Marisa's Poetry High-Tech Startup Blog

Aldo Cocchiglia, CEO M31 USA, LLC

Who knew that M31 USA, the name of  the Santa Clara-based incubator plus was derived from the 18th century French astronomer, Charles Messier’s cataloging of galaxies, nebulae and star clusters? M31 is the Messier catalog name of Adromeda galaxy. About 100 years later the Hubble Space Telescope revealed that Andromeda has two nuclei. It was these two nuclei, metaphors for “university and industry” that inspired Ruggero Frezza, a professor at the University of Padua to name his organization M31 Italia in 2006. Aldo Cocchiglia founded M31 USA in 2010 with the goal of bringing Italian technology companies to The Valley.

Italian and U.S. Startups. This was a lot to absorb on one cup of delicious espresso at 11:00 a.m. in the morning (the Italian equivalent of 7:00 a.m.). You don’t have to be Italian or even like espresso, but if you are in the medical equipment, embedded computing, optical systems, software and web or sensor networks and are looking for an investment in the $66k to $2.6M size (the odd numbers are because of the conversion from Euros to dollars) talk to Aldo. In addition to bringing Italian technology companies to the U.S., M31USA, LLC also provides seed capital for U.S. startups.

Incubator Plus? Unlike other incubators (you know who they are) that are playing a numbers game hoping to come up with one or two home runs out of many, sometimes hundreds of startups, Aldo Cocchiglia’s model has a goal of 100% success. His successes may not be as big as the rare home runs in the mega-incubators, but all of his M31 startups are successful.

Italian Technology: US Success Stories? I met Aldo at an event last week (Thursday, April 19th, 2012) at the Italian Consulate in San Francisco that was featuring demonstrations and talks on several Italian technology companies that are making their entree into the Silicon Valley market. I sat down with Aldo at his Santa Clara headquarters, Wednesday, April 25, 2012 to find out more about M31 USA.

Duality? The blog metaphor for today is duality. We have an 18th century French astronomer paired with the 1983 Hubble Space Telescope,  the University of Padua (founded in 1222, one of the oldest universities in Europe) paired with the new kid on the block, Stanford (founded in 1885), seed money ($66k to $2.6M) paired with co-managers, local startups given access to global markets and Italian startups given access to the U.S. market.

Successes and Clients: Centervue (medical equipment and telemedicine) which designs automated medical devices for early diagnosis and management of sight-threatening eye diseases. Thanks to M31 USA help, they just made a major deal with WalMart to have their retinal screening machines installed in WalMart. Si14 (embedded hardware and software), Adaptica, Energy Resources (renewable energy market), Kynetics, Blum Sky (product: I m watch, a wearable smart device) and Omnys are other companies that are taking their run at the U.S. market.

M31USA Partners: Stanford University, European Entrepreneurship and Innovation Program, BAIA-Business Association Italy America and Mind the Bridge, the Italy-Silicon Valley based business plan competition.

100% Success: So if you want more than money (essentially a lottery ticket), consider M31 where you will be one of the few, more like a family member than a cold investment. All of their few, quality investments  to date have been successful. They will help you avoid many of the common  startup pitfalls. Aldo told me that startups rarely fail because of the technology, they typically fail because the founder, while technically competent, may not have the business chops necessary to find customers, manage money, hire employees and market his product or service.

Takeaway: A personal pet peeve. Remember coffee is a beverage, preferably paired with a nice donut. I can’t tell you how many startups I’ve visited (all my interviews are in person) and been offered a beverage. When I ask for coffee, the most common reaction is shock since the choices always seem to be 32 different kinds of mineral water and an infinite assortment of herbal teas. Instant coffee is o.k., but the donut needs to be fresh.

If you are looking for seed funding, help with business strategy and planning and someone (like an experienced parent) who will be in with you for the long-haul, talk to M31USA.

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David J. Blumberg, Managing Partner, Blumberg Capital

To review, the 7 Deadly Sins are: lust, gluttony, greed, sloth, wrath, envy, pride except in France where the translation for “lust” is “desire”. Desire is not a sin, but a source of joy, maybe not in American, but certainly in France. As you literate and Biblical types know, there is no 8th Deadly Sin, but if there were one, David J. Blumberg of Blumberg Capital would define it and it would be sartorial perfection.

I first saw David on a panel for “Israeli Startups in Silicon Valley.” I noticed him because he was impeccably dressed. The other side of the sartorial perfection coin is attention to detail and pattern recognition–two key elements of entrepreneurial success as well as VC success.

David’s Israeli Startups presentation with the  DoubleVerify founder was profoundly moving. When the DoubleVerify founder first met David, he had no product, no money, no customers, was older than 21 and was located in Israel. So DoubleVerify didn’t have the winning team (the jockey) that most VCs look for or the big customer or really any high profile or even low profile investors, but David’s attention to detail and pattern recognition talent encouraged him to place an “early bet” on this plucky entrepreneur. David’s DoubleVerify Quick Pick® won him one of the Silicon Valley lotto jackpots.

I sat down with David yesterday, April 5, 2012,  in the conference room of his San Francisco Headquarters on Howard Street. I photographed him standing in front of a couple of maps because he has portfolio companies located all over the world. All you have to know about David is that he travels a lot (he is headed for Cartagena, Columbia soon at the invitation of the government there), he speaks several languages and he is impeccably dressed (he mostly wears a British brand called “Hackett”). His current portfolio contains 40 companies and oh yes, he is also lucky.

Have You Had Any IPOs? Yes: DSP Group, CREO, Electronics for Imaging, CheckPoint Software Technologies.

Areas for Early Bets? Augmented reality (AR): Dekko and Mishor.

IPO Predictions? Nutanix.

Peter Thiel? Yes, David actually knows him, after all “birds of a feather…..” and is not just hoping to meet him.

What is Your Brand? Fueling innovation.

What Do You Do with the Zombies (“walking dead”)? This is something no one likes to think about, but David deals with it in a very humane way. Instead of abandoning them, as most would do, he encourages them to pivot or sell or merge so they can continue and find success in a different form.

Takeaway: If you are NOT Steve Jobs or Mark Zuckerberg, you may have to wear a suit sometimes, maybe to raise money or to pitch your company. If you need a sartorial role model, take notes on what David is wearing. He is always appropriately dressed for the occassional and yes, he even owns a tux. If you are looking for a life-cycle investor, one who isn’t trying to figure out your exit strategy before you have a product or who is only concerned with how much $x he can make on you, then look to David. He can see your potential, even before you can, and isn’t afraid to make “early” bets where other VCs would be afraid to tread.

Alan Safhi, President, CEO and Founder of Zip Zap

Imagine that you live in Russia (Moscow), you have tons of rubles (aka cash) in your bank or you live in Brazil (Rio) and have millions of Reais (aka cash) in the bank. You have cash, but you don’t have an American credit card. You still don’t see the problem? You want Ferraris, Fendis, Hermes, Ferragamos, but you can’t buy them. Why? I already told you, you don’t have an American credit card so your credit, bank account or address can’t be verified. That’s the cream of the money cup, while at the grounds of the money cup are millions of hard-working illegal aliens living in the U.S. or even U.S. citizens who don’t own a credit card: they can’t buy on-line either.

After Global Payments was recently hacked and hackers got customer information from up to 1.5M  accounts across North America, you may NOT want to use a credit card as much for making your on-line purchases. Never heard of Global Payments? That’s understandable, but you have heard of Visa and MasterCard. Global Payments provides processing services for them as well as for every other major credit card company.

Yesterday, April 3, 2012 I traveled to the new payment processing capital of the world: San Francisco. I met with Alan Safhi, President, CEO and Founder of ZipZap. Some famous San Francisco-based payment processors are Square, Facebook Credit, Blackhawk and now ZipZap.

So How Does this Wrath Reliever Work? You make an online purchase, pay bills, top-up your e-wallet, prepaid and mobil accounts, then you complete the transaction in one of the 700,000 globally-located payment centers. Usually there is a neighborhood one and you can use your local currency. In short you: “Shop online. Pay cash offline.” If you haven’t already guessed Wrath is the last sin of the David (Blumberg) Series: The Seven Deadly Sins, Sin Sells.

Now that Alan Has Made the Cash-Laiden Consumer Happy, What is he Doing for the Merchant? With ZipZap, Alan give e-commerce merchants a way to monetize the billions of cash-perferred customers world wide.

How Does ZipZap Differ from PayPal? ZipZap and PayPal are complementary rather than competitors. You could potentially, some day, use ZipZap to add cash to your PayPal account. As you PayPal users know, you need a credit card to set up a PayPal account or a bank account. PayPal in it’s current form can’t service the world-wide cash only customer.

Revenue Model? Instead of the 30% surcharge added by the Russian shopping agents, Alan’s charge is comparable to credit card charges, 3-5%, but unlike credit cards which have to deal with disputes and charge backs which can equal 1-1.5%, since all the transactions are cash, there are no disputes. A shopping agent is a person in Russia that the cash rich pay to buy goods on-line or in foreign countries, in return the shopping agent adds a 30% surcharge and makes you wait several weeks before you get your items, since they have to be shipped to the shopping agent first, then shipped to the customer by the shopping agent.

Scaling? The scaling is done with partners both on the processing side and the merchant side. Recently ZipZap formed a partnership with SafetyPay, a secure payment provider for online shoppers, merchants and banks worldwide. The partnerships first target will be the travel industry.

Lucky, Smart or Just Good Timing? Alan realizes that since over 50%  of the world’s population does not have access to banking or credit (statistic from World Bank) and 30% of consumers would spend more online if they could pay with cash (Javelin Research statistic), Zip Zap is a smart solution. Alan is also lucky because he got snapped up into the startup portfolio of visionary, Silicon Valley VC, David J. Blumberg (Blumberg Capital).

Takeaway: If you are a global consumer with cash, ZipZap has leveled the consumer goods playing field for you. If you are an e-commerce merchants, ZipZap, can tap you into the piles of Rubles and Reais that want to be turned into goods.

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