B2B marketing startup Demandbase has raised $15 million in new funding to help it add more sales members and push for growth in U.S. and European enterprises.

San Francisco-based Demandbase offers real-time targeting and personalization for B2B marketing efforts, and its tech can be embedded into other systems. It helps you see which companies are visiting your website and gives you ways to reach out to them or change content on your site based on visitors. Companies such as Adobe, HP, Dell, and Informatica have already embedded Demandbase’s software into their marketing systems.

Scale Venture Partners led the new funding round, with participation by existing investors Sigma Partners, Altos Ventures, Costanoa Ventures, Sutter Hill Ventures, and Adobe Systems. Including the new round, Demandbase has raised $44 million to date.

“Demandbase’s unique ability to not only personalize a prospect’s first engagement with a brand site but also to focus ad spend on reaching target customers is why ScaleVP is so excited to work with [founder and CEO Chris Golec] and his team.” Scale Venture Partners partner Stacey Bishop said in a statement. “We believe Demandbase delivers tremendous value to B2B marketers, and we look forward to helping fuel its growth.”

Marketing concept via Peshkova/Shutterstock

This is a guest post by investor Joseph Floyd

Consumer-to-consumer (“C2C”) marketplace startups are enjoying a Renaissance, as exemplified by Airbnb and others. Sites like these that facilitate transactions between people have disrupted older offline business-to-business marketplaces by taking advantage of ubiquitous mobile access, and delivering a better experience.

For example, Scripted connects businesses to freelance journalists through its online marketplace. Since Scripted sells access as a SaaS subscription, businesses sign annual contracts (which lowers churn) with Scripted supplying a minimum quantity of written content. If the customer does not utilize the full quantity of service, subscription breakage occurs – Scripted still earns the full revenue but does not incur the cost of providing the unused service (which expands margins). In combination, these two forces increase customer lifetime value, allowing Scripted to increase sales and marketing spend to scale growth more aggressively.

For example, MetalSite, one of a few vertical specific marketplaces in the early 2000s, connected commodities buyers and sellers via auctions. But, MetalSite and many other vertical B2B marketplaces failed because they were taken out of the loop after the first transaction as suppliers began bidding lower prices directly to buyers, without paying commissions to MetalSite.

On the other hand, OpenTable, a restaurant reservation marketplace, has become the de facto system of record for many customers. As a result, customers are locked in to using the platform, which ensures OpenTable captures each transaction and receives its commission. Additionally, restaurants are much less likely to replace OpenTable with a competitor because it keeps the system of record as opposed to simply being a source of reservations.

Frankly, tech incubators are getting too ubiquitous for their own good. Why do we need yet another Y-Combinator or 500 TechStars imitator?

But when Silicon Valley’s newest accelerator, Alchemist, launched its first class of startups this week, investors opened their check books.

The startups that have been selected for the first class are far from sexy — unless a “software-defined infrastructure platform for heterogeneous computing” does it for you – but they’re all generating revenues. What they have in common is that they target their products at businesses, not consumers.

Ravi Belani, the program’s managing director, has introduced the program at the perfect time. Part of Alchemist’s appeal is that investors are wary of consumer-facing mobile apps and social games, which have millions of users who won’t fork over a dime. As a result, this year’s hot investing targets are business-to-business (“B2B” or “enterprise”) startups.

General Catalyst is just one of the venture capital firms that is keeping a close eye on Alchemist’s seed-stage startups. “Incubators have historically worked well in the consumer internet space,” noted Deepak Jeevankumar, an enterprise-focused VC at the firm. “With the right access to mentorship and design customers, Alchemist is well-positioned to guide enterprise startups,” he said.

Already, Andreessen Horowitz, Citrix’s Accelerator, True Ventures, Greylock Partners, and Founders Fund have invested in the program’s startups. Alchemist provides the startups with about $30,000 in initial funding, which is a larger sum than alternative programs such as Y Combinator.

“I think what Ravi is doing is exceptionally interesting,” said Kevin Spain, a partner at Emergence Capital.

At Alchemist’s packed Demo Day in Mountain View, Calif.

“There’s a real need for enterprise-focused accelerators in the market,” said Spain, explaining that B2B companies have a whole different set of requirements than consumer startups to get their products off the ground.

Lightspeed‘s Bipul Sinha, an investor with a focus on the enterprise, agrees that it makes far more sense for enterprise-focused startups to enroll in an accelerator. In an interview, he said the “product building and sales process” are very different from the consumer space. He added, “there is a need for mentorship and education.”

Belani isn’t surprised that investors have been so receptive. After all, VCs are beholden to their limited partners (LPs), who expect to see solid returns. “It’s fun to build stuff and make money,” said Belani. “And in the enterprise, your first customers will write million-dollar checks.”

During their six months at the accelerator (a typical accelerator program lasts three months), Alchemist connects the founders with chief information officers at Fortune 500 companies, and they learn how to present a compelling sales pitch. Most of the entrepreneurs have a strong technical background, so this education in marketing and business is vital.

To ensure the startups get the attention they need, Belani will only take on 10 teams per quarter. Belani has already raised enough money to fund 90 companies in the next two years, but won’t yet disclose the amount. The big picture vision is to foster a stronger relationship between Silicon Valley’s enterprise tech startups and key decision-makers at Fortune 500 companies. The current class met with top executives at Procter & Gamble, Best Buy, and Dell.

Ravi Belani, the managing director of Alchemist’s Accelerator.

“We have different needs than guys in a garage building a social game,” said Ryan Nichols, founder of Tylr Mobile, a startup targeting sales professionals that raised $500,000 last month. The serial entrepreneur, who spent four years at SAP, saw a lot of value in the program, which fronted about half of his startup’s seed round. ”I don’t need business 101 advice, but I’m absolutely hungry for expertise in making enterprise sales and help finding development customers with specific needs.”

Mark Trang, cofounder of Social Pandas (pictured above, flanked by his cofounders), heads one of Alchemist’s venture-funded startups. He said he tapped Belani’s “network of experts,” including former Oracle-on-Demand CEO Timothy Chou and DFJ’s Tim Draper, for advice on hiring, research and development, and PR. With its social tools for salespeople, Social Pandas has already raised a sizable $1.5 million seed round.

Related: In 2013, analysts predict that 80 percent of the companies that will go public are B2B.

When Balani hatched the idea for the new model accelerator, he had no trouble convincing Khosla Ventures, Cisco, SAP Ventures, US Venture Partners, and his former VC firm, DFJ, to underwrite the fund. This is an impressive feat. With a few notable exceptions, said Belani, “Venture funds do not fund another instrument that is funding startups.”

Alchemist spun out of the Harvard Club in San Francisco, where Belani brought in top speakers to meet with talented college students. Likewise, the first batch of startups in Alchemist’s program met with entrepreneurs and visionaries like Adam Pisoni, Yammer’s cofounder and CTO; Melinda Gates; and Box’s 27-year-old CEO, Aaron Levie.

At a launch party for Cambrian Genomics, one of the startups enrolled in the accelerator.

At a recent get-together with the founders, I noticed an unusually large number of female entrepreneurs and developers. In another unusual twist, about half of the class are recent college grads, which suggests that the growing interest in enterprise-technology is permeating the top universities.

Andrea Faz is the twenty-something cofounder of ConnectBright, which offers a directory of reviews of B2B companies. Given her lack of real-world corporate experience, the mentorship was invaluable.

“We all unite on this common ground of innovating the sexiest industry [and that's the] enterprise,” said Faz.

With an explosion of seed-stage companies, and a relatively steady supply of first-round capital, it seems pragmatic to teach entrepreneurs how to make money. Alchemst’s founders will be in a strong position when they decide to raise, if they need VC funding at all.

In their own words, the first batch of startups are:

• SendTask, a next generation enterprise task management platform.
• Social Pandas, a social selling platform to help salespeople close deals.
• Xockets, a software-defined intfrastructure platform for heterogeneous computing cofounded by a former Cisco engineer.
• JyMob, a platform to choose the best people for your jobs.
• Selligy, a mobile service helping salespeople with their primary activity, sales meetings [Editor's note: Selligy was a finalist at VentureBeat's Mobile Innovation competition.]
• Active Scaler, a storage-load balancer for network driver enterprise storage.
• ConnectBright, an advocacy empowerment platform for B2B service providers.
• Cambrian Genomics, a DNA laser printer.
• MobileSpan, a BYOD platform for enterprises.

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Energetic CEO Aaron Levie of Box today revealed that his company is prepping for an initial public offering in 2014.

In an interview with Bloomberg, Levie said a 2013 IPO would be a “long shot,” but he didn’t completely rule it out. The company had previously aimed to IPO in the coming months, and analysts predicted that it would be in a strong position to compete in the public markets.

2012 was a hell of a year for companies that target their products at businesses, rather than consumers. And as we reported, about 80 percent of companies that will IPO next year will be business-to-business (B2B). Likely contenders include SurveyMonkey, which raised $800 million today, Zendesk, and Hubspot.

With software-as-a-service (“SaaS”) vendors Workday and Splunk surging more than 80 percent since 2012 public-market debuts, expectations are high.

The company’s ample shareholders expect to see a return on their investment. Venture capitalists have poured a massive $284 million into Box, which began in 2005 as a college business project. The rapidly growing cloud storage provider competes with larger players like Dropbox and Microsoft.

In recent interviews with VentureBeat, Levie said that the role of the chief information officer is changing, and startups have an opportunity to compete with legacy vendors like Microsoft and Oracle. In recent years, the venture capital community has caught up. “In 2007 when we looked more into the enterprise, even Silicon Valley didn’t think we could win,” he said.

Levie revealed today that his company would be using its ample resources to hire staff and open offices in countries like Germany and Japan. He expects to add about half a dozen executives in senior management roles, including an international chief. According to Bloomberg, it expects to bolster its staff to 1,000 employees in the next year, up from about 670.

The Los Altos-based startup recently celebrated the opening of its London and San Francisco office.

Barriers to entry have fallen with light touch interfacing and sticky product features through web and mobile apps, as well as APIs. Deal flow opportunities are tremendous: Think scoring 50 fold+ in revenue over long term contracts with large clients, as opposed to one-night-stands with consumer who can flake out at any given time.

Exciting times, to be sure — but investing time, capital, and resources to align the ideal go-to-market strategy can easily burn out the most ambitious and experienced.

For those that are just starting out, here are a few ground business, marketing, and personal rules for building the foundation of a highly scalable business-to-business startup:

1.  Don’t compete, just win

Execution trumps ideas every time.

Once you get past your ‘friends and family’ circle of prospects, no one will care about or your offering unless you push.  You’re going to need tons of positive and assertive take-no-prisoners-style energy, while still being likable and a fun person for the other side to talk to.

When you get tired or frustrated, always push for one more call.  It will give you a boost to perform and deliver above average more consistently.

2. Forget about 100% reliance on inside sales

It’s for the rich and well experienced, not for you.

You don’t have enough time or money to buy $10Ks in media, convert, and measure and expect to be successful from day one.   Invest your time building a pipeline of prospects - through your network and straight cold calling like crazy.  Find the processes that work and the customers that find value in your offering and pay.  Constantly adapt your site messaging and selling methodologies based on paying customer feedback.

You’ll still need to buy media, but keep the budget low and consider it strictly for branding to build awareness, not direct revenue.

3. Get attention fast

You can’t do it alone on the phone.

Reach out to media outlets that speak to your target market right off the bat — don’t wait for your product to be perfect. Instead, focus on bringing one to three killer beta customers that can vouch for your offering.  Highly visible beta users or customers will always speak better than you can about your company and are instantly recognizable by your prospective customers.

4. Hustle big

Remember David and Goliath?  It’s scary reaching out to people for the first time and selling… even scarier when approaching larger companies.

But the important thing is that a few heavyweight names in your category will validate your market and the strategy you’re implementing to engage them.  More than likely, it will take just as much time to bring on board as a smaller prospect … so why shoot small?

Shoot big, welcome them as partners, and promote your relationship as much as possible.

5. Eat and train well

Workout in the morning – at least four work days a week.  By working out, you’ll find some type of physically stimulated activity that you’ll get addicted to doing every morning.  You’ll come to the office ready to kick ass and will have more energy to continuously perform all day — believe it.

It’s a long road that will be challenging and confusing, but it will pay off.

When in doubt – focus strictly on execution!

Cameron Peron is VP Marketing and Chief Customer Advocate at Newvem, a web-based cloud usage analytics service that enables CIOs, CTOs, IT managers, Developers and Operators to capture and improve the effectiveness of their public cloud operations  and ensure their cloud infrastructure is in sync with business performance so they are financial efficient and contribute to a company’s profits. Follow him at @cameronperon.

photo credit: Stuck in Customs via photopin cc

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For startups developing software for businesses rather than consumers, pitching products to IT divisions can be a predicament: It’s often unclear who makes the final decision on purchases, and IT budgets have become notoriously tight.

A new wave of companies — like GoodData, founded in 2007 — have boldly entered the market with plans to bypass IT entirely and sell their products to marketing and business users.

Research firm Gartner is partially responsible for its shift in attitude with its frequently-cited projection that by 2017, chief marketing officers will spend more on IT than chief information officers. Startups selling software to businesses fear that they can no longer count on IT managers as customers.

With the global economic climate expected to improve, Gartner predicts that the “major retardants to IT growth will lift.” In a statement, Richard Gordan, managing vice president of Gartner, explained that uncertainties in the global market derailed IT spend and caused “pessimistic business and consumer sentiment throughout the world,” but he expects to see “accelerated business growth” by the end of the year.

Gartner’s analysts predict that IT spending will reach $3.7 trillion in 2013, up 4.2 percent from 2012. In previous forecasts, researchers only projected a 3.8 percent increase in the coming year, meaning they see cause for optimism.

Worldwide enterprise software spending is forecast to total $296 billion in 2013, up 6.4 percent from 2012. Hot technologies like security, storage management, and customer relationship management will drive some of this growth, but the global telecoms market will remain the largest IT spending market.

According to Gartner, by 2014, “big data” analytics tools will be increasingly viewed as a necessary investment.

Gartner analysts warned that some of this projected spending increase is a result of gains in the value of foreign currencies versus the dollar.

The firm revised its estimates on worldwide device spending on printers, PCs, mobile phones, and tablets. The previous forecast of $706 million is likely overblown — analysts project that spending will only reach $666 million in 2013.

The market for tablets and PCs will be hardest hit. “The tablet market has seen greater price competition from Android devices as well as smaller, low-priced devices in emerging markets,” said Gordon.

Black cloud image //  artemisphoto, Shutterstock

Influitive’s software helps businesses mobilize their customers into advocates and use these advocates strategically as part of marketing campaigns. The products are geared towards business-to-business companies, rather than those selling consumer-facing products.

Basically, Influitive helps boring, unsexy companies activate an “army” of advocates to boost their sales effort. Using AdvocateHub, marketers invite customers to join a community and incentivize them with perks and privileges. It is one thing for an athletic gear company to motivate their brand enthusiasts with free sneakers. It is quite another to find passionate fans of email marketing software or telecommunications systems, and yet referrals, references, and social media are valuable assets when selling a product or service.

A statement issued by the company states that trust in corporate sales and marketing continues to drop, and B2B buyers are increasing their reliance on social media and “blind” peer endorsements to make purchasing decisions. Influitive offers a more productive alternative by gamifying the process.

Since it raised the seed round, Influitive has increased its sales by 145%. The new funding will help the company build its marketing, sales, and service teams and further development of AdvocateHub. Hummer Winblad and Relay Ventures led this round, with participation from existing investors Lightspeed Venture Partners, New Enterprise Associates, Illuminate Ventures, and other angels and firms.

Influitive is based in Toronto and San Francisco. Read the press release. 

The enterprise is red-hot now, but pragmatic investors have been quietly investing for decades.

According to technology research firm CB Insights, these investors will reap the rewards in the next few years. The firm’s Tech IPO Pipeline report found that 80 percent of the technology companies that will likely file for an initial public offering by the end of 2013 aim their products at businesses, rather than consumers.

Business-to-business (B2B) companies like Workday and Splunk experienced stellar IPOs this year, fueling interest in the space. When Facebook and Zynga’s IPOs failed to meet expectations, the enterprise was declared “sexy.”

“The chatter about enterprise startups is more a function of the fact that consumer startups look less appealing [to investors] more than anything else,” said CB Insights’ CEO Anand Sanwal. ”Folk are saying now that enterprise is the place they should be playing.”

Related: Read more about the 12 investors that are on the hunt for the next Microsoft or Oracle.

All eyes are on high-performing startups like Box, Github and Square, which are rumored to go public in the next few years. Ones to watch also include Stripe, Palantir and Hubspot. “These companies are all attacking different spaces from infrastructure to payments,” said Sanwal on a phone interview. “But they have one thing in common: they are all targeting businesses.”

The average amount raised to date by companies in CB Insights’ report is $84.7 million, which proves that it takes significant capital to build technology for businesses. Investors backing the companies include Intel Capital and Sequoia Capital, as well as Goldman Sachs. About a fifth of the companies were backed by private equity firms.

The 472 companies on CB Insights’ list are all currently valued at $100 million or above. When compiling the report, the firm also took into account hiring patterns, and the quantity of media articles.

According to Sanwal, venture firms that have recently began paying attention to B2B are a little late to the party. Many of the companies that he expects will IPO in the coming years were founded in the late 1990s and throughout the 2000s.

Overnight success isn’t the norm; many of the most successful B2B companies have been around for decades, and have experienced ups and downs. The most common year the startups on the list received financing is 2007, which is significant, as this marks the beginning of the global economic recession.

“It’s telling that these companies go through tough times and emerge stronger,” said Sanwal.

$100 bill image via Shutterstock

Besides running the Verizon Center and three professional sports teams, including the Washington Capitals and the Washington Wizards, he serves as a vice-chair of Groupon and chairman of documentary film producer SnagFilms and is one of the three core partners, with Steve Case, behind the $450 million Revolution Growth fund.

And yet, when Revolution Growth invested in FedBid, a reverse auction site for government agencies and businesses, Leonsis took a position as chairman of the board.

VentureBeat interviewed the former AOL executive to learn more about the site, what it promises, and why a billionaire with so much on his plate already would take a reasonably active management role in what was probably something like a $25 million investment.

VentureBeat: It’s got to be a tough time for a sports team owner when one team is locked out or on strike and the other is not doing so great.

Leonsis: Now, you never get too high with the highs or low with the lows. I just have more time right now to talk to you about why we’re excited about FedBid.

VentureBeat: Excellent. How would you describe FedBid if somebody asked you off the street?

Leonsis: FedBid is a private marketplace that delivers great cost savings by connecting multiple sellers digitally with an RFP-based buyer.

The technical word for it is “reverse auction,” and now the network effect has taken place because we now have 45,000 to 50,000 active vendors in the marketplace, and we’ve got 25,000 to 35,000 or so active buyers.

FedBid originally was created to help government procurement officers buy more efficiently and save dollars out of their budget. That’s how it was created. And the entrepreneur who founded the company literally over a 10 year period had to get each arm of the government to approve the use of the platform.

So that would take time … you’d go to the Army and you’d have to work really hard to get the Army to say ‘yes, we understand, and we agree to let you implement and have the platform exposed to our thousand procurement officers all over North America.’ Then they had to go and train all of those procurement officers on what they should be putting up on this network.

VentureBeat: Which means that the ramp-up was slow, but once you’re up and running, you’ve got some large volume coming through?

Leonsis: Right. Now there’s volume so sellers are interested because they can go in and look on a daily basis at what RFPs are going up, and the buyers are putting more up because their last field that went up, a lot of people bid on it, and the more people who bid, the better the pricing, and so you get that network effect.

Now it’s more than 10 years old, and the volume, I mean right now I think over the next 12 months we could do $3 billion on the top line.

VentureBeat: Can you walk through a specific case of how it works?

Leonsis: I’ll give you a personal case study — I own Verizon Center, where the Capitals and the Wizards and the Mystics play. These teams have been around for a long time, and we have unbelievably competent financial people in our organization. They spend an inordinate amount of time managing the building, maintaining the building, upgrading the building, keeping two-and-a-half million customers a year happy. We buy big things from big companies, and we do lots of little transactional sales.

VentureBeat: Supplies, food, souvenirs, stuff like that.

Leonsis: Right. So as an example, I asked our CFO, who’s incredibly diligent, loyal, competent: could we take a consumable product to test on FedBid. And he chose paper cups.

We went to our incumbent person, who’s done a fine job for us for many years, and asked for a bid. And for the size lot we asked for on that bid, [we were told] ‘here’s what you paid last year, and we’re increasing the price 2.5 percent.’

Coffee has gone up, costs have gone up, and so that bid was up. And then we put that exact same spec for paper cups on FedBid. Thirty-three vendors first got approved — they had paper cup products that met the exact spec that we had — and then they started to bid; and they bid in excess of 140 times.

VentureBeat: Seriously — while you’re sitting there watching the numbers come in and go lower and lower and lower?

Leonsis: Yes. Then there was the final bid – which our CFO checked to be sure came from a company of size and scale and reputation, and whether they met the spec, and if they could ship the product on time — and it was almost 20 percent less.

VentureBeat: So in other words, you’re running a reverse auction which, to do manually would be inconceivable, I mean, you’re talking months of work for many, many people, and you’d never get the same sort of effects of everybody seeing the bid go lower and pushing it down.

Leonsis: Exactly. So as the network gets bigger there are more people selling, and there are more people buying. As you get more people buying, then more people will be interested in selling, and there’s virtuous circles within that as well.

Another example: We added the Veterans Administration to the network and the VA … and they want to get the best price, but they also have mandates to give business to small businesses — not just big businesses — and veteran-owned businesses as well.

VentureBeat: Ahh … which could mean tons of overhead in management, presumably.

Leonsis: And they are supposed to source from minority-owned businesses as well, so as a procurement officer you’re having to manage multiple mandates. So you’re wanting to bring the price down to save money … there’s a needle to be threaded.

So the VA in this instance wanted to upgrade to digital scales, just as an example, and they needed 1,000+ digital scales. So they put that out on FedBid, many people bid, and the next-to-lowest bidder happened to be a female-owned business; she was also a vet.

So it hit a lot of the positive metrics. We’re saving money, and we’re giving business to a veteran-owned business that’s female owned and operated, and for the seller, she was very competitive now because it was online selling.

VentureBeat: Because she didn’t need to have outside salespeople going all over the place, traveling, staying in hotels, meeting 10 different people in five different departments?

Leonsis: Exactly, exactly. So the case study we gave you about the Detroit Public School systems, was, I thought inspirational. I call that one a double bottom line endeavor, in that we had a city that was struggling with its economy, a school system that was under mandate, wondering how are we going to open, if we can’t pay for it, and so they said they needed to generate new revenues or cut expenses.

So the questions become: Does that mean we have to have layoffs, do we have to shut schools, is there a way that we can find money in being more efficient in using technology and business methodology to come up with a lot of dollars?

That’s where they used FedBid, and that’s just a perfect story because the school systems saved $103,000.

VentureBeat: Pretty impressive.

Leonsis: So we see why I’m enamoured of FedBid as a company and as an invest: The benefit of working with them and using the service is self-evident. It’s not about romance, it’s high utility. You know what you paid before and what the spec was. Here’s an option to meet that same spec and save 10 to 12 percent on average.

VentureBeat: And to make the whole bidding process very transparent, I would assume.

Leonsis: And very automated, with lots of data around it and with lots of historical data, but also to have all value-adds that you can put into the system.

For example: I’m looking for this kind of price but also this other criteria … and that is proving to be of great benefit to lots and lots of customers, and it’s why we’re growing so rapidly. I look at it and we’re growing rapidly, but if we’re saving organizations 10 percent and we do $3 billion, that means we’re saving someone $300 million!

And that $300 million can be used by those organizations in multiple ways. It allows them to keep people employed, it allows them to hire new people, it allows them to reinvest that savings into new R&D and innovation, it allows them to drive profitability.

VentureBeat: Why did you take a role as chairman of the board?

Leonsis: The strategy with the original set of investments Steve Case and I made was that we would not make a lot of investments; we would make a few investments of size, where we could own a big piece of the company and we would add value through our leadership and management with the entrepreneur and his leadership team.

So we own about a third or so of FedBid, and we’ve been in it for about a year. The company is a growth company both on the top line and the bottom line – about 40 percent top line growth — and we’re proud of it because it’s doing the right things the right way.

VentureBeat How big can this company get? I mean the federal government is enormous, and you’re hitting education now, and there might be room beyond those, I don’t know …

Leonsis: So our investment went in so that we could scale the business and the network and go after three or four adjacent opportunities, one of which is state and local, and another of which is the B2B marketplace, mostly around midsized companies. Because if you’re a company that’s $50 million to a billion, you don’t have the pricing leverage and the scale of a really really big company.

Although I’m pleased to say — we can’t announce it yet — that several really really big companies have come on board, and they’re putting a lot of test trial orders on FedBid. They’ll say, we buy $10 billion worth of stuff, we’ll let you try and see if it works on $100 million. And everyone goes through that initial phase like my CFO did, thinking they’ve been buying paper cups for a long time, I know I’m getting the best price!

That’s what they all say! And they say ‘I’m not spending a lot of time on it because I know I’m getting the best price.’

And then the bids come in, and they go, ‘Whoa, I didn’t realize I could save that percent on that. Could I do it on hotdog holders and on straws and on toilet paper and on cleaning supplies and on laptop computers and on writing pads and …’ all of a sudden you start to look at all the dollars you’re spending on those unmanaged assets, if you will, unmanaged purchases and a 10 to 12 percent savings, it really adds up.

VentureBeat: So you actually have the opportunity to go revolutionize the procurement side of perhaps any business?

Leonsis: Well, I mean, a lot of companies have tried to modernize and create their own networks like this.

VentureBeat: Right, which doesn’t make a ton of sense because as a seller you have to belong to 15 or 25 or 100 different networks.

Leonsis: Right, so we’ve broken through as a bigger marketplace.

VentureBeat: Talk to me about competition — who do you view as your biggest competition? Is it just legacy systems?

Leonsis: You know, we don’t have a direct head-on competitor. There are companies that will sell an organization a single platform solution, like Ariba, and there are some different  vertical solutions, Liquidation Services, for example. But they’re very different business models.

Some could say [FebBid is] kind of like eBay, but for business, but it’s a very unique company. It has big buyers, lots of money from buyers and big sellers and then the network effect takes place, so the more buyers, the more sellers, the more sellers, the more bids, the more bids, the more buyers, and so you get both spirals going up.

VentureBeat: Do you have to rebrand or anything like that as you attack non-governmental markets?

Leonsis: No, we’ve been very pleased with that. At first we thought that would be an issue, but when people hear what the market’s all about, they realize that having all of those buyers, they just add to the community. It could be a lot of people think of FedBid like Federal Express. You know, like it’s the federated network between buyers and sellers, and we say, ‘yes that’s exactly what it is!’ But no, we haven’t had any confusion or any issues with the brand yet.

VentureBeat: Anything I’m missing that maybe you wanted to let me know?

Leonsis: Um, no, just that you should talk at some point to the founder, because he never took any outside financing –

VentureBeat: Bootstrapped?

Leonsis: Yes. A lot of big firms wanted to invest in his company, and he chose us. You know, money is money, but it was our philosophy and strategy of working with him as a partner that differentiated us, and it’s been great, it was our first fund investment and he’s very very happy.

VentureBeat: You’re kinda the anti-VCs in this case.

Leonsis: Yeah, it’s not spray and pray, it’s very concentrated, kind of a throwback to the early days of venture capital: lots of mentoring, concentrated capital, really really good due diligence before you go in … and having one of the principals stay very close to the company.

There’s three principals: Steve Case, myself, and Don Davis, and we see in this first fund — which was close to a half a billion dollars — we’re going to do 10-15 deals between the three of us. So we’ll have three to five portfolio companies each over a five year period.

VentureBeat: I have to ask … I am Canadian, and a hockey player. When are the Capitals and Ovechkin gonna hit the ice?

Leonsis: I’m afraid I have no comment [laughing].

photo credit: jaredpolin via photopin cc

Emailvision brought in $30 million in new funding to deliver targeted marketing emails to your inbox.

The company sells software-as-a-service to businesses looking to increase the effectiveness of their email campaigns. Its enterprise products include tools to manage email, mobile, and social marketing efforts as well as customer intelligence data and analytics to achieve the greatest impact.

Each month, the platform delivers 600,000 personalized marketing campaigns for 3,300 clients around the world. Customers include The Washington Post, Cisco, Club Med, Walmart, Mercedes-Benz, Staples, Ikea, and Rail Europe.

The investment came from Izurium Capital and enabled Emailvision’s recent acquisition of PredictiveIntent, a company that develops behavioral targeting and predictive analytics systems. The partnership is intended to further improve Emailvision’s ability to deliver highly personalized marketing content.

Emailvision is based in New York and has 22 offices around the world.

Read the press release.

Chinese e-commerce giant Alibaba Group is raising more than $8 billion in a new round of funding, the majority of which will be used to buy back half of its shares from Yahoo, the New York Times reports.

The deal values Alibaba at as high as $43 billion, making it one of the most highly valued private Internet companies.

Yahoo currently holds a 40 percent stake in Alibaba, and the Chinese company plans to spend $7.1 billion to buy back 20 percent of its shares, according to the report. The amount will come from borrowing nearly $4 billion, along with sales of $2.6 billion common shares and $1.5 billion in preferred stock.

Yahoo paid $1 billion for a 40 percent stake in Alibaba seven years ago, when the Chinese firm was little known outside its home country. Today, the investment comprises more than half of Yahoo’s $20 billion value. Yahoo has agreed to sell back another 10 percent when the Alibaba Group goes public and divest the remaining holdings at a later date.

Among those financing the $8 billion in Alibaba are the sovereign wealth fund China Investment Group and the China Development Bank. The investment comes as Alibaba earned $1.8 billion in revenue during the first half of 2012, a 60 percent increase over a year ago, the Times reported. Yahoo stock, by comparison, has lost more than 50 percent of its value since it initially invested in Alibaba.

Photo Natalie Behring/World Economic Forum

Joe, who knows my former boss Frank, on the other hand … that’s an entirely different matter. That is the premise behind Reachable, a social connection tool for business-to-business sales professionals, which just updated its “enterprise social” graph to over 100 billion connections.

“Companies are sitting on a goldmine of under-utilized social assets – the relationships of all their employees, their customers, and their partners,” said Reachable chief executive Al Campa in a statement.

The idea behind Reachable is to gather all those relationship and then correlate them with the connections that the company already knows about. And then to leverage them to help salespeople make connections, turning cold calls into at least semi-lukewarm conversations.

Why?

Because, according to Reachable, a potential customer is five times more likely to return a sales call if they have some kind of personal connection with the rep.

Reachable built the social graph through analyzing online profiles of both businesses and individuals. The company says they are aggregated from “a number of sources,” which I presume but cannot confirm includes LinkedIn and Plaxo. By checking work history and educational background, Reachable creates a web of connections that could enable sales reps to find a common alma mater, a shared former colleague, or another point of connection.

The cloud-based service is integrated with Salesforce.com and Oracle CRM on Demand, so clients of those tools can use the tool right inside a familiar environment. In addition, Campa said, “Reachable supports the import of information from LinkedIn and Facebook as well as email address books.”

The company has released a free version with limited functionality and a premium version, priced at $49/user/month; a desktop version is also available.

Reachable has received venture funding from Rho Ventures, Signal Peak Ventures, and Parkview Ventures. It is based in Palo Alto and Salt Lake City.

Image credit: Alekup/ShutterStock

Traxpay is striving to refine the payment process by giving businesses a more streamlined way to send and receive payments online, as well as greater control over the transactions. Companies can also manage their transactions and have instant access to funds.

“Online B2B payments represent a nearly $250 billion market with many inefficiencies, and we think it is a massive opportunity for innovation,” said Jason Whitmire, a partner at Earlybird. “Traxpay’s unique blend of enterprise software, payments, and banking expertise will deliver one of the most disruptive technology solutions since Paypal reshaped the B2C payments market.”

Traxpay also announced the appointment of John Bruggeman as CEO. The company is headquartered in Mountain View, Calif., with an R & D office in Cologne, Germany. The company was founded in 2009 and will use the funding to continue building the European customer network and expand into the US.

[Top image credit: Denisenko/Shutterstock]

Most consumers are likely oblivious to the issues of international trade fraud, but for businesses that rely on overseas suppliers, it’s becoming an increasingly large problem. The issue stems from the lack of communication between businesses, which makes it easy for fraud of all varieties to take place.

HD Trade Services aims to reduce fraud for distributors of high-value goods with its high-definition video inspection. It’s also offering a way to make business-to-business deals more efficient with its management platform. The company is making its debut today at DEMO Spring 2012 in Santa Clara, Calif., an event which is co-produced by VentureBeat.

In a survey of more than 1,200 senior executives for its latest Global Fraud Report, the consulting firm Kroll found that 42 percent of companies listed “Vendor, supplier or procurement fraud” as one of their biggest vulnerabilities last year. That’s an increase from just 26 percent in 2010.

Source: Heather Kelly/VentureBeat

HD Trade Services founders Dan Sugarman (left) and Dan Sperling-Horowitz, onstage at DEMO Spring 2012.

Using high-definition streaming video, HD Trade Services lets companies keep a closer eye on their overseas goods. The company’s technology lets you get a close look at the quality and quantity of goods before you actually make a purchase. Logistics providers can get “HD Certification” from HD Trade Services, which will allow them to perform live inspections via desktop and mobile app. And with its Deal Manager, you can forgo manual data entry and automate deals with distributors, freight companies, and the like.

In the demonstration, the founders showed how a customer could click to view details on a deal with an overseas supplier, then click on a button to view live HD video from the site where the goods are being shipped, and either pass or fail the inspection. Internet troubles interrupted the live video in the conference room, however, suggesting a potential flaw in the technology: It depends on a reliable connection on both ends.

To address that significant challenge, the company’s founders say they’re pursuing partners with global freight-forwarders to install HD video inspection stations. Presumably, high-speed internet connections will be an important component.

“Since our founding, the problem of trade fraud has grown at a staggering rate,” said HD Trade Services chief technical officer Daniel Sugarman in a statement today. “Last year, over 100 employees of the world’s leading B2B marketplace were caught aiding fraudsters. In addition to this, trade fraud was one of the main topics of this year’s State of the Union Address.”

“In terms of global trade, it comes down to trust. So I wonder if HD video is really the best way to create trust,” said David Friedberg, The Climate Corp., in an investor panel after the HD Trade Services presentation. Friedberg suggested that social networks might be a better way to vouch for a company’s trustworthiness.

The company was founded in 2011 by Sugarman and CEO Daniel Sperling-Horowitz, who has spent years researching international trade fraud. Sperling-Horowitz first ran into the issue when trying to import electronics from Alibaba.com, but was shocked to find many complaints from a supposedly trusted supplier. That spurred him on to make several trips to China to further investigate trade risk at its source.

Garden City, New York-based HD Trade Services currently has 5 employees and has raised $100,000 so far from Prime Transport.

HD Trade Services is one of 80 companies chosen by VentureBeat to launch at the DEMO Spring 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.

Tradesparq, a Shanghai based startup, is trying to simplify the process of locating a trustworthy manufacturing partner by allowing business owners to search a directory of global suppliers and match those results against their social network. Think Alibaba meets Linkedin.

“The Chinese manufacturing market, valued at nearly $1.9 trillion last year and representing almost 20% of the worldwide total, suffers from well-documented problems around supplier quality and reliability,” said Tradesparq founder Brain Hager, who worked for years in China on just these kinds of problems.

Tradesparq co-founder Michael Kleist

“We reduce the time spent on supplier discovery and due diligence,” said Hager. “Traditional Web 1.0 Chinese supplier directories are based on paid ratings, which offer buyers no reliable validation of the quality of their Chinese suppliers. Plus, with no filters, the sheer volume of information and suppliers to verify is too time consuming. Search for kitchen sink to find a manufacturer on Alibaba, and you are likely to get tens of thousands of results. We winnow that down to a dozen top rated firms who you can check for references against your social network.”

On stage at DEMO, co-founder Michael Kleist said that Tradesparq has more than 500,000 products from 75,000 suppliers available on its service.

Last year Tradesparq had 1.2 million inquiries and says its on pace to do four times that this year. It has backing from a mix of angels and institutions, including Ed Haynes, the CFO of China Omnicom Media and founder of Wangyou.com, an early Chinese social network.

For a great rundown on how the company works, check out this presentation they gave at a recent DEMO Asia event.

Tradesparq is one of 80 companies chosen by VentureBeat to launch at the DEMO Spring 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.

Image from Flickr user K.Kendall

By making communication between the many different parts of a business easier, Xinosys hopes to help businesses run more smoothly with its cloud-based business-to-business trading platform.

Typical e-commerce platforms are rife with limitations, says Xinosys CEO Even Chung. For example, suppliers frequently don’t offer their most updated product details on the web, and it’s often a lengthy process for new businesses to get in their good graces. With Patisco, it’s much easier for suppliers to get a sense of what a business offers and start working them.

In addition to promoting communication, the platform allows owners to manage most of their business activities from a single web-based interface, including online catalogs, order taking, pricing strategy and more. Patisco competes with Alibaba.com, a business-to-business marketplace.

Chung tells VentureBeat that since the service launched in January, about 270 companies have been trying it out. At the moment, over 5,000 products have been put together within Patisco, and around $4 million worth of orders have been filed within it.

Xinosys was founded in 2006 and currently has seven employees. The company has bootstrapped to the tune of $300,000 so far from its founders.

Xinosys is one of 80 companies chosen by VentureBeat to launch at the DEMO Fall 2011 event taking place this week in Silicon Valley. After our selection, the companies pay a fee to present. Our coverage of them remains objective.

So how do you adapt to the changing landscape, in order to engage and nurture potential customers more effectively?

Here are five areas that B2B marketers should be paying careful attention to and selecting their marketing automation tools accordingly.

Data Collection

Listening, absorbing and acting on information about contacts rather than shouting generic marketing messages is key to nurturing leads in an age in which inboxes are overflowing and time is short.

For marketers, this means using marketing technology tools to help build a robust database based on prospect preferences and behaviors that can be used to send automated, triggered messages. A few hot areas:

• Web tracking: While not new, Web tracking has grown more sophisticated, enabling marketers to tie anonymous behaviors to specific contacts and thus send more relevant automated messages, as well as monitoring a more expansive range of behaviors, such as blog comments, Foursquare check-ins, white paper downloads, Twitter follows, etc.
• Progressive profiling: Instead of trying to collect 12 data points about a prospect up front and risking form abandonment, progressive forms allow marketers to set up an automated process in which they ask buyers for a few key data points at first and then gradually increase their knowledge as the relationship grows.
• Social: Offering website visitors the option of signing in with their social network credentials, adding a lead generation form on a company Facebook page and inserting share call-to-actions in event reminder emails and white paper .pdf files are just a few ways marketers can build their database and increase their message reach.

Lead Management

Marketing automation enables you to add a layer of sophistication to your lead-management process that will increase efficiency, tighten up any remaining leaks in the funnel, and improve alignment between marketing and sales.

New technology enables you to create more comprehensive lead-scoring systems than ever, allowing you to rank the qualification of prospects according to their buyer interest and increase the number of quality leads sent to sales.

And tighter integration between marketing automation platforms and CRM systems means you can easily alert sales when leads perform certain meaningful actions, as well as giving sales full visibility into marketing’s activities—and vice versa—when you turn a lead over to them.

Cross-Channel Campaign Management

Today’s buyers want to be communicated with as individuals, so marketers are faced with the challenge of incorporating various decision points into their campaigns in ways that build deeper relationships and drive conversions. The best marketing automation platforms make this process easier by providing visual campaign tools that enable marketers to create programs with multiple messaging tracks and touch points and automatically route each contact down a specific track based on his or her interactions with the company.

Whether it’s a nurture email, event invite or an alert to your call center to contact a lead in your system, the possibilities for engaging prospects are endless.

Social Marketing

Many prospects are now coming to companies via search and social, so marketers need to make sure their content creates a consistent conversation path during the relationship. In addition to the tactics mentioned above, B2B marketers should focus on making their content shareworthy and shareable, delivering educational content that addresses key pain points and including social icons that make it easy to share with the click of a mouse.

Marketers should also plan their automated nurture campaigns around the idea of facilitating a social dialogue, encouraging sharing in multiple emails and enabling conversations around their content. In today’s marketplace, integrating social media into a multichannel marketing strategy is becoming an increasingly essential element of nurturing leads and driving conversions.

Tracking and Reporting

There’s a lot of pressure on marketers today to demonstrate their value and impact on the bottom line. By employing marketing automation technology and strategy that captures all aspects of their campaigns and offers a clear view into the results of their marketing efforts—from lead acquisition to account close and beyond—marketers will be well-positioned to accurately showcase how they’re capturing prospects’ attention throughout the whole lead-management process.

To gain a complete picture of their marketing efforts, marketers should run reports that look at both first touches and influence. The former will tell you where new leads are coming from and where you should keep spending your money, while the latter will provide insights into what actually convinced someone to buy.

When tracking where leads came from (“first touch”), put an automated system in place that separates the source from the offer, so that no matter how prospects interact with your content and what path they take from seeing your ad to signing a contract, you’ll be able to keep tabs and better determine where to focus future resources.

As the director of product strategy at Silverpop, Bryan Brown is responsible for defining the broad strategic vision of the company’s family of products and helping marketers grow revenue.

Image: Nikoniano / Shutterstock.com

Social technologies are breeding a new type of savvy marketing pro, tasked with reaching a more fragmented audience of customers, prospects and brand influencers than ever before. While B2C marketers have started to significantly crack the code, established B2B companies (as well as start-ups in the space) still have to catch up and embrace the “world of social” and reach their customers through channels like Facebook, Twitter, YouTube and LinkedIn.

For many start-ups and young companies, the real-time buyer information that is shared and accessible across social channels – aka social intelligence – is the “golden ticket.” This data source delivers valuable insight about what customers want and need, but may not explicitly state as such, in their personal or business lives.

Deeper understanding of customer requirements not only helps sell existing products and services, but also provides a new perspective into industry voids for start-ups to further develop products and differentiate from the (often more established) competition.

While the social business tactics are alive and conversation within the “social business” trade is abundant, enterprises and many B2B marketers are embracing these tools at a glacial pace. This opens a door for start-ups to quickly react to market demand, customer feedback and investor or advisor expertise by adopting new – and socially-focused – tactics to drive strong lead pipelines, customer satisfaction and overall brand success.

For early-stage companies, this social savviness typically starts with the CMO, since community managers are too expensive to bring in house, sales professionals are fully engaged in selling and the CEOs are busy driving business strategy.

Social intelligence provides a deeper understanding of prospects’ buying cycles.  These new insights increase sales team productivity by minimizing the time sales reps spend on “cold” prospects – and accelerate the sales conversion for “warm” candidates, leading to higher close rates.

Social media is moving beyond the B2C world. As big B2C brands like Southwest Airlines and Ford Motor Co. mastered the art of social marketing, B2B organizations must also recognize the fact that customers and prospects live hours of their daily lives online, conversing across social channels.

However, B2B social intelligence is more fragmented and niche than a “sexy” consumer brand, which makes the modern CMO’s job more reliant on listening and engagement tools (such as Social Media Monitoring and Social CRM), which provide the much-needed “personal” touch that notoriously lives within small businesses.

Since outbound marketing is deemed interrupt-driven and considered less effective by the customers, companies must find a way to improve the timing and the relevance of their messages. Want to know how to increase your marketing budget as a CMO? Show greater ROI through more targeted outreach.

For example, HR services firm TriNet found that talking to prospects at times of business change – i.e. new management, funding, expansion, etc. – drove unusually high response rates.  Social platforms gave the company timely and in-depth knowledge of these “times of change” windows. The result: An incredible 70 percent conversation-to-appointment rate for the sales team, simply by listening to and engaging with prospects based on social intelligence.

The social revolution is an important part of the ongoing transformation in the way marketing teams learn about, engage with, sell to and sustain relationships with customers and prospects. As savvy marketers are leading the adoption curve, recognizing social intelligence as a key driver to marketing productivity and business success is a critical characteristic to modernizing not only the CMO’s department, but also the business at large.

Zendesk is part of a batch of fresh collaboration and enterprise startups that have seen some explosive growth in recent years. Along with Huddle, Yammer and some other startups, Zendesk has seen a lot of interest with its on-demand help desk services. With that much momentum, it makes enough sense that the company is going to go as far as possible — which could involve going public, though that’s a completely different beast, Svane said.

“This most recent round of funding has all the characteristics of being the last round of funding,” Svane said. “We want to push this company as far as we can — we believe we have fantastic momentum here.”

The whole generation of enterprise startups has seen some significant rounds of funding as well. Zendesk has hired about 50 people in the past year or so, and has seen an incredible amount of growth. That’s on top of two earlier rounds of funding, the second of which was worth $6 million. Yammer, another startup in that generation, recently announced a funding round worth a whopping $25 million. Huddle raised an extra $10.2 million in its second round of funding earlier this year in May.

It’s another indication of the newest startups bringing typical consumer-facing strategies to the enterprise. Yammer brought the lessons Facebook taught startups to the enterprise space with its business social network. Zendesk, like Yammer, brought lessons from the consumer space by letting customer help desks communicate with customers anywhere at any time, using a large number of tools like e-mail and Twitter.

“The whole notion of customers and companies is completely changing, we’re all customers,” Svane said. “All our tactics are consumerish — the traditional B2B is quietly dying out.

Svane wouldn’t give any indication of what kind of valuation the company had in its most recent round of funding, but said he was “very humbled at the size of the round.” He said the company was a bit oversubscribed and, like other fresh startups in the area, had the luxury of being a bit picky in what investors the company chose.

“We can’t say yes to everybody,” he said. “There can be only one, and that was actually the hardest part.”

If that weren’t any kind of indication of how much influence the consumer space has on Zendesk’s enterprise strategies, the company has enlisted the likes of Cory Doctorow for a series of holiday videos ranging from creative commons musicals to parodies of TED talks.

As he took the stage, Jack Ma, CEO of the Alibaba Group, said, “I got an SMS (text message) from a friend before going up: ‘Jack, what’s up? Why is he [eBay CEO John Donahue] doing here? Isn’t he a competitor?’”

But Donahue stated that eBay won’t compete for consumers in the Chinese market, not that it has much hope of competing there anyway. eBay acquired EachNet for $180 million in 2003 (which had 85 percent market share), as its entry into China’s business-to-consumer (B2C) market. But it lost out to Alibaba’s Taobao, which offered free listings, local servers, and more localized features. By the time it essentially left China in 2006, eBay had spent a total of $280 million in the China market.

Donahue offered no clear vision of how eBay could cooperate, but Alibaba clearly had an angle. David Wei, CEO of Alibaba.com, said in an interview that he wants to reach the “90 percent of eBay sellers who source offline.” Alibaba’s vision is a business to business to consumer, or “B2B2C,” chain from AliExpress supplier to eBay seller to eBay consumer. Alibaba views this as cooperative with eBay, though it’s unclear what eBay stands to gain in this arrangement.

AliExpress, a ‘wholesale platform for small sellers,’ is Alibaba’s play in the space. AliExpress formally launched in April 2010 and is ambitious and well-funded: Alibaba has budgeted $100 million for acquisitions in the US in support. The recent acquisitions of Vendio and Auctiva, two sites offering tools for eBay sellers, are part of this effort. Both of those sites will offer integration and exclusive discounts to encourage sellers to source from AliExpress.

eBay and Global Sources, an Alibaba competitor, previously cooperated on a wholesale service that failed because of the difficulties in ensuring quality, availability and delivery times in cross-border transactions.

“I think the two acquisitions of Vendio and Auctiva awake eBay to consider more seriously the business to business to consumer (B2B2C) market. Jack [Ma] and John [Donahue] have confirmed that both businesses should seriously, officially explore how to create value for both companies’ customers,” said Wei.

As AliExpress moves Alibaba closer to the consumer, it raises the obvious question: is Alibaba aiming to challenge eBay for consumers in the US and globally? Representatives adamantly denied that the Alibaba Group might compete with eBay for global consumers, but a review of AliExpress and Taobao suggest that it may ‘reconsider’ in the future.

AliExpress is meant as a business to business (B2B) platform, but a quick review of the site reveals significant business to consumer (B2C) potential. The top-selling item is an iPhone/iPod cable that retails for $0.61, with free shipping worldwide from Hong Kong (no minimum order quantity or size).  That’s cheaper than this author could find on eBay’s “Buy Now” ($1.00) or Amazon ($1.90), when shipping is factored in. Pages and pages of previous buyers show quantities of 1-3 units, which makes clear that consumers worldwide are enjoying cheap China prices and shipping that is almost certainly completely subsidized by Alibaba at present. In general, AliExpress looks like a mix of deals that appeal to small sellers and consumers.

Wei stated that any B2C on AliExpress is a mistake, as Alibaba discourages consumers from using the website: ”I have never seen any online or offline platform in the world, that can serve both wholesalers and retail consumers. For example, wholesalers never want their pricing to be that transparent to retail consumers.” He said low order quantities and sizes are available solely for the sake of sample orders. But AliExpress prices are very similar to those found on Taobao, which is for consumers, albeit only Chinese so far. It’s not difficult to imagine that Alibaba is using AliExpress to test waters for an eventual entrance into global B2C.

Still, the learning curve is steep. “We have no knowledge or insights about consumers in the states,” Wei readily concedes.

Any global consumer play would likely come from Taobao, The Alibaba Group’s other star holding. Taobao controls 80 percent of the e-commerce market in China, offering both C2C and B2C.

Most of AliExpress’ core features, from its rating system and customer chat to its “Escrow” payment, are borrowed from Taobao. Notably, AliExpress does not use eBay’s PayPal, another sign that ‘cooperation’ only goes so far.

In Japan, Alibaba is already challenging eBay via a partnership with Softbank-owned Yahoo Japan, which will enable merchants to sell through each other’s platforms. “After we join our strengths together we will definitely beat eBay,” said Masayoshi Son, Softbank Chief Executive, chairman of Yahoo Japan, and Alibaba board member.

Taobao has extensive consumer e-commerce experience and high aspirations. In its B2C Taobao Mall, it works with more than 20,000 brands, including more and more international heavyweights, including Adidas, Uniqlo, and Jack Jones. Insiders say Taobao itself will IPO in 1-2 years, further evidence of the ambitious plans of The Alibaba Group.

The Unwanted and Ailing Grandfather: Yahoo!

Just as conspicuous as the presence of eBay’s CEO was the absence of Yahoo speakers at AliFest. In 2005, Yahoo purchased 40 percent of the Alibaba Group in return for $1 billion and the Yahoo China property. It’s an open secret that The Alibaba Group wants to buy back its stake, but Yahoo is not selling on what has been a spectacular investment. The research firm Stifel, Nicolaus & Co. states that as much as 85 percent of Yahoo’s stock price may be attributable to the value of Yahoo Japan and Alibaba.

“Yahoo is like our grandparent. And that’s the grandparent, who as a grandson, I don’t visit… The grandparent used to have something very important to [us], which doesn’t exist anymore: the search engine technology,” stated David Wei. When asked if Alibaba would terminate the relationship if possible, Wei responded: ”The grandfather may pass away himself, unfortunately, before this question can get answered. It’s a question of grandparents ts keeping healthy.”

Yahoo has a ‘bull in a China shop’ relationship with Alibaba. Yahoo! CEO Carol Bartz expressed dissatisfaction with Alibaba’s management of Yahoo China, which has faded into insignificance as a portal in China (from 15 percent market share to less than 1 percent) despite the continued strength of others like Sina and Sohu. Second, Yahoo went out of its way to express solidarity with Google in its position vis-a-vis the Chinese government, to which Alibaba spokesman John Spelich responded, “Yahoo’s statement was reckless… given the lack of facts in evidence.”

The latest imbroglio, on the eve of AliFest, was the statement by Yahoo Hong Kong’s Managing Director that Yahoo may try selling ads to mainland Chinese SMEs. “If Yahoo begins to compete with Alibaba for customers in China, we will have to re-evaluate our relationship with Yahoo further in light of this activity and the intentions it implies,” stated Spelich.

But it seems that the Alibaba Group has little recourse beyond tempting Yahoo with an enormous buyback. “China-based companies buying ads on the Yahoo Hong Kong network does not affect the investment (in Alibaba),” Yahoo said. 

International Aims, International Culture

Of Chinese internet giants, Alibaba is the most accessible to an international audience. Other guest speakers at AliFest included Arnold Schwarzennegger and US Ambassador to China, Jon Huntsman. The Netrepreneur Summit featured 10 star sellers from Alibaba.com’s worldwide network, which runs especially deep in the US (16 percent of registered users), EU (16 percent), India (11 percent), and Pakistan (3 percent).

CEO Jack Ma himself is the story of the Chinese dream. At age 12 he became determined to learn English, so everyday for the next 9 years he biked 40 minutes to a hotel to serve as a free guide to foreign tourists. Today he gives keynote speeches in fluent and charming English. His humble background makes him a hero to many Chinese entrepreneurs.

A group of U.S. college entrepreneurs from the Kairos Society that Alibaba flew out for the event reported a fun, Zappo’s-like atmosphere at Alibaba.com headquarters, with a bell that rings for each sale to suppliers. Inspired by Schwarzenegger and the visiting entrepreneurs, Alibaba pledged $3 million for a new “Schwarzenegger Emerging Entrepreneur Initiative”.

In addition, the entire Alibaba Group has a forward-thinking corporate social responsibility policy that earmarks 0.3% of annual revenue for conservation of environment in China and abroad. 

It’s often said that ‘soft skills’ present the greatest challenge for Chinese companies with global ambitions. Alibaba has taken note and is actively building a culture and image to rival the best, as befits a firm with international horizons.

Kai Lukoff is an analyst at BloggerInsight, a spin-off of Web2Asia, that crowdsources market intelligence through an expert online panel of bloggers. Follow Kai on Twitter.