Google just acquired Lab Pixies, one of my portfolio companies!

I am glad to report that Google just acquired Lab Pixies, one of my portfolio companies. Lab Pixies was the first investment I had made in Israel. The impetus for investing in Israel came from my friend Mark Gerson who decided to look for global Internet investment opportunities a few years ago and who was kind enough to invite me to participate. He teamed up with Yaron Carni who became our investment opportunity lead generator and co-investor in Israel and they invited a bunch of our entrepreneur friends to invest alongside him such as Auren Hoffman and Gilad Carni.

When I met the Lab Pixies team, I was seduced by the company: the team led by Ran, Nir, Oded and Udi was fantastic. They had crazy amounts of traffic (almost 1 billion page views per month) in the right countries (Western Europe and the US). Their users loved them. Moreover, their products fell squarely in a rapidly growing ecosystem: social networks and mobile applications. They were generating very little revenues at the time which they supplemented by building apps for third parties, but I did not feel it would be an issue given the categories they were in.

I had actually been seduced by high traffic companies in the past, but those deals turned out not to be good investments: the traffic was in low value countries which proved impossible to monetize and the products were not nearly as good. I felt (and hoped) this time would be different.

In this Ran and the team did a fantastic job at rapidly moving from offering utility apps on iGoogle to offering more social apps to building iPhone and Android apps. Nudging them to do that transition is the one thing I can take a bit of credit for along pushing us to make the investment. By the time of the sale, the company had moved away from building apps for third parties and was generating significant revenue and was very profitable.

It makes perfect sense for Google to acquire them: they make the most popular iGoogle widgets and some of the most popular Android apps. In a way I am sorry to sell so early. The company and team are great and the category is only becoming bigger. However, the team loved the idea of working for Google and I can’t complain about having such a good return just two years after my original investment. It’s also Google’s first acquisition in Israel!

I should really say I was impressed by all the work that Mark and Yaron put into making this deal happen. Yaron who was already on the board became head of business development. Mark was integral in the negotiations with Google. They have been the most entrepreneur friendly and helpful investors I ever met and I hope this deal will lead to many more such deals to come our way!

As a side note, since the book Start-up Nation: The Story of Israel’s Economic Miracle came out, it definitely seems that the Israeli Internet market is heating up. Dan Senor, the author of Start-up Nation was also an investor in Lab Pixies 🙂 I look forward to seeing what next great startups come out from Israel!

BTW You can read the Techrunch article on the deal at:

French Entrepreneur Dinner

My entrepreneur dinners have become somewhat of a tradition on my visits to Paris. They allow me to reconnect with my old Internet friends from the bubble days and meet the new generation of French entrepreneurs.

This time we were not well served by the logistics. While the food and setting of the restaurant La Plage on the Seine in the 15th were fantastic, it was noisy, the long rectangular table did not help conversations and the restaurant was not able to accommodate the fact that 15 people showed up while we had booked for 10. Next time, I will make sure we have a private room somewhere with a round table.

I also wish to offer my sincere apologies to the entrepreneurs present for having to absent myself from the proceedings for so long for a phone call.

Fortunately, the inconvenient setting and my long absence seemed to be made up for by the number of new faces who showed up making the conversation all the more interesting.

In the front right of the photograph, you can see James Blouzard, who headed in France and now runs Wonderbox a very successful European online gifting company focusing on life experiences with nearly $100 million in revenues! He was joined by his wife Bertile Burel who co-heads Wonderbox and cannot be given enough credit for putting up with 14 men! I have actually known James since I was around 10 years old as he also lived near Nice and shared my passion for remote controlled planes. We reconnected over a common love of Age of Empires, Internet startups, adventure travel and martial arts in 1999 and have kept in touch since.

In the front left of the picture, you can recognize Aymeric Chotard who is also an Internet old timer. We met in 1999 while he ran an online barter site, In 2000, I became an angel investor in his company and provided him with a business plan to launch a type site in France. I actually don’t think I helped all that much as I seem to remember he was already headed in that direction, but I like to believe I helped a little. In any case, after a long hard slog which took every bit of ingenuity and perseverance he could muster, his new site,, became successful and he sold it to Les 3 Suisses. He recently left Les 3 Suisses and has been taking a well deserved break between Bali and Paris while making real estate investments.

To James’ left you find Gael Duval. Gael was one of the co-founders of BLL which was the online ad agency which did all the online marketing for my first Internet startup, Aucland, my southern European copy of eBay. Gael can also take credit for finding the name Aucland. Aucland was originally going to be named Alibaba, but the Chinese B2B marketplace company ended up taking the name. Aucland was then going to be called OLX, but two weeks before the launch one of our competitors named Quixel renamed themselves QXL. We felt the names were too close and that we would be accused of plagiarism so I kept that name for another day. Gael came up with the name Aucland. It was available and easy enough to spell so we ran with it. Gael sold BLL to CLM/BBDO and also introduced us to them. They ended up producing for us an amazing TV ad which won a Silver Lion at Cannes’ advertising festival. After BLL, Gael created UnSoixanteDixSept, another online ad agency and Nextedia a leading online media buying agency sold to Lagardere which proved to be an even greater success. For the past few years he has been running which is the French equivalent of MoneySuperMarket.

To Gael’s left, you can see my dad who has been an important advisor and thought partner during my entire life. His advice proved especially invaluable while I was running Aucland and Zingy. My dad is also an entrepreneur with expertise in a much more staid but very lucrative industry: pest control. During the past 20 years he did a rollup of pest control business in Florida, Arizona and Puerto Rico. His company, Oliver Exterminating, now dominates those markets.

Luis Talavera sat to Bertile’s left. It was the first time I had met Luis, but I feel a sense of kinship as he shares my love of adventure travel which in his cases expresses itself through a love of climbing. He is currently training to climb one of the world’s highest peaks in the Himalayas. He chose not to climb Everest because 5% of the people who climbed Everest in the past 25 years died. Only 1% of those who climbed the peak he is going to attempt to climb died. Clearly a very safe choice 🙂 I still can’t believe Gladwell thinks entrepreneurs are not risk takers! Luis worked for Microsoft for 15 years, moved to Paris to enjoy its quality of life, started a new company which he sold a few years ago to EMC and has recently advising one of Bessemer’s portfolio companies.

Martin Destagnol sat to Luis’ left. We had exchanged a few emails, but had never met. Martin has been getting a lot of press recently as he created Plyce, a slightly different take on the FourSquare model which was just funded by my friends Marc Simoncini and Jeremie Berrebi (and Xavier Niel though I don’t know him).

Jean-Xtophe Ordonneau from Melcion sat to Martin’s left. I have met Jean-Xtophe a few times over the years and he’s always been very thoughtful. He is a strategic consultant to a number of Internet CEOs such as Fabrice Boutain, my good friend and CEO of Anxa. He also does M&A and financing advisory work.

Hubert Roche, the CEO of Netfective sat to Jean-Xtophe’s left. I met Hubert briefly when I was in Paris last December for Leweb. He heard one of my radio interviews on BFM and reached out to me. Once I met him it was clear we were like minded. His company successfully provides software that automates the building of software. For all his success, he is extremely humble and gave us a good sense of perspective when he estimated that the restaurants we were dining in probably did $10 million in revenues per year and that even successful startups only really amounted to a few Paris restaurants in terms of revenues!

In the far left corner you can glimpse Jean-Laurent Wotton. Jean-Laurent was one of the first programmers at Aucland and was probably my favorite programmer to work with. He had as much dedication as anyone in the company! If I needed anything done urgently, I could always go to his office and work on the product with him. He patiently indulged my desire for all the pixels to be perfectly aligned and for the product to both look and be fantastic. It has been a pleasure to see him grow professionally over the years and to broaden his horizons. He joined Google in London many years ago managing partner relations for most Google tools and APIs (Maps, etc.) and is currently completing an MBA at London Business School. I can’t wait to see what he does with his joint technical and business experience!

Laurent Kretz sat to my right. After a few startup attempts, he is launching a new startup Submate to help people find things to do and people to meet near where they live and work.

Pascal-Emmanuel Gobry sat to Laurent’s right. He’s an editor for Silicon Alley Insider and StartupDigest France as well as being a consultant.

Franck Le Ouay sat to my left. He is one of the founders of Criteo a successful ad retargeting company which he created with Romain Niccoli and Jean-Baptiste Rudelle. While I had not met Franck until that dinner, his partner Jean-Baptiste was the founder of Kiwee, France’s largest ringtone company and one of my inspirations for Zingy showing once again how small the Internet world really is!

I am only sorry that my friend Minter Dial who is part of my extended family had to leave as the table was overflowing with people. Minter’s dad was the ex-husband of my aunt. Minter has always been one of my favorite people. He’s extremely smart and sporty. He always proved a worthy adversary in tennis and padel. He worked for Loreal for many years, in recent years trying to bring them to the Web. More recently he has become a successful and much thought after consultant to CEOs with his company TheMyndSet and a thoughtful blogger.

Between the old timers and the new faces, it was quite clear that the French Internet community is thriving. I am looking forward to the next dinner!

A Prisoner of Birth is Jeffrey Archer’s best book in years!

I grew up loving Jeffrey Archer’s epic books – Kane & Able, A Mater of Honor, Not a Penny More, Not a Penny Less, As the Crow Flies… I read all of his books including all of his fantastic short stories. However, during the past few years I have found his books wanting – cardboard characters, simplistic plots and mundane stories.

Fortunately, A Prisoner of Birth reads much more like Jeffrey Archer’s earlier works and is highly entertaining! It’s a modern retelling of The Count of Monte Cristo. Like in most Jeffrey Archer books the story is utterly predictable and the characters very black and white. I did not know what the book was about, but within a few pages I could have told you everything that going to happen at every point of the story. Interestingly enough, neither limitation hindered my enjoyment of the book. I knew what was going to happen, but I really wanted to know how it was going to happen!

The first hundred pages which set the stage for the rest of the story were too long and predictable for my taste, but don’t let them fool you. The minute Danny ends up in jail the story really picks up.

Pick up the book this summer, it is perfect beach reading. It will also serve its purpose well if, like me, you are waiting a few days for the volcanic ashes to clear to go back home!

How to Train your Dragon is the best movie of the year so far!

I had the pleasure of seeing How to Train your Dragon in 3D IMAX last Friday. The movie looks great, but much more importantly the story is great. Even though the movie is completely predictable, the story is so well done, the dialog so good and the scenes so touching, that it’s a must see movie. I actually cried a few times! Maybe I was overly emotional because I was sleep deprived (a grown man needs an excuse after all :), but maybe it was that good and touching.

It’s definitely the feel good movie of the year so far!

Three Cheers for Jason Calacanis!

I don’t really know Jason. I sublet some office space from him in the early days of Zingy when he was running Venture Reporter, but we never took the time to have a meaningful conversation. However, I am very impressed by his initiative to promote entrepreneurship with the Open Angel Forum.

Open Angel Forum brings together carefully screened entrepreneurs with angel investors without charging either side! Charlie O’Donnell, who is an entrepreneur in residence at First Round Capital and runs a great mailing list with everything noteworthy happening every week in New York tech, invited me to the first Open Angel Forum event in New York last night. He co-headed the event which took place at DogPatch Labs’ offices.

The event was very well done! Six startups presented and there were twenty or so angels in the room. The format worked well: 1 hour of informal chats from 6-7, 2 hours of presentations from 7-9 with a break for burgers, fries and beers and more networking and informal chats after the presentations. The presentation format was extremely effective: the entrepreneurs declared upfront how much they were raising and on what valuation. They then gave a 5 minute demo (no Powerpoint presentations allowed) and did 5 minutes of Q&A. The presentations & Q&A were exactly the right length.

I had never heard of any of the 6 companies (and actually liked one of them) or met half the angels in the room, really highlighting the importance of the event.

I look forward to going to their next events!

My speech at TEDx Paris (in English)

Last January, I was privileged to be invited to speak in French at the first TEDx Paris. They asked me to speak for 10 minutes about my life as an entrepreneur and my love of entrepreneurship. I had already spoken on this topic in Paris at LeWeb, but it was in English so they asked me to give a similar speech in French. You can also find a translation of the notes I prepared for the speech below:

I want to tell you a story. I think I am the luckiest man in the world!

In 1984, at the age of 10, my parents bought me my first computer. Thus started a long love affair with technology. In high school I built computers from spare parts and sold them to my classmates. At Princeton University, in my free time, I built a small company exporting computer equipment from the US to Europe.

After college, I worked as a consultant for McKinsey & Company in New York. Two years later, the opportunity of a lifetime presented itself: the Internet bubble started inflating and the world disproportionately valued what little talent I had: youth and computer expertise. I was at the right place at the right time with the right skills.

I left McKinsey and sold everything I had to start the adventure! I faced a dire problem: not being particularly creative, I did not have a new idea to bring to the world. I then recalled a quote by Picasso: “Smart people plagiarize, but geniuses plunder and steal!” You can see on the screen behind me to what extent Picasso and Matisse were stealing from each other. Picasso’s quote is not particularly original either as it is inspired by an almost identical quote by Oscar Wilde. As stealing seemed to work for Picasso and Matisse, I decided to copy them and to steal American ideas to bring them to the rest of the world. Given that stealing has a negative connotation, I coined the concept “international idea arbitrage”.

I studied all ideas that were successful in the US to see which ones I could bring to France and Europe. To select the right one, I defined 9 business selection criteria. I looked at Amazon, Priceline, Yahoo, E*TRADE before choosing eBay’s online auction model. My first company, Aucland, was born!
The experience was incredible! The company had up to 150 employees in 5 countries and was one of the market leaders. Even if that first experience ended up as a failure when the Internet bubble blew up in 2000, it was obvious I would remain an entrepreneur.

It is hard to imagine the joy of entrepreneurship until you actually become an entrepreneur. The freedom of thought and imagination is incredible. It is only matched by the pride you feel from creating something from nothing, from giving opportunities to your employees and to receive thank you letters from your customers. Having felt such sensations, it was impossible to consider doing anything else!
I was still not creative and went back to my 9 business selection criteria and did an arbitrage in the other direction. I noticed that the market for mobile content was more advanced in Europe and Asia than in the US and decided to bring cell phone ringtones from these regions to the US with a new company: Zingy.

What is amusing is that I met the same skepticism bringing this idea to the US that I had met while bringing auctions to France. Where they told me only these crazy Americans would buy online, Americans told me only Europeans, Japanese and Koreans would be crazy enough to buy ringtones for cell phones. If there is one thing I learned after all these years is that ideas which work in one country work in other countries. Despite cultural differences, human beings are quintessentially similar in all countries: we want to communicate, be entertained and give meaning to our lives.

That said, given the first three extremely difficult years with Zingy, I almost confirmed the skeptics’ analysis! Raising money in 2001, after the Internet bubble deflated, had become impossible. I had not even finished the first sentence explaining my idea that every venture capitalist had hung up! I ended up investing, little by little, everything I had in Zingy and we almost did not make it! I could not make payroll or pay my rent 4 months in a row! When you stop paying people, something amazing happens: they stop showing up for work 🙂 We went from 23 employees to 7. Fortunately, the company finally became profitable in August 2003. We were saved!

The failure with Aucland and the quasi-failure with Zingy completely changed my relationship with risk. There is no risk or at least the consequences of failure are much less worse than one can imagine. Even if Zingy had failed, I would have gotten a fantastic life lesson that I could have brought to any employer! Since then, where others see risks, I see opportunities! This type of thinking has completely changed my relationship with risk in my personal life. I became a fan of adrenaline: I kite board, helicopter ski, play paintball, adventure travel… The world has become my playground!

Despite difficult beginnings, Zingy ended up being a success. Sales of the company went from $1 million in 2002 to $5 million in 2003 to $50 million in 2004 to $200 million in 2005. $1 to $200 million in 4 years with no funding! I sold Zingy in May 2004 for $80 million in cash and stayed as CEO for another 18 months before creating my new company.

At the beginning of 2006, I realized that the world of classifieds was undergoing a revolution with a transition from paid classifieds in newspapers towards free online classifieds. Paradoxically, it’s in the least rich countries, especially in Latin America, Eastern Europe and Asia, that that transition had not yet started and where it still cost $100 or more to post a classified ad! I thus created OLX with my Argentine partner Alec Oxenford to answer that need. OLX is now present in 91 countries in 40 languages. We have 140 employees in Buenos Aires, Sao Paulo, Moscow, Delhi and Beijing. More importantly, 100 million people use the site every month! The fact that it’s free is magical because where people only used classifieds for high value transactions like selling a house or a car, the free model allows people to find roommates, to sell their couch or to simply find a babysitter or a DJ for an evening. Every month we receive hundreds of thank your notes from our users – they found the house of their dreams, the job of their dreams or simply got a good deal on something. There is nothing more gratifying for an economist to create a free marketplace to help people better live their lives!

Anyone can be an entrepreneur regardless of age, education, sex, social class or experience. At the age of 52, in 1954, Ray Kroc, ambulance driver then door to door salesman met two brothers who owned a restaurant. He decided to buy them out and to franchise the concept. Those brothers were called McDonald. Ray Kroc built the McDonald empire from age 52 to 81!

To help entrepreneurs I am an investor in 28 startups. I donate to several non for profits who foster entrepreneurship. Project Enterprise is an example of such an organization. They offer advice and micro credits to the under privileged in New York who want to become entrepreneurs. It’s incredible the number of ideas their entrepreneurs had by observing what was missing in the world around them. By answering those needs they often succeeded in escaping poverty while creating many jobs. To give you an example, Mustaqeem Abdul Azeem, whom you can see in the top right on the screen, came out of prison looking for something to do. He discovered he was a born salesman. He obtained a license to sell from a table in the streets of New York. With a loan of $1,540 in 2005 he started selling creams, incense and oils. Today he owns multiple tables, does several hundred thousand dollars in sales and employs many people. With a second loan he bought a van to transport his inventory between his various tables as quickly and cheaply as possible. There is nothing more moving than to listen to stories of entrepreneurs like Mustaqeem.

I want to leave you with this quote from Goethe: “Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic to it!”

Malcolm Gladwell is wrong!

I usually find much to agree with in Malcolm Gladwell’s writing, be it in Outliers or his collection of assorted New Yorker articles in What the Dog Saw. However, I strongly disagree with his recent article The Sure Thing which appeared in the January 18 edition of the New Yorker.

By studying the entrepreneurial techniques of a few successful entrepreneurs, especially Ted Turner and John Paulson, he argues that far from being risk takers, entrepreneurs are incredibly risk averse and the successful ones are those who did their outmost to avoid risk. Rather than being risk takers, entrepreneurs are predators, “and predators seek to incur the least risk possible while hunting.”

His argument is flawed on two levels. First, he confuses careful planning and analysis with risk aversion. It makes good business sense to think through what you are going to do, whether the endeavor is risky or not. Arguably it’s even more important to do so if what you are attempting to do something inherently risky. Gladwell ignores the fact that starting a business is incredibly risky regardless of how much planning you put into it: the 5 year survival rate of a company created today is less than 5%!
That’s much riskier than almost any other business endeavor you can undertake!

Second, his analysis suffers from survivor bias. He assumes that because the entrepreneurs who succeeded acted one way, those who failed must have acted differently. Careful planning and analysis is not limited to successful entrepreneurs and hedge fund managers. Having invested in over 30 startups, I can tell you all the entrepreneurs were smart, hard working and made a very good case for why there was a market need they were going to address. Beyond luck, it’s hard to tell the difference between the winners and the losers: sometimes the market was too competitive and a better funded competitor won, sometimes the market they were hoping for never materialized (even though logic and analysis dictated it should) or external events like the bubble bursting led to their demise.

His argument that John Paulson faced no risk because his team analyzed the data and concluded we were in a housing bubble does not hold water. The investing world is littered with the bodies of acclaimed investors (e.g.; Julian Robertson) who realized there were bubbles and bet against them. They were unable to sustain the losses while the bubble continued to inflate much beyond the point of reason and their funds blew up. Worse, they had to endure the ridicule of their peers and criticism from their investors. It was little comfort to them that they were ultimately proven right.

It’s incredibly risky to bet against a bubble and Paulson got lucky to have gotten the timing right, but even in the case of the real estate bubble, many who did the exact same analysis got the timing wrong. Michael Burry’s fund, which ended up succeeding in betting against the bubble, barely made it. He created a side pocket in his fund to prevent his investors from redeeming and faced lawsuits and insults during two years as he waited for his trade to work. What he did was incredibly risky. It’s much riskier to potentially be wrong alone, than to be wrong when everyone else is wrong!

Anecdotally, from observing my entrepreneur friends, it also seems that entrepreneurs are much more likely to engage in risky behavior outside of work: they kite board, heli ski, race cars, fly planes, cross deserts on foot and do many things much riskier than most people undertake. This implies that either they have a higher fear threshold than most or maybe that they love adrenaline and thrill seeking. Either way, they are not risk averse!

The two comments in the article I agree with are that entrepreneurs and people who work for themselves are far happier than other people. Moreover, while entrepreneurs want to make money, their real motivation is to do something they love doing.

Regardless, the claim that entrepreneurs are incredibly risk averse does not hold up!

The Big Short is fantastic!

Michael Lewis’ books have been hit or miss for me. Liar’s Poker provided a great social commentary on the insanity of Wall Street and was a great introduction, in my teens, to the world of high finance. Moneyball’s description of how statistical analysis helped Billy Beane, general manager of the Oakland As, to defy conventional wisdom and win so much with the lowest payroll in Baseball was engrossing! The New New Thing, while attempting to portray the crazy “can do” ethos of Silicon Valley, somehow felt short probably because Michael Lewis chose the wrong role model in Jim Clark and spent too much time describing Clark’s building of his sailboat Hyperion.

The Big Short represents Michael Lewis at his best – it’s a nonfiction book that reads like a thriller! It’s very similar to The Greatest Trade Ever by Gregory Zuckerman, but instead of focusing on John Paulson’s trade, it focuses on the stories of the other crazy cast of characters who saw the crisis coming in subprime mortgages and what they did about it.

The stories of Steve Eisman, Michael Burry, Greg Lippmann and the others are every bit as compelling as the story of John Paulson’s trade. What is even more remarkable is that The Big Short does a better job at explaining what actually happened. You finish the book understanding how AIG, Citigroup and others lost those tens of billions of dollars.

As I sat reading the book, I could not shake the feeling that the story was far from being played out. The global government bailouts of their banks and economies suggest that the financial crisis will be followed by a fiscal crisis. The deleveraging event that was supposed to occur has not occurred: leverage has just been transferred to the government balance sheets and those have since been levered up even more. As more money is leant to governments with unsustainable future spending commitments and non-productive current consumption, one is left to wonder if the entire Ponzi scheme of lending money to subprime borrowers hoping house values would rise and they would be refinanced to repay their debts has not been replaced by a Ponzi scheme of lending to governments hoping they can refinance their debts to repay them. Eventually someone will realize that many governments are not in a position to repay and all hell will break lose. Michael Lewis will have a great sequel to write. Now I just need to find out a way to make the trade that will make me one of the central casts of characters 🙂