Category Archives: Texas

The Zebra Welcomes Brett Little, Former Travelocity and Match.com VP of Finance, to Executive Team

Posted August 31st, 2016 by The Zebra

Little joins The Zebra to build company’s finance function, bringing 20+ years of global finance and accounting experience from Match.com, Travelocity and AppFolio

AUSTIN, Texas — August 31, 2016 The Zebra, the most comprehensive car insurance comparison marketplace in the U.S., today announced the addition of Brett Little as Executive Vice President of Finance & Administration. Little brings more than 20 years’ finance experience from Match.com, Travelocity and AppFolio, and will oversee The Zebra’s financial, legal, and human resources operations to help drive optimal consumer experience and continued disruption throughout the massive auto insurance industry.

“In a few short years, we’ve grown TheZebra.com into the most visited car insurance comparison website in the U.S. Now, with the addition of Brett, we can accelerate our growth as we strengthen the position of The Zebra and our partners,” CEO Adam Lyons said. “Brett has the right mix of skills and experience to complement an already world-class leadership team. We could not be more excited.”

Meet Brett Little, EVP of Finance & Administration

Little joins The Zebra after nearly four years at AppFolio, a California-based SaaS provider of workflow solutions, where he was part of the team that took the company public in 2015. Little’s tenure saw both a quadrupling of revenue and progress toward realizing operating leverage in the business.

Before AppFolio, Little was instrumental in growing the financial organizations at big-name consumer-facing brands Match.com and Travelocity. In his 10 years at Match.com, Little partnered with the leadership team as the company realized revenue and subscriber expansion and became a globally recognized name in the ever-popular world of online dating.

Prior to his tenure at Match.com, Little built and led a team at Travelocity that contributed to the company’s rapid revenue growth and emergence as a pioneer in the online travel industry.

At The Zebra, Little will focus on connecting all elements of the business to create the best possible product and experience for consumers seeking auto insurance in the modern, connected world.

“I’ve had great opportunities to grow fledgling ideas alongside industry-leading companies, and I’m incredibly excited to do that and more with The Zebra,” Little said. “The Zebra is already revolutionizing the highly regulated and complex auto insurance industry, which is a massive undertaking. I see so many opportunities to continue to tweak the formula and I’m excited to roll up my sleeves.”

Resources:

About The Zebra

The Zebra is the most comprehensive online car insurance comparison platform in the U.S. Since 2012, the company has sought to bring transparency and simplicity to car insurance shopping — “car insurance in black and white.” With The Zebra’s real-time, side-by-side quote comparison tool, drivers can identify insurance companies with the coverage, service level, and pricing to suit their unique needs. Headquartered in Austin, Texas, The Zebra compares over 200 car insurance companies and provides agent support and educational resources to ensure drivers are equipped to make the most informed decisions about their car insurance.

 

Contact:

Alyssa Connolly

The Zebra

Phone: 773.59.ZEBRA

press@thezebra.com

Iconixx Software grows C-suite again, hires first chief revenue officer

AUSTIN, Texas – July 11, 2016 – Iconixx Software Corp., an Austin-based maker of compensation management software, has named sales veteran David Loia as its first chief revenue officer.

Loia was previously the vice president of sales for Austin software maker ZenossInc. and senior vice president of revenue for Austin-based HumanIntelligence Inc. Before that, he was vice president of sales for Spokane, Washington-based Next IT Corp. and a director of California-based Oracle CX Cloud, according to his online profile.

Iconixx Software, founded in 2010, develops software designed to manage sales compensation, bonuses and salaries. It employed about 80 workers last year.

Last August, Iconixx Software reported raising a $10 million financing from investors that included Florida-based Ballast Point Ventures LP and Alabama-based Harbert Venture Partners LLC, CEO Derrik Deyhimi said.

In December, the company hired William Getchell as its first chief financial officer. Then in April, Iconixx announced establishing a credit facility with Comerica Bank to fund future growth, but it didn’t disclose the financial details of the facility.

This article originally appeared in the Austin Business Journal.

 

BPV announces two new growth equity investments

PowerChord – St. Petersburg, FL
Provider of digital brand management software and services – Ballast Point Ventures has led a $10 million equity investment in PowerChord, Inc. Founded in 2001, PowerChord, Inc. provides a suite of internet brand management and digital marketing services for major brands and their dealer networks in the United States and Europe. PowerChord’s Software-as-a-Service offering allows major brands to maintain brand consistency down to the local dealer level. The Company’s customer engagement platform creates a universal online brand experience for national and international brands with consistent content, data, and messaging at the local dealer level. Today, there are over 9,000 individual dealers on the PowerChord platform. PowerChord is led by CEO Lanny Tucker and Founder and Chief Strategy Officer Pat Schunk. PowerChord will use the proceeds from this minority investment for partial shareholder liquidity, sales force additions, and to bolster its product development and marketing efforts.

 

The Zebra – Austin, Texas
Online automotive insurance agency and comparison platform – Ballast Point Ventures has led a $12.5 million equity investment in The Zebra. Founded in 2012, the Zebra offers a comprehensive automotive insurance comparison platform that allows consumers in all 50 states to compare quotes from more than 200 insurance carriers. The Company’s comparison engine collects user-submitted data via the website and displays the automotive insurance rates from multiple carriers, providing a valuable new tool to insurance shoppers that has earned comparisons to the travel search engine Kayak.com. The Zebra also operates as a licensed independent insurance agency and can currently sell and bind automotive policies in multiple U.S. states. The Company is led by Founder and CEO Adam Lyons and COO Joshua Dziabiak, both of whom were named to Inc. Magazine’s 30 Under 30. The Zebra will use the proceeds from this minority investment to enhance its online comparison platform, expand its insurance agency capabilities and hire new team members.

“We challenged that dogma, and it was incorrect.”

ed-at003_winter_j_20141205170433The Weekend Interview in Saturday’s WSJ – “The Oilman to Thank at Your Next Fill-Up” – provides an absorbing look at the “shale revolution” and touches on several of our favorite themes:  iterative collaboration, how to fail the right way, the incremental, adaptive ways by which success is achieved, and even the role of luck – although we’d describe it a bit more favorably as “serendipity.”

The pioneering company featured prominently in the article is EOG Resources, a former division of Enron discarded in 1999 when that company “decided to jettison tangible assets as they evolved into a trading company.”  By 2007 – one year after the last remaining piece of pre-bankruptcy Enron had been sold off – the former red-headed stepchild had become an industry leader.

(That particular charming detail brings to mind one of our very first posts, Built to Flip or Built to Last, in which we mused about an alternate history in which Hewlett and Packard sat in their garage, sipping lattes, saying to each other, “If we do this right, we can sell this thing off and cash out in 12 months.”)

Flush with success, EOG looked at their innovation and thought: we’re doomed.

“About 2007,” (CEO) Mr. Papa recalls, “I looked around and said, EOG has found so much shale gas, but there are a whole lot of other companies that have found vast amounts of shale gas. All the other companies were ecstatic, and their whole business strategy was, ‘We’re going to find more shale gas.’ I stood back and said this probably doesn’t bode well for natural-gas prices in North America.”

So rather than cling to their initial intuition they tried something impossible:

If gas prices would remain depressed due to a glut, as in fact they would, Mr. Papa’s insight was that perhaps oil, as well as gas, could also be coaxed from shales. Oil molecules are several times as large as gas molecules, and “because the flow paths through these shales are very small, very narrow and restrictive, the general feeling was that you could not produce oil from shales commercially.”

Mr. Papa and his team suspected this was “an apocryphal old wives’ tale,” and no one had “really done the work to prove that conclusively. So we challenged that dogma, and it was incorrect.”

EOG maintains no central research-and-development department. “Our R&D was just applied R&D,” Mr. Papa notes. “We went out there, drilled some wells, and the first eight or nine were unsuccessful. We got improvements, improvements, improvements, until we finally ended up hitting the right recipe for success.” EOG’s decentralized technical operations and “minimum bureaucracy” encouraged engineers to experiment well by well.

Late in 2006, EOG showed that shale oil was feasible in the Bakken. This discovery meant that EOG could switch to oil, with production flipping to 89% liquids (mostly crude) this year from 79% gas in 2007. More to the point, by proving everyone else wrong—again—Mr. Papa changed the domestic industry as other companies chased his achievement. To the extent that U.S. shale oil is transforming world-wide markets, he deserves a lot of the credit.

EOG is a great example of a contrarian definition of entrepreneurship:   see economic value where others see heaps of nothing, combine the self-confidence to defy conventional wisdom with the determination to overcome obstacles, and distinguish yourself more by the ability to achieve the impossible than the originality of your thinking.  They’re also a great example of stupid experimentation:

(A)t the creative frontier of the economy, and at the moment of innovation, insight is inseparable from action.  Only later do analysts look back, observe what happened, and seek to collate this into categories, abstractions and patterns.

More generally, innovation appears to be built upon the kind of trial-and-error learning mediated by markets.  It requires that we allow people to do things that seem stupid to most informed observers — even though we know that most of these would-be innovators will in fact fail.  This is premised on epistemic humility.  We should not unduly restrain experimentation, because we are not sure we are right about very much.

Mr. Papa adds that, in retrospect, they “misjudged the upward slope of technological progress” and undershot by a factor or two or three times what the effect would be on total U.S. production:

Where we sit today with shale is the same place a petroleum engineer sat in the 1940s with a conventional sandstone reservoir,” Mr. Papa says. The best recovery rate then was 10% to 15%, leaving the rest underground, much like shale now—but since has climbed to 40% or 50%. The technology doesn’t yet exist for shale to yield similar shares, but Mr. Papa is confident that over the next 10 years it will emerge, “which basically means we’re going to double or more the amount of oil we’re going to recover. . . . Technology is always going to find a way to unlock each increment of resources.”

Mr. Papa discounts what could be considerable political risks to the energy boom, like some carbon tax or a federal takeover of fracking oversight. On the latter, he thinks the business is well regulated by the states and “there’s been a million frack jobs performed in the U.S. with zero documented cases of damage to the drinking-water table. For my set of statistics, those are pretty good odds.”

As for everything else that might come out of Washington, Mr. Papa says: “It’s my belief that for likely the next 40 or 50 years, we’ll continue to be in a hydrocarbon-powered economy, the main drivers of which are natural gas and crude oil. . . . You have to rely on the logic of the American people and our legislators to say, look at the economic benefits. The benefits are so obvious that an objective person would question whether we want to impose punitive regulations that will diminish what’s accrued.”

Mr. Papa reels off a few examples: A new burst in employment, business investment and GDP. Self-sufficiency in natural gas “for probably the next 50 years” and a two- or threefold competitive price advantage over Europe and Asia, leading to a revival of in-sourced manufacturing. A state and federal tax-revenue bonanza. Diminishing the importance of Persian Gulf and Russian energy dispensations in foreign policy.

Mr. Papa observes that these disruptive gains confounded the zodiac readings of the experts. The gains were driven by smaller, independent, nimbler companies, risking their own capital on potential breakthroughs across mainly state and private lands without federal subsidies.

“If you want to point to a success of private enterprise, and how the capitalist system works for the benefit of the total U.S. economy,” he says, “I can’t come up with a more glowing example.”

Update: Jocks and Bonds

Arian Foster for NVSEOn the first of this month we wrote about the planned “IPO” of shares in Arian Foster, running back for the Houston Texans.  Fantex, Inc. is applying the concept of celebrity bonds to professional athletes and securitizing their potential future earnings.

At that time we expressed concerns about the business model and the ability to quantify risks or conduct due diligence:  (a) it’d be analogous to a musician securitizing songs he planned to compose rather than his library of existing proven songs, (b) a professional athlete’s fortunes can turn on a dime, and (c) their “brand” is easily tarnished by revelations about past or current activities.

Last Tuesday brought unfortunate news for Mr. Foster.  (Unfortunate but impeccably timed as follow-up to the original story…)  He must have season-ending surgery and as a result, Fantex has postponed the IPO.

San Francisco-based Fantex last month filed with the U.S. Securities and Exchange Commission to raise $10.6 million in an initial public offering priced at $10 a share for Foster, who pledged 20 percent of his on- and off-field earnings to the company in exchange for most of the proceeds of the IPO. It was to be the first public offering for a professional athlete.

“After consideration, we have made the decision to postpone the offering for Fantex Arian Foster,” Fantex Chief Executive Buck French said yesterday in a statement. “We feel this is a prudent course of action under the current circumstances…  We continue to support Arian and his brand, and we wish him well in his recovery.  We will continue to work with him through his recovery and intend to continue with this offering at an appropriate time in the future based on an assessment of these events.”

Jocks and Bonds – similarites between entrepreneurs and pro athletes

Arian Foster for NVSEWriting at Grantland Katie Baker discusses the proposed Arian Foster (Houston Texans, University of Tennessee) IPO and compares entrepreneurs to professional athletes:

When you think about it, many entrepreneurs share a number of similarities with professional athletes (and not just a predilection for hoodies or the phrase “at the end of the day”).  A breakout success early in life — say, spending $6.7 million on a stake in eBay that would be valued at $5 billion two years later, or having a 1,600-plus-yard rushing season at age 24 — can be the platform that launches a career.  But it can also become, for better or worse, the only thing that defines you.  For every hit, there are multiple soul-crushing misses. Hard work and luck have a chicken-and-egg relationship, and the distinction between being the best and just being the best-positioned is often hard to spot.

Her focus on the similarities in career arcs is a bit ‘meta’ but that is an excellent point about luck and elsewhere in the piece she makes more practical comparisons:  both have to be nimble and adaptable to their environments, and, like a pro athlete, an entrepreneur is (quoting Randall Stross) “the person who is afflicted by a monomaniacal fever, who cannot not be an entrepreneur.”

San Francisco start-up Fantex is seeking to issue 1,055,000 shares of Arian Foster tracking stock at $10 apiece – with $10 million of the $10.55 raised going to Foster, who, in turn, will owe Fantex 20 percent of his future income (with a few exceptions).  They’re trying to apply the concept of Celebrity Bonds to a professional athlete – in this case, a “trailblazer” (their idea of his brand) like Arian Foster.

Celebrity bonds were pioneered in 1997 by David Bowie, who, faced with financial pressures that could have ultimately cost him the rights to his songs, chose to securitize the future cash flows from his catalogue.  These “Bowie Bonds” received investment-grade ratings from the bond agencies because they were backed by assets:  an “established portfolio of songs that generated mostly reliable, known cash flows.”  Other asset-backed securitization had been done, but “not with what was essentially intellectual property.”

A better analogy for Fantex’s deal would be if a musician were to attempt to securitize the songs he planned to compose in the future.  Baker again:

That’s because, when you look closer at the company’s SEC filing, you start to realize that at its root this isn’t really about Arian Foster, nor is it a more high-stakes version of fantasy football exactly. Buying a slice of the running back at the $10 IPO price does not give you any more ownership than buying his jersey would. (There are currently no plans, for example, for Foster to meet with investors or appear on quarterly earnings calls, and shareholders won’t have any voting rights.)

What it does get you is one share of a “Fantex Series Arian Foster Convertible Tracking Stock” that theoretically will benefit from his future earnings stream. Except that any actual distributions are at the discretion of Fantex, which will also take a 5 percent cut. If you want to buy or sell shares, you need to do so on Fantex’s proprietary exchange, for a brokerage commission. The stock that you own can be abruptly converted, at any time, into basic company stock. (And, again, at the discretion of Fantex.) I’d love to listen in on the customer service calls on the day that a bunch of fans with cash to burn wake up to find out that they’re now proud minority shareholders of an unlisted Silicon Valley venture capital–backed marketing firm.

Baker also mentions the challenge of conducting due dilly in these circumstances:

We all love Arian Foster, but just like the running back himself, things can turn on a dime. In his 2007 piece about Protrade, Lewis wrote: “Tiger Woods is a prime candidate to launch the new market. But Tiger Woods’ financial future is secure; he’s the sports equivalent of a blue-chip stock.” (He would soon turn into more of a … speculative investment.) The “Risks” section of the SEC filing on Foster makes mention of his recent admission that he received money while at the University of Tennessee as an example of where Fantex’s diligence failed to turn things up.

Rise of the high-tech South, cont.

The Private Equity Growth Capital Council (PEGCC) reports that Texas received the most private equity investment in U.S. based companies in 2012: $46.6 billion in growth equity and venture capital invested in 222 companies.  (Florida ranked 4th in companies and 5th in dollars invested: 115 companies and $17.3 billion.)

This is the latest confirmation of “the gradual but inexorable geographic spread of the start-up ethos throughout the country” we wrote of when recounting The Atlantic’s road-trip through the Southeast in search of the next Silicon Valley.  The magaizine praised the Southeast as a place which “embrace(s) an ethos that encourages rather than crushes startups and the broader mentality from which they grow.”  In the same article Paul Graham, founder of Y Combinator, coined the term “startupicide” when describing cities or regions that might as well have been sprayed with something to suppress entrepreneurial activity:

I could see the average town was like a roach motel for startup ambitions,” he wrote. “Smart, ambitious people went in, but no startups came out…The problem is not that most towns kill startups. It’s that death is the default for startups, and most towns don’t save them.  Instead of thinking of most places as being sprayed with startupicide, it’s more accurate to think of startups as all being poisoned, and a few places being sprayed with the antidote.

The growth corridors of the high-tech South enjoy several advantages familiar to NVSE readers: growth-oriented tax policieslower public sector debt burdens, stronger job creation, the best climate for entrepreneurs, and a superior overall business climate.  (The actual climate happens to be conducive to a great quality of life as well.)

The love of taxes is the root of unhappiness, Part II

New evidence from the dismal science confirms what social science has already shown: the love of taxes is the root of unhappiness.

The original social science, from the December 2009 issue of Science, indicated that states with the highest taxes also have the least happy residents.  Residents of high tax states not only have less money to spend on other things that make them happy, they don’t enjoy many benefits in exchange for all their hard-earned tax dollars.  Roads, schools, and crime are no better (and in many cases worse) while their state governments borrow even more and spend disproportionately on public employee pensions and entitlement programs.  Their needs ignored at the expense of entrenched special interests, taxpayers get unhappy.  And then they get out.

From this one might argue causation; high taxes = unhappiness.  While we are certainly sympathetic to that point of view, we also have to wonder if it runs vice-versa, or at least cuts both ways: unhappy people like to raise taxes.

We are… happy.  And happy to report that’s true for our region as well.  NVSE readers already know that the Southeast’s advantages extend well beyond the matter of taxes and include lower public sector debt burdens, stronger job creation, the best climate for entrepreneurs, and a superior overall business climate.  (The actual climate happens to be conducive to a great quality of life as well.)

The more recent dismal science is courtesy of The Red-State Path to Prosperity, from Arthur B. Laffer and Stephen Moore in last week’s Wall Street Journal:

Consider the South. We predict that within a decade five or six states in Dixie could entirely eliminate their income taxes. This would mean that the region stretching from Florida through Texas and Louisiana could become a vast state income-tax free zone.  Three of these states—Florida, Texas and Tennessee—already impose no income tax. Louisiana and North Carolina… are moving quickly ahead with plans to eliminate theirs. Just to the west, Kansas and Oklahoma are also devising plans to replace their income taxes with more growth-friendly expanded sales taxes and energy extraction taxes…

All the empirical evidence shows that raising a state’s tax burden weakens its tax base. Still, too many blue-state lawmakers believe that a primary purpose of government is to redistribute income from rich to poor, even if those policies make everyone, including the poor, less well off. The obsession with “fairness” puts growth secondary.  Meanwhile, in the South, watch for a zero-income-tax domino effect.

Here Mr. Laffer further discusses how blue states are struggling to compete for businesses and workers with the Journal‘s Mary Kissel:

BPV completes successful exit from FSV Payment Systems

Ballast Point Ventures is pleased to announce a successful exit from its investment in BPV II portfolio company FSV Payment Systems, a leading provider of prepaid program management and processing services.  FSV is known for its expertise managing a broad range of prepaid programs for companies, government agencies, financial institutions, and incentive/marketing firms.  Under the terms of the transaction, Ballast Point Ventures, North Hill Ventures, Berkley Capital, and the other non-management investors sold their ownership stakes in the Company to U.S. Bank.  The acquisition combines U.S. Bank’s payments strength and prepaid expertise with FSV’s platform which will position the combined entity as one of the few financial institutions in the industry capable of providing efficient end-to-end prepaid programs and services for its clients.

Paul Johan, Partner with BPV, had praise for the management team:

The sale of our interest in FSV marks the end of a very successful three and a half year investment for BPV.  We are very appreciative of the outstanding job that Rick Savard and his team did in taking FSV from a solid growth company to a very profitable firm with a high profile in the prepaid sector.  They’ve done a fantastic job working with clients while leading a dramatic improvement to the service platform and technology capabilities of the company.  Rick and his team have created significant value for FSV shareholders and their customers.  We are delighted U.S. Bank will be working with FSV management to continue to build the business.

Additional detail can be found here.

Southeast dominates CEOs Top 10

For the eighth consecutive year, Texas has been voted the best state for business by Chief Executive magazine. 

The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and adds to the growing list of evidence that some states understand job creation better than others.  The 2012 edition of their annual survey of CEOs includes a feature on What Keeps Texas on Top:

The state is growing its own companies but also is displaying remarkable success in luring investments from other states, particularly California, which once again ranks last in our survey. A raft of small, technology companies have either relocated to Texas or moved key operations there.  Bigger California companies, such as Facebook, eBay and PetCo also have recently opened operations in Texas, and major manufacturers from different states, such as General Electric’s transportation unit and Caterpillar have located big new plants in Fort Worth and Victoria, respectively.  “Employers from around the nation and all over the world continue to look to Texas as the premier location for business expansion, relocation and job growth thanks to our low taxes, reasonable and predictable regulations, fair legal system and skilled workforce,” Gov. Rick Perry told Chief Executive.

Texas has powerful momentum and it’s difficult to see what could halt it…  The sheer diversification in its economy—all the way from wheat farming to semiconductors—suggests that the state could absorb many punches and keep on rolling.

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