So much for Facebook's anticipated external ad network, at least for now. The social media giant is halting testing on a program that would use social data to place ads on third-party sites. [AllThingsD]

The New York Stock Exchange touted its role in the startup community, noting that 52 percent of 2012's tech IPOs listed on the Big Board, and and even showing enough tact to refrain from mentioning that Facebook's high-profile IPO debacle wasn't one of them. [NYSE]

Elepath is set to launch Moonbase, a plug and play service that lets users create web animations—without learning how to code. [The Verge]

Alas, the terrible things that didn't happen to Flavorpill digital media developer James Reston as he skated his longboard to work. [The Onion]

Here's wishing you an ff-ing happy holidays. [David Teten/ff Venture Capital]

Mr. McGuigan (left) and Mr. Frazier from Bitbanger Labs

There are only two rules for the “idea dinners” held by New York early-stage investment firm ff Venture Capital. No side conversations and a strict 8 p.m. end time. Every month, the company invites financiers, founders and other “influencers” to its Midtown headquarters for a catered get-together. The meal is served in a glass-walled conference room, situated just past the rows of adjustable standing desks, where it’s not unusual to see startup employees cranking out code well past dessert.

The conversation often focuses on tech-oriented subjects, but this February, as the group fired questions at veteran investor Esther Dyson, the discussion turned to the subconscious.

Josh Weinstein, the 25-year-old founder of YouAre.TV, brought up his experience using lucid dreaming to get over his fear of heights, noting that he first toyed with the idea while trying to memorize Chinese characters during an immersion program in Beijing—using his nonwaking hours to cram for tests. Later, when he found himself flying above the jogging path along the FDR in a dream, “I just let myself drop onto the concrete,” Mr. Weinstein said. “I would hit the ground, but I wouldn’t feel impact. I kept experiencing that sense of falling without actually feeling the pain of impact.” Above him, the sky morphed into psychedelic swirls. “I don’t do any drugs or drink, so when people talk about their experience being high, this is analogous.”

Lucid dreaming refers to the act of being conscious while in a dream state—you’re in the dream, but you know it. With practice, proponents say, you can harness that awareness to manipulate your surroundings. Think Inception without the corporate espionage, or Neo’s trips to the Matrix after he downed the blue pill. (Tom Cruise’s cryogenically induced affair with Penelope Cruz in Vanilla Sky doesn’t quite fit because, for a good two hours, the poor sap thought it was the real deal.)

A century after the term “lucid dreaming” was coined by Dutch psychiatrist Frederik van Eeden in 1913, the practice is experiencing a major resurgence. For New York techies, already dutifully maximizing their waking hours, it seems sleep has become the last efficiency frontier. “We need to maximize the output that we get from our time, so if I’m not sitting in front of Codecademy or eating, I should be doing something cool, learning something, analyzing things, having cool experiences,” Mr. Weinstein said later.

After two hours that included watching investors whip out their calorie-tracking FitBits (Ms. Dyson’s was affixed to her bra strap) and blood-pressure monitoring iPhone apps, the takeaway from dinner seemed to be that truly self-optimized life-hackers should be quantifying their bodies’ every input and output, standing while they work, learning to code or speak Mandarin in their free time and using their dreams to overcome personal weaknesses or conjure up the next billion-dollar app. Or at least indulge in some mind-blowing virtual sex—often the first stop on a Lucid Dreaming Experience Tour. “It’s rewarding,” suggested psychologist Stephen LaBerge, who spent decades researching the science of dreams at Stanford and then at the Lucidity Institute and has been credited with proving the existence of lucid dreaming, “and people who don’t have the opportunities for getting sex elsewhere in their lives, then why not?!”

Then again, who wants to be conscious all the time? Weren’t bars invented expressly to avoid the burden of 24-hour lucidity?

At the dinner, Rob Cromer, the 26-year-old founder of a stealth startup called Adcade, chimed in with advice about “reality checks” that he picked up from a lucid dreaming coach at a cocktail party. One of the trickiest parts of lucid dreaming is recognizing that you’re in a dream. Thus practitioners train themselves during their waking hours by, say, drawing a dot on their hand as a signal to look at a clock.

New apps are coming on the market to solve the same problem. In less than a month, the Brooklyn-based duo behind Bitbanger Labs has managed to raise more than $330,000 from more than 3,800 backers on Kickstarter, including Mr. Weinstein and Mr. Cromer, to build a sleep mask called Remee that uses flashing LED lights as a “reality check.” Their initial goal was just $35,000. Kickstarter also hosted campaigns for the book Oneironautics: A Field Guide to Lucid Dreaming, funded three times over; and The Lucid Dream Tour, a “multimedia, multidimensional road trip event” that promises to showcase the “entrepreneurial possibilities of today’s consciousness movement.” Soon that will include a video game designed to elicit lucid dreams currently being developed by a grad student in Copenhagen.

Since Remee first appeared on Kickstarter on April 3, the number of people who subscribe to the lucid dreaming forum on Reddit has grown more than 30 percent, up to 33,300 “oneironauts,” as practitioners like to call themselves. The influx of new users got be such an issue that the moderator was moved to create a separate forum for lucid dreaming memes so as not to interrupt discussion topics like “I can’t feel emotions in my dreams” or “Loosing [sic] track of reality quickly, help!”

The fantasy of controlling one’s dreams goes way back—Aristotle and Tibetan Buddhists were proponents—but for the new wave of technologically-savvy acolytes, dreams are seen more as a form of virtual reality. “The brain works so well it’s like the operating system on a Mac,” said Dr. LaBerge. By exploring your subconscious, “You find out how the system works.”

The last lucid dreaming boom had a more spiritual cast. “I think that was the ’80s,” noted Bitbanger Labs cofounder Duncan Frazier. “It kind of got new-aged a little bit. It went away and now it’s coming back and people are trying to make sure it doesn’t go down that weird road of pseudo-science.”

According to psychologist and dream researcher Jayne Gackenbach, hard-core gamers are more likely to both have lucid dreams and be able to control them. She's releasing three books on the subject this year, including a self-published e-book called “Play Reality” told from the perspective of her 27-year-old son, a harcore gamer.

Still, both Dr. Gackenbach and Dr. LaBerge cautioned against getting too goal-oriented with one’s REM cycle. “Dreaming is specifically designed for information processing,” Dr. Gackenbach explained. “It’s when we store new emotions and process negative emotions and try to make sense of them. If you’re trying to optimize it, what does that mean? Do you want to get rid of your negative emotions in an efficient way? It’s a system that’s doing pretty well on its own.” She expressed some skepticism about the idea of maximizing the use of this supposed downtime. “If it’s just about being able to control this alternative reality and go to a Rolling Stones concert,” she noted, referring to a goal articulated by one of her students, “then I have some concerns.”

Mr. Frazier and Steve McGuigan, the 30-year-olds behind Bitbanger Labs, makers of the Remee sleep mask, don’t seem too worried about it. During a late-night visit to Mr. Frazier’s apartment in Windsor Terrace, he talked about flying over the Grand Canyon and being able to push and pull the mountains below him at will, like he was “conducting music.” On the desk next to his left, a handful of Remee prototypes with their circuitry exposed lay in front of a 3D printer Mr. Frazier built from scratch.

Mr. McGuigan plays around with dimension. “I’ve always been into increasing or decreasing my size,” he said. “Shrink down to the size of an atom. Get microscopic and go hang out with subatomic particles.”

Teaching oneself to fly is another favorite pastime of lucid dreamers. “People on Reddit like to ride dragons,” added Mr. Frazier. At the dinner, Ms. Dyson, a trained cosmonaut, said she dreams of weightlessness.

In the late ’80s, Dr. LaBerge actually put out two versions of a mask similar to the Remee, among other “lucid dreaming induction devices,” called the DreamLight and NovaDreamer. But at around $1,000 a pop, he sold only 10,000 or 20,000 in the five or six years they were on the market, though he noted that they “had a disproportionate influence on technical types.”

A standard-issue Remee will retail for $80. The device is simple, using flashing LED lights on a timer—“like the front of Knight Rider,” as Mr. Frazier put it—to prod the dreamer into lucidity without waking him up.

“We’ve had to explain it to most of our friends, and it takes awhile,” Mr. Frazier admitted. “Over beers.”

-ntiku@observer.com

A version of this story appeared in the May 2, 2012 issue of the New York Observer.

Mr. Teten

This guest post was written by David Teten, Koen Bremer, Gyorgy Buslig, and Adham Hussein. David is a Partner with ff Venture Capital and Founder and Chairman of Harvard Business School Alumni Angels of Greater New York.  Koen, Gyorgy, and Adham are all Columbia Business School MBA 2012 students and former consultants with McKinsey and BCG.

Even the best VCs and entrepreneurs have a painfully high failure rate.  Lowering that failure rate would be highly impactful on venture capitalist returns, if we could figure out how to do it.  In addition, in light of increasing competition in the startup funding space, a methodology  for helping portfolio companies consistently is a strong competitive advantage.

In an effort to address this, we launched last year a formal study of best practices of VCs in improving portfolio company value. The objective of the research is to define a blueprint for how investors can help portfolio companies succeed through operational (non-financial) support, including  but not limited to facilitating shared services, recruiting, knowledge sharing, and enhancing management skills. To do so, we are working to understand what the best practices in the industry are, as well as what the correlation is between providing this kind of support and start-up success.

We’re now in the midst of surveying VCs and entrepreneurs for this research.  We’ll feature in our published work the most effective firms and practices we identify, subject to the interviewees giving us permission to use their names and data.  We’d greatly appreciate you taking a few minutes to fill out our survey:

VCs please click here.

Entrepreneurs please click here.

The value creation study draws on a wide range of research:  in-depth interviews with over 50 venture capital investors, entrepreneurs, startup incubators and advisory service providers; a proprietary database and survey of VCs’ portfolio value creation practices; a wide scan of academic and practitioner publications focused on the topics of entrepreneurship and venture investing; and the authors’ experience working in venture capital, early-stage technology companies, and strategy consulting.

This study is effectively a sequel to the study David Teten led with Chris Farmer of General Catalyst on best practices of venture capital and private equity funds in originating new deals, published in Journal of Private Equity, Harvard Business Review, Institutional Investor, etc.  Similarly, we plan to publish this value-creation study in a few different major journals.

If you have any questions, you can contact the team at vcbeyondthemoney(@)gmail.com

We’ve summarized below some of our preliminary results. This is the first in a series of articles as our research findings unfold.

Are VCs a different breed of “investors”?

The conventional school of thought argues that investors –generally- should be creating value by selecting the “right” companies, business plans, and teams into which to invest. We argue that on top of that selection function, venture investors have a wider role to play beyond funneling financial resources with a high-risk appetite.

Venture capitalists are financiers of a special nature. They fund highly uncertain projects that usually operate within a very fast moving environment and within consistently shifting technological paradigms. The company teams they work with are usually highly motivated entrepreneurs trying to engage in extensive product and customer development efforts for a product they don’t typically have a full vision of, for a customer whose needs are opaque, and for a use case which is ambiguous. This is a very different world than traditional corporate lending.

Almost every VC will say, “I respond to the CEO’s requests, I put him in touch with someone in my network when he asks me to”.  We view that as the bare minimum.  We think that VCs can add tremendous value by systematically actively supporting their portfolio companies.

So how can VCs help their startups?

We have interviewed over 50 entrepreneurs and some leading VCs around the US about their experiences and pain points while building their companies. Our in-depth interviews have led us to define a framework (TOSCAN) for early-stage investors to systematically support their entrepreneurs, which we believe will in turn increase success and valuations.

-      Team Building: accelerating hiring to help startups build their most important asset; people

-      Operations: minimizing entrepreneurs’ burden in admin, accounting and legal

-      Skill Building: building the right skills, especially for top management, and ensuring they develop inline with the early-stage company’s life cycle

-      Customer Development: identifying the right customers and gaining access to them

-      Analysis: how entrepreneurs measure, understand and report the performance of their early-stage companies

-      Network: helping entrepreneurs building relationships with networks key to their company success

What is important, useful, new, or counterintuitive about your idea?

So far, there are two particularly innovative techniques we found VCs to be using:

• Dedicated teams: Some of the investors we interviewed have started building dedicated business support teams, led by Partner-level experts. We are particularly interested in learning how these teams are organized, their interaction patterns with portfolio companies, and the company’s perception of their value-added.  Andreessen Horowitz, First Round Capital, and ff Venture Capital are all examples.

• Portfolio companies’ networks: Many VCs said that the people who know the most about building a company are the portfolio CEOs.  In order to enable information-sharing, VCs must build very strong online and offline networks between portfolio companies, which organically provide a wealth of knowledge and support to each other.  All of the firms above have online networks for their portfolio executives.

Mr. Gollash (via twitter/paulgollash)

Voxy, the New York City-based language learning startup that launched at TechCrunch Disrupt in 2010, is in the process of raising a Series A-2 round of equity financing. In a Form D filed with the SEC today, the startup indicated that it had already closed $2.3 million towards its $4 million goal from previous investors including ff Venture Capital, Contour Venture Partners, and Seavest Capital Partners, which all participated in Voxy's Series A.

Founder and CEO Paul Gollash told Betabeat that Voxy plans on announcing two more "exciting" institutional investors in the coming weeks. The round was actually oversubscribed, "But we'll limit the demand and allocate what's available as best we can," said Mr. Gollash, noting that he didn't want to raise more capital than was necessary. Admirable restraint in these frothy times.

Voxy teaches English to Spanish and Portuguese speakers using what Mr. Gollash calls mobile immersive learning. Through partnerships with the Associated Press and Bloomberg, for example, its smartphone app highlights important phrases, offering audio pronunciation and translation and then tests users with reading comprehension and vocabulary quizzes. The app also allows for image recognition, "turning your photos into flash cards," and a geo-located phrase book targeted to whether you're in a coffee shop or hair salon.

"Voxy is attacking a huge market for language learning, which is something that’s not very conducive to learning in a classroom," said Mr. Gollash. "Basically we have an experiential learning platform, where we can take content from your life--what you’d actually be interested in reading." Its iPhone app is ranked the top-rated education app in 20 different countries, he said.

Sixty percent of consumers in the $80 billion language learning market are interested in learning English, said Mr. Gollash by way of explaining why 85 percent of Voxy's users are outside the U.S. Twenty-five percent of Voxy's user base is in Brazil, where the "rapidly growing middle class have an insatiable appetite for language education." The fact that Voxy has been able to get that kind of adoption in Brazil with just one Brazilian employee in its Soho office is "a testament to how fluid the mobile app economy is," he said. But Voxy has domestic users as well, including 15 percent from the U.S. Hispanic population.

Longterm, the company plans on offering other languages as well. However, the new financing will go towards hiring more engineers and accelerating product development.

Straphangers need only to look up at the Living Language ad campaign currently plastered all over the walls of the C train to get some sense of the competitiveness of the market, which Mr. Gollash called highly fragmented. Rosetta Stone, perhaps the best-known player, only reported revenues of $268 million last year

Naturally, Mr. Gollash sees that as an opportunity for Voxy. "It’s our goal to become the first billion dollar language learning company," he said.

We'll update you on those exciting new institutional investors once Mr. Gollash is ready to spill the beans.

In an email to members today, Klout, everyone's favorite dubiously scientific social influence analyzer/punching bag announced it would be teaming up with Badgeville, a gamification platform that lets companies like eBay, Samsung, and Dell find and reward engaged customers with badges, tokens and online prizes.

By integrating Klout's "influence ranking technology," Badgeville will now, in theory, be able to help those brands figure out which loyal users have more influence and reward them accordingly. Judging by our latest Klout score, this only works for Betabeat if there's a brand out there interesting in courting someone who influences 2,000 people on topics like "Blogging, Stanford University, Reddit." That has to at least qualify us for a "Nerd" badge or something, right? What about "People who spend too much time in front of screens"?

Klout has tried to monetize its ranking system with partnerships before, reports Mashable, pointing to deals with the Palms Hotel and Casino's "Klout Klub" or the three-day loans Chevrolet offered those with Klout scores of 35 or more. But it remains to be seen if that's enough incentive for the norms to open up their Facebook, Twitter, Foursquare, and LinkedIn accounts to Klout's algorithm.

As we learned earlier today, "perks" are merely one of 18 business models the company contemplated. In an interview with TechCrunch that we told you about this morning, ff Venture Capital, a Klout investor, said that early on, other were dubious of the startup's premise. "A lot of people saw a Twitter analytics company and said, 'Hey, do I really want to invest in that?'" said ff partner John Frankel. "What we saw was a company that had potential to help people by the middle of this decade to really understand their online footprint, what they're really doing on Twitter, Facebook, etc. Normalize that data and allow people to understand and then manage their online footprint."

Perks, Mr. Frankel assured TechCrunch, were just the start, "I sat down with Joe [CEO Joe Fernandez], gosh back in April 2010 and we laid out 18 different business models and we decided perks was the first one to focus on."

Will users stick around to the mid 2010's to hear about the rest?

According to ff Venture's—the fund insists on the cummings-style "ff"—Form D filing, which sneakily offers a Roseland, New Jersey address, rather than its Midtown headquarters, the company filed an intent to raise on November, 29, 2010. Partner John Frankel says the firm was already deploying capital from the new "silver" fund even as it was raising the dough. Of the 23 investments, which includes startups like Klout, ThinkNear, Livefyre, Voxy, and Kohort, four have had up rounds. "So, it looks like performance is accelerating," he told Erick Schonfeld in a video interview.

But ff has another feather in their cap, their previous $6.3 million fund, raised in 2008 "two months after Lehman collapsed," as Mr. Frankel, a Goldman Sachs refugee, points out. According to him, Prequin ranked that fund, called "ff blue," the top-performing VC fund through the end of 2010.

David Teten, a partner with ff as well as a former entrepreneur and banker, said despite the firm's obvious concentration in social, the firm's philosophy is not to think thematically:

"I'm new to VC, I just joined this side of the table in the middle of last year and what I've seen is a a lot of VCs say, 'This sector is hot, therefore I'm going to find a company in that sector.' We think that's not a healthy approach. If the sector is defined, that means there's already some players in it, so you're probably investing in player four and someone else has defined it and is going to take the lead. Our approach is the people who know the most about the growth sectors of 2017 are the entrepreneurs. As they come to us, we filter the ones that are really promising with a promising  industries and then we'll invest in them.

It happens to be that Internet companies have great economics, so we're very happy to invest primarily in Internet companies, but our mandate is invest where there are growth opportunities which will produce great returns for our investors and of course for the entrepenrue who have most of the equity."

So invest in people, not themes and the future, not the present. Yeah, we think we got that. Earlier this week, Betabeat dropped by the ff offices for one of the firm's rousing idea dinners. The discussion was certainly future-facing covering outer space, health informatics, lucid dreaming, but, we're sorry to report, off-the-record.

Not here yet, but getting close.

When GroupMe co-founder Steve Martocci threw out his desk chair for a Bosu ball to lose "the founder fifteen," we had an inkling it was only the beginning. After all, at least some of those early Fitocracy adopters had to be coming from inside the tech scene. Then we found out Michael Galpert--Aviary's own, personal self-quantifying fiend--was trying to foster (healthy!) competition in the workplace through a shared employee database measuring weight loss down to the pound.

But ff Venture Captial partner David Teten has really gone and done it. He emailed Betabeat to let us know that that ff's new ergonomically-optimized 5,000 sq. ft. office space on 6th Avenue can basically tell GroupMe's single Bosu ball can suck it, although not in so many words.

In a blog post that reads not unlike a motivational sermon, Mr. Teten explains that, like any good techie, ff was aiming for disruption, namely of the broken white collar model of sitting at a desk for 8-12 hours and thinking that three gym sessions a week can offset that. (Based on the massive crick in our neck that doesn't show any signs of healing, we're with him on that.)

Mr. Teten explains that since they had the luxury of building the space from scratch for ff's team and portfolio companies like Parse.ly and Phone.com, they did it with a few maxims in mind. Motion over statis. Standing over sitting. No added costs to living well. And flat surfaces. Did you know, for example, that "up to a third of women suffer permanent problems as a result of their prolonged wearing of heels, ranging from hammer toes and bunions to irreversible damage to leg tendons"? We wish we could forget it!

In any case, here are just some of the amenities ff staffers and its start-ups can expect: "a standing desk with anti-fatigue comfort mat," conference rooms with ball chairs, hand grippers (for flexing during tense term sheet phone calls), pedometers, wobble boards, and "walking meetings." Although those are technically outside the office.

Did we say the craze was official? Maybe we meant officially crazy.

Who wants t0 #FF ff Venture Capital?

Betabeat will be getting some new neighbors! Hopefully the air has cleared and we can all grab lunch.

John Frankel, who has been an angel and VC since the dot-com days, announced today that his ff Venture Capital is building out 5,000 square feet of new office space at W. 36th. It will be the home base for Frankel and his new team, partner David Teten and venture partner Mike Yavonditte, who are joining the firm.

Portfolio companies like Parsley will be using the space too, with twelve desks free for funded companies in all, but don't call it an incubator! "I hate that word. I can't tell you why, I just do," Frankel told Betabeat by phone.

ff Venture Capital is more than halfway to raising its second fund, pegged around $25 million. One of its biggest wins was Quigo, where Mike Yavonditte served as CEO, which sold to AOL for $340 million back in 2007. It's made 11 investments in 10 companies since December says Frankel.