All posts in “Entrepreneurship”

Markett will get people paid to talk about their favorite tech companies

Franky Bernstein loves startups. His latest company, Markett, is born out of that love, and his innate desire to share tips about those innovative new startup companies with the wider world.

The 24-year-old serial entrepreneur first was bitten by the entrepreneurial bug while attending Loyola Marymount University, where, as a representative in student government, he began looking for a way to cut down on drinking and driving among the student body.

He found Uber. The ride-hailing service embraced the idea of a promotional deal for LMU students and Bernstein became a commission-based ambassador for the student body.

From there, Bernstein expanded his network, building a team of student ambassadors for the company’s ride-sharing app that were making hundreds — then thousands — of dollars per week.

That exposure led to the creation of Markett, Bernstein’s latest venture that connects everyday users with brands and gives them a way to make money by shilling for the companies they love.

After working with Uber, Bernstein reached out to Lyft and talked to Josh Renfro, the director of business development there. Working with Renfro, while still a student, Bernstein helped train thousands of brand ambassadors nationwide — and even converted several Lyft drivers into brand advocates.

“Working with Uber and Lyft planted the seed of entrepreneurship,” says Bernstein.

Indeed, Bernstein was so inspired by his brush with the startup world that he launched his own company. Bernstein’s first foray into the wild world of startup businesses was Interwallet (now called Maya), a bill-pay kiosk network for the underbanked.

Now, with Los Angeles-based Markett, Bernstein wants to give everyone the same opportunity he had — the ability to make money talking up the new startup services that they love.

We want to be the largest marketing company in the world that doesn’t spend any money on marketing.

— Franky Bernstein, chief executive, Markett

“Being able to work with Uber and Lyft isn’t easy to do, and I want to provide more access to that,” says Bernstein. Beyond that, Bernstein wants people to be able to make money talking about the products they love and give brands an opportunity to achieve more of a direct relationship with their customers.

To achieve that vision the company has raised roughly $2 million in venture financing from investors, including KEC Ventures, Amplify.LA, Luma Launch, Wavemaker VC, Tiller Partners, Building Blocks, and angel investors like Jamie Patricof, Michael Kane, Joseph Varet, Varun Pathria and John St. Thomas.

With the company’s launch, ambassadors can sign up to work with venture-backed companies like Airbnb, ThriveMarket, FanDuel, The Bouqs, Zeel and Winc.

Bernstein chose those companies because of their approach to their customers and their willingness to reward their brand ambassadors.

“Every consumer brand wants to increase word-of-mouth marketing and explore alternative marketing channels to Facebook and Google,” Bernstein wrote in an email. “Markett is seeking to redistribute a piece of these brands’ ad budgets and put it into the pockets of their loyal customers.”

Markett isn’t the first company to try this approach. A company called BzzAgent launched in 2001 to bring brand ambassadorship to the masses. The company, which raised around $14 million in venture funding, was acquired in 2011 for around $60 million.

The legacy of the viral marketing campaign remains… but for Bernstein it’s not about marketing… it’s about truly connecting power users to the companies they love, and having those companies reward their everyday spokespeople for the work they’re doing.

To ensure that he achieves this vision, Bernstein has committed to giving nearly 100 percent of the marketing budgets that Markett’s partners spend on the program to the Markett marketers. Any profits are dedicated to bonuses, Bernstein tells me. Eventually, the company intends to take a cut of every transaction.

“We want to be the largest marketing company in the world that doesn’t spend any money on marketing,” Bernstein says.

Amazon Starts the Clock on Prime Day Hoopla

Amazon has set its third annual Prime Day promotion for July 11, promising its biggest-ever promotion with 30 hours of deals starting at 6:00 p.m. PT on July 10.

The company has expanded the event to China, India and Mexico, to reach a total of 13 international markets. Amazon will go head-to-head with some of its most important international rivals, including Chinese e-commerce player Alibaba, as overseas sales have become an increasingly important share of the e-commerce mix.

“Every part of our business is working to deliver more deals to a record number of shoppers,” said Greg Greeley, vice president, Amazon Prime.

Amazon is offering the lowest prices in 365 days on hundreds of thousands of deals, with millions of items in stock, according to spokesperson Julie Lawson.

Although the company has increased the number of deals from last year and increased the available inventory, it’s likely that some items will sell out during the promotion, she told the E-Commerce Times.

Prime Directive

The promotion is considered a critical part of Amazon’s strategy to grow its Prime membership, which has doubled over the past two years to 80 million members, according to Michael Levin, a partner at Consumer Intelligence Research Partners. Prime members spend an average of US$1,300 per year, compared with the average $700 that non-members spend.

“The merchandise bump, while nice, is barely material to their quarterly results,” Levin told the E-Commerce Times. “The Prime member bump is much more important, given how sticky Prime membership can be.”

Amazon last summer announced that its second annual Prime Day was the biggest single sales day ever, with sales up 60 percent globally compared with the prior year promotion.

Despite those strong results, Prime Day has its critics.

“I’m not a big fan of Prime Day,” said Paula Rosenblum, a partner in RSR Research.

“I tend to view it as an age-old retail tradition, which is to drive traffic at a time when people would otherwise be at the beach. But it’s rather grand just for that,” she told the E-Commerce Times.

The promotion has done a good job in generating new Prime membership, Rosenblum conceded.

“It may generate a great deal of momentary buzz, but the deals that Amazon offers are generally pretty nominal — and interestingly, pretty hard to find,” Michael Jude, a research manager at Stratecast/Frost & Sullivan, told the E-Commerce Times.

It remains unclear how rivals like Walmart plan to respond to this year’s event. Walmart last year offered five days of free shipping and its own series of discounted merchandise, and it since has acquired rival and taken other steps to challenge Amazon in the e-commerce space. A Walmart spokesperson was not immediately available to comment for this story.

Amazon intends to emphasize its small business partnerships during the event; 40 percent of the lightning deals will come from small businesses and entrepreneurs.

Partner businesses tripled their year-over-year orders during last year’s Prime Day promotion, according to Amazon.

Amazon Exclusives

Amazon plans a series of special incentives for its most loyal customers:

  • Prime members with Alexa voice-controlled speakers like Amazon Echo, Echo Dot, Echo Show, Amazon Tap or compatible Fire TV or Fire tablets will get special exclusive offers.
  • Prime members with the Amazon app will be able to get special previews with deal alerts and can shop and track them at home or on the go.
  • Prime members in China and Mexico will be able to shop for local deals as well as deals in other countries using the Amazon Global Store.
  • Amazon will offer special deals every day leading up to July 11.
  • Amazon members that stream a video for the first time will get a $10 credit.
  • Prime members can save up to 40 percent on Kindle Unlimited memberships, which allow unlimited reading of more than 1 million titles.
  • Prime members can try Audible for 40 percent off for the first six months, or only $8.95 per month.
  • Prime members can save up to 35 percent off food and household items from the Prime Pantry.
  • On July 11, Amazon is offering Prime members a sneak peak of the second season of The Grand Tour.

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain’s New York Business and The New York Times.

McClure steps back at 500 Startups after internal sexual misconduct investigation

Dave McClure, the founder and public face of 500 Startups — one of the most prolific and best-known accelerator programs for early stage companies — has stepped away from managing the firm he set up and largely built in his own image.

McClure is the latest venture capitalist to be ensnared in the industry’s investigations into alleged sexual misconduct by investors with women that they were supposed to be mentoring or backing financially or simply professionally.

News of McClure’s departure was first reported by The New York Times.

Since revelations of sexual misconduct at the venture capital firm Binary Capital (by its co-founder Justin Caldbeck) first appeared at the Information, basically unraveling the firm, other women entrepreneurs have come forward to share their own stories of harassment (and in some cases, assault).

Chris Sacca, another storied investor whose early bets in companies like Uber have made him a millionaire several times over, was also brought up in The Times’ report. Sacca, who stepped away from investing earlier in the year, issued what amounts to a public apology in a Medium post earlier today for his behavior.

Sacca writes:

…as more and more brave women have come forward to share their own tales and experiences from the hostile environment of the tech world, it has become clear to me there is a much bigger underlying issue in this industry, and I am realizing at times I was a part of that.

Over the last week, I have spoken with friends, friends of friends, heard from people from my past including stories of how I’d behaved, and read incredibly thoughtful and courageous essays. I’ve learned that it’s often the less obvious, yet pervasive and questionable, everyday behaviors of men in our industry that collectively make it inhospitable for women.

Listening to these stories, and being reminded of my past, I now understand I personally contributed to the problem.

I am sorry.

While Sacca has stepped away from investment, his former partner, Matt Mazzeo, had jumped over to Binary Capital and had been planning to join the firm as a partner before allegations there unraveled the firm.

Meanwhile, here’s the statement from 500 Startups’ new chief executive, Christine Tsai, about the changes there:

In recent months, we found out that my co-founder Dave McClure had inappropriate interactions with women in the tech community. His behavior was unacceptable and not reflective of 500’s culture and values. I sincerely apologize for the choices he made and the pain and stress they’ve caused people. But apologies aren’t enough without meaningful actions and change.

Because of this, we made the decision a few months ago to change the leadership structure at 500. I took on the role of CEO, which involves directing the Management Team and overall day-to-day operations of 500.

Dave’s role has been limited to fulfilling his obligations to our investors as a General Partner. In addition, he’s been attending counseling to work on changing his perspectives and preventing his previous unacceptable behavior.

The actions we took weren’t easy, but it was critical to us that we uphold our culture and values – even if it meant asking my co-founder to step aside in order for 500 to grow stronger.

That said, I’ll echo what many are already saying. As much as we want to be part of the solution, we clearly have also been part of the problem. Undoubtedly there are ways I could have done more or acted sooner.

The change I want to see is a startup environment where everyone, regardless of gender and background feels welcome and safe. Where sexual harassment or discrimination will not impede great talent from producing great impact.

How do we make this change happen? How can we be that change we want to see?

It starts with me, and the work 500 started on and will continue to do. I am far from perfect, and 500 is far from perfect. But 500 is much more than one person, and we will continue building on our momentum of change. We have a lot of work to do.

Featured Image: Jared Goralnick/Flickr UNDER A CC by-ND 2.0 LICENSE

Naming the Ephemeral

So much is happening as we approach the end of Q2 — our industry’s busiest quarter, at least by some measures. I’m flying around seeing things but not always able to comment from a middle seat on a red-eye. So this piece is an attempt to catch up and set some markers for the traditionally slower summer.

I’ve been searching for a word to describe a new category I see. You can call it various things, like “on-demand services” or even “Service as a Service,” which somewhat distinguishes it from “Thing as a Service,” such as SaaS, but it’s confusing.

Here Now, Gone Tomorrow

SaaS has led the way in Things as a Service. While it’s a perfectly good descriptor, the rapid evolution of the IoT — that is, Internet of things — has introduced some confusion. Things as a Service describes any traditional goods delivered as a service, such as software or a car or a cellphone. Services delivered as services often don’t have a physical component — or that component is of a different type, perhaps not even human.

For instance, you can get Software as a Service, but the training or consulting that needs to go with it is very different. First, it’s delivered by people who show up, do a job and disappear. You don’t employ them, and you certainly don’t own them, and their work product is pure service. Often, they leave behind only thoughts in others’ minds or software code.

Another example — my favorite right now — is earthmoving. Various makers of things like excavators and bulldozers now offer Earthmoving as a Service, obviating the need to purchase a big device. The difference is that the service is intentionally and decidedly temporary.

These companies calculate the amount of earth moved (to draw a simple example) and charge by a meaningful metric, such as tons or cubic yards moved. These are short-term services; the equipment and people to run it show up one day, do a specific task, and then are gone. Or perhaps they are idle for one week per month — how do you charge for this?

In a SaaS model, you might buy a specific number of seats per month and that’s it. If your people don’t use the system, too bad. However, in the earth-moving example, an idle machine still has overhead for a vendor. How does the vendor capture revenue when the device is idle?

It’s not hard to do, but it gets into some branching logic that typical billing systems might not cover. So, very quickly, we see that a Service as a Service is different from a Thing as a Service. What do you call it? And what’s the name of the business model? And how do you account for these services?

My thoughts include words like “precision services” or “discrete services.” Each conveys a sense of the ad hoc, a temporary, specialist thing that won’t become part of the status quo in the sense that it will be gone at some point. Just think of the earthmoving equipment required to build a tall building and understand that it’s not there any more once the building is completed.

So that’s one thing I’ve been noodling on. Send me a note with your thoughts.

Oracle’s Infrastructure Business

Also on the docket are Oracle’s results for the last quarter. It’s only important to look at the direction, which is up and to the right of the graphs, to know that the company has hit its stride on cloud computing.

I am happy for Oracle and previously have written that its model is suited uniquely to its customer base. It includes all phases of cloud computing — infrastructure, applications and platform — to support customers in various stages of the move.

Oracle’s big footprint attracts lots of competition — from Amazon’s AWS at the infrastructure end to Microsoft, Salesforce and SAP on applications and platform. I am not even sure if they all agree on what platform is, which is important. It tells us that the tip of the spear is platform and that it’s the competitive landscape. It’s also the metric that we need to use to analyze and understand the quality of any software vendor’s earnings.

Infrastructure is heading toward pure commodity status, and if it has not yet arrived there, it’s getting close. Ironically, however, you can’t be wildly successful in the other phases of the game if you don’t have a credible infrastructure offering.

So you have to look with great interest at Oracle’s infrastructure number which equals just north of US$400 million on what I believe is a $1 billion cloud base. Is it a good thing? I think it’s a necessary thing, and it might set up the company to do well in other phases. That jury is still out, though.

Who’s Afraid of AI?

Finally, I am in complete disagreement with a piece on artificial intelligence in The New York Times Sunday Review: “The Real Threat of Artificial Intelligence” by Kai-Fu Lee. I’ve seen the argument before: AI will swallow up jobs, leaving a large and unemployable group of people who will require some form of guaranteed income support. Rather than offer an opinion, let me supply an analysis and some data.

Massive income assistance never has worked well in human history. You might go all the way back to the Roman Empire and recall the idea of bread and circuses as an example of such welfare — but if you do, you also need to factor in that it didn’t work out well for guys named “Caesar.” In modern times the top earners always have objected to the confiscatory taxes needed to make such a scheme work.

This kind of analysis is too dependent on straight-line thinking. What’s missing is any sense of the dynamism of free markets in a democracy. Free markets enable innovation and entrepreneurship, and with them come new industries and new jobs.

I know things look kind of bleak for people with high school educations or even people with BAs in literature or philosophy. Still, the fact of the matter is that since the Industrial Revolution there have been five ages when an industry or a clutch of them took off and did really well for a few decades, only to fall back to earth later, killing some of the jobs it created in the name of efficiency and commoditization.

What we’re going through with AI is cyclical and not one of a kind. I just wrote a book about it, and it will be out in September — a time when we come back from the beach, put our game faces on, and rediscover that a machine really can’t do what we do.

Denis Pombriant is a well-known CRM industry researcher, strategist, writer and speaker. His new book, You Can’t Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. He can be reached at

VA Gives Thumbs Up to Commercial IT Software

By John K. Higgins
Jun 30, 2017 5:00 AM PT

A U.S. Department of Veterans Affairs decision to pursue a new direction in processing health records has created a highly visible endorsement of the use of commercial off-the-shelf (COTS) information technology by federal agencies. President Trump cited the VA’s action as an example of the administration’s commitment to vastly improve federal IT management.

The VA earlier this month awarded a contract to Cerner to develop an electronic health record (EHR) system for the department. The Cerner program will replace the existing VA patient data system, known as “VistA,” which was developed in-house and has been in use for at least 30 years.

The sheer size of Veterans Affairs, which serves 8.7 million veterans through 1,700 facilities, makes the decision to use an outside contractor noteworthy, as federal agencies strive to meet recently introduced initiatives promoting the outsourcing of information technology.

For vendors, the policy turn indicates more potential in the federal market. VA did not immediately disclose the value of the Cerner contract, but it could amount to several billion dollars. The U.S. Department of Defense in 2015 awarded a similar medical records contract to a consortium of companies including Leidos, Cerner and Accenture, which was valued at US$4.3 billion. DoD noted that the eventual cost of the program could reach $9 billion.

Time for a Change

The VistA system, which VA personnel designed in their off hours decades ago, has been heralded as a pioneering effort in EHR management. The program became a template for both government and private healthcare providers.

However, VA Secretary David Shulkin recently decided that it would be more appropriate for the agency to concentrate on healthcare and leave data processing to commercial specialists.

The department’s system “is in need of major modernization to keep pace with the improvements in health information technology and cybersecurity,” Shulkin said.

“Software development is not a core competency of VA,” he added.

“I said recently to Congress that I was committed to getting VA out of the software business, that I didn’t see remaining in that business as benefiting veterans,” Shulkin said, “and because of that, we’re making a decision to move towards a commercial off-the-shelf product.”

In addition to the need for modernization, the shift to the Cerner offering was triggered by the VA and DoD’s shared goal to create a seamless health record that would follow service personnel from active duty through veteran status.

After spending hundreds of millions on the effort, the agencies abandoned the project, largely because of the inability to provide proper interoperability functions, according to Shulkin. DoD then engaged the consortium of Leidos, Cerner and Accenture to provide EHRs for the military.

The prudent course for VA would be a similar approach based on the same technology, Shulkin concluded. As a result, the Cerner contract was issued as a sole source, noncompetitive transaction that potentially will assure compatibility by way of Cerner’s Millenium offering as the core technology for both the DoD and VA.

Another benefit of the sole source award is that it will save time, given that the DoD competitive process took more than two years from the initial Request for Proposals to the final contract award, Shulkin noted.

The emphasis on commercial off-the-shelf solutions began late in the Obama administration.

“Agencies need a more centralized and collaborative software management approach so that they can optimize utilization of commercial and COTS software licenses and maximize the use of best-in-class software purchasing and management solutions,” Anne Rung, then U.S. chief acquisition officer, said last year.

The effort to upgrade federal IT has been reinforced by the Trump administration.

“Our goal is to lead a sweeping transformation of the federal government’s technology that will deliver dramatically better services for citizens [and] stronger protection from cyberattacks,” the president said in a recent meeting with technology executives.

“VA Secretary Shulkin recently announced that we’re upgrading technology to allow the seamless transfer of veterans’ medical records from the Defense Department, which has been a huge problem for decades and decades for our great veterans,” Trump said.

Conversion Challenges

The VA could encounter significant hurdles in implementing the COTS system.

“Many COTS solutions are built around private sector healthcare models and workflows with zero direct application to how the VA actually works, while VistA was developed specifically to meet VA’s needs according to its best practices,” noted Deanne Clark, senior health informatics consultant for DSS, in an online post.

Many private sector COTS vendors of EHR programs have failed to meet federal interoperability standards, she pointed out.

Additionally, the VistA system, as an open technology government-developed program, has been adopted widely for use in the private sector health system, Clark said, and it received a top ranking by 20,000 clinicians.

The VA will face challenges switching to an unproven system while simultaneously maintaining the existing VistA system during the conversion period, she said.

Despite those misgivings, Clark’s company, which has been a supporting contractor to VA, hopes to remain steadfast in that role.

“We want to see VA succeed at this effort,” she told the E-Commerce Times.

While the VA will switch out of VistA, Clark still sees value in the private sector version of VistA that will remain a service provided by her company.

“We support VA and our veterans, but we will continue to innovate, enhance, and modernize VistA for our present and future commercial clients, and hopefully throughout the duration of VA’s transition to COTS,” she said.

Multiple factors went into VA’s choice to use the COTS approach, Clark acknowledged.

“I know that Secretary Shulkin based the decision on a number of factors, and I am not aware of all of the information he had available to make that decision,” she said.

Contracting Competitors Busy at VA

While potential competitors for the VA contract could be miffed that the department used a sole source procurement, several seem satisfied with their existing business with the department.

For example, VA early last year gave 21 companies spots on a multiyear IT support contract known as “T4NG,” with a potential value of $22 billion.

The department in 2015 awarded a $624 million IT contract for health scheduling services to a former Lockheed Martin unit that is now a part of Leidos, along with Epic Systems, a major health IT provider.

“We remain focused on and committed to our mission of delivering a world-class electronic health records [system] to the men and women of our Armed Forces,” said Leidos Senior Vice President Jerry Hogge.

“Our MHS Genesis solution was designed with system interoperability in mind. The VA Secretary’s decision to accelerate getting the DoD and VA on a common electronic health record system represents a profoundly important milestone for our nation’s veterans, their families and beneficiaries,” he told the E-Commerce Times.

Epic declined to comment directly on competitive issues but noted its continuing work with VA.

The company is “proud to serve our veterans both through the VA scheduling project and through our customers that care for millions of veterans across America,” Epic said in a statement provided to the E-Commerce Times by spokesperson Meghan Roh.

In fact, there is a good possibility that Cerner might enlist other companies to support the COTS contract with VA.

“We look forward to sharing more information as we build the team of innovative and experienced partners that will join us to complete this vital work,” Cerner said in a statement provided to the E-Commerce Times by spokesperson Dan Smith.

In cooperation with the DoD, the VA project will improve interoperability, Cerner said, as well as the creation of a “single longitudinal health record that can facilitate the efficient exchange of data” for current and former service members.

John K. Higgins has been an ECT News Network reporter since 2009. His main areas of focus are U.S. government technology issues such as IT contracting, cybersecurity, privacy, cloud technology, big data and e-commerce regulation. As a freelance journalist and career business writer, he has written for numerous publications, including
The Corps Report and Business Week.
Email John.