Geeks-on-a-Plane Meeting Russian Startup and VC Community

In a progressive place in Moscow DigitalOctober 20 and 21 September a significant event for entrepreneurs and investors: Geeks-on-a-Plane Meeting Russian Startup and VC Community. Among the panelists would like to mention the representatives of companies VimpelCom, Yandex, Synqera, Bitrix, LinguaLeo. The event was attended by over 100 guests into the evening with interest absorbed the latest information on the development of high technology market.

In the first part of the conference participants in the debate about the development of the Internet in Russia discussed the development of e-commerce.
According to the results, the market for e-commerce in Russia is dominated by small players: only a third (38%) of retailers site traffic by more than 20 thousand visitors a day. At 38% it is less than 10 thousand, 24% is between 10 and 20 thousand visitors daily.
Certain market leader remains ozon.ru (1,05 million visits every day). Also in the top 10 included wildberries.ru (600 thousand), kupivip.ru (380 thousand), mvideo.ru (269 thousand), exist.ru (240 thousand), svyaznoy.ru (229 thousand) , wikimart.ru (210 thousand), eldorado.ru (177 thousand), ulmart.ru (132 thousand), quelle.ru (125 thousand).
Among the leaders in average daily attendance, so dominated by retailers involved in trading electronics, appliances, clothing, shoes and accessories, as well as a general store.
Gainers attendance for the period from April to June 2012 - a furniture store zvet.ru (29,1%), bike shop velostrana.ru (27,6%) and one furniture retailer lazurit.com (21,7%).
Average conversion sites segment of "children's products" was 3.2%, "cosmetics and perfumery" - 2.9%, "general merchandise" - 1.7%, "clothing, footwear and accessories" - 1.6% "do himself "," electronics and home appliances "- 1.4%," jewelry and watches "- 1%," furniture "- 0.5%," sporting goods "- 0.3%.
Of the 100 study 16% of retailers have a user rating of 5 for "Yandex.Market", 15% - rated by 4. 19% of online retailers, according to the auditors' on the triple "8% - bound 2.
42% of retailers available on the "Yandex.Market."
Of the top 100 retailers in seven involved in sales of clothing and footwear. During the period from March to June, site traffic this segment decreased by 38.4%.
Two of the hundreds of retailers involved in selling auto parts. Their visits to the positive dynamics. Growth for the period from March to June was 2.4%.
The largest increase in attendance in this period was at the general store. They are in the top 12, but the increase was 44.8%.

34 of the hundreds of retailers engaged in the sale of electronics and home appliances. They dynamics of attendance is negative (-8.8%).
Positive it in stores segment of "do it yourself" (tools, products for home and garden) and is 21.9%, and all shops in this segment in the top five.

The most striking was the performance of the partner fund 500 Startups, a successful business angel Dave McClure. Dave encouraged startups to abandon the illusion that they are simple and can easily change their areas of the market. Dave said that startups need to work hard on their product and business model to improve its position in the market, and in order to enable them to attract private equity.
He noted that in recent years in the Internet space have a unique situation: the leading platform on which to concentrate the majority of users, now missing, but there are several large resources, which spreads the audience. He noted that in general the situation for a start-up project is very favorable. Costs of Internet projects are negligible, while even without the involvement of a large investor can gain significant exhaust cheaper, faster, better and getting customers easier, more measurable. "We have a huge database of users of all ages, from children to senior citizens", - stated Dave.
Dave urged participants not to be afraid to start your projects, do not waste time learning the successful experience of their predecessors, and to act. "I do not read business books, do not pay coaches in the business schools. Learn from your mistakes. Try. And soon it will pay you money for you to tell the business school about their experiences or describe your case in a book "

Read More digitaloctober.com

Disruptions: Will Apple Be the First to Break $1 Trillion?

If Apple continues on its current trajectory, something remarkable might happen on April 9, 2015, at around 11 a.m.
That is, statisticians and investors I’ve spoken with say, a conservative estimate of when Apple could become the first company ever to be valued at $1 trillion. (Yes, you read that correctly: the number one, followed by 12 zeros.)
Other analysts are making even more aggressive estimates for the company’s value, which, as of Friday, was $656 billion. Those people put the trillion-dollar mark at less than a year from now: Aug. 16, 2013.
“It’s hard to imagine Apple growing any faster than it has grown on both the release of the iPad and iPhone,” said Michael E. Driscoll, chief executive of Metamarkets, a big data and predictive analytics company, and one of the people betting Apple will top $1 trillion in 2015.
Estimating when, or if, Apple will become the first to be worth $1 trillion is a bit of a parlor game, but we can all likely agree on one fact: today, it is a juggernaut.
Not long ago, Apple was a boutique PC maker. Since then, it has rolled over almost every company in its path, first with music players, then with cellphones and, more recently, with laptops. Nokia, Sony, Research in Motion, Dell and Hewlett-Packard have all watched open-mouthed as Apple took markets they thought were secured. Each time, Apple’s stock rose and their stock fell.
“They are certainly a different kind of company,” said Walter Piecyk, a wireless research analyst at BTIG Research. But, he warned: “So was Nokia in the late ’90s. No one thought they’d ever be challenged, and look at where they are today.”
Even with this growth, there is another possibility: that Apple never reaches $1 trillion. “In a worst-case scenario, Apple could befall the fate of Microsoft, which had a similarly dizzying peak in late 1999,” Mr. Driscoll said. “In this scenario, it will never happen.”
If $1 trillion were the peak of Mount Everest, Microsoft would have been rising through the highest base camp in December 1999, when its market capitalization hit an all-time high of $616.3 billion. Since then, the company has slid down the side of the mountain and is currently valued at a mere $261 billion.
Indeed, the flap over the poor-quality maps on the iPhone 5 has led some people to wonder if Apple has already jumped the shark. But remember how well it has weathered other challenges, like poorly functioning antennas and Siri’s erratic behavior.
Apple is different from Microsoft. “When Microsoft peaked in 2000, it had 20 years running the PC revolution. We’re essentially only five years into the smartphone revolution,” said Charles S. Wallman, a securities analyst who runs an investment group in Middleton, Wis. “Apple has 435 million customers based on the number of credit cards in iTunes. That’s 6 percent of the world’s population. It’s not a stretch to say it can get to 10 or 12 percent of the world’s population.” (Before we go any further, stop and reflect on the power that gives Apple.)
Even if Apple didn’t enter any new product categories, it could reach $1 trillion by doubling its sales. That’s hard for a big company, but in many respects, it is already happening. According to the latest statistics released by I.H.S. iSuppli, a research company, the Apple iPad accounts for nearly 70 percent of the tablet market. BTIG Research predicts Apple will sell 45 million iPhones in the December quarter alone. (During the same quarter last year, the company sold 37 million iPhones, doubling its revenue from a year earlier.)
While it used to be a presence in the United States and a nobody overseas, Apple is now rolling out products like the iPhone 5 worldwide on the same day. The company will also, predictably, continue to increase its global retail division of 388 stores. These stores make an average of $5,647 in sales per square foot. By comparison, shopping malls in the United States make an average of $341 in sales per square foot.
The company will continue to grow in China, too, where many of the more than one billion people who own mobile phones are upgrading to smartphones.
And don’t forget those clunky old PCs. While other computer makers have lost ground, sales of Macs have grown each quarter for the past six years.
And none of these staggering drivers of growth consider Apple entering entirely new markets.
“When we invented the car, it was a substitute for horses, but it was the second phase of the car revolution — when we invent things around the cars like gas stations and drive-ins — that created new business markets,” Mr. Wallman said. “We’re seeing this happen now with the technology we have in our hands. We’re entering the second phase of this revolution, where entirely new markets will be created, and Apple could create those.”
For instance, Apple could transform the television industry, making its own TV set built on iOS, which analysts estimate could bring in another $20 billion a year in revenue. Or it could try to reinvent money itself, turning on the 435 million credit cards it has on file and enabling mobile payments. And there are consumer electronics areas that haven’t even been invented yet, like wearable computing.
When Apple first introduced the iPhone, people slept in the streets to buy one. Five years later, people are still lining the streets to snatch the latest update, even though it is only a slight variation on the one before it. A company that can pull that off, selling two million iPhones in the first 24 hours, might be worth $1 trillion in no time at all.
Read More nytimes.com

Verizon to Pay TiVo $250 Million Settlement

TiVo has turned to litigation to generate revenue from licensing fees as it struggles with competition from low-cost rivals.
Analysts said the settlement could bode well for a TiVo victory in cases against other companies, including Time Warner Cable and Motorola Mobility, which is now owned by Google. TiVo reached a similar deal in January with AT&T, which agreed to pay $215 million.
TiVo also prevailed in a similar case against Dish Network and EchoStar in May 2011. Verizon declined to comment and referred questions to TiVo.
Regarding the continuing legal cases, “Verizon has set a strong precedent for Motorola to settle,” said Todd Mitchell, an analyst at Brean Murray, Carret, a boutique investment bank.
TiVo sued Time Warner Cable in connection with the Motorola litigation, and Monday’s settlement only improves the company’s position, according to Barton Crocket, an analyst at Lazard Capital Markets.
“It also potentially sets the stage for a similar settlement with Time Warner Cable over the next year or so,” Mr. Crockett said.
Time Warner Cable declined to comment on Monday. Motorola Mobility had no immediate comment.
TiVo said Verizon would initially pay $100 million in cash, and recurring quarterly payments totaling $150.4 million through July 2018.
As part of the deal, the companies were discussing having TiVo boxes carry a new Internet video streaming service that Verizon is developing with Coinstar’s Redbox to compete with Netflix. TiVo’s DVRs already feature video services from Netflix and Amazon.com.
In addition to the guaranteed compensation, Verizon will pay TiVo license fees on a monthly basis through July 2018 for each Verizon DVR subscriber above a certain number.
If Verizon and TiVo pursue “certain commercial initiatives” by Dec. 21, up to $29.4 million of the payments made by Verizon would be subject to a credit of an equal amount, TiVo said.
This appears to refer to a nonexclusive deal for Verizon to offer TiVo boxes to customers, according to Mr. Mitchell of Brean Murray.
The companies also agreed to dismiss all pending litigation between them.
Read More nytimes.com

Facebook prematurely sends out satisfaction survey to some users

Facebook sent out a rather strange survey to some of its nearly 1 billion users.

The social network advertised a multiple-page survey at the top of select users' News Feeds. But when some people clicked on it, the survey stopped short and was incomplete.

"For a brief period of time, an incomplete test survey was visible to a small percentage of users," a Facebook spokeswoman told the Los Angeles Times. "This survey has been removed."

There were several pages of questions related to satisfaction regarding users' overall Facebook experience and about some specific features, such as the News Feed.

That was followed by questions related to how users get their news, with Facebook mentioning Twitter, CNN and other outlets and mediums. The company then began asking users more personal questions, including when they were born, how much money they make and what race they identify with.

That's as far as I got with the survey before the pages no longer functioned, but then things really got strange.

According to MarketingLand.com, the Facebook survey then began asking users about their political leanings, including how they describe their political ideology.

The Facebook survey then literally started a news quiz on modern politics. Among the questions asked were who the vice president is, which presidential candidate supports allowing some illegal immigrants to remain in the U.S., and which company Mitt Romney used to run.

And the news quiz continued for five pages.

Afterward, the survey showed you the correct answers to all the questions it asked. It let you give feedback on how you felt about the survey (was it too long or too short) and it also gave you a text box where you could share any comments.

It's unclear what exactly this survey was for, but it could be that Facebook was trying to get data from users to improve its service. On the other hand, MarketingLand speculates Facebook could be readying surveys as another service clients can purchases in addition to the ads the social network sells. Read More latimes.com

Google introduces new YouTube app for the iPhone

Google rolled out a new YouTube app for the iPhone on Tuesday morning, making good on a promise to create a new app for the video service since the next iPhone won't have the app pre-installed.

The company said the new YouTube app features more videos than before, notably adding more official music videos. The app also makes it easier for users to find channels they subscribe to, and videos can now be easily shared on Facebook, Twitter and Google+ or over text message.

The new YouTube app is available internationally starting Tuesday.

Google is launching the new app one day before a scheduled Apple event where the Cupertino, Calif., company is expected to announce the next iPhone and with it the next version of the phone's operating system, iOS 6.

Earlier this year, Google and Apple announced that the existing YouTube app would no longer come pre-installed on future iPhones, as it had during the phone's first five generations.

Though some people said they were happy to see this -- mostly because the app rarely got updated -- the exclusion of a YouTube app was another sign of the deep divide between Google and Apple. Read More latimes.com

Can Square Remain Hip

It’s not exactly a hip question right now. But what exactly is Square?

Excitement is building around the payments company, which is led by Jack Dorsey, Twitter’s co-founder. It’s close to raising $200 million of new capital, and Starbucks said in early August that it was going to use Square’s technology.

Disappointed by Facebook and Groupon, technology industry watchers at least have hope for Square. It’s easy to see how nifty card readers and other innovations can make payments much easier for small businesses and their customers. Meanwhile, the Starbucks deal raises the prospect that other large retailers may partner with Square.

But it may too early to anoint Square as the firm that will lead us into a cashless society. The main issue with Square is that it’s not yet clear what it wants to be.

Yes, on the surface, it’s a company that provides payments to hardware and software to merchants. But it may struggle to achieve burgeoning profits from the payments fees paid by merchants, according to an analysis of the economics of those payments.

Square is almost certainly working to develop a much bigger revenue source. The success of that will likely determine the success or failure of Square.

As innovative as Square is, it cannot easily get around the established fixed costs charged by the payments industry, which comprises processing companies, banks and firms like Visa and MasterCard.

Square charges merchants 2.75 percent of the amount transacted when a card is swiped, or $275 a month. That’s at the low end of the fee scale. But it may also be too low for Square to a profit on payments below $10, which are a big part of Square’s business.

Nebo Djurdjevic, chief executive of Cardis International, shows why. He simply calculates the money Square would take in with a 2.75 percent fee on a transaction and then compares that with the money it would have to pay out in fees to credit card companies and processors. (As a note, Cardis has its own product, which aims to cut the costs of smaller credit card payments.)

On a $5 transaction, Square would get 2.75 percent of $5, or 14 cents. But, citing public fee data, Mr. Djurdjevic calculates that, with a premium Visa card, Square would have to pay out 27 cents in fees. The theoretical loss to Square would therefore be 13 cents. The loss may be lower on other types of cards, according to Mr. Djurdjevic, who nevertheless thinks the Starbucks deal is a positive development for Square.

Square declined to comment on Mr. Djurdjevic’s numbers and their significance for Square’s business model.

The challenging economics won’t be a surprise to Square watchers. Enthusiasts may argue – correctly – that Square will make money on each payment that is over $10. And if Square gets picked up by larger retailers, larger payments may make up a large share of its business. Square may even have software that allows it to reduce slightly the amount it has to pay to card operators.

So what will the big, alternative revenue source be? Recent investors in Square must see one, given that the company now has an estimated valuation of $3.25 billion.

The company probably wants to take all the payment data and use it to help merchants with their marketing. Square might, say, take a cut of any business generated from that marketing. In other words, it may aim to be a more sophisticated version of Groupon. Square’s fans may say that, with a wealth of payments data, the company can do better than Groupon.

The more merchants that use Square’s payments system, the more data it will have. And with its low fees, Square may well draw in large numbers of merchants.

But as Mr. Djurdjevic’s numbers show, those low fees can also generate losses. And it’s not like other companies are standing still. For instance, PayPal and Discover recently announced that PayPal customers will next year be able to use the service in stores, not just online.

In all, it’s too early to tell whether Square is leading us, or itself, into a cashless future. Read More dealbook.nytimes.com

Thrive Capital Raises $150 Million Fund, Bolstering Profile

Thrive Capital, a venture capital firm based in Manhattan and run by Joshua Kushner, has raised $150 million for its latest fund as it seeks to raise its profile and become more competitive against larger firms.
The firm spent about 10 weeks raising the fund, receiving commitments from new and existing limited partners, a group that includes Princeton University, Hall Capital Partners and the Wellcome Trust.
The fund, which was oversubscribed, will operate under a broad mandate, with the flexibility to pursue early or later stage start-ups in the Internet sector. In total, Thrive has raised about $200 million across three funds.
“Thrive is opportunity driven,” Mr. Kushner, 27, said in an interview by phone. “We invest in assets as opposed to stage or geography.”
Mr. Kushner, son of the real estate magnate Charles Kushner and brother of Jared Kushner, owner of The New York Observer, has spent the last three years investing in social and e-commerce Internet start-ups.
He was an early backer of Fab.com, a flash sales site that recently raised $105 million; Hot Potato, which was sold to Facebook; and GroupMe, a messaging service acquired by Skype last year.
His firm was also one of the lead investors in Instagram’s $50 million financing round in April. The investment, which valued the photo-sharing service at half a billion dollars, was closed mere days before Facebook purchased the company for roughly $1 billion. However, the value of the deal, a combination of cash and stock, has since fallen as Facebook’s stock price declined sharply.
Though Mr. Kushner says he recognizes the weakness in the I.P.O. market, he remains bullish on the technology sector and the disruptive power of the Internet. And while Thrive has largely been defined by its consumer Internet plays, he said he was willing to invest in a broad array of start-ups, in the United States, Latin America or elsewhere.
“Many see the way the Internet has already transformed our daily lives and conclude that most of the change that was going to happen already has.” he said. “I am of the belief that it is only the beginning.”
The Wall Street Journal had earlier reported that Thrive was seeking to raise $150 million. Read More dealbook.nytimes.com

Zuckerberg On Instagram (Now 100M Users Strong): “No Agenda” Except Supporting App’s Growth

Facebook CEO Mark Zuckerberg said the social network is focused on supporting Instagram’s growth, following the close of a roughly $750 million deal to buy the photo-sharing app. Instagram is the most unusual acquisition in Facebook’s history, considering the huge sticker price, the startup’s small team, and a pledge to stay hands-off with the service. Most of Facebook’s other deals have been talent-oriented where they bring on a small team of engineers, shut down the core product, and re-shuffle people onto other company products.
“Our mission with Instagram is we want to help them grow to hundreds of millions of users,” Zuckerberg said on-stage at the TechCrunch Disrupt conference in San Francisco. “We have no agenda with making them go onto our infrastructure.” He added that Instagram just crossed 100 million registered users.
He said they’ll basically treat Instagram like an Open Graph partner (which means they should be like a big third-party developer that has priority access to features).
He also went into the history of the deal, which is often compared to Google’s acquisition of YouTube when the upstart video search engine was heavily competing with Google’s own attempts at the market. A more cynical take on the Instagram deal is that Facebook bought the app out of fear of its rapid growth and prowess in one area that Facebook has historically been weak — mobile. Photo-sharing was also a key piece — if not the key reason — why Facebook broke out from a number of social networking competitors five years ago. With a similar dynamic taking place on mobile platforms, Facebook was wise to duck in and take out a budding rival.
The history of how this thing came together is really interesting, especially the way that I got to know [Instagram CEO] Kevin [Systrom]. They started off building on top of our platform. They had just a great Open Graph integration that made it so you could take pictures and share them to Facebook. It was really first class.

They did a really good job with that. One of the things I like to do with all of our big developers is I like to get to know them personally. This is because I’m personally just interested in entrepreneurship. But I also want to get to know the people who are building on top of our platform.

Over the course of our discussions, we build a roadmap of all the things we could do together. They were starting to get a lot of distribution from our platform and there was this question: how much did they want to depend on one platform’s distribution? That was a big question for them. Then there was this question of how we could help them grow. But we had this question of how the value would accrue to us.

Eventually, I just brought up the idea to Kevin. ‘Hey, maybe we can just join and become one company.’ And that’s the game plan. We’re going to execute on features we decided on earlier.” Read More techcrunch.com

Maluuba Wants To Challenge Apple’s Siri With Its “Do Engine”

Ever since Apple launched its voice-driven personal assistant Siri, a slew of clones have appeared on the scene. Most of these, however, clearly show that Siri was the result of a massive research project that isn’t easy to replicate. Maluuba, which is launching at TechCrunch Disrupt today, is the closest thing I’ve seen to a viable Siri competitor on Android. In many ways, Maluuba is actually more reminiscent of Siri before Apple bought it, as the company describes it as a “do engine” that ties in with numerous third-party services. Maluuba, just like Siri, also allows you to set up meetings, alarms and location-based reminders and the app ties in tightly with your Google Calendar account, for example.

Maluuba isn’t shy about comparing itself to Siri and as the company’s co-founder Sam Pasupalak told me last week, the team believes that its solution is actually superior to Siri. Maluuba, says Pasupalak, sees it as its mission to make it really easy for you to find what you want. In his view, the next evolution of search has to do away with ten blue links and just allow users to get to “do” as fast as possible.

What Pasupalak is especially proud of is how quickly the team built out the number of domains the service currently understands. At this point, Maluuba focuses on 18 domains, including restaurants, movies, and general knowledge questions (which, just like Siri) are powered by Wolfram Alpha. Yelp, Eventful, West World Media (movies), Rotten Tomatoes, Facebook, Twitter, Foursquare, Google Calendar, Weather Underground and Wikipedia are among the other APIs used by the service.

Here are some sample questions that Maluuba can answer for you: What’s happening this weekend in Montreal? Is today a good day to go hiking? I’d like to watch a romantic movie with my girlfriend. What can I do for fun tonight? Where can I practice Yoga? I’m really craving some sushi? How much is a Kindle Fire?

I got a chance to test a preview version of the app for the last couple of days and the service is indeed very impressive. Maluuba does a great job at answering your queries without the need to use specific keywords. The app’s design is somewhat reminiscent of Microsoft’s Metro design, with big, colorful boxes and a menu bar on top.

Maluuba, which is based in Waterloo, Canada, already received a $2 million Series A investment from Samsung Ventures in February, making it a strong possibility that Samsung could pre-install the app on some of its devices in the future. The company is also talking to other Android OEMs right now and as Pasupalak told me, there is a good chance we’ll see the service pre-installed on a number of Android phones in about six months or so. Pasupalak also noted that there’s been some talk about integrating the service with smart TVs as well.

Maluuba plans to make most of its revenue from these deals, but also from licensing its API and, of course, through deals with the third-party providers it taps into for things like restaurant reservations. Currently, these are affiliate deals, but the company plans to set up direct payment pipelines to its providers so that it can offer one-step movie ticket purchasing, for example.

The Maluuba team started working on the research behind its app in 2010. The company currently has 22 employees. For now, Maluuba’s focus is on the Android app, but iOS and Windows Phone versions are already in development and should arrive in a few months.Read More techcrunch.com

Spinlister Makes It Into Disrupt Battlefield With It’s ‘Airbnb For Bikes’

Peer-to-peer bike rental service Spinlister was chosen by the audience from amongst the Startup Alley companies today to pitch on stage as part of the TechCrunch Disrupt Battlefield in San Francisco this week.
There are over 100 million bikes in the US and over a billion on the planet. But most bikes are not used daily, meaning there’s plenty of opportunity to meet demand. Normal bike rental from a store costs about $16 a day. On Spinlister you can rent a bike from $5 a day up to about $100 for a really nice bike. They are now in 275 cities in 40 countries with over 2,000 bikes listed.
Founded in May 2011, Spinlister is a peer-to-peer bike rental company allowing people to rent a bike online, either from other individuals or existing bike rental shops. It’s like an Airbnb for bikes. Pretty handy if you’re a tourist in a city. However it obviously needs lots of people to participate. So far it’s launched in San Francisco and New York but it announced on stage at Disrupt that it’s prepping a national launch this Fall and a new mobile app is in the works. International plans are also on the way.

Although it’s only being available in those two cities, back in May it managed to garner about 400 and over 2,000 from bike rental shops. Plus it’s reached bike renters in six continents globally.
In the first six weeks after its launch about 25 percent of listers completed a rental, and of those, about 25 percent did multiple rentals. That means those users make an average of $50 each renting out their bike. The more popular your bike the more rents you get, with some people making up to $100 a week. Spinlister also now offers a guarantee which insures your bike for up to $5,000, which helps with traction obviously.
The next stage is to decrease fulfillment times by getting renters and listers interacting.
So far Spinlister has raised $225,000 in seed funding from Angels.
Judges asked why the company did not start with mobile, but the team said the small team of three had come from a Web background and were now adding a mobile engineer to develop the mobile side. The team is also looking a ‘recreational enthusiasts’.Read More techcrunch.com

Gyft Is Moving The Plastic Gift Card Industry To Your iPhone

Gyft, a new mobile application launching at TechCrunch Disrupt SF, allows you to buy, save and redeem gift cards using your mobile phone. Unlike the numerous mobile gifting applications currently available, Gyft isn’t attempting to carve out a spot for itself in the new “social gifting” market; it’s taking the existing $100 billion market for physical gift cards and moving it to the phone. As co-founder and CEO Vinny Lingham describes it, “we’re focusing specifically on trying to be the mobile gift card mall for consumers.”
“When you go Walgreens or Costco and buy gift cards off the shelf, that’s the experience we’re trying to recreate on the phone,” he says. “We’ve got the widest selection of gift card retailers. And when you’ve got that big of a selection, you’re able to customize the gift card selection by [your friend's] ‘likes’ on Facebook.” Lingham, the former co-founder and CEO of Clicks2Customers and Yola, co-founded Gyft with COO CJ MacDonald, formerly of LiveOps, and Luminate. He says he was originally interested in doing something in the mobile payments space, but after meeting with MacDonald through a mutual friend, they began discussing building a digital gift card platform on mobile. (MacDonald was particularly interested, having just gotten married and winding up with a surplus of gift cards.)
The company seemingly has a lot of competition, including recent Facebook acquisition Karma, as well as startups like Giftly, Wrapp, and others. But where these social gifting applications are focused on creating new ideas around gifting (Wrapp gives out free cards, for example, and Giftly works around merchants by crediting the recipient’s credit card after checkout), Gyft is about mobilizing the existing industry of plastic cards.
The problem with plastic gift cards is that they’re often forgotten, whether left at home or just not remembered at point-of-sale. Plus, with their current digital counterparts, like those sent via email, the cards tend to get lost in the inbox and also forgotten. And here’s an interesting factoid — retailers don’t actually like that people are buying gift cards that go unused. Maybe that was the case in the past, but MacDonald tells me that a 2010 law made it so that the retailers can’t actually book gift card sales as revenue until the cards are redeemed. So by keeping the cards managed in the Gyft app, which provides a visual interface for managing your collection of cards, retailers will have a new channel to remind gift card holders to use them. These reminders could come by push notifications, geo-fenced alerts, or even incentives like “get 10% off your purchase when you use your card this week.”
The app itself is attractive, well-designed and seems simple enough to use, based on the demo. You key in the numbers for the plastic cards in your wallet to add them to Gyft, or you can use the app to send virtual cards to friends. Like the plastic cards hanging on the rack at Walgreens, Gyft is working with real inventory from its retailer partners. It has also partnered with processors like First Data, Stored Value Solutions, Giftango and CashStar, which combined account for about 80% of today’s gift card programs. Gyft also has to get each retailer’s approval in order to sell their cards, upload them, check balances, and interoperate with the retailers’ backend systems.
There are several nice touches in the app, like the way it can sort your Facebook friends list by birthday or name, and the (patent-pending) way you “scratch” off the strip on the back of a virtual gift card to reveal the number. To kick off its launch at Disrupt, Gyft is offering more than $250,000 in free gift cards from retailers, including Sephora, Amazon, Lowe’s, Brookstone, Toys “R” Us, and more, which will be given out to users just for downloading the app, as well as from retailers who want you to promote them on social networks (e.g. a Facebook “like”) in exchange for a card.
The company is also announcing it has closed a “healthy” but undisclosed $1.25 million round of funding (update: the founders previously told me the amount off the record, but later this afternoon said it could be public) from Google Ventures, Founder Collective, 500 Startups, Romulus Capital and other angels. You can download Gyft on iTunes here.

Read More techcrunch.com