I met with Jonathan McCoy who is part of the Entrepreneur Organization or EO as members call it. EO membership is available to entrepreneurs whose company has at least $1M in revenue. Numerous CTAN members are part of EO so I hear about the support that EO provides to its members.
So what is your background?
I studied electrical engineering at UT and then went on to work in Semiconductors for about 4 years. I worked at AMD and Cirrus Logic primarily. About five years ago I started some cash flow businesses. The first was a local courier / logistics business called Green Light Delivery that I recently sold. I also co-founded a company called Greenling which is an organic food delivery service to the home. The management of the company has grown the business considerably here and now in San Antonio. Then, I formed a partnership to purchase a small company, Longhorn Delivery that delivers restaurant meals to the home. You can have a meal delivered to your home in under an hour. Most recently, I started a company called Perception Labs. It is my primary focus today - the venture is working to commercialize a technology I have developed over the last four years or so.
Tell me more about the home delivery service market?
When the internet first became popular it was an interesting service to offer but nobody could figure out how to make money with the business model. With Longhorn Delivery we’ve taken a much slower approach, and as a result the business is sustainable and provides value to a lot of consumers. However, what might start to happen over the next several years as mobile applications become more ubiquitous is that ordering becomes a contextually-aware process - then the home delivery service becomes a seamless value-added service. Like many industries, embedding more and more software applications into our lives could be a game changer.
What’s the status of Perception Labs?
It’s still in the R&D phase – we’re working very hard to get the technology in a state that is ready for customers. The technology is very cool – a sort of unique method for performing domain specific search and simulation. I’ll keep you updated when we have a public demo.
So you’re a part of EO. Tell me about it?
I’ve been in EO for a couple of years now. It’s a great group that I’ve gotten a lot of value out of. The idea is to get people who have similar needs together to help each other - issues such as hiring/managing employees, growing sales, etc, come up often. I think the group has something like 15,000 members around the world, and about 80 in Austin. To get in EO you go through an application process at the local chapter level. The minimum requirement is that you have $1M in revenue for your company. What I like best is Forum, its kind of like having your own virtual board of directors. These are guys who have also become some of my best friends.
So what is EO’s new Accelerator program all about?
The EO Accelerator provides classroom education, peers, and mentoring support for up and coming companies. It’s a non-profit organization within EO. It’s been rolled out in 12 cities across the US and I’m volunteering to ‘Champion’ the local chapter. It’s for companies with $250K - $1M in sales and seeks to take entrepreneurs to the next level. It’s perfect for businesses that have a solid plan in place to reach $1M+ in sales within 18-24 months.
What does the entrepreneur get if they apply and then accepted?
The entrepreneur gets four quarterly meetings – each one a full 8-hour day. Like most things in EO you have to make a strong commitment to the program. There are four focus areas: people, sales/marketing, money, and strategy. During that eight hour session, there’s a professional facilitator, in our case a very successful entrepreneur named Gerry Morton, who teaches the entrepreneurs about setting goals for their business for the subsequent three months. It’s very tactical in nature. You’re setting goals for yourself so you can incrementally improve the business. The curriculum was pulled from successes within the EO network. They took the more successful business owners (there’s about 40 contributors) and drew out their experience. That’s the learning environment. Then there’s a local speaker that comes in for a few hours and talks about a related topic.
Where does the mentoring come in?
So, the other members of the Accelerator program provide peer support in groups of 3. EO members from the local chapter participate in the program for their own businesses and are available as mentors. We also invite mentors to the program from various communities within the city.
When does it start?
We’re launching on February 20. We have accepted just about all the members we need for the first round, but still looking for a few qualified candidates. So far we’ve had a couple information events to get the word out. We had a speaker come in from Microsoft last week and talk about how small business can profit from Microsoft as a vendor, how to position your business for a sale to Microsoft, and how businesses can leverage the newest technologies both to grow their own businesses and also to partner in providing new products and services.
How would you characterize the EO members?
It’s very diverse. It’s one of the most diverse groups I’ve been in. Maybe about 25-40% of the companies are tech oriented. In my forum we have 8 very different businesses represented. The philosophy of the group is to seek diversity in order to build off of one another’s experiences. We expect to see the same thing in the accelerator group. Nearly any kind of business is acceptable. We want people to graduate and move up. We don’t want people in the program for more than 18 or 24 months.
How much do you charge for the program?
Normally, the program like this would cost from $5K to $15K per. This program is $1K due to the sponsorship by Mercedes Financial. It’s heavily subsidized. It is really a no-brainer for businesses focused on growth because of the sheer amount of resources that are available. The program has you fill out worksheets on your strategy, sales/marketing etc. How many business owners in the hectic growth phase sit down and write up their strategy, then have the support to follow through? The program encourages good practice.
Best regards,
Hall T.
Wednesday, February 6, 2008
Monday, February 4, 2008
Daniel Marcos of Creditos123.com Starts Venture Fund for Companies Serving Hispanics
I met with Daniel Marcos of Creditos123.com who provides financing to Hispanic customers. He now has a new project – applying venture funding to startup companies serving Mexican customers living in the US or in Mexico. He has experience having built an angel fund in 2000 and made eight investments. One of them has multiplied its sales by over 15 times in its 7 years of investment.
Daniel’s current fund is matched by the Mexican development bank at 35%. He has over $3M in the fund so far and it continues to grow. They are seeking a name for the group that will work in both the US and the Mexico market.
From the first one in the late 1990s to about 20 funds countrywide today, the number of venture funds in Mexico is growing. The other impact on the venture fund situation is the creation of the “AFORES” which is similar to a 401K program. There is now over $70B invested in the AFORES throughout Mexico. Soon, the managers of these funds will be allowed to invest some % of those funds into venture funds.
Angel funding in Mexico is not very large yet. There are two ways companies are started: large companies start small, stand alone businesses, or individual families start them. The Young Entrepreneurs Organization (YEO) has three chapters in Mexico. Most of the entrepreneurs in it are self-funded.
Best regards,
Hall T.
Daniel’s current fund is matched by the Mexican development bank at 35%. He has over $3M in the fund so far and it continues to grow. They are seeking a name for the group that will work in both the US and the Mexico market.
From the first one in the late 1990s to about 20 funds countrywide today, the number of venture funds in Mexico is growing. The other impact on the venture fund situation is the creation of the “AFORES” which is similar to a 401K program. There is now over $70B invested in the AFORES throughout Mexico. Soon, the managers of these funds will be allowed to invest some % of those funds into venture funds.
Angel funding in Mexico is not very large yet. There are two ways companies are started: large companies start small, stand alone businesses, or individual families start them. The Young Entrepreneurs Organization (YEO) has three chapters in Mexico. Most of the entrepreneurs in it are self-funded.
Best regards,
Hall T.
Wednesday, January 30, 2008
Joe Cunningham of Sante Ventures—Bringing VC funding to Life Science
Joe Cunningham of Sante Ventures talks about how they started their new fund and what he sees in the life science market today.
What is your background?
I’m a physician by background and I’m still on the board of trustees of the Texas Medical Association. I did serial entrepreneur work and then received an MBA from Baylor. After that I went on to work as the chief medical officer of Providence Health System which is part of the Ascension health system. Ascension is the largest non-profit medical system in the country with $14B in revenue. Austin-based Seton is one of the bigger hospitals in that system. The CEO of Ascension, Doug French, recognized the difficulty of bringing innovation into the big health system so he started a $125 million corporate venture fund and he asked me to help him run it. The fund was a financial success.
How did Sante Ventures start?
Along the way we ran into Austin Ventures in a deal we seeded together called Spinal Restoration here in Austin. Our partner Kevin Lalande was building a healthcare investment practice at Austin Ventures, and asked Doug and me to join as Venture Partners to help drive that effort. Over the next four years, we built a successful portfolio with AV and ultimately decided together with AV that Texas and the Central US could support a dedicated early-stage healthcare venture firm. We spun out of AV and raised our own fund. They were very collaborative and supportive in that effort – the two firms maintain close working relationships and, in fact, we still share office space with them.
What is the relationship with AV today?
They are a limited partner in the fund and a close co-investor.
How big is the fund in total?
$130 million. We also have some outside investors in the fund, many of them from Nashville with the healthcare system capital of the world. We set out to raise $100M and were oversubscribed but the fund documents cut us off at $130M.
Who works on the fund?
The three general partners, an associate, Omar Khalil who has a Masters in biomedical engineering and our CFO, Brad Wolfe.
What do you look for in an investment deal?
We do early stage seed through Series B investments in capital efficient medical technology, healthcare services and healthcare ID companies. We have a preference for companies located in Texas or the Central US although we will consider the either coast for select opportunities.
CTAN sees medical device deals. We recently looked at Class One Orthodontics and previously looked at ConMediSys. Did you see those deals?
We did. We see many interesting companies that for one reason or another don’t end up a fit for our portfolio. We will make only 15-20 investments out of this fund, so as you can imagine, we will by design be in only a subset of the interesting companies in our space.
Do you require FDA clearance on your deals?
Most of the time our deals are not FDA-cleared at the time we invest. In many cases, FDA approval is required by law prior to selling the product in the US, and the expense of the necessary clinical trials is a big driver of the company’s need for our investment dollars.
How do you vet the deals?
We have a deep network of clinical, regulatory and market advisors who we tap to help diligence deals.
Best regards,
Hall T.
What is your background?
I’m a physician by background and I’m still on the board of trustees of the Texas Medical Association. I did serial entrepreneur work and then received an MBA from Baylor. After that I went on to work as the chief medical officer of Providence Health System which is part of the Ascension health system. Ascension is the largest non-profit medical system in the country with $14B in revenue. Austin-based Seton is one of the bigger hospitals in that system. The CEO of Ascension, Doug French, recognized the difficulty of bringing innovation into the big health system so he started a $125 million corporate venture fund and he asked me to help him run it. The fund was a financial success.
How did Sante Ventures start?
Along the way we ran into Austin Ventures in a deal we seeded together called Spinal Restoration here in Austin. Our partner Kevin Lalande was building a healthcare investment practice at Austin Ventures, and asked Doug and me to join as Venture Partners to help drive that effort. Over the next four years, we built a successful portfolio with AV and ultimately decided together with AV that Texas and the Central US could support a dedicated early-stage healthcare venture firm. We spun out of AV and raised our own fund. They were very collaborative and supportive in that effort – the two firms maintain close working relationships and, in fact, we still share office space with them.
What is the relationship with AV today?
They are a limited partner in the fund and a close co-investor.
How big is the fund in total?
$130 million. We also have some outside investors in the fund, many of them from Nashville with the healthcare system capital of the world. We set out to raise $100M and were oversubscribed but the fund documents cut us off at $130M.
Who works on the fund?
The three general partners, an associate, Omar Khalil who has a Masters in biomedical engineering and our CFO, Brad Wolfe.
What do you look for in an investment deal?
We do early stage seed through Series B investments in capital efficient medical technology, healthcare services and healthcare ID companies. We have a preference for companies located in Texas or the Central US although we will consider the either coast for select opportunities.
CTAN sees medical device deals. We recently looked at Class One Orthodontics and previously looked at ConMediSys. Did you see those deals?
We did. We see many interesting companies that for one reason or another don’t end up a fit for our portfolio. We will make only 15-20 investments out of this fund, so as you can imagine, we will by design be in only a subset of the interesting companies in our space.
Do you require FDA clearance on your deals?
Most of the time our deals are not FDA-cleared at the time we invest. In many cases, FDA approval is required by law prior to selling the product in the US, and the expense of the necessary clinical trials is a big driver of the company’s need for our investment dollars.
How do you vet the deals?
We have a deep network of clinical, regulatory and market advisors who we tap to help diligence deals.
Best regards,
Hall T.
Monday, January 28, 2008
Paul Teich of AMD – Scenario Analysis for Predicting the Future
Paul Teich of AMD describes scenario analysis in developing roadmaps for product development. He also discusses the “Long Nose” concept and his first startup experience.
Tell me about your background?
I earned a CS degree at Texas A&M back when C was still a pretty cool programming language, and much later I earned the joint IC2/UTexas MS in Science and Technology Commercialization. I worked at AMD for pretty much all of the 1990s and then moved to Dell’s short lived New Product Concepts group. As that was disbanded I left to direct product management at a start up that you have never heard of. After that ride I went back to AMD. For the past 6 years I’ve been the business strategist for AMD’s Opteron processor brand.
What was the name of the startup?
It was called Fracta Networks, we were based here in Austin. You probably never heard of it.
You’re right I’ve never heard of it. What did it do?
It was a very early experiment in how people can track information they think is important, store it persistently on the web, and share that knowledge with other folks. The intent was to save snippets of web sites and documents so if the web site or document disappeared you still had that bit that you thought was important captured persistently.
Sounds like a backup or archival system. Is that right?
Actually, look at Google Notebook which is a very little known app. It does much of what the Fracta app did years ago for web capture. We did some things differently, of course, they seem to have a broader audience targeted. They’re Google, after all…
What was the business model?
Back in 2000 there wasn’t a viable advertizing model, so we were looking at subscription-based revenue. Our target was knowledge workers, so the customer, or at least the person who eventually paid our subscription fee, was a company. If we did it again today, we’d use an ad revenue model and skip the step of asking customers to ask their employers to reimburse them.
One of the issues systems like this face is privacy issues. As your system gathers information, at some point it learns significant things about customers. What can you ask them to let you monetize? What can you do and not do?
Facebook faces that same question today. How do you solve it?
The whole privacy thing is very interesting because if you ask your customers for meaningful demographic information, if they see the point in letting you have accurate information, you can start to figure out what groups of similar people do on the web. I believe that people at work trying to be productive will make different privacy tradeoffs with their professional persona than they will outside of work with their private persona. What’s it worth for say the Wall Street Journal to know what authors a specific technical community reads and which ones they do not read? We don’t know how much that is at the moment because no one can do it with any accuracy. Everyone says it’s worth money, but how much? There will eventually be interesting incentives in place to gather high-value personal information.
What happened to Fracta Networks?
It was funded in 1999-2000 primarily by Polaris and G51 just as the market was peaking. As the market headed down we started looking for partners or a buyer. We ended up selling Fracta to Chicago-based Divine Interventures as they changed their business model from VC to that of a product portfolio company. I worked for Divine until shortly before their reorganization in 2002.
Tell me about scenario planning. How does it work?
I do a lot of forward looking market research and forecasting, have been doing it for decades. I particularly like a tool called scenario planning. It’s a very handy tool for both envisioning and mitigating risk.
All of the big new technologies and products for the next five years are already in the market today. The challenge for predicting the next big thing is that they have not yet reached critical mass and are therefore, for practical purposes, invisible. I recently read a paper called the Long Nose of Innovation. It talks about the incubation of technology…immature products need refinement and nurturing. Most people see new products only after the incubation and refinement period, as they cross the chasm into larger, more visible customer bases.
I’ve found that a lot of futurists are on the “lunatic fringe.” They are very excitable, they have incredible detail about stuff I’ve never heard of, and in general they don’t listen very well. They know they are smarter than I am. Some of them have better manners than others and do a very good business consulting, but they come into a business arrangement with the expectation that you’re hiring them because they already know the answer.
If you look around, there are a lot of smart people who have bits of relevant information, knowledge and experience…and they are not only willing to help, they’re happy to help.
It’s the “Bazaar” model as opposed to the “Cathedral” model. Are you familiar with the metaphor?
No. What is that?
There’s a great paper called the “The Cathedral and the Bazaar.” Microsoft and Oracle are examples of companies building isolated, monumental, proprietary pieces of software similar to a ‘cathedral’ while the open source movement treats software more as a ‘bazaar’ where development is a collaborative project among many differently motivated people.
The key to forecasting in general and predicting discontinuities in particular is that individuals are guaranteed to be wrong about major aspects of their predictions.
A group of smart, informed people can collaborate very effectively to envision major features of the future. This is the basis for Prediction Markets, but in scenario planning we’re primarily trying to figure out what’s uncertain about the future, because what’s certain isn’t going to help you mitigate risk.
In scenario planning, we’re looking for events that are fundamentally uncertain for the organization and the overall industry. We have a method for ranking the uncertainties and the ones that pop up on top of the list are events that are inherently unpredictable in timing or in directional vector. In a scenario planning exercise we look for these uncertainties because they are areas of weakness in the industry and you can’t predict what’s going to happen. You then create a set of scenarios that are structurally different based on different resolution of the key uncertainties. They are not a little different, they are a lot different. And they are all plausible.
We can then use the scenarios for contingency planning and risk mitigation. Pick a product direction. The scenarios inform the product specification in the same way that wind tunnels inform aerodynamics. You have a set of specific futures you can fly your product through and ask how well it will do. In product planning the goal is as much to make sure the product doesn’t suck as it is to ensure that you hit a home run. A home run product is very hard to intentionally create. I’ll take a series of doubles (extending the gratuitous sports analogy) any day.
Most of the category-killer software applications in the market today are not the best at everything they do. From productivity suites to databases, there are niche products that compete quite effectively with the market leaders by being better at some relevant performance metric. The trick for most of us is to have a “good enough” product to gain a large audience.
Do you know David Smith of Technology Futures ?
I’ve taken his course. It’s very well grounded, I enjoyed it. He’s very quantitative in his approach. He has very sound mathematical models. It takes a lot of research and dedication to use his models as they should be used. His models can’t predict discontinuities, but no trend-based model can – some events have fundamentally unknowable probabilities of occurring. The trick is to use other methods, like scenario planning, to put bounds on discontinuities and their timing. Forecasting markets and technologies within scenarios makes good use of both techniques. It’s all about making rational assumptions.
So what are you planning to do with scenario analysis?
I’m co-authoring a book on the scenario planning technique I’ve jointly developed with the other authors. Our book will help small organizations – startups, workgroups, virtual teams – make use of scenario planning without spending a lot of money or dedicating huge internal resources. Along with the scenario planning I’ve lead at AMD, I’ve done pro bono scenario planning work for non-profits and I’d like to see the technique more widely adopted.
Best regards,
Hall T.
Tell me about your background?
I earned a CS degree at Texas A&M back when C was still a pretty cool programming language, and much later I earned the joint IC2/UTexas MS in Science and Technology Commercialization. I worked at AMD for pretty much all of the 1990s and then moved to Dell’s short lived New Product Concepts group. As that was disbanded I left to direct product management at a start up that you have never heard of. After that ride I went back to AMD. For the past 6 years I’ve been the business strategist for AMD’s Opteron processor brand.
What was the name of the startup?
It was called Fracta Networks, we were based here in Austin. You probably never heard of it.
You’re right I’ve never heard of it. What did it do?
It was a very early experiment in how people can track information they think is important, store it persistently on the web, and share that knowledge with other folks. The intent was to save snippets of web sites and documents so if the web site or document disappeared you still had that bit that you thought was important captured persistently.
Sounds like a backup or archival system. Is that right?
Actually, look at Google Notebook which is a very little known app. It does much of what the Fracta app did years ago for web capture. We did some things differently, of course, they seem to have a broader audience targeted. They’re Google, after all…
What was the business model?
Back in 2000 there wasn’t a viable advertizing model, so we were looking at subscription-based revenue. Our target was knowledge workers, so the customer, or at least the person who eventually paid our subscription fee, was a company. If we did it again today, we’d use an ad revenue model and skip the step of asking customers to ask their employers to reimburse them.
One of the issues systems like this face is privacy issues. As your system gathers information, at some point it learns significant things about customers. What can you ask them to let you monetize? What can you do and not do?
Facebook faces that same question today. How do you solve it?
The whole privacy thing is very interesting because if you ask your customers for meaningful demographic information, if they see the point in letting you have accurate information, you can start to figure out what groups of similar people do on the web. I believe that people at work trying to be productive will make different privacy tradeoffs with their professional persona than they will outside of work with their private persona. What’s it worth for say the Wall Street Journal to know what authors a specific technical community reads and which ones they do not read? We don’t know how much that is at the moment because no one can do it with any accuracy. Everyone says it’s worth money, but how much? There will eventually be interesting incentives in place to gather high-value personal information.
What happened to Fracta Networks?
It was funded in 1999-2000 primarily by Polaris and G51 just as the market was peaking. As the market headed down we started looking for partners or a buyer. We ended up selling Fracta to Chicago-based Divine Interventures as they changed their business model from VC to that of a product portfolio company. I worked for Divine until shortly before their reorganization in 2002.
Tell me about scenario planning. How does it work?
I do a lot of forward looking market research and forecasting, have been doing it for decades. I particularly like a tool called scenario planning. It’s a very handy tool for both envisioning and mitigating risk.
All of the big new technologies and products for the next five years are already in the market today. The challenge for predicting the next big thing is that they have not yet reached critical mass and are therefore, for practical purposes, invisible. I recently read a paper called the Long Nose of Innovation. It talks about the incubation of technology…immature products need refinement and nurturing. Most people see new products only after the incubation and refinement period, as they cross the chasm into larger, more visible customer bases.
I’ve found that a lot of futurists are on the “lunatic fringe.” They are very excitable, they have incredible detail about stuff I’ve never heard of, and in general they don’t listen very well. They know they are smarter than I am. Some of them have better manners than others and do a very good business consulting, but they come into a business arrangement with the expectation that you’re hiring them because they already know the answer.
If you look around, there are a lot of smart people who have bits of relevant information, knowledge and experience…and they are not only willing to help, they’re happy to help.
It’s the “Bazaar” model as opposed to the “Cathedral” model. Are you familiar with the metaphor?
No. What is that?
There’s a great paper called the “The Cathedral and the Bazaar.” Microsoft and Oracle are examples of companies building isolated, monumental, proprietary pieces of software similar to a ‘cathedral’ while the open source movement treats software more as a ‘bazaar’ where development is a collaborative project among many differently motivated people.
The key to forecasting in general and predicting discontinuities in particular is that individuals are guaranteed to be wrong about major aspects of their predictions.
A group of smart, informed people can collaborate very effectively to envision major features of the future. This is the basis for Prediction Markets, but in scenario planning we’re primarily trying to figure out what’s uncertain about the future, because what’s certain isn’t going to help you mitigate risk.
In scenario planning, we’re looking for events that are fundamentally uncertain for the organization and the overall industry. We have a method for ranking the uncertainties and the ones that pop up on top of the list are events that are inherently unpredictable in timing or in directional vector. In a scenario planning exercise we look for these uncertainties because they are areas of weakness in the industry and you can’t predict what’s going to happen. You then create a set of scenarios that are structurally different based on different resolution of the key uncertainties. They are not a little different, they are a lot different. And they are all plausible.
We can then use the scenarios for contingency planning and risk mitigation. Pick a product direction. The scenarios inform the product specification in the same way that wind tunnels inform aerodynamics. You have a set of specific futures you can fly your product through and ask how well it will do. In product planning the goal is as much to make sure the product doesn’t suck as it is to ensure that you hit a home run. A home run product is very hard to intentionally create. I’ll take a series of doubles (extending the gratuitous sports analogy) any day.
Most of the category-killer software applications in the market today are not the best at everything they do. From productivity suites to databases, there are niche products that compete quite effectively with the market leaders by being better at some relevant performance metric. The trick for most of us is to have a “good enough” product to gain a large audience.
Do you know David Smith of Technology Futures ?
I’ve taken his course. It’s very well grounded, I enjoyed it. He’s very quantitative in his approach. He has very sound mathematical models. It takes a lot of research and dedication to use his models as they should be used. His models can’t predict discontinuities, but no trend-based model can – some events have fundamentally unknowable probabilities of occurring. The trick is to use other methods, like scenario planning, to put bounds on discontinuities and their timing. Forecasting markets and technologies within scenarios makes good use of both techniques. It’s all about making rational assumptions.
So what are you planning to do with scenario analysis?
I’m co-authoring a book on the scenario planning technique I’ve jointly developed with the other authors. Our book will help small organizations – startups, workgroups, virtual teams – make use of scenario planning without spending a lot of money or dedicating huge internal resources. Along with the scenario planning I’ve lead at AMD, I’ve done pro bono scenario planning work for non-profits and I’d like to see the technique more widely adopted.
Best regards,
Hall T.
Wednesday, January 23, 2008
Ash Prabala of DVC – Providing ‘enabling technology’ to Life Sciences and BioTechnology OEMs
I’ve known Ash Prabala for about five years now. He started a company called DVC back in 1998 which previously performed consulting work in the area of scientific imaging for several years before identifying a key market in life science applications using digital cameras. I had the opportunity to catch up with Ash the other day.
What does DVC do?
We provide a combination of hardware and software to solve imaging problems in the life science area – primarily to key companies who OEM our product to enhance their solution. One example is a company which has the first (and only) FDA approved process of detecting and quantifying breast cancer through a routine, clinical blood test. The system utilizes DVC cameras and software to quantify Circulating Tumor Cells (CTCs) in a blood sample.
How did the market evolve?
Customers got tired of trying to use machine vision cameras for life science applications. Ten years ago, I saw customers take my cameras and apply them to new applications in life science. After a while the light bulb went off that there’s an under-served niche in the market – especially in fluorescent microscopy. My management team and I re-tooled our product strategy and we created OEM-friendly, feature-rich, modular cameras that were well-suited to Life Sciences OEM applications.
How is the growth?
We’re seeing steady and continuing growth. It started in 2005 after the 2002-2004 slowdown. During the down years we didn’t do what most other companies did – many tech companies chose to reduce head count, particularly in R&D. Instead we continued to invest in R&D. You can imagine how hard that is to do when sales are flat or trending down and you’re continuing to spend on R&D. But it paid off in 2005 because we had better products. We focused on the OEM portion of the market which grew faster than the end-user market.
How do you win against the competition?
We have better people than the competitors; in the Life Sciences niche, we have better products. We win most of the opportunities that we get a chance to bid on. Also, the product has to be high quality and we make that a priority. Our customers operate in the high-end of the market, and our quality processes have to be second-to-none.
How was DVC financed in the past?
We’ve done very well as a bootstrapped company. Our profitability and success is a validation of our strong business model. In my opinion if a business model is sustainable it should be able stand on its own and grow itself – at least up to a certain point. If it isn’t, all you’re going to do is take someone else’s money and throw it away at some point. That’s not the objective when you start a company. Our business model also imposes a strong fiscal discipline – and it is one that is embedded in the DNA of the company.Our conservative, disciplined approach helped us go through some tough times and ensured that we didn’t lose a single key person during the downturn. We still have them today.
How about for the future?
We are reaching the point where we are seeing large opportunities. We want these large orders but it’s difficult to fulfill them. Our average order size is increasing by a factor of ten. We have a technological need, but now need to convert that into a market lead. Having the team, the products and a proven, profitable business model will help us attract the right type of investment, to take the company to the next level.
Are you still in the same office?
One of the few privileges of founding a company is choosing the office location. I chose a building only a few minutes from my home near the old Motorola office in Oak Hill. We have outgrown our existing space, and will be seeking ‘flex space’ in the near future.
Best regards,
Hall T.
What does DVC do?
We provide a combination of hardware and software to solve imaging problems in the life science area – primarily to key companies who OEM our product to enhance their solution. One example is a company which has the first (and only) FDA approved process of detecting and quantifying breast cancer through a routine, clinical blood test. The system utilizes DVC cameras and software to quantify Circulating Tumor Cells (CTCs) in a blood sample.
How did the market evolve?
Customers got tired of trying to use machine vision cameras for life science applications. Ten years ago, I saw customers take my cameras and apply them to new applications in life science. After a while the light bulb went off that there’s an under-served niche in the market – especially in fluorescent microscopy. My management team and I re-tooled our product strategy and we created OEM-friendly, feature-rich, modular cameras that were well-suited to Life Sciences OEM applications.
How is the growth?
We’re seeing steady and continuing growth. It started in 2005 after the 2002-2004 slowdown. During the down years we didn’t do what most other companies did – many tech companies chose to reduce head count, particularly in R&D. Instead we continued to invest in R&D. You can imagine how hard that is to do when sales are flat or trending down and you’re continuing to spend on R&D. But it paid off in 2005 because we had better products. We focused on the OEM portion of the market which grew faster than the end-user market.
How do you win against the competition?
We have better people than the competitors; in the Life Sciences niche, we have better products. We win most of the opportunities that we get a chance to bid on. Also, the product has to be high quality and we make that a priority. Our customers operate in the high-end of the market, and our quality processes have to be second-to-none.
How was DVC financed in the past?
We’ve done very well as a bootstrapped company. Our profitability and success is a validation of our strong business model. In my opinion if a business model is sustainable it should be able stand on its own and grow itself – at least up to a certain point. If it isn’t, all you’re going to do is take someone else’s money and throw it away at some point. That’s not the objective when you start a company. Our business model also imposes a strong fiscal discipline – and it is one that is embedded in the DNA of the company.Our conservative, disciplined approach helped us go through some tough times and ensured that we didn’t lose a single key person during the downturn. We still have them today.
How about for the future?
We are reaching the point where we are seeing large opportunities. We want these large orders but it’s difficult to fulfill them. Our average order size is increasing by a factor of ten. We have a technological need, but now need to convert that into a market lead. Having the team, the products and a proven, profitable business model will help us attract the right type of investment, to take the company to the next level.
Are you still in the same office?
One of the few privileges of founding a company is choosing the office location. I chose a building only a few minutes from my home near the old Motorola office in Oak Hill. We have outgrown our existing space, and will be seeking ‘flex space’ in the near future.
Best regards,
Hall T.
Monday, January 21, 2008
Hank Weghorst of Troux Talks about His Next Project
I met with Hank Weghorst of Troux who talks about his next project-- a startup in the mobile space as well as the local startup environment. Hank is also working on an idea for starting an incubator to help seedstage companies get up and running.
What do you see in the local startup scene?
The model has changed dramatically today from when I started Troux five years ago. A company like mine needed $20M dollars. Now that same company needs $5M or even less. The whole software world has moved to a different model. It’s beginning to come to angel groups like yours.
What are you doing now?
I moved out of Troux a few months ago. I’m working on another startup idea. We’re going to focus on the mobile space. I’ve done several enterprise deals. All of them have $10M, $20M, $30M dollar deals a piece. The whole enterprise space is dead. The next step down from that is the Software as a Service model. The intent of it is to build an annuity stream. The success stories are few and far between, because if you run the financial model on it. It takes forever before you make money. If you have an enterprise company now trying to convert to an SAAS model it could take 3 to 5 years before you turn the corner and make the same amount of money as a perpetual license. When you take the perpetual license you get all the money up front. On a subscription model, it could take 3 to 5 years to get the same amount of cash. Now the good news, is that once you get to the 3 year mark then it’s gravy. It just takes a long time to get there and you have to have very patient investors and huge amounts of startup capital. This panacea of SAAS is talked about by everyone who hasn’t seen the bottom line. If you go one step down you get back to the old “eyeball” web deals. A lot of the deals that are successful now aren’t good, they’re just lucky. I don’t like to depend on luck. I want to depend on hard work. In an enterprise deal you were always looking at a 5 to 7 year horizon. The first 12 to 18 months I’m developing the product. In the next 12 to 18 months I’m rolling it out to my alpha/beta customers. Then in my 4th year, I’m in a growth cycle. If you only have a half million dollars you have to turn the whole thing on in 12 to 18 months. If you look at that model, you have to pick something where you believe the discontinuity is only about 12 to 18 months away.
I believe the mobile market disruption is about 12 to 18 months out. With such a short timeline, it’s all about execution. The smarter guy isn’t necessarily going to win because of the shortened timeline. An investor has to be willing to do whatever it takes in that short timeframe to make it successful. I believe the funding required will be $3M to $5M in total but will be consumed in a short period of time. It has to be a model of killer execution. The challenge is that in a 3 year timeframe, everyone can see the discontinuity coming up. The entrepreneur with a view on it no longer has an exclusive.
You mentioned the mobile market. What do you see in the mobile space now?
There’s a huge discontinuity in the 18 to 36 month window. I don’t know if you’ve been following it but we’re about to transition from cellphones to smart phones. Apple showed us what that will look like. The difference between a smartphone and a cellphone is the access to data. It’s not the communications. It’s in the web access capability. In a sense, the device becomes a disconnected computer. In less than five years, when you walk into your office your device will sense the monitor and keyboard and they will come alive. It’ll be your computer you’re carrying around. Then when you go to your car, your car will sense it. Sprint just announced that they are spending $5B in the next five years to rollout a WiMAX network nationwide. WiMAx is Wi-Fi everywhere.
What kind of product/service would you offer?
The thing I’m focusing on is the form factor and usability of the mobile device. When I’m on my phone, I want this thing to be smarter than my desktop computer. I want it to go and do things for me. “Here go do this for me.” If you go back to the advent of the web there was also the “semantic web” which was built for computers to communicate with computers. The shift from the desktop computer to the mobile device will use that concept in a real way.
The mobile phone in the future will have an “agent” mentality that will go do things for you. Any applications will reside on the web. If you take Google apps and move them to the mobile phone you can start to see what that will look like. Google is going to own this. Two months ago they released their Android software and opened up a contest to developers to show the best Android applications.
In a few years, you’ll go to Fry’s and you’ll find the Apple stuff on one side of the aisle and on the other side will be the open hardware—Motorola, Nokia, and so on but they’ll have a Google OS. I don’t know where Microsoft will be in all of this. I think they get belted by this. It’ll be Google vs. Apple.
What about Research in Motion?
With the advent of ubiquitous broadband networks, RIM’s advantage goes away. There are two distinct markets – mobile professionals and then there are the digital natives (kids from 13 to 25) who use it because it’s their digital lifestyle.
In a few years everyone will own a pocket PC and there will be no need for that big thing under their desk. There will be servers in the backroom running it.
The usage paradigm for mobile computing will change dramatically from a ‘desktop—I have time to sit and search’ to a ‘do’ mentality of the mobile space. I want to be the ‘do’ company. I want them to be configurable. I want to give people toolsets that can let people do what they want.
What’s a killer app?
It’s more of an approach than a killer application. Imagine an iPhone screen with a set of icons and you can configure those icons to do something for you. It could be anything from “have there been any new contacts that have come in for my territory in the last six hours?” All the way to “show me the latest score for my basketball team and who do they play next?” You can imagine configuring a matrix of thirty of these things to do. I want to extend that to something bigger. These agents that are collecting the information are storing it in a central area so you can access it from a desktop as well. It would be a mistake to build a mobile only application at this time.
The mobile phone and the desktop have to work in concert. The iPhone is one example of how well that works. What do you think?
That’s right. The computer and the phone always works as one although the biggest thing the iPhone missed is that you have to plug it in to synchronize it. The Blackberry does this already. I can’t believe they missed that one.
Tell me about the incubator idea you’re working on.
There are a couple of models out there for incubating startups. The one I like is called YCombinator. I just thought it was relatively unique in that it was team shotgun approach. Instead of hunting for one deal at a time, we hold a competition. They find the five or six best ideas and put them in a class and move them through a training process. That class gets a little bit of funding. We could hold once or twice a year a well publicized competition to find the people who want to join that class. We’ll surround them with the resources that they need to get going – not just funding but management, operational, financial, etc. The goal is to get them to the next level whether that be angel funding or something else. Typically the entrepreneur knows what they want to do but they need help.
Where I began to hang up is that I found myself becoming a VC – raising funding, etc. I could get the funding but then I’m competing against the guys I want to hand them off to.
I’m now looking at gathering a group of four with backgrounds in management, financial, operational, and HR along with four entrepreneurs. They may take an equity position. It’ll need some operating capital. I don’t know where that will come from just yet.
Best regards,
Hall T.
What do you see in the local startup scene?
The model has changed dramatically today from when I started Troux five years ago. A company like mine needed $20M dollars. Now that same company needs $5M or even less. The whole software world has moved to a different model. It’s beginning to come to angel groups like yours.
What are you doing now?
I moved out of Troux a few months ago. I’m working on another startup idea. We’re going to focus on the mobile space. I’ve done several enterprise deals. All of them have $10M, $20M, $30M dollar deals a piece. The whole enterprise space is dead. The next step down from that is the Software as a Service model. The intent of it is to build an annuity stream. The success stories are few and far between, because if you run the financial model on it. It takes forever before you make money. If you have an enterprise company now trying to convert to an SAAS model it could take 3 to 5 years before you turn the corner and make the same amount of money as a perpetual license. When you take the perpetual license you get all the money up front. On a subscription model, it could take 3 to 5 years to get the same amount of cash. Now the good news, is that once you get to the 3 year mark then it’s gravy. It just takes a long time to get there and you have to have very patient investors and huge amounts of startup capital. This panacea of SAAS is talked about by everyone who hasn’t seen the bottom line. If you go one step down you get back to the old “eyeball” web deals. A lot of the deals that are successful now aren’t good, they’re just lucky. I don’t like to depend on luck. I want to depend on hard work. In an enterprise deal you were always looking at a 5 to 7 year horizon. The first 12 to 18 months I’m developing the product. In the next 12 to 18 months I’m rolling it out to my alpha/beta customers. Then in my 4th year, I’m in a growth cycle. If you only have a half million dollars you have to turn the whole thing on in 12 to 18 months. If you look at that model, you have to pick something where you believe the discontinuity is only about 12 to 18 months away.
I believe the mobile market disruption is about 12 to 18 months out. With such a short timeline, it’s all about execution. The smarter guy isn’t necessarily going to win because of the shortened timeline. An investor has to be willing to do whatever it takes in that short timeframe to make it successful. I believe the funding required will be $3M to $5M in total but will be consumed in a short period of time. It has to be a model of killer execution. The challenge is that in a 3 year timeframe, everyone can see the discontinuity coming up. The entrepreneur with a view on it no longer has an exclusive.
You mentioned the mobile market. What do you see in the mobile space now?
There’s a huge discontinuity in the 18 to 36 month window. I don’t know if you’ve been following it but we’re about to transition from cellphones to smart phones. Apple showed us what that will look like. The difference between a smartphone and a cellphone is the access to data. It’s not the communications. It’s in the web access capability. In a sense, the device becomes a disconnected computer. In less than five years, when you walk into your office your device will sense the monitor and keyboard and they will come alive. It’ll be your computer you’re carrying around. Then when you go to your car, your car will sense it. Sprint just announced that they are spending $5B in the next five years to rollout a WiMAX network nationwide. WiMAx is Wi-Fi everywhere.
What kind of product/service would you offer?
The thing I’m focusing on is the form factor and usability of the mobile device. When I’m on my phone, I want this thing to be smarter than my desktop computer. I want it to go and do things for me. “Here go do this for me.” If you go back to the advent of the web there was also the “semantic web” which was built for computers to communicate with computers. The shift from the desktop computer to the mobile device will use that concept in a real way.
The mobile phone in the future will have an “agent” mentality that will go do things for you. Any applications will reside on the web. If you take Google apps and move them to the mobile phone you can start to see what that will look like. Google is going to own this. Two months ago they released their Android software and opened up a contest to developers to show the best Android applications.
In a few years, you’ll go to Fry’s and you’ll find the Apple stuff on one side of the aisle and on the other side will be the open hardware—Motorola, Nokia, and so on but they’ll have a Google OS. I don’t know where Microsoft will be in all of this. I think they get belted by this. It’ll be Google vs. Apple.
What about Research in Motion?
With the advent of ubiquitous broadband networks, RIM’s advantage goes away. There are two distinct markets – mobile professionals and then there are the digital natives (kids from 13 to 25) who use it because it’s their digital lifestyle.
In a few years everyone will own a pocket PC and there will be no need for that big thing under their desk. There will be servers in the backroom running it.
The usage paradigm for mobile computing will change dramatically from a ‘desktop—I have time to sit and search’ to a ‘do’ mentality of the mobile space. I want to be the ‘do’ company. I want them to be configurable. I want to give people toolsets that can let people do what they want.
What’s a killer app?
It’s more of an approach than a killer application. Imagine an iPhone screen with a set of icons and you can configure those icons to do something for you. It could be anything from “have there been any new contacts that have come in for my territory in the last six hours?” All the way to “show me the latest score for my basketball team and who do they play next?” You can imagine configuring a matrix of thirty of these things to do. I want to extend that to something bigger. These agents that are collecting the information are storing it in a central area so you can access it from a desktop as well. It would be a mistake to build a mobile only application at this time.
The mobile phone and the desktop have to work in concert. The iPhone is one example of how well that works. What do you think?
That’s right. The computer and the phone always works as one although the biggest thing the iPhone missed is that you have to plug it in to synchronize it. The Blackberry does this already. I can’t believe they missed that one.
Tell me about the incubator idea you’re working on.
There are a couple of models out there for incubating startups. The one I like is called YCombinator. I just thought it was relatively unique in that it was team shotgun approach. Instead of hunting for one deal at a time, we hold a competition. They find the five or six best ideas and put them in a class and move them through a training process. That class gets a little bit of funding. We could hold once or twice a year a well publicized competition to find the people who want to join that class. We’ll surround them with the resources that they need to get going – not just funding but management, operational, financial, etc. The goal is to get them to the next level whether that be angel funding or something else. Typically the entrepreneur knows what they want to do but they need help.
Where I began to hang up is that I found myself becoming a VC – raising funding, etc. I could get the funding but then I’m competing against the guys I want to hand them off to.
I’m now looking at gathering a group of four with backgrounds in management, financial, operational, and HR along with four entrepreneurs. They may take an equity position. It’ll need some operating capital. I don’t know where that will come from just yet.
Best regards,
Hall T.
Wednesday, January 16, 2008
Austin American –Statesman Article on Angel Investing
Not too long ago the Austin American-Statesman ran an article on angel investing in its TechMonday section. I was glad to see the extensive coverage which drew on survey information from the University of New Hampshire. CTAN fills out their survey forms regularly as we support the information they gather about angel investing. The Angel Capital Association is also engaged in a similar effort to provide data and stats about funding, membership, etc.
The article highlighted two companies CTAN recently funded: Minggl, a social networking site, and Displaypoints, an at the restaurant table digital media play. Both companies have solid product offerings and strong management teams behind them. According to the stats, Angels funded 24,000 companies last year compared to 1822 by venture capitalists. That’s quite a difference.
It’s interesting to note that the data shows a flat to slightly down trend for angel investing across the USA. This is a little surprising as CTAN continues to see strong deal flow and increasing investments. I’m not sure what caused the numbers to slow. Angel investing runs in five to seven year cycles. We had a strong cycle starting in 1994 and then closing in 2001. Starting in 2005 the cycle started again. We currently see about thirty deals a quarter submitted to our website from which we can choose four deals to present. Of the four deals that present we typically fund two of them. Next year we plan to increase the number of presentation meetings so we can view more deals.
Best regards,
Hall T.
The article highlighted two companies CTAN recently funded: Minggl, a social networking site, and Displaypoints, an at the restaurant table digital media play. Both companies have solid product offerings and strong management teams behind them. According to the stats, Angels funded 24,000 companies last year compared to 1822 by venture capitalists. That’s quite a difference.
It’s interesting to note that the data shows a flat to slightly down trend for angel investing across the USA. This is a little surprising as CTAN continues to see strong deal flow and increasing investments. I’m not sure what caused the numbers to slow. Angel investing runs in five to seven year cycles. We had a strong cycle starting in 1994 and then closing in 2001. Starting in 2005 the cycle started again. We currently see about thirty deals a quarter submitted to our website from which we can choose four deals to present. Of the four deals that present we typically fund two of them. Next year we plan to increase the number of presentation meetings so we can view more deals.
Best regards,
Hall T.
Monday, January 14, 2008
Leslie Price –an Angel Investor Profile with an Outlook for 2008
I recently had the pleasure of interviewing Leslie Price, a new member of the Central Texas Angel Network who recently moved from Dallas to Austin. Here’s her take on angel investing and the outlook for 2008.
What is your background?
Corporate communications. Developing communications strategy and programs for technology companies. I was over corporate communications at Sabre Holdings out of Dallas, a travel technology company whose businesses include Travelocity. Before that I worked many years at Texas Instruments. My last position there was VP of strategic communications, which involved the external positioning of the company during a time of major transformation. Before that I was over communications for TI’s European operations for more than four years, living first in France and then Belgium.
One area where I’ve gained a lot of experience is in acquisitions and divestitures – which is where I also developed my interest in working with startups. When I came back to the U.S. in 1997, TI was in the midst of its transformation to primarily a semiconductor company, selling off several businesses and buying in a number of small technology companies. In a three-year period, I worked on more than 20 acquisitions and divestitures, and more later at Sabre.
These communications are very involved, and multi-phased. One critical element is determining how to best integrate the newly acquired company and build that brand going forward. Given the entrepreneur’s personal investment in their company, it may be challenging to see any change to their company’s identity -- which I can understand. But you have to look at how to bring the most clarity to customers and how the acquiring company can best generate that new value. Sometimes that will mean maintaining the existing identity, and sometimes the decision is to fully integrate into the acquiring company’s brand. But there has to be a framework in place to guide those decisions.
Why do you like startups?
I have always admired entrepreneurs – people who have an idea and take the risk to go off and start a business and get it going. It’s exciting to see them succeed. We have a culture here in the U.S. that encourages some level of risk taking and innovation. I haven’t seen that everywhere – there is a lot more understanding here if a company doesn’t succeed.
What do you look for in an angel deal?
I look at the management team. I think the quality of the management team is so significant. You have to determine if they can take the product idea all the way through and make it successful. And other factors include the market opportunity, the technology, what differentiates them from what’s out there.
You recently invested in Displaypoints. What did you like about them?
I think they have a strong management team as well as a great idea. They’ve met their milestones and progressed very well. I think they’ve found a niche that has some real interest as seen by the companies who are in talks with them. They’re at an early stage but progressing well and getting a lot of interest that is helping them refine their product and expand their customer base. They’re about to roll out version 2 of their product, and they’ve just gotten approval for a pilot program with a national restaurant chain. I think we’re going to be hearing a lot more about them.
What is your day job?
I work at Edelman, which is a global public relations agency, the largest, independently owned PR agency in the world. They’re family owned and have been in business for over fifty years. It really combines the best of a boutique – local presence, specific expertise – with the resources of a global company. I focus on technology companies.
Why change from the corporate world to the agency world?
I like the idea of applying my experience to many companies, and I admire Edelman’s creative history and how they continue to shape the PR profession.
How does Edelman work with startup companies?
We recognize that there are unique needs with a new company. We recently designed a PR model that’s specifically for companies at this stage – to help smaller companies get noticed. We’ll work with these companies to help develop their initial communications platform and build that early buzz that they need. The level of support the startup needs is different from a more established company, and we offer a lot of flexibility with this program.
What are some of the tactical ways a startup gets their message out there?
It really depends on their business needs and the markets they want to reach. Certainly talking with industry analysts and the media is key. And being visible at key forums – conferences, trade shows. But you need to first build a strategic PR program based on the company’s business objectives, and then a variety of tactics will fall in place.
PR is evolving based on technology. What do you see as trends for 2008?
Social networking and mobile marketing are going to be the key trends in 2008. It’s becoming more and more important to a solid PR program. Edelman has been on the forefront of this. For example, one client, a technology startup, needed help in building its name and customer base and countering misinformation about them. Edelman used social media – in particular blogs, and built up a program and trained execs and had it live in under two weeks, with great results. It allowed them to open up a dialogue and talk with potential customers, and clarify who they were. They were able to correct the misinformation as well as sign up new customers. It’s all about getting that initial conversation going rather than having a one way communication. Mobile marketing is growing too – but these programs must be opt-in. You have to earn the right to be on their handsets. These are complicated programs to develop, but it can be an effective tool if used in the right way.
Best regards,
Hall T.
What is your background?
Corporate communications. Developing communications strategy and programs for technology companies. I was over corporate communications at Sabre Holdings out of Dallas, a travel technology company whose businesses include Travelocity. Before that I worked many years at Texas Instruments. My last position there was VP of strategic communications, which involved the external positioning of the company during a time of major transformation. Before that I was over communications for TI’s European operations for more than four years, living first in France and then Belgium.
One area where I’ve gained a lot of experience is in acquisitions and divestitures – which is where I also developed my interest in working with startups. When I came back to the U.S. in 1997, TI was in the midst of its transformation to primarily a semiconductor company, selling off several businesses and buying in a number of small technology companies. In a three-year period, I worked on more than 20 acquisitions and divestitures, and more later at Sabre.
These communications are very involved, and multi-phased. One critical element is determining how to best integrate the newly acquired company and build that brand going forward. Given the entrepreneur’s personal investment in their company, it may be challenging to see any change to their company’s identity -- which I can understand. But you have to look at how to bring the most clarity to customers and how the acquiring company can best generate that new value. Sometimes that will mean maintaining the existing identity, and sometimes the decision is to fully integrate into the acquiring company’s brand. But there has to be a framework in place to guide those decisions.
Why do you like startups?
I have always admired entrepreneurs – people who have an idea and take the risk to go off and start a business and get it going. It’s exciting to see them succeed. We have a culture here in the U.S. that encourages some level of risk taking and innovation. I haven’t seen that everywhere – there is a lot more understanding here if a company doesn’t succeed.
What do you look for in an angel deal?
I look at the management team. I think the quality of the management team is so significant. You have to determine if they can take the product idea all the way through and make it successful. And other factors include the market opportunity, the technology, what differentiates them from what’s out there.
You recently invested in Displaypoints. What did you like about them?
I think they have a strong management team as well as a great idea. They’ve met their milestones and progressed very well. I think they’ve found a niche that has some real interest as seen by the companies who are in talks with them. They’re at an early stage but progressing well and getting a lot of interest that is helping them refine their product and expand their customer base. They’re about to roll out version 2 of their product, and they’ve just gotten approval for a pilot program with a national restaurant chain. I think we’re going to be hearing a lot more about them.
What is your day job?
I work at Edelman, which is a global public relations agency, the largest, independently owned PR agency in the world. They’re family owned and have been in business for over fifty years. It really combines the best of a boutique – local presence, specific expertise – with the resources of a global company. I focus on technology companies.
Why change from the corporate world to the agency world?
I like the idea of applying my experience to many companies, and I admire Edelman’s creative history and how they continue to shape the PR profession.
How does Edelman work with startup companies?
We recognize that there are unique needs with a new company. We recently designed a PR model that’s specifically for companies at this stage – to help smaller companies get noticed. We’ll work with these companies to help develop their initial communications platform and build that early buzz that they need. The level of support the startup needs is different from a more established company, and we offer a lot of flexibility with this program.
What are some of the tactical ways a startup gets their message out there?
It really depends on their business needs and the markets they want to reach. Certainly talking with industry analysts and the media is key. And being visible at key forums – conferences, trade shows. But you need to first build a strategic PR program based on the company’s business objectives, and then a variety of tactics will fall in place.
PR is evolving based on technology. What do you see as trends for 2008?
Social networking and mobile marketing are going to be the key trends in 2008. It’s becoming more and more important to a solid PR program. Edelman has been on the forefront of this. For example, one client, a technology startup, needed help in building its name and customer base and countering misinformation about them. Edelman used social media – in particular blogs, and built up a program and trained execs and had it live in under two weeks, with great results. It allowed them to open up a dialogue and talk with potential customers, and clarify who they were. They were able to correct the misinformation as well as sign up new customers. It’s all about getting that initial conversation going rather than having a one way communication. Mobile marketing is growing too – but these programs must be opt-in. You have to earn the right to be on their handsets. These are complicated programs to develop, but it can be an effective tool if used in the right way.
Best regards,
Hall T.
Brewster McCracken of the City Council Talks about the Pecan Street Project
Brewster McCracken of the City Council Talks about the Pecan Street Project
How did the idea for the Pecan Street Project get started?
I was having lunch with BJ Stanbury, Steve Darnell, and Dave Bowen, over at Taverna on March 7. We were talking about Helivolt’s plans. BJ was very passionate about how our focus needs to be on the locally sited solar rather than big, remote solar panel farms out in the hinterlands. That’s how you create the jobs and make it directly relevant to people.
I got together with Isaac Barchas and Joel Serface and started working through it. If you have solar covering offices, homes, stores, then you would need to have thin-film or a building integrated material, and you would need to reinvent the way utilities deliver electricity.
We asked ourselves what success would like 20 years down the road. Imagine we have solar all over the city. What changes would be needed to make that system as reliable and affordable as conventional fossil-based power? Currently, solar is intermittent now and it’s subsidized, so what does it take to get it as reliable as polluting energy. You would have to connect the solar systems coating the buildings to 2-way wiring systems. In turn, the wiring would send the solar energy large, interconnected storage servers. It sounded a lot like the internet. We learned from reading Google.org that Google had already reached a similar conclusion about the future of clean energy—that you have to reinvent the energy system into one with the architecture of the Internet. Thomas Friedman and former Motorola CEO Robert Galvin are also is advocating for the creation of an energy Internet. Friedman writes that this is the most important thing we could do to promote economic opportunity and to address the world’s biggest environmental challenge, climate change.
So we had our first formal meeting on April 16 at MCC.
It was Joel Serface, Isaac Barchas, Rachael Proctor May, Marsha Inger of UT’s Advanced Computing Center, UT engineering professor Michael Webber, Jose Beceiro with the Greater Austin Chamber and Austin Energy General Manager Roger Duncan there. Shortly afterward, Joel moved away and Colin Rowan from I&O Communications and Heath Hignight from UT’s Engineering School joined us. We started hashing through it what we needed to do in Austin to lead in clean energy – both economically and from a utility perspective. It took us three months to develop the consensus plan that became the Pecan Street Project.
Why did you call it the Pecan Street project?
It was initially called the Austin Project but that name it was already taken. Interestingly, the Austin Project was the name for the the job training initiative from Sematech. We didn’t want to use a generic name like “clean energy project.” So we decided to call it Pecan Street Project because Pecan Street used to be Austin’s original main street. We felt it fitting because we’re talking about taking energy away from the hinterlands such as from a coal-fired gas plant and bringing it into Austin’s main street.
When Edison was building out the infrastructure for generating and distributing electricity he had a choice between centralized and decentralized. He chose centralized which many people say is now outdated.
The most direct analogy is the evolution of broadcast television to the internet. If you look at broadcast television you get your news from three networks that they broadcast from big towers (with no way to store it) and you had to be in front of the TV at a certain time. Later VCRs, cable, and other devices came along but the fundamental structure was still there. Then along comes the internet in which information is deposited into servers and the users can pull out that information at your own convenience and the user can also put information out there. If power were structured like the internet then users could put energy out on the grid or take it back off at their convenience.
After the landline phone companies deregulated, that after twenty-five years later we’re basically back to one landline phone company. It’s a natural monopoly. It makes no economic sense to have duplicated line systems. It is likely that utilities will also be natural monopolies on the wiring side. Even in Austin, we essentially have a competitive market for the source of power, because we go out for bid on coal, uranium and natural gas. If you have a decentralized smart grid Energy Internet system and it’s just as reliable as from traditional energy sources, then it doesn’t matter from a systems perspective that the power would be coming from solar panels on people’s roofs rather than big power plants in remote locations This won’t just be an engineering and technology challenge. Developing an Energy Internet will also be a major software challenge. It will require the creation of a new business model for how utilities pay for solar panels and excess solar power coming from people’s roofs.
It’s too early to say what kind of business model will emerge from the Pecan Street Project. Duke Energy is paying put solar panels on its customers roofs. SoCal Edison is paying rent to building owners to place solar on their rooftops – that is a model similar to the cell phone tower business model in the mobile phone industry.
Christian Reed of E6 Capital made the point that Austin pays for putting in a solar panel system when it should pay for power put into the grid. How successful is the current solar power rebate project for Austin?
It’s too successful. The current way we do the rebate program will bankrupt the utility if we keep doing that because we’re spending more than we’re getting back. But we are sending our energy dollars outside of Austin in other ways, too. Right now as rate payers, we’re doing a massive export of our dollars out to Wyoming for coal and west Texas and Oklahoma for uranium and natural gas. Not only that but if you can get the technology for locally-sited systems to work as efficiently as carbon-based electricity then you could eliminate not only the several billion dollar cost of a power plant generating the electricity but also the inputs to that plant such as coal. About half of a customer’s electric fuel bill goes to pay for the cost of the fuel such as coal. With solar and wind, the fuel is free, so if we could develop a reliable, affordable delivery system for wind and solar, theoretically half the charge on your electric bill – the charge for the fuel to run the power plants – would be lopped off. It’s a long way off but that’s the vision.
What is the Pecan Street Project’s contribution to this effort?
We have everyone in Austin coming together to tackle this problem including Austin Energy, the City of Austin, the University of Texas, Austin Community College, the Environmental Defense Fund and leading technology companies, including SEMATECH, Cisco, Dell, Freescale, GE, GridPoint, IBM, Intel, Microsoft and Oracle .
As Thomas Friedman writes, creating an Energy Internet will require innovation in utility systems, building codes, land use policies and information technologies. It will require economic development investments. The City of Austin has all of the components needed to create and implement an Energy Internet – utility policymaking, economic development, building code authority and land use authority – integrated into one organization — the City of Austin. so We can, for example, change building codes to match the needs of the energy technology required to make this work. Utilities alone can’t do that. We can do this in one near-seamless body. We are likely the largest city in the nation and the largest public utility run by the same management – the Austin City Manager and the same board –the Austin City Council. That gives Austin an important differentiator in clean energy that can position us to lead economically and to make an important positive contribution to this national priority.
The vision is to have 100,000 homes and businesses in Austin equipped with solar. To make a vision like that work, we will need a reliable, cost-effective Energy Internet and a new business model – likely one in which we’re getting paid for the electricity we produce from our own rooftops. We can do make Austin the home for researching, developing and implementing this vision. Through the Pecan Street Project, we are bringing together the best in the nation to do precisely that.
Has anyone put up any money for it?
The corporate partners are dedicating 2 to 4 employees at 25% of their time for the next 7 8 months. On August 1st, we’re going to have recommendations from all our partners about what technologies and investments we will need to make to implement the vision.
How can angel investors help?
We believe there will be a tremendous amount of innovation and entrepreneurship coming to this effort. As we create in Austin an Energy Internet that makes it possible for entrepreneurs and innovators to introduce new clean technologies into the electric grid, many of which will involve the commercialization of university technologies, angel investors will be key to funding the innovators who will be making this vision a reality. We are talking about major opportunities for new applications in software, energy storage, solar, and home and business “operating systems.” Just like the internet created untold number of jobs, the distributed smart grid Energy Internet being researched, developed and implemented through the Pecan Street Project offers the promise of creating a tremendous number of jobs and startup opportunities. A distributed smart grid Energy Internet also offers the prospect of much lower barriers to entry for entrepreneurial start-ups to compete on the electric grid. We’re bringing the partners together to make this system work. Everyone involved in this project is tremendously excited about the future we can create – both environmentally and economically.
Best regards,
Hall T.
How did the idea for the Pecan Street Project get started?
I was having lunch with BJ Stanbury, Steve Darnell, and Dave Bowen, over at Taverna on March 7. We were talking about Helivolt’s plans. BJ was very passionate about how our focus needs to be on the locally sited solar rather than big, remote solar panel farms out in the hinterlands. That’s how you create the jobs and make it directly relevant to people.
I got together with Isaac Barchas and Joel Serface and started working through it. If you have solar covering offices, homes, stores, then you would need to have thin-film or a building integrated material, and you would need to reinvent the way utilities deliver electricity.
We asked ourselves what success would like 20 years down the road. Imagine we have solar all over the city. What changes would be needed to make that system as reliable and affordable as conventional fossil-based power? Currently, solar is intermittent now and it’s subsidized, so what does it take to get it as reliable as polluting energy. You would have to connect the solar systems coating the buildings to 2-way wiring systems. In turn, the wiring would send the solar energy large, interconnected storage servers. It sounded a lot like the internet. We learned from reading Google.org that Google had already reached a similar conclusion about the future of clean energy—that you have to reinvent the energy system into one with the architecture of the Internet. Thomas Friedman and former Motorola CEO Robert Galvin are also is advocating for the creation of an energy Internet. Friedman writes that this is the most important thing we could do to promote economic opportunity and to address the world’s biggest environmental challenge, climate change.
So we had our first formal meeting on April 16 at MCC.
It was Joel Serface, Isaac Barchas, Rachael Proctor May, Marsha Inger of UT’s Advanced Computing Center, UT engineering professor Michael Webber, Jose Beceiro with the Greater Austin Chamber and Austin Energy General Manager Roger Duncan there. Shortly afterward, Joel moved away and Colin Rowan from I&O Communications and Heath Hignight from UT’s Engineering School joined us. We started hashing through it what we needed to do in Austin to lead in clean energy – both economically and from a utility perspective. It took us three months to develop the consensus plan that became the Pecan Street Project.
Why did you call it the Pecan Street project?
It was initially called the Austin Project but that name it was already taken. Interestingly, the Austin Project was the name for the the job training initiative from Sematech. We didn’t want to use a generic name like “clean energy project.” So we decided to call it Pecan Street Project because Pecan Street used to be Austin’s original main street. We felt it fitting because we’re talking about taking energy away from the hinterlands such as from a coal-fired gas plant and bringing it into Austin’s main street.
When Edison was building out the infrastructure for generating and distributing electricity he had a choice between centralized and decentralized. He chose centralized which many people say is now outdated.
The most direct analogy is the evolution of broadcast television to the internet. If you look at broadcast television you get your news from three networks that they broadcast from big towers (with no way to store it) and you had to be in front of the TV at a certain time. Later VCRs, cable, and other devices came along but the fundamental structure was still there. Then along comes the internet in which information is deposited into servers and the users can pull out that information at your own convenience and the user can also put information out there. If power were structured like the internet then users could put energy out on the grid or take it back off at their convenience.
After the landline phone companies deregulated, that after twenty-five years later we’re basically back to one landline phone company. It’s a natural monopoly. It makes no economic sense to have duplicated line systems. It is likely that utilities will also be natural monopolies on the wiring side. Even in Austin, we essentially have a competitive market for the source of power, because we go out for bid on coal, uranium and natural gas. If you have a decentralized smart grid Energy Internet system and it’s just as reliable as from traditional energy sources, then it doesn’t matter from a systems perspective that the power would be coming from solar panels on people’s roofs rather than big power plants in remote locations This won’t just be an engineering and technology challenge. Developing an Energy Internet will also be a major software challenge. It will require the creation of a new business model for how utilities pay for solar panels and excess solar power coming from people’s roofs.
It’s too early to say what kind of business model will emerge from the Pecan Street Project. Duke Energy is paying put solar panels on its customers roofs. SoCal Edison is paying rent to building owners to place solar on their rooftops – that is a model similar to the cell phone tower business model in the mobile phone industry.
Christian Reed of E6 Capital made the point that Austin pays for putting in a solar panel system when it should pay for power put into the grid. How successful is the current solar power rebate project for Austin?
It’s too successful. The current way we do the rebate program will bankrupt the utility if we keep doing that because we’re spending more than we’re getting back. But we are sending our energy dollars outside of Austin in other ways, too. Right now as rate payers, we’re doing a massive export of our dollars out to Wyoming for coal and west Texas and Oklahoma for uranium and natural gas. Not only that but if you can get the technology for locally-sited systems to work as efficiently as carbon-based electricity then you could eliminate not only the several billion dollar cost of a power plant generating the electricity but also the inputs to that plant such as coal. About half of a customer’s electric fuel bill goes to pay for the cost of the fuel such as coal. With solar and wind, the fuel is free, so if we could develop a reliable, affordable delivery system for wind and solar, theoretically half the charge on your electric bill – the charge for the fuel to run the power plants – would be lopped off. It’s a long way off but that’s the vision.
What is the Pecan Street Project’s contribution to this effort?
We have everyone in Austin coming together to tackle this problem including Austin Energy, the City of Austin, the University of Texas, Austin Community College, the Environmental Defense Fund and leading technology companies, including SEMATECH, Cisco, Dell, Freescale, GE, GridPoint, IBM, Intel, Microsoft and Oracle .
As Thomas Friedman writes, creating an Energy Internet will require innovation in utility systems, building codes, land use policies and information technologies. It will require economic development investments. The City of Austin has all of the components needed to create and implement an Energy Internet – utility policymaking, economic development, building code authority and land use authority – integrated into one organization — the City of Austin. so We can, for example, change building codes to match the needs of the energy technology required to make this work. Utilities alone can’t do that. We can do this in one near-seamless body. We are likely the largest city in the nation and the largest public utility run by the same management – the Austin City Manager and the same board –the Austin City Council. That gives Austin an important differentiator in clean energy that can position us to lead economically and to make an important positive contribution to this national priority.
The vision is to have 100,000 homes and businesses in Austin equipped with solar. To make a vision like that work, we will need a reliable, cost-effective Energy Internet and a new business model – likely one in which we’re getting paid for the electricity we produce from our own rooftops. We can do make Austin the home for researching, developing and implementing this vision. Through the Pecan Street Project, we are bringing together the best in the nation to do precisely that.
Has anyone put up any money for it?
The corporate partners are dedicating 2 to 4 employees at 25% of their time for the next 7 8 months. On August 1st, we’re going to have recommendations from all our partners about what technologies and investments we will need to make to implement the vision.
How can angel investors help?
We believe there will be a tremendous amount of innovation and entrepreneurship coming to this effort. As we create in Austin an Energy Internet that makes it possible for entrepreneurs and innovators to introduce new clean technologies into the electric grid, many of which will involve the commercialization of university technologies, angel investors will be key to funding the innovators who will be making this vision a reality. We are talking about major opportunities for new applications in software, energy storage, solar, and home and business “operating systems.” Just like the internet created untold number of jobs, the distributed smart grid Energy Internet being researched, developed and implemented through the Pecan Street Project offers the promise of creating a tremendous number of jobs and startup opportunities. A distributed smart grid Energy Internet also offers the prospect of much lower barriers to entry for entrepreneurial start-ups to compete on the electric grid. We’re bringing the partners together to make this system work. Everyone involved in this project is tremendously excited about the future we can create – both environmentally and economically.
Best regards,
Hall T.
Tuesday, January 8, 2008
The Frank Peters Show—Dave Berkus the Uber Angel
One of my favorite podcasts is the Frank Peters Show in which Frank Peters describes the startup scene in southern California. A long-time member of the Tech Coast angels, Frank interviews entrepreneurs, venture capitalist and angels about their experiences. I met Frank last year at the Angel Capital Association summit meeting in Chicago in which he gave a round table talk on generating PR. As a podcast it’s one of the best in both content and production values. It is unique in content since there are very few podcasts that focus on startup investing. This shows up in Frank’s download numbers which reach 25,000 monthly. Frank is also a prolific podcaster as he’s been doing this for about two years and has over 100 podcasts already published on his web site.
One of my favorite shows is the one with Dave Berkus, who Frank called the Uber Angel. In this interview Dave talks about sitting on the board of startups and helping the entrepreneur get the business off the ground. Dave summed it up well when he said that all companies go through three crises. The first is the “funding crisis” which is why the company comes to the angels and VCs in the first place – to get funding for their startup. The second is the “operating crisis” in which the company now has the funding but must hire and put the core processes in place to grow the company. Third is the “quality crisis” in which the company produces a product and places it in the market place and undoubtedly encounters problems that must be resolved. In working with startups in Austin, I found that view rather insightful. If you’ve invested in a startup you can look forward to these three phases with expectation rather than surprise when the company comes back struggling with one of these issues.
I recommend you download a Frank Peter podcast when you have the chance. The interviews with angels and entrepreneurs are quite insightful.
Best regards,
Hall T.
One of my favorite shows is the one with Dave Berkus, who Frank called the Uber Angel. In this interview Dave talks about sitting on the board of startups and helping the entrepreneur get the business off the ground. Dave summed it up well when he said that all companies go through three crises. The first is the “funding crisis” which is why the company comes to the angels and VCs in the first place – to get funding for their startup. The second is the “operating crisis” in which the company now has the funding but must hire and put the core processes in place to grow the company. Third is the “quality crisis” in which the company produces a product and places it in the market place and undoubtedly encounters problems that must be resolved. In working with startups in Austin, I found that view rather insightful. If you’ve invested in a startup you can look forward to these three phases with expectation rather than surprise when the company comes back struggling with one of these issues.
I recommend you download a Frank Peter podcast when you have the chance. The interviews with angels and entrepreneurs are quite insightful.
Best regards,
Hall T.
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