best known for its army of temporary workers. The highest unemployment rates in decades have meant that more people than ever have turned to firms that specialise in finding people jobs. But at a time when firms are hiring far less, if at all, that can easily add up to more disappointed clients. One thing Manpower has got better at during the recession, says Mr Joerres, is figuring out quickly which job-hunters can be helped, and which to send elsewhere rather than risk leading them on. In the final quarter of 2009 Manpower’s profits were down by 62% from the same period a year earlier, on revenues that were 4% lower. Although its share price is twice what it was last March, it is still at barely half its peak. The story is much the same across the recruitment industry. On February 23rd Heidrick & Struggles, a big headhunting firm, announced that revenues had fallen by 19% in the fourth quarter, although it eked out slightly higher profits. It trimmed its team of consultants from 419 to 359 over the course of last year. Monster, an online job-listing firm, posted a loss in the fourth quarter. Its shares, though up since last March, remain two-thirds lower than in February 2007, before the deterioration of the American economy became apparent. Even so, Sal Iannuzzi, Monster’s boss, is upbeat. He, like his counterparts at other recruitment firms, is increasingly confident that unemployment in America has peaked. Moreover, his firm, like many in the industry, has made big changes to improve its prospects as the market recovers. Before the recession, Mr Iannuzzi had publicly acknowledged that neither Monster’s technology nor the services it offered were up to snuff. Although it led the shift of job listings away from newspapers to the web—newspaper revenues from such listings are down by over 90% since Monster announced itself with its first Super Bowl ad in 1999—it had rested on its laurels. The recession underscored the problems, when desperate jobseekers used Monster to fire off scattergun applications, in effect spamming recruiters. Mr Iannuzzi decided to push ahead with an overhaul despite the recession, “forgoing profitability to invest in innovation”. Monster has developed a search engine called 6Sense, which is designed to help recruiters screen out “aspirational applicants” (the spammers). It also allows recruiters to search for suitable candidates themselves, rather than waiting for the right person to apply. Instead of relying on telemarketing, Monster is visiting employers to show off these products. In early February Monster announced a deal to buy HotJobs, a rival listings site, from Yahoo!. It will pay $225m—barely half what Yahoo! paid when outbidding Monster for the firm eight years ago. The deal is expected to bring enough new customers to make Monster, which now operates in over 50 countries, the largest online database of potential hires, ahead of its biggest rival, Careerbuilder. These moves are intended in part to see off specialist competitors, which have grown despite the downturn by exploiting niche markets. Dice, for example, focuses on technology jobs; TheLadders lists only jobs with a salary of $100,000 or more. People seeking jobs on TheLadders pay a monthly fee of $35, enough to deter the eager but unqualified. Hyperactive users (defined as those who apply for more than 100 jobs a day) are strongly discouraged. According to Marc Cenedella, the firm’s boss, “on average, there are 21 applicants per job on TheLadders, whereas on Monster you can get a thousand people applying, which is far too much noise.” Mr Cenedella, who blogs about recruitment, says “curation”, meaning more filtering of those looking for work, is the new trend. “The sites have evolved from online jobs boards into ‘talent communities’,” says Jayson Saba, a specialist in employment at Aberdeen Group, a market-research firm. In other words, recruitment firms are hoping to capitalise on the popularity of social networking. Monster owns sites such as military.com and theapple.com, which allow soldiers and teachers respectively to hobnob and hunt for work. Along with rivals, it is also trying to use Facebook (with mixed results) and, above all, LinkedIn, a professional-networking site. Reid Hoffman, the founder of LinkedIn, says its revenues from employers looking for recruits among its 60m members have risen consistently throughout the downturn. Mr Hoffman thinks his members are only just beginning to appreciate the edge the site can offer when it comes to job referrals. “When someone recommends you for a job, that counts for far more than when you apply for it yourself,” he says. “We use LinkedIn, quite frankly,” says Kevin Kelly, the boss of Heidrick & Struggles, who readily concedes that the emergence of online search and networking is undermining the advantage conferred by his firm’s proprietary database of contacts. In response to the gradual erosion of their main selling point, Mr Kelly and his colleagues have begun offering their services as consultants on other aspects of employment, helping firms keep their best staff and manage successions. Senior executives suffer from a high rate of attrition: 40% leave their job within 18 months. Heidrick has analysed 20,000 hirings it orchestrated to assess why some of those appointed lasted longer than others. It is incorporating its findings into its advice. Like Heidrick, Manpower is increasingly having to compete by finding new ways to help recruiters, helping them manage high-powered but short-lived projects, for example. Companies are putting together many more ad hoc teams often connected virtually around the world, notes Mr Joerres. “Perhaps only 20% of a team will be on the full-time staff,” he says, “so they need a much more on-demand talent spigot, which we can provide.” Recruiters are clearly becoming far more sophisticated, thanks to the new search tools that are available, says Aberdeen’s Mr Saba: “You’d think with 10% unemployment, jobs would be filled more quickly, but the focus on sourcing the right people, screening them and so on means that the time to fill has not fallen.” Mr Joerres believes that the increasing sophistication of recruiters means that firms will do less “anticipatory hiring” than in previous recoveries. Instead, firms will wait to get exactly the staff they need, when they need them. However, Heidrick’s Mr Kelly thinks lots of executives who have stayed in their jobs over the past year or two despite working twice as hard for less money will grab the first opportunity to move to pastures new. The same may be true for less exalted workers, too—and could signal a better year ahead for recruitment firms. Portfolio Company News 2010-02-26T00:47:43+00:00 http://matrixpartners.com/index.php/site/polyvore_names_sukhinder_singh_cassidy_as_ceo/ http://matrixpartners.com/index.php/site/polyvore_names_sukhinder_singh_cassidy_as_ceo/#When:23:32:23Z Polyvore Names Sukhinder Singh Cassidy as CEOFormer Google and Accel Executive Brings Growth and Scaling Experience to Pioneering Global Fashion and Social Shopping Community February 22, 2010 MOUNTAIN VIEW, CA Polyvore, the leading fashion and social shopping platform, today announced the addition of Sukhinder Singh Cassidy as Chief Executive Officer. Ms. Singh Cassidy will join Polyvore on March 1, from Accel Partners where she served as CEO-in-residence. From 2003 to 2009, Ms. Singh Cassidy held a variety of executive leadership roles at Google including President of its Asia-Pacific & Latin American Operations. Ms. Singh Cassidy brings over 14 years of experience in media and technology to further accelerate Polyvore’s growth in the fashion and social shopping space. Polyvore is redefining how people around the world experience, create and share fashion on the Internet. Polyvore’s easy-to-use virtual styling tool lets people mix and match products from any online store to create their own fashion collections called “sets.” The Polyvore community consists of trendsetters, shoppers and aspiring stylists, who create more than 30,000 sets daily and spend an average of 10 minutes on the site per visit. With over 6 million unique visitors and 140 million pageviews per month, Polyvore is the largest fashion community site in the world. Polyvore members also share their creations on blogs and social networking sites like Facebook and Twitter, extending Polyvore’s reach by an additional 22 million impressions per month. This viral distribution network fosters the exposure and discovery of new products, brands and styling insights across a large global audience. “The tremendous organic growth of Polyvore over the last three years has ushered in a new and exciting chapter for the company,” said Pasha Sadri, Polyvore Co-Founder. “Sukhinder’s track record at scaling companies and expertise as both an executive and entrepreneur is the ideal combination Polyvore needs to continue growing and driving innovation globally.” “I am very excited to join Polyvore as CEO. I’ve watched the company grow and gain momentum as online shopping evolves from a static and solo experience into a very social form of digital entertainment and e-commerce,” said Ms. Singh Cassidy. “This is a unique opportunity to join a talented and passionate team and collaborate with a product visionary like Pasha to grow the business and redefine the industry.” “Ever since meeting Sukhinder 10 years ago, the entire Benchmark partnership felt she had all the qualities to be a truly phenomenal CEO,” said Peter Fenton, a partner at Benchmark Capital and Polyvore and Twitter board member. “With the unique chemistry between Sukhinder’s passion, the world class team at Polyvore, and our global community of creators, we see the potential to change the fashion industry forever.” “Polyvore is transforming the online shopping and fashion industry with an innovative social shopping platform that empowers people to engage with brands and products in creative ways to drive discovery, sharing and e-commerce. This is a very powerful and game-changing experience for both consumers and brands. We’re very pleased to have Sukhinder join Polyvore as we tackle the future in this exciting space,” said Dana Stalder, General Partner, Matrix Partners. Ms. Singh Cassidy was responsible for all of Google’s commercial operations in Asia-Pacific and Latin America, and built the company’s presence from inception to scale across 40 domains and 103 different countries. Ms. Singh Cassidy first joined Google in 2003 as the General Manager for Google Local & Maps, helping to launch these innovative new services, then expanding her responsibilities to lead the company’s strategic partnerships for Google Books, Scholar, and Video. From 1999-2003, Ms. Singh Cassidy was Co-Founder and Senior Vice President of Business Development for Yodlee.com Inc., a leading solutions provider to the global financial services industry. Ms. Singh Cassidy started her Internet career in strategy and business development with Amazon.com and OpenTV. Prior to Silicon Valley, she worked in New York and London for Merrill Lynch and British Sky Broadcasting. Ms. Singh Cassidy is a board member of specialty apparel retailer J.Crew Group (JCG) and serves on the advisory board for A Woman’s Nation, a project led by Maria Shriver and Center for American Progress. She is also a board member for Jobtrain, dedicated to vocational training for troubled adult and youth, and is a graduate of the Richard Ivey School of Business Administration at the University of Western Ontario, Canada. About Polyvore Polyvore (polyvore.com) is redefining how people around the world experience, create and share fashion on the Internet. Polyvore’s easy-to-use virtual styling tool lets people mix and match products from any online store to create their own fashion collections called “sets.” The Polyvore community consists of trendsetters, shoppers and aspiring stylists, who create more than 30,000 sets daily and spend an average of 10 minutes on the site per visit. With over 6 million unique visitors and 140 million pageviews per month, Polyvore is the largest fashion community site in the world. Polyvore members also share their creations on blogs and social networking sites like Facebook and Twitter, extending Polyvore’s reach by an additional 22 million impressions per month. This viral distribution network fosters the exposure and discovery of new products, brands and styling insights across a large global audience. Located in Silicon Valley, Polyvore is backed by leading venture capital firms Benchmark Capital and Matrix Partners and consists of technology industry veterans from Google and Yahoo. Portfolio Company News 2010-02-23T23:32:23+00:00 http://matrixpartners.com/index.php/site/fast_company_names_gilt_groupe_to_worlds_most_innovative_companies_of_2010_/ http://matrixpartners.com/index.php/site/fast_company_names_gilt_groupe_to_worlds_most_innovative_companies_of_2010_/#When:17:51:19Z Fast Company Names Gilt Groupe to World's Most Innovative Companies of 2010 ListBy Kate Rockwood February 17, 2010 Want to find a fashionista at lunchtime? Try Gilt Groupe. The two-year-old company’s daily sample sales have made e-commerce fun and exciting in a whole new way. Gilt grew almost sixfold last year and is on track to hit $500 million in revenues in 2010. CEO Susan Lyne explains why Gilt is golden. FC: How is Gilt Groupe different from other Web retailers? Susan Lyne: Most online shopping mirrors brick-and-mortar stores. They’re not taking advantage of what’s uniquely possible online, the heightened sense of entertainment and competition. A big part of the Gilt brand promise is discovery: You come every day and it’s new every day. You’ve grown remarkably in a recession, especially for retail. How has the economy fueled and challenged Gilt? In the depths of the recession, we became a safety net for designers, and we bought a lot just so some of our brands could stay in business. We are still trying to create a safety net, but now it’s more about “Let us help you take risks again.” If a designer believes in six items and thinks they’re going to be really big, we’ll agree to take x number as a minimum but we’ll agree to take as many as y. If they can sell the difference at full price, fantastic. If they can’t, we’re going to buy them. And that lets them bet on their instincts. How have you gotten brands to think of Gilt as more than just a place to off-load excess inventory? You have the permission to experiment on Gilt in a way that develops brand loyalty. We can deliver an incredible amount of information about the product, and we have a direct line to our customers every single day. The day a particular label is on Gilt, traffic to that brand’s site increases, across the board. Anecdotally, so many people have told me, “Oh my god, my new favorite designer is ...” because they were able to try a new one at a price that felt comfortable. If I’m going to drop $3,000 on a jacket, I’m probably going to do it on one of my old favorites, a smaller universe of brands that I know and I’m comfortable with. Starting this year, we’re going to be selling exclusive items and capsule collections from emerging labels such as Trovata and Yigal Azrouël. Last fall, you launched a number of subsections such as Gilt Man, and Jetsetter for travel deals. How’s the expansion going? Gilt Man has totally taken off. Our revenue for menswear has tripled since we launched the new site. Part of that is offering more sales a day, but there’s also a lot of enthusiasm among our male members that they have their own store. On Jetsetter, one of the surprising things has been how quickly the hotels and resorts have recognized the marketing opportunity. We really had to explain it more to our apparel brands. Are you worried about all the sample-sale copycats? One thing that’s become clearer to me over the course of the last 16 months is that this is a pretty easy market to enter. But it’s very difficult to do well at scale, because the operational aspects of it are incredibly complex. We change out the store every night. Receiving, sale prep, and shipping and fulfillment are massively complex.  I’m more concerned about making sure we’re thinking about what the Internet makes possible. How can we do something again that drives the next wave of excitement in e-commerce? As we offer more and more sales every day, we need to get better personalization. We need to be able to offer you different sales than we might offer somebody in Minneapolis or your mother. What are your favorite Gilt purchases? There’s a Costume National jacket that I bought that I must have worn a dozen times now. I bought two black fleece Thom Browne coats that I adore. And the one that got away? I felt that way about the Jil Sander sale earlier this week. I had marked it, I really wanted to shop it, and I was in meetings until 4 o’clock and the three dresses I would have bought in a heartbeat were gone. Employees don’t get a scoop? Absolutely not. That would be a disaster. Read the article at Fast Company. Portfolio Company News 2010-02-20T17:51:19+00:00 http://matrixpartners.com/index.php/site/buywithme_featured_in_fortune/ http://matrixpartners.com/index.php/site/buywithme_featured_in_fortune/#When:19:34:17Z Buywithme featured in CNNMoney.com: Buywithme Secures $5.5 Million in FundingBy Jessica Shambora January 20, 2010 Meet the latest “viral loop” company to enter the big leagues Boston-based Buywithme, an online “group buying” site, will today announce that it has secured a $5.5 million investment from Matrix Partners. Prior to the investment, the startup had been privately funded by friends and family. Buywithme, like rival Groupon, combines the power of online shopping with social media. Matrix’s lead partner on the deal, Nick Beim, also spearheaded the firm’s $43 million investment last August in Gilt Groupe, the U.S. leader in another buzzed-about sector of ecommerce, online luxury sample sales. (The model originated in France with the site Vente Privee). “There are interesting similarities between Buywithme and Gilt when it comes to the nature of viral loops and the best merchandising and marketing strategies to optimize virality,” says Beim. One of the hottest corners of e-commerce today, “group buying” sites offer daily limited-time deals in the form of deep discounts from local merchants, provided a minimum number of buyers “buy in.” Groupon, based in Chicago, last month raised $25 million from Accel Partners. Since launching with its first deal in May 2009, Buywithme says it has saved $2 million for hundreds of thousands of users in the three cities where it operates: Boston, San Diego and Washington D.C. Deals range from discounts on oil changes to hotels to apple picking. Last week, 4,636 Bostonians purchased a $25 voucher for $50 worth of food at Sel de la Terre, an eight-time “Best Of Boston” winner. Like Groupon, Buywithme utilizes the social web to attract new users. According to Moss, 10% of users share the deals with tools like Facebook, Twitter, and email. And of those purchasing each deal, almost one-third are new. Battle of the online co-ops? Buywithme differs from Groupon in that its deals are available for a week rather than 24 hours like at Groupon. Since a new deal is introduced each day, that means multiple deals are run simultaneously at Buywithme. The intention is to prevent any buyer’s remorse stemming from impulse purchases, that might then turn people away from the site. Founder and CEO Andrew Moss, 34, also emphasizes developing ongoing relationships with merchants. “Clients should want to offer on our page repeatedly,” he explains, saying that only then can the deal truly be considered a win. And Moss resists the coupon moniker. “We don’t use that word. We are selling vouchers,” he says. “Our subscribers are people with an interest in trying things, not just coupon clippers.” This is thanks in part to a deal inked last October with The New York Times Company’s (NYT) Boston.com, wherein Buywithme “powers” the news site’s daily deal. It’s no secret that Buywithme will use the additional funding to grow its subscribers and expand to new markets.  But how it does that, and how far it takes the group buying model could have larger implications for the future of commerce online. Just as Gilt has grown the luxury flash-sale platform beyond women’s fashion to include new categories, including travel site Jetsetter, Buywithme can “offer many differentiated services over time,” says Matrix’s Beim. Click here for article at CNNMoney.com Portfolio Company News 2010-01-20T19:34:17+00:00 http://matrixpartners.com/index.php/site/venturebeat_skyfire_1.5_mobile_browser_outruns_firefox_for_now/ http://matrixpartners.com/index.php/site/venturebeat_skyfire_1.5_mobile_browser_outruns_firefox_for_now/#When:18:44:37Z VentureBeat: Skyfire 1.5 Mobile Browser Outruns Firefox — for nowDecember 9, 2009 Mobile browsers are replaying the browser wars of the 1990s. With no clear better-than-the-rest winner, phone owners are trying everything available. Opera, Internet Explorer, Mozilla’s Firefox for mobile (codenamed Fennec until its formal release) and several others have a fighting chance. Even on the iPhone, indie browser iNetDual one-ups the phone’s built-in Safari browser by adding split-screen capability so you can see two Web pages at once. On Windows Phones — technically, they run the Windows Mobile 6.5 operating system — the Skyfire browser one-upped other browsers this year by playing streaming videos within Web pages, so that they look just like they do on a desktop. Other browsers launch a separate player. Even the iPhone, which can play YouTube videos but not others, hands off video to a separate player. Skyfire Labs, the Mountain View company that makes Skyfire, will formally release its free Skyfire 1.5 browser for Windows Phone later today. The new version’s features very much play catchup on missing touches: Text is much sharper and scrolling much smoother than the previous versions. There’s a menu bar at the bottom of the browser that includes familiar buttons to zoom in and out, or to star (bookmark) a page. The browser can go full-screen, hiding its frame of user interface controls. With the Mozilla Organization constantly improving Firefox for mobile, designed to mimic Mozilla’s game-changing Firefox except where there are different needs between a handset and a laptop (think: touchscreen), is there any reason to bother with Skyfire now? Yes, because Firefox for mobile is focusing on the Nokia N900 as its first platform. Windows Mobile development is “still under active development,” according to Jay Sullivan, vice president of Mozilla’s mobile arm. Translation: Firefox for Windows phones won’t be out until next year. Once released, Firefox will be tough to compete against. Besides the brand name, it will sync bookmarks and other data with users’ desktop Firefox browsers. It will support Firefox add-ons, small software plug-ins that can add powerful features such as language translation for Web pages. Sullivan says it will also play Flash content in-line. “YouTube performance is good,” he said, but for now the under-development Fennec browser will only support Flash on Nokia’s smartphone. Support for streaming media — Flash, Silverlight, Real — will come from plug-ins created by the makers of those technologies rather than from Mozilla. CEO Jeffrey Glueck told me that on Windows Phones, Skyfire 1.5 has two advantages over other browsers: Its ability to play video within a page, and its ability to handle large Flash applications such as the homepage of Disney.com, a 50 megabyte Flash app. Skyfire does this by converting the application from Flash to Skyfire’s own format somewhere in the cloud, and serving the converted video in its correct position on its hosting page. “Everything plays” is one of Glueck’s unofficial slogans. “Go to any site that has Flash, Silverlight, RealPlayer,” he told me in a phone call. “Skyfire plays it on the page, just like on a desktop. Other browsers — iPhone Opera, IE, Safari — give you a plugin error. Google spends millions of dollars to re-encode some YouTube videos from Flash to support some smartphones, but it’s not the full live site. Usually ‘we support Flash’ means ‘we get out of the way’ and launch a separate player.” Glueck claims Disney’s site and the M&Ms homepage at mms.com are perfect for browser shootouts against Skyfire. “Disney.com is a 50 megabyte Flash animation. That will load in seconds in Skyfire. It won’t load on any other browser in the world.” Is he right? Let me know (paul@venturebeat.com or @paulboutin) if you’ve got another phone browser that can handle these sites. One more question I had: Where’s the part where Skyfire gets paid? “Search revenue share is our current model,” Glueck said. When a Skyfire user searches the Internet, Skyfire gets a cut of the money Google makes by serving ads on the result page. “Rumor has it Apple splits $100 million a year with Google for iPhone queries.” Skyfire has nowhere near that volume of traffic, but the company claims the number of search queries in November was double that of two months before. Since a year ago, according to Glueck, users are up more than threefold, and pagefiews are up sixfold. “In the future,” he added, “we hope to get revenue through ads on the start page. We also hope to get pre-loaded on Windows Phones. Microsoft lets you set the default to our browser, as long as IE is also there.” Almost needless to say these days, Skyfire has built-in interfaces and support for Facebook, Twitter, Gmail, and RSS feeds. Skyfire was founded in 2006 and has raised $22.8 million in three rounds of funding. Investors include Matrix Partners, Trinity Ventures, and Lightspeed Venture Partners. Click here for article on VentureBeat Portfolio Company News 2009-12-09T18:44:37+00:00 http://matrixpartners.com/index.php/site/next_generation_texting_company_gogii_raises_8.2_million_in_new_financing/ http://matrixpartners.com/index.php/site/next_generation_texting_company_gogii_raises_8.2_million_in_new_financing/#When:16:02:04Z Next Generation Texting Company GOGII Raises $8.2 Million in New FinancingMatrix Partners Joins Kleiner Perkins as Series B Investors in GOGII’s Popular Texting Technology Marina del Rey, Calif. (December 9, 2009) – GOGII, Inc., the creator of the next generation texting application textPlus, announced today that it has raised $8.2 million in a round of financing led by Matrix Partners, with existing investor Kleiner Perkins Caufield & Byers also participating in the round.  The new funding is the second round of successful financing for the quickly growing mobile start-up, which raised a Series A round from Kleiner Perkins’ iFund in December 2007. GOGII’s mobile application textPlus merges both old-style texting – one-to-one conversations – and next generation texting – rich, engaging environments and instant group text conversations.  The company uses sponsorships and advertisements embedded in the textPlus app environment to make it free for users to download and use. “Today, the number of cell phone users who use texting as their primary mode of communication is staggering; GOGII has learned how to tap this enormous market and help advertisers reach consumers on their mobile devices in a way that has never been done before,” said Scott Lahman, CEO and co-founder of GOGII.  “We are honored to receive this kind of validation from two of the world’s most successful venture firms. The new financing will allow us to bring our rich texting environments and features to even more carriers, handsets and users.” “What impressed us most about GOGII was its ability to provide a simple, appealing environment on mobile phones where rich advertisements are sure to be seen: alongside SMS messages,” said Matrix Partners General Partner Dana Stalder, who will join GOGII’s board as of this round. “Customer response to the textPlus app is higher than that of any competitor in the market we have seen thanks to its unprecedented features – and advertisers eager to reach this market are catching on quickly.” Since launching the textPlus app in June 2009, GOGII has taken several major steps to bring texting to a new level. This November, textPlus debuted username “text addresses,” which allow anyone in the U.S. with a mobile phone to start a text conversation with their friends using textPlus by simply texting a friend’s username to 60611. textPlus with usernames also provides users worldwide the ability to send messages app-to-app anywhere in the world for free.  textPlus will soon make it possible to create usernames for entire groups, or communities, of users. textPlus has proven to be tremendously popular with consumers.  To date, the textPlus app has been downloaded almost 3 million times, reaching over 9 million people, with over 300 million messages sent using the service since June.  And while only the top 5% of applications in the Apple App Store reach 100,000 unique monthly visitors, textPlus exceeded that by over 7 times in its second month of release.  About GOGII (go-jee) GOGII provides customers the next generation of text messaging through its flagship product, textPlus, a feature-rich, third-party text messaging application. The company was founded in 2008 by the three founders of JAMDAT Mobile, the leading mobile entertainment publisher that was acquired by Electronic Arts in 2006. For more information visit www.GOGII.com. About Matrix Partners Matrix Partners is a premier venture capital firm that has generated outstanding returns for over three decades. The firm has delivered several of the industry’s top performing funds of all time. Matrix Partners operates in the United States, India and China.  The firm has been fortunate to be a part of the creation of game-changing, industry-leading businesses such as Aruba Networks (Nasdaq: ARUN), JBoss (Red Hat), Netezza (NYSE: NZ), SanDisk (Nasdaq: SNDK), Starent Networks (Nasdaq: STAR), Sycamore Networks (Nasdaq: SCMR) and Veritas Software (Symantec). About Kleiner Perkins Caufield & Byers Since its founding in 1972, Kleiner Perkins Caufield & Byers has backed entrepreneurs in over 600 ventures, including AOL, Amazon.com, Citrix, Compaq Computer, Electronic Arts, Genentech, Genomic Health, Google, Intuit, Juniper Networks, Netscape, Lotus, Sun Microsystems, Symantec, Verisign and Xilinx. KPCB portfolio companies employ more than 250,000 people. More than 150 of the firm’s portfolio companies have gone public. Many other ventures have achieved success through mergers and acquisitions. The firm has offices in Menlo Park, California; Beijing, China; and Shanghai, China. For additional information visit www.kpcb.com. Portfolio Company News 2009-12-09T16:02:04+00:00 http://matrixpartners.com/index.php/site/gilt_groupe_featured_in_nytimes.com_secrets_out_sample_sales_move_online/ http://matrixpartners.com/index.php/site/gilt_groupe_featured_in_nytimes.com_secrets_out_sample_sales_move_online/#When:16:37:46Z Gilt Groupe featured in NYTimes.com: “Secret’s Out: Sample Sales Move Online”December 6, 2009 By Claire Cain Miller and Jenna Wortham Daniela Busciglio still winces at the memory of shivering in line for hours to get into New York sample sales, then shoving her way through throngs of other shoppers looking for deals on designer clothes. But now the mobs are moving online, to sites like Gilt, Rue La La, One Kings Lane, Ideeli and HauteLook. On the Web, the shopping is just as competitive, but it is no longer a blood sport. “Who wants to go to sample sales with lines out the door and girls scratching to get in?” said Ms. Busciglio, 27, now a graduate student at the University of Wisconsin-Madison. Online, she said, “I can take my time and not have to worry about people getting up in my face.” The private-sale sites — a misnomer because most of these so-called exclusive sites are open to anyone who signs up — have become a thriving corner of online commerce. Sites using the same “while supplies last” approach have sprung up recently to sell home furnishings, beauty products and travel packages. The business model is simple: the sites buy mostly overstocked clothing and accessories from brand-name designers, then discount them deeply. Adrenaline-pumped shoppers rush to get the deals because the items are often gone in a few hours. The sites try to recreate the rush of a warehouse sample sale, minus the trampling and shoving, but they borrow as much from the Home Shopping Network as they do from Saks Fifth Avenue. After shoppers add an item to their cart at Gilt, for example, they get a 10-minute countdown before they lose the item. For Matthew Rodriguez, 29, a Web marketer and Gilt shopper, the sales turn shopping into a game. “Knowing the sales start every day at noon makes me really competitive to get an item before someone else gets it,” he said. He recently bought a pair of Clae white patent leather sneakers for $38 on Gilt. They can sell for as much as $135 in retail stores. More mainstream retailers are also adopting the idea. Saks, for example, is holding 24-hour half-price sales on brands like Hervé Léger. Others are using the idea for holiday promotions. On the Monday after Thanksgiving, a big online shopping day known as Cyber Monday, Ashford, which sells luxury brand watches, discounted a different watch every two hours on its site. Blue Nile, the jewelry site, is offering a different deal every day until Dec. 23. By discounting one item at a time, the retailers attract bargain-seekers and avoid the deep discounting done storewide last year, thereby protecting their profit margins. By 3:10 p.m. on Cyber Monday, Blue Nile had sold out of a five-carat diamond bracelet, marked down to $3,950 from $5,300. One of the buyers, Dan Stanley of Falls Church, Va., said that he had not heard of private sales before and that for four days, he had been shopping for a bracelet for his wife. He bought it on the spot. “The ‘one day’ caught my eye, and I wouldn’t have risked it,” Mr. Stanley said. Private-sale sites are attracting brand-name investors. Kleiner Perkins Caufield & Byers, the venture capital firm that backed Google and Amazon.com, invested on Wednesday in One Kings Lane, which sells home décor. Gilt Groupe raised $55 million from Matrix Partners and General Atlantic, and Rue La La’s parent company was recently acquired by GSI Commerce for $180 million. The concept seems tailored to recessionary times. Any guilt that consumers feel over spending thousands of dollars on unnecessary items can be replaced by bragging rights for finding a killer bargain, like a $4,500 diamond necklace that was recently on sale for $2,250 at Gilt. “We started this at the worst possible time and got traction right out of the box,” said Susan Feldman, a founder of One Kings Lane. People still want to shop, but in the privacy of their homes, she said. “They just don’t want to be seen walking down the street carrying a Bloomingdale’s or Barneys or Bergdorf bag.” It works for the fashion industry, too, because as the economy slumped, stores deeply cut inventory, which left some designers with excess stock, depending on their production calendars. Some high-end brands view the sites as a place to unload inventory without sullying their image by having their merchandise appear on Overstock.com or on the racks at Filene’s Basement. The members-only Web sites also ensure that search engines will not locate and list the discounted products. Juliska sells its full-price tableware, like a $625 stoneware soup tureen, at luxury department stores like Neiman Marcus. It sells off-season products on One Kings Lane, Gilt and Rue La La. Selling those items at T. J. Maxx, as some of Juliska’s competitors do, “is suicide for a luxury brand,” said Dave Gooding, the company’s chief executive. “With flash sales, you have the beauty of it being a one-day sale that is done in a very quick, efficient, tastefully done way, as an alternative to your product sitting on a dusty shelf for six months.” For shoppers, the sites provide a selection of items, akin to a boutique, so they do not have to wade through the thousands of items on bigger e-commerce sites. Swirl, a private-sale site that went live on Nov. 19, is betting on the allure of a handpicked collection. It was started by DailyCandy, which publishes e-mail newsletters about fashionable activities in various cities. The company’s reputation for pointing readers to up-and-coming designers will help differentiate its sample sale site, said Dany Levy, DailyCandy’s founder and editorial director. “They trust us, and they know we’ve done our homework,” she said. But private-sale sites could run into trouble as manufacturers and stores cut back on inventory. “The universe of what’s overstock is not an infinite universe,” said Sucharita Mulpuru, an e-commerce analyst at Forrester. To maintain their growth, many of the sites have recently expanded beyond high-end, overstocked apparel. Ideeli sells spa and vacation packages in addition to clothes, and One Kings Lane has avoided clothes altogether. Gilt now sells gadgets, like a Tivoli radio and a Jawbone wireless headset, and offers products for men, children, the home and younger women with smaller budgets. Gilt also started a site called Jetsetter that sells travel deals, like a room at the Hôtel de Crillon in Paris marked down to $500, from $795. Susan Lyne, Gilt’s chief executive, said that as long as people coveted something, they would be eager for a deal. “Gilt and these other shopping sites allow people to do the thing that gives them pleasure, without all that guilt,” she said Click here for article at NYTimes.com Portfolio Company News 2009-12-06T16:37:46+00:00 http://matrixpartners.com/index.php/site/gilt_groupe_featured_in_hbs_weekly_retail_fashion_prodigy_how_two_hbs_entre/ http://matrixpartners.com/index.php/site/gilt_groupe_featured_in_hbs_weekly_retail_fashion_prodigy_how_two_hbs_entre/#When:20:52:54Z Gilt Groupe featured in HBS Weekly: “Retail Fashion Prodigy: How Two HBS Entrepreneurs Changed the Fashion Industry Forever”November 23, 2009 By Tamara Obradov On the outside it looks just like any other office building on West 20th Street in New York City: no bright lights, no big signs, no fashion models running you over as you enter…walking into the office area and getting greeted by the Halloween décor is also different than I imagined… but just as I sit down in the waiting room I see my first celebrity of the day. It’s a different kind of celebrity than the ones you imagine seeing at a company that sells Marc Jacobs, Valentino, Hervé Leger and the like. It is Kevin Ryan! Many of you might not know who this is (yet), and neither did I until I started my research for this article. But Kevin is one of the founders behind one of the fastest growing start-ups in the fashion industry at the moment. Together with Alexandra Wilkis Wilson and Alexis Maybank, both HBS grads, they founded a start-up that in its second year of operation reached sales of $150 million and is expected to reach sales north of $500 million in 2010. This is the story of the success of The Gilt Groupe. In the beginning… The Gilt Groupe started in 2008 with 6 founding members on the team. “I was walking in New York one day and saw this group of women in front of a store. When I asked what was going on, it appeared to be a sample sale. This is when I thought, why don’t we bring this concept to other people across the U.S.?” Kevin remarks. Alexandra adds that each of them had a similar idea and that they were also inspired by their European competitor Vente Privé. The concept is quite fascinating: Gilt Groupe provides access, by invitation only, to Men’s, Women’s and Children’s coveted fashion and luxury brands at prices up to 70% off retail. Each sale lasts 36 hours and features hand-selected styles from a single designer. Building the team Most of us at HBS always wonder, how do we build out our team and how do we find those additional capabilities that we are missing? Alexis and Alexandra were friends from college and had met each other again while at HBS. After HBS both Alexis and Alexandra went to work at other companies until 2007 when they started talking about the Gilt Groupe. Their skills complemented each other perfectly as Alexis had worked in the ecommerce / technology arena (eBay and AOL) while Alexandra worked in the luxury fashion arena (Louis Vuitton and Bulgari). “Alexis and I were very lucky to have known each other and had a very solid relationship in terms of trust. In business school we worked on projects together, so we knew how it would be to work professionally together and we had very complimentary skills. Business school students should be constantly trying to expand their network of different people-whether it is classmates, previous alums or colleagues from summer jobs and previous jobs; if they were to start their business they can reach out to people for whatever the subject matter is, whether its fundraising, recruiting, marketing, or even industry experience. It is impossible for one person to have a perfect network, but recognizing people who complement your skills is really crucial as an entrepreneur. For example I did not have a deep technology background or network or infrastructure, but Alexis did, because she worked at eBay before. I did have a very extensive network of people in the retail industry. Now we have recruited over 50 merchandisers and buyers in our firm, so it was important to align our networks.” Funding In the beginning Kevin provided the initial seed funding to get the company started. As Alexandra says, “Kevin Ryan was our angel investor. He, [at the time CEO of double click] and Dwight Merriman [his CTO at Doubleclick.com], put in together our seed funding and got us started.” Then in November 2007, approximately eight months after they started, Matrix Partners decided to fund their Series A with $5 million. “The timing was very lucky because our European inspiration Vente Privé had just sold at around a billion dollars valuation. They sold a 20% stake right as we were launching, so the U.S. investor community was very interested in the business model. When they saw that someone with a great internet track record, like Kevin Ryan, was closely affiliated with the business, the investor community felt that it was a safe and smart investment; as opposed to just investing in something started by two young HBS entrepreneurs. So it was great to have Kevin’s credibility associated with business. He is our chairman. He is physically here. He is very involved in the business.” According to Silicon Alley Insider, in August 2009 General Atlantic and Matrix Partners decided to fund Series C with $43 million with a valuation of $400 to 500 million. Many of our first year’s TEM cases warn us about equity dilution, so the natural question that arises is: When should we take up VC funding? “Every business is different and has a unique cap structure and unique situation in terms of competitive landscape. For us we knew it was important to grow as quickly as possible. We had heard that Vente Privé was going to come to the U.S., so that was one fear, and we knew that other U.S. sites were getting ready to launch. So we had the mentality that scale is important and that the first one to the finish line was going to get scale and was going to be the winner. We did not have the luxury of time on our side and we needed funding. We did not really debate do we need VC money or not. It was a question of finding the right partner who is going to be supportive of our business, who we can work well with and who is going to propel us instead of slow us down. Matrix has been a great partner, very collaborative and supportive. When you look at dilution, sure it is great to have as much equity as possible. But at the end of the day you look at how big is the valuation of the company and having funding is going to ultimately grow the business so much further, that is more important,” said Alexandra. Culture The Gilt Groupe is expanding so rapidly that they will be moving to a new office location soon. In the meantime they are located on West 20th Street in New York in an open space office with cubicles. Everyone seemed very approachable, and there was certainly a start-up atmosphere pervading the room. “Our business changes from week to week. It is constantly evolving. We are constantly changing, growing and challenging our decisions. We are hiring about 10 employees every week. In the beginning we were launching Gilt, then six months later, a men’s business, then kids and home decor, then fuse and the travel site. However, that spirit of entrepreneurship, ideas, creativity and innovation has stayed consistent since the beginning,” said Alexandra. Of course their growth has made the small start-up much more robust. At first, “[w]e had a six person team and we had an idea we could test it very quickly; now we have such a big infrastructure and we have so many members (1.6 million members)… We cannot test every day since it has impact on so many customers.” Support at HBS While at HBS there are resources that support student entrepreneurs, such as professors who make time to listen to business ideas and provide students with their perspectives, but also the business plan contest, IXPs, and Rock Center fellowships, among other opportunities. However, according to Alexandra she felt that the support got even stronger after HBS: “The professors at HBS were very available once we really started working on our start-up. The professors were very engaged and wanted to see us succeed; they are a great resource for students.” Alexis and Alexandra worked together with professor Sahlman on many issues that arose especially in the beginning of their start-up. Success and managing growth The Gilt Groupe has grown out to be a very successful venture. Its sales were around $25 million in 2008, $150 million in 2009 and expected to be $500 million in 2010. At the same time their customer base grew from 60,000 in 2008 to 1.6 million people in 2009. As Gilt is expanding they are also launching new products, such as Gilt Fuse-aimed at a younger audience, Gilt Man-specially for men, and Jetsetter-providing exclusive access to insider travel deals on exclusive properties. Their strategies per product group are different, so for example, Jetsetter is located in another building at the moment, but they do share some resources (e.g., IT). In addition to launching new products, their expansion in staff (approximately five people are hired every week) also brings operational challenges in office space. Walking through their office you feel that the place is about to become very small very fast. All the cubicles and chairs seem taken, piles of binders are everywhere, boxes and cabinets are randomly placed. Although a cozy mess, they are moving to a new location next month to accommodate their growth. A CEO for the growth phase While they were growing they also brought in a CEO. Susan Lyne, former President and CEO of Martha Stewart Living Omnimedia (MSLO), decided to join the Gilt Groupe in September 2008. Alexandra comments: “We are very lucky that we got Susan Lyne on board, so we are thrilled that we were able to convince her. Initially what happened is that our partner from Matrix, Nick Beim, knew Susan and knew that she had left Martha Stewart. He initially reached out to see if she would be interested in a Board seat. Then we realized that she actually wasn’t working and was looking for a next step in her career. She was so far in her career that she could do something a little unconventional and didn’t really need to take a job with a high cash salary. We could never have afforded what someone of her experience was used to making. We were very lucky when she said that she would be interested in a full time position.” Susan came from a corporate environment where she had worked for many years. This certainly must have been quite different from the “trading floor” feel of cubicles at the office of the Gilt Groupe. According to Alexandra this did not change the culture much: “We were nervous when she came on board. I remember thinking she is definitely used to a huge corner office, and a lot of amenities that we knew we could not offer. We are set up as a trading floor. Everyone is out in the open. When I first met her I asked her how she would feel about sitting like that. She said that it would definitely be a change, but she was excited and thrilled to be a part of it all. And for her I think it was invigorating and exciting to be part of something so alive and fresh, where she could really help shape the company. She definitely adapted to our culture and she has instilled a lot of great thinsg in the company. But she takes a seat out with everybody else. Even though she was very senior in her career she was very adaptable to the culture we have created.” Alexandra’s advice for the young HBS entrepreneur “Not everyone who ultimately wants to become an entrepreneur, who graduates from HBS, will become an entrepreneur right away. So, I worked for over three years in companies before we started Gilt. That was great for me because it gave me industry experience, gave me credibility in launching a start-up. So I think for someone who feels in their heart, while a student, I am an entrepreneur and I want to do something entrepreneurial, if you can find a great industry experience, don’t be afraid to do that for 1, 3, or even 5 years. Your career is going to be many years. You can always start up something in the future if you don’t have that idea [right now]. Now if someone has that idea, while they are a student, by all means go for it. It is a very exciting time and learning process,” said Alexandra. Click here for article at HBS Weekly Portfolio Company News 2009-11-23T20:52:54+00:00 http://matrixpartners.com/index.php/site/gilt_groupe_featured_in_businessweek_psst_private-sale_shopping_sites_are_h/ http://matrixpartners.com/index.php/site/gilt_groupe_featured_in_businessweek_psst_private-sale_shopping_sites_are_h/#When:15:24:40Z Gilt Groupe featured in BusinessWeek: “Psst! Private-Sale Shopping Sites Are Hot”Saddled with unsold merchandise amid the recession, makers of luxury goods are selling their wares through members-only shopping sites November 4, 2009 By Douglas MacMillan During last year’s bleak holiday shopping season, fashion designer Lauren Merkin greatly overestimated the number of handbags she’d sell in upscale retail stores such as Neiman Marcus and Bloomingdale’s. She found a good way to sell them elsewhere without consigning them to a bargain-basement rack that might tarnish the brand in the eyes of would-be customers. All year, she’s been selling the excess goods for half-price on the members-only Web site Gilt Groupe, during 36-hour sales that are hidden from the view of the general public. “What we’re selling is first-rung, but if it sits around at a sale I think the consumer gets the wrong impressions about the product,” Merkin says. Saddled with overstock from the retail recession, makers of luxury apparel, home furnishings, and other high-end goods are selling their wares at reduced prices through Gilt Groupe and other private shopping sites. Many of these companies help fuel pent-up demand by limiting membership, forcing would-be clients to park on a waiting list or be referred by existing members. Lure for Bargain-Hunting Fashionistas Luxury brands can use these members-only sites to hide markdown prices from retail shoppers willing to pay the full amount, while attracting scores of wannabe fashionistas willing to wait for haute couture at a low price. “The brands they offer are of such high quality, and because they’re at discount prices it makes them much more attainable,” says Meghan Donovan, a 24-year-old San Francisco resident who shops on Gilt.com. The private-sale model also makes sense for Gilt Groupe and other sites that act as middlemen, because they carry no inventory and earn a wide margin on sales. Combined revenue at Gilt Groupe, Rue La La, and Ideeli, three of the top four players in the U.S., is expected to exceed $300 million this year. That, along with sales at other private-sale sites, makes up a significant portion of the estimated $1 billion a year in online sales of luxury apparel, says Sucharita Malpuru, e-commerce analyst at Forrester Research (FORR). Online private-sale fever is spreading. In October, upscale department store Saks (SKS) held its own online “flash sale,” a 36-hour event open only to customers on its mailing list. Cable company Comcast (CMCSA) recently announced it’s getting into the space by opening Swirl, a private-sale site affiliated with its DailyCandy newsletter, which provides an insider’s guide to shopping and nightlife in cities such as New York and Miami. And on Oct. 27, e-commerce services company GSI Commerce (GSIC) said it will buy the parent company of Rue La La for up to $350 million, a deal that may see a range of GSI clients like Kate Spade (LIZ), Ecko, Calvin Klein (PVH), and Adidas (ADSG) lining up for private sales on the site. “Our brands want to sell a lot of inventory in a very quick period of time and they want to do it discreetly,” says Michael Rubin, CEO of King of Prussia (Pa.)-based GSI. U.S. Market Heating Up Rue La La, like Gilt Groupe and a few other private-sale players, was started in late 2007. But the business model dates at least to 2001, when French site Vente-Privee.com first took the common sample sales of high-fashion Parisian designers online. Vente-Privee.com has expanded to Germany, Spain, Italy, and the U.K., and has now worked with more than 600 brands in luxury apparel, wine, home decor, and other areas. In 2007, Boston-based venture capital firm Summit Partners acquired a 20% stake that valued Vente-Privee.com at about $1 billion. Dozens of copycat sites have sprung up in France, fueling a substantial e-commerce industry there. The U.S. market for private-sale sites may be just heating up. “It looks like these sites are growing revenues significantly faster than any other part of retail,” says JPMorgan (JPM) retail analyst Bryan Tunick. At specialty retail stores such as Abercrombie & Fitch (ANF), Coach (COH), and Tiffany (TIF), same-store sales—those of stores open at least a year—have declined an average of 5% to 7% this year, Tunick says. By contrast, at the top private-sale sites, sales are growing fourfold and fivefold a year, he says. Venture capital firms have begun placing bets in the space. “We think the market is quite large,” says Jeff Lieberman, a partner at Insight Venture Partners, which invested $10 million in members-only shopping site HauteLook in May. Gilt Groupe had sales of more than $85 million in fiscal 2009, which ended in June. The company says it’s on track to generate sales of $400 million in fiscal 2010. Analysts say it’s a strong candidate for an acquisition or a public offering. “If Gilt doesn’t get acquired, it would be an interesting” IPO, says JPMorgan’s Tunick. Existing e-commerce players like Amazon.com (AMZN) and eBay (EBAY), as well as brick-and-mortar retailers like Saks and Macy’s (M), are likely suitors, says Gartner (IT) analyst Gene Alvarez. Expanding into New Areas Just as the recession has contributed to gains by private-sale sites, signs of recovery in consumer spending may dampen the sites’ prospects. “It will be tougher for the private-sale sites to get merchandise,” says designer Merkin, who expects to sell off her remaining 2008 holiday inventory during a sale on Gilt Groupe this holiday season. Merkin and other brands expect more shoppers to buy full-price items, and are more closely tying the number of products shipped to expected demand, resulting in lower stockpiles of unsold goods. Still, private-sale sites in the past year have expanded into new areas, such as online outlets for travel packages and marked-down home furnishings. The sites are a good showcase for young brands looking to get exposure and acquire new customers. “The online sale is marketing for new customer acquisition, but marketing that does not require an investment,” says Annbeth Eschbach, president and CEO of Exhale, a New York-based chain of spas that offers discounted massages, facials, and manicures on Rue La La. Others are looking to distinguish their sites by tying online sales to offline events. Billion Dollar Babes, a Hollywood sample-sale business bought by e-commerce company OneStop Internet last year and brought online, still holds live sales in Los Angeles, San Francisco, Chicago, and New York, replete with DJs, bars, and personal makeovers. Says John Tomich, OneStop Internet co-founder and CFO: “Everybody’s got excess merchandise. It’s the dirty little secret of the industry.” For the growing ranks of members who shop private-sale sites, the secret is out. Click here for article at BusinessWeek.com Portfolio Company News 2009-11-04T15:24:40+00:00