Investing in the Next Generation of Entrepreneurs

As we move into this New Year, I want to pick up the theme of investing in the next generation of Austin entrepreneurs.  This is a large part of our mentality at ATI.  Even though we typically have around 20 – 25 companies in the portfolio at any one time, we are supportive of probably another 25+ entrepreneurial teams so that we can have a broader impact in the trajectory of emerging entrepreneurs.  Many entrepreneurs express frustration to us as they proceed through the fund raising process and I want to provide my perspective on two related underlying drivers.

Surprising to most, the average age of the entrepreneurs at ATI is probably around 40.  Many come to us with significant industry experience and / or prior experience with startups as a junior team member.  However, they frequently find it tough to raise funding or attract the critical talent to the team because they are not one of the proven Austin startup leaders.  While 75% of ATI companies have received angel or VC funding over the last three years, that statistic does not hold true for the broader ecosystem.  That is probably a good thing.  However, more entrepreneurs need to get a chance – albeit perhaps to fail fast, but that is the only way they can become next generation of Joel Trammell, Larry Warnock, Richard Schwartz, Brett Hurt, Sam Decker, Curt Bilby, Rob Neville, Josh Baer, etc. (all of these folks have at least one successful exit and are now leading another funded startup).  We need to be cultivating 10x the number of future entrepreneurs to have a viable “senior class” in 15 years to replace the current proven startup leaders as they retire or pivot to become investors.

Driver #1

I recently wrote about a “class” of startups that may end up moving to the west coast for funding.  This has been a pattern for a while, and it will continue to be for some time to come.  The implication is that Austin is potentially loosing a portion of the current generation of up and coming entrepreneurs – and these are not the “wet behind the ears 22 year olds” either.  [Disclaimer – yes, I know the counter to that statement is Microsoft, Dell, Google, and Facebook]  I think the challenge for this category of entrepreneur is that they are in spaces that do not line up with the sweet spot of Austin investors – i.e., there companies are somehow consumer related.  There may be a disconnect between the Austin investors and the Austin talent base, and the types of companies that talent want to create.  If so, either the money or talent will flow out of Austin – or new talent or money will flow into Austin.  Probably some of both.

Driver #2

A challenge for investors in funding these new entrepreneurs is that they frequently only get to meet them in a transaction context, not a long term relationship context.  Those of us who work with these entrepreneurs for 6 or 12 months before they engage the investor community have a different perspective on the entrepreneurs because we have been working so closely with them for so long.  It is not that we have become BFFs (best friends forever), it is that we have seen the entrepreneurs execute, explore, struggle, succeed, fail and all the other range of efforts and emotions that come with launching a startup so that we develop a much clearer sense of their capabilities.  One reason seasoned entrepreneurs get funded is that the investor has developed a similar long term relationship with them and the investor’s confidence in that relationship allows the investors to believe the entrepreneur can get through the next set of risks and company milestones.  In contrast, when an investor first meets a new entrepreneur, it is usually in the fund raising context and for web or software related startups, the market windows are narrow and require an investment decision in weeks or a couple months at most.  Although investors work rapidly to get to know the entrepreneur and do background checks, there is still additional risk in that entrepreneur that is not inherent in the proven leader the investor has worked with previously.

I have no idea how to break the conflict – investors clearly cannot spend as much time with 50 entrepreneurs as we do for 6 or 12 months prior to a potential funding event, but the investor needs that level of familiarity to reduce risk.  This impasse is a compounding issue for investors when an entrepreneur pitches a company that is outside of the investor’s wheel house as is the case with many consumer related startups – now there are two risks, one relating to the entrepreneur and the other to the market or technology space.  That is one too many too frequently, especially when one makes the other worse.

At ATI, we are also working with the Rice Alliance’s Austin Chapter and CTAN on entrepreneur education and have launched a suite of programs aimed at exceptional UT students to help home-grow the next generation of Austin entrepreneurs.  In the case of the UT-focused programs, that is a 20 year effort but the ecosystem needs some short term answers as well – in the 6 month to 3 year timeframe.  Let me know if you have some ideas.

Funding Gap Creates Push / Pull to the Coasts

The good news is that Austin companies are getting funded.  The bad news is that many really good companies are going to leave Austin so they can get funded on the west coast.   The reason is that there is a hole in the funding continuum, with a particular focus on anything that touches the consumer.  I know of three great software companies with customer traction, massive scale potential, and prior small angel rounds that are not able to raise a viable Series A here in Austin (even though two are really B-B-C).  They will get funded by the west coast.  Some may just say it is because “they are crazy on the west coast,” but that is a copout.  From an effort-to-results perspective, the startups could bang away in Austin and possibly get funded, or spend an equal effort on the west coast and probably get funded (in reality, likely less effort with a higher valuation).  It is a relative effort issue.  More importantly, it is likely that all three will move to the west coast if funding comes from there.

At a back-of-the-envelope level of sophistication, there are several major inflection points in a startup’s evolution that show significant reductions in risk.  Each one of the four business milestones below can somewhat be correlated with a round of funding:

1. Seed funding supports the company to prove the product works
2. Series A supports the company to prove customers will buy it and there is a revenue model
3. Series B supports the company to prove there is an internally coherent and sustainable business model
4. Series C supports the company to prove the product and business model can scale to become a significant company

The specific gap that these software companies are at is between the “customers will buy” and the “business model works” stages.    They all did a tremendous job identifying a need, building a product to solve that need and proving that someone will pay to have the need solved.  That actually sounds like Series B progress and certainly should be enough to get Series A funding, and it is on the west coast – and at a good valuation.  Not in Austin.  In Austin, the feedback they are getting is that they need massive amounts more of customer traction, an “upgraded team”, clear path to profitability, and the Series A is too big or the valuation is too high.

Lately, ATI has seen renewed interest by west and east coast investors in the Austin startup scene.  More firms are covering Austin – meaning they seek out meetings with startups, asking around about good entrepreneurs and startups, attending key technology and startup events, etc. – and are writing checks.  The most recent funding announcement from an ATI company in my portfolio was Calxeda (formerly Smooth-Stone) which was funded by six non-Austin investors.  Now, each of those six investors will be in Austin once a quarter and, if the pattern holds, should start considering additional investments here.  I certainly plan on hitting them up.  While I do not expect to see a frothy market any time soon, it is an optimistic sign for many startups.

Arcade Fire vs. Britney Spears

Sara Lacy recently wrote a post for Tech Crunch that pulled entrepreneurial lesson’s from Arcade Fire, one of the hottest indie pop-rock groups in the world.  At the 2007 ACL Festival, Cold Play said “after seeing them, we almost quit” because they are so good.  Sara’s post describes them as:

“A big part of what made them so phenomenal wasn’t just the music it was how they played. They were a wild, musical-chairs-cacophony, going totally ape-shit on instruments as varied as a megaphone or an accordion, and yet somehow they produced a tight, controlled sound.”

I have long thought I aspire to work in a startup that functions like Arcade Fire, but my experiences here in Austin make me think it would be less risky to join a startup that is more like Britney Spears (or Spoon, to give a shout out to local rock stars).  Specifically, I think that in Austin, the Britney Spears’ type startups are much, much more likely to get funded – probably more than 4:1.  This may not be the case on the West Coast, and in fact, it may be opposite.

Why?  My impression of Austin investors is that the pitch of “look how awesome our team is, we don’t know what we are going to do, but when we do it, it will be amazing” doesn’t fly.  The Britney Spears model is a very tightly defined product with as few moving parts as possible.  There is only one face to the world so they only have to train one person on media interaction, the revenue split (i.e., equity) is clearly defined by industry rules for the writer, producer, artist, promoter, etc. – even in a 4 person rock band, there is generally clear understanding of the split between the singer, bass guitarist, drummer and lead guitarist, etc.

For startups in Austin, there is a known talent pool that can fill in clearly defined roles and focus on execution, investors want to see explicit customer validation – revenues, contracts, letters of intent, etc., and several other proof points before investing.  The overall theme here is risk reduction by investors.  This is very rationale and I would probably act the same way if I was running a fund.  But, it can be frustrating to those entrepreneurs who are first timers or in a rapidly evolving space (i.e., small market size but with expected explosive growth) where the paths to market, competitive dynamics and customer requirements are unknown.

The other issue is that there are not many Arcade Fire-like teams around Austin – possibly a self-fulfilling prophecy.  Austin Ventures sort of does this with the “high profile CEO $50M VC roll-ups”, but that is with a proven single leader.  Austin Ventures and some other firms will have entrepreneurs in residence (EIRs) that explore spaces while getting a small stipend from the firm, which is a bit closer.  In recent memory, the only teams that I have seen that could approach the Arcade Fire model is very early on at Calxeda (formerly Smooth-Stone), or Macheen (still in super stealth mode but is a “global cloud service provider for connected devices” – do you know what that means yet?), or perhaps the closet fit is InfoChimps.  There is a potential gaming company in the works that might actually be a true Arcade Fire model, but I do not think it has yet fully come together.

Many investors, entrepreneurs, and startup supporters have mentioned that Austin has not had any massive home runs lately – meaning $1B plus.  There may be a correlation with the type of startups that get funded here – there are a lot of $50M – $250M exits that generate wealth for the entrepreneurs and investors, but since risk and reward are correlated, the risk reduction mentality may be stemming the flow of potential massive home runs.

Smooth-Stone, an Austin Technology Incubator Company, Lands $48 Million Invest

This was originally posted on the Austin Technology Incubator blog

Austin, TX, August 16, 2010 – The Austin Technology Incubator (ATI), a not-for-profit arm of The University of Texas at Austin, congratulates member company Smooth-Stone on its $48 million investment round, announced today, from Battery Ventures, Flybridge Capital Partners, Highland Capital Partners, ARM, Advance Technology Investment Company (ATIC) and Texas Instruments. ATI also announces Smooth-Stone’s graduation from ATI membership.

Power consumption matters more than ever. Smooth-Stone will bring the low-power virtues of mobile phone technology to servers and data centers. Its semiconductors and software will provide a solution for companies where energy consumption by servers has become a constraining and expensive issue by increasing the density of computer resources while significantly conserving energy, cooling and space in the data center. “Our goal is to completely remove power consumption as an issue for the data center. Imagine that change for companies with a large presence on the Internet,” said Smooth-Stone CEO Barry Evans. “We want to make sure space and power are not constraining these companies’ potentials.”

Smooth-Stone received support from ATI in numerous ways – strategic advice, pitch development, go-to-market analyses, connections to advisors and mentors, access to industry and investor events. “Partnering with ATI was crucial to Smooth-Stone establishing the foundation we needed from the very start to be set up to take this company to market over the long haul, and to secure this significant funding today,” added Evans. “In particular, ATI was invaluable in guiding us through the process to secure our critical $1 million seed funding from the Texas Emerging Technology Fund, which truly provided the runway and confidence to begin implementing our bold vision.”

Smooth-Stone joined ATI in mid 2008 as essentially a one-man operation. “When we began working with Barry, it was evident that he and Smooth-Stone had tremendous potential,” said Bart Bohn, ATI’s IT Incubator Director. “This funding announcement is strong validation that Smooth-Stone has developed something disruptive and compelling. It has been our privilege to support Barry as he built the team, and they in turn built a world-class startup.”

In conjunction with the funding announcement, ATI is also announcing Smooth-Stone’s graduation from the Incubator. “With an industry leading team, top-tier investment syndicate, strong product progress and rapidly deepening customer engagement, Smooth-Stone is poised for a rocket ship ride,” added Bohn. “The mix between strategic and VC investors will serve them well as Smooth-Stone makes its aggressive play for the low power server market. Our ATI community is thrilled to indoctrinate another successful alumnus.”

About the Austin Technology Incubator

The Austin Technology Incubator is a nonprofit unit of The University of Texas at Austin that harnesses business, government and academic resources to provide strategic counsel, operational guidance and infrastructure support to its member companies to help them transition from early stage ventures to successful technology businesses. Since its founding in 1989, ATI has worked with over 200 companies, helping them raise close to $750 million in investor capital. ATI is a key program of the IC2 Institute at The University of Texas at Austin. For more information, visit www.ati.utexas.edu.

About Smooth-Stone

Founded in January 2008, Smooth-Stone brings unseen performance density to the data center on a very attractive power foot print by leveraging ultra-low power processors as used on mobile phones, as a foundation for its revolutionary technology. Smooth-Stone will make it possible for data center managers to increase the density of their computer resources while significantly reduce need for power, space and cooling. At the same time, Smooth-Stone technology will contribute to the reduction of the CO2 footprint of the data center in a significant way. More about Smooth-Stone can be found at www.smooth-stone.com.

Bridging the gap: How Semantic Web can move into the mainstream through SXSW

The following post is from Juan Sequeda, UT Ph.D. candidate and Semantic Web Austin co-founder. ATI-IT and Wireless director Bart Bohn serves on the board at Semantic Web Austin. Visit Juan’s blog here.

Juan Sequeda

Personally, I believe that the Semantic Web will become mainstream in the next few years (I actually have a bet on this with some college friends). I know that this is a strong statement, but I am confident that it will happen. Mainstream is defined in Wikipedia as “the common current of thought of the majority”. Furthermore it states that something is mainstream if it “is available to the general public” and it “has ties to corporate or commercial entities”. However, how do you evaluate if something is on the verge of becoming mainstream? I propose the following metric: inclusion at the South by South West (SXSW) Conference!
What is SXSW?
At SXSW, “tomorrow happens here” (or so their marketing logo says). It is a 10 day conference, which takes place in Austin, Texas, about technology, film and music. SXSW Interactive (the technology part) is the place where web developers, marketers, social media, PR and basically all web related people get together to discuss and learn about the new and upcoming web companies, technologies and trends. Companies such as Twitter, Foursquare and Gowalla gained attraction thanks to SXSW. So if we want semantic web technologies to start gaining traction, this is the place where it should start.

Mainstream for whom?
After reading the wonderful blogpost on the BBC’s dynamic semantic publishing system, it reminded me that the Semantic Web has two audiences: the common web user (my mom) and developers. If my mom were to go to the BBC’s World Cup website, she would be seeing a normal web page… nothing out of the ordinary. However, from the developer’s perspective, using semantic web technologies enabled a new type of publishing platform including easy data integration, inferencing , etc.

Nevertheless, there is still a huge gap in understanding and adoption between semantic web technologies and the general web audience (my mom and developers). I’m not trying to undermine current efforts or accomplishments; instead, look for example at the Semantic Technology conference. This is valid proof that this bridge is being gaped. Starting in 2005 with 300 attendees from a variety of backgrounds (research, academia and entrepreneurs), this past conference had 1200 attendees from large enterprises, government and a lot more startups and entrepreneurs. Creating a conference exclusively around semantics, and seeing it grow demonstrates that interest for semantic technologies is growing… but maybe not mainstream yet. So what else should we do?

Current mainstream state of the Semantic Web
I have a search feed on Twitter for “Semantic Web” and “Linked Data”; and, I can say that almost everyday there is an article being shared. People are definitely discussing more and more about the Semantic Web. Nevertheless, does this mean that the Semantic Web is starting to gain traction and moving into the mainstream? It is hard to judge, but if any of the following examples are any indication, then it would be safe to assume so:

• BBC’s World Cup news system was developed on semantic web technologies (RDF, OWL, SPARQL, inferencing, triplestore).
• The upcoming Drupal 7 release will have full native support with RDF.
• Semantic MediaWiki is an extension to the popular MediaWiki that already offers full RDF support.
• Best Buy uses RDFa and has shown a 30% increase in their SEO efforts.
• The US and UK government publish their data on the web as Linked Data.
• Huge media players such as New York Times and Thompson Reuters/Open Calais publish Linked Data.
• Google and Yahoo both have Rich Snippets and Search Monkeyrespectively which index RDFa.
• Metaweb/Freebase, a huge player in the Semantic Web spacewas bought by Google.

So, I restate my ask: “Isn’t this evidence enough for consideration of the Semantic Web as mainstream?” Clearly, it is becoming more widely available to the general public and increased ties in the private sector. But, I’m obviously biased, so I’ll let you be the judge.

Moving into the mainstream through SXSW
One way of how we can move the Semantic Web into the mainstream is by injecting semantics into an existing conference that already attracts a broad audience. And that is exactly what we have done! We have submitted over 10 panels and presentations to the 2011 South By South West (SXSW) Conference.

Who is “we”? By “we” I mean two things. First, it refers to Semantic Web Austin, a non-profit that is positioning Austin as a leader in the semantic web technology space. Second, refers to a group of people who responded to a call that I made last month about submitting panels and presentations to SXSW.

Without further adieu, check out all the panel and presentations that we submitted. Remember that 30% of the final decision comes from votes, which starts today and goes till August 27, so start voting!

Panel – Giving away data: was it worth it?

Almost two years after Obama’s directive to promote Open Government (Open Data) standards, we ask the following questions: 1) what are the most significant advancements made possible by this movement? 2) what have been some of the challenges in implementing and executing on the President’s call to action? 3) How are the private and public sectors working together to make this a possibility? 4) What other technical advancements lie in the horizon? This panel will explore the good, the bad and the “what’s next” for the Open Data movement. The potential panelist will be:

• Tim Berners-Lee (Inventor of the WWW and Open Data advocate)
• Jim Hendler (Professor at RPI and technology expert at data.gov)
• Beth Noveck (United States deputy chief technology officer for open government )
• Nigel Shabolt (Professor at University of Southampton and technology expert at data.gov.uk)
• Sascha Meinrath (Director of the New America Foundation’sOpen Technology Initiative and Research Director of the Foundation’sWireless Future Program) – moderator

http://panelpicker.sxsw.com/ideas/view/7678

Note: Thanks to Kristine Gloria for helping organize this panel

Panel – Data Nerds, Is Big Data Crushing the Web

Beneath the surface of the web is a cataclysmic explosion of data that continues to grow larger by the second. A variety of factors have led to this phenomenon, from the availability of inexpensive terabyte-scale storage to the myriad methods for sharing data about ourselves. Web data is growing at a record pace – and data junkies will soon rule the tech world.
50 million tweets per day. 1.2 million photos served per second. 50 million websites added annually. The question is, how are we expected to build the next generation of technological innovations on top of this ever-growing Everest of data? To be honest, it can be daunting.

In this panel, we’ll discuss how big data on the web changes the game for everyone. Is Hadoop good enough to manage this data explosion? Is massive web crawling dead? Is it even feasible to make such vast amounts of data open to everyone, and how do people even tap into it? Should the average Joe even care? This panel will discuss the impacts of big data on the future of the web, and debate how data will impact the next decade in tech. Potential panelist are the following:

• Infochimps
• 80 Legs

http://panelpicker.sxsw.com/ideas/view/8184

Panel – What the F*** is the Semantic Web
Juan Sequeda – University of Texas at Austin/Semantic Web Austin

You may have heard about it. You may or may not even understand what it is. You may be very skeptical or even call bullsh**. Or you may thing there is a potential. What am I talking about? The Semantic Web.

The web that we are all used to is a web of documents where we search for things inside of documents. The Semantic Web enables a web of data, which makes the web appear as a giant global database. The Semantic Web is here and organizations such as the Drupal, New York Times, Best Buy, Thompson Reuters and even the US and UK government make part of this reality together with Google’s Rich Snippets and Yahoo’s Search Monkey. The Semantic Web is already changing the way we search, do SEO, find information, integrate data and create web applications.

Surely, with all of the skeptics in the crowd, we expect this to be a lively discussion. We intend to interact with the audience as much as possible; so come prepared with questions. Let us prove to you why we see the future of the Web to be Semantic.

By the end of this panel, all the intrigued people should leave with a clear idea of what the Semantic Web is and all the skeptics should drop their skepticism.

http://panelpicker.sxsw.com/ideas/view/6790

Beyond Social Marketing: Leveraging the Web’s Knowledge Stream
John De Oliveira – Hoovers/Semantic Web Austin
Zach Richardson – Locus

The social web isn’t just for the marketing department anymore. As businesses become increasingly skilled at using social media for advertising and brand building, the next round of technologies are emerging — technologies that will put real-time social data to work in all corners of the business. For example, a purchasing manager preparing to buy a new video conferencing system will chat directly with recent purchasers, helping him to strike a better deal. Triggers
that respond to trending Twitter topics will auto-generate tasks across the business. And startups will receive almost instant attention from the companies that would benefit most from their products.

See what happens when the leader of social strategy for a multi-billion-dollar content company teams up with the winner of MIT’s Linked Data contest to look at the Web in a new way. You’ll learn some fancy new terms, like “disambiguation” and “triple store”. More importantly, you’ll see how your business can use facts extracted from real-time social data to make better choices and accelerate your success.

http://panelpicker.sxsw.com/ideas/view/7890

Beyond Wikipedia: Crowdsourcing Structured Data
Mark Greaves – Vulcan

The immense success of Wikipedia has inspired people to imagine new ways in which crowdsourcing can solve old problems. One promising direction involves leveraging established wiki techniques crowdsource raw data, in a way that supports collaboration over the structure and schema of the data as well as its values and instances. Five years ago, the open-source Semantic MediaWiki (SMW) project was started to create software to enable a new type of wiki-based environment based on these principles. The goal of the SMW project was to allow wiki contributors to author basic data elements and data types in their articles in addition to the normal text, and to support user queries over the authored data. It was a simple and extremely powerful idea, and SMW now encompasses an active worldwide developer community.

In this presentation, I will describe SMW and the technologies that support the successful crowdsourcing of raw data. I will show how the various data-oriented features of SMW provide a set of compelling new capabilities for wiki authors (generated information graphics and consistency checkers) and for wiki readers (faceted navigation, sophisticated queries, interactive visualizations). I will illustrate the technology with several examples of different applications which have been built using SMW. Finally, I will conclude by showing a prototype of a new type of online encyclopedia, an “analytic encyclopedia,” which extends Wikipedia into the realm of structured data.

http://panelpicker.sxsw.com/ideas/view/7137

Duplication is Evil: Drupal to the Rescue
Stephane Corlosquet – Massachusetts General Hospital
Lin Clark – Digital Enterprise Research Institute (DERI)

Don’t repeat yourself! And don’t repeat the Web. Instead, reuse content from across the Web with Drupal’s Semantic Web tools.

Programmers have been following the philosophy of Single Source of Truth in their code for years. Smart (and lazy) programmers know that reusing code is the only way to get the job done right—to do more, write less, and make changes in one place.

Even more time consuming than maintaining repetitive code, though, is maintaining repetitive information. Feeds help share and reuse content, but only provide simple streams of information. APIs can be used to target information, but developers have to learn a new API for each service.

Lately, easy ways to single source content on the Web are appearing with new Semantic Web tools. Now you can use Wikipedia, the New York Times, or even your friends’ Web sites as your database—all without learning custom APIs. In Drupal 7, you can pull specific information, on the fly, from sites across the Web. And on the other side, you can expose your content for reuse and feed sites with your information.

Just as users don’t handcode HTML today, users can reap the benefits of SemWeb tech without having to learn all about it. With RDF in its core, Drupal 7 takes web publishing to the next level by annotating content with semantic markup. And with contributed modules, it’s easy to query other Web sites for their content without learning any new query languages or writing any code.

http://panelpicker.sxsw.com/ideas/view/7645

Escape Database Jail – Moving Beyond NoSQL
Jans Aasman – Franz

The web has gone social and is rapidly going semantic. The trend for social networks (Facebook, Twitter, etc) is to expose their graph interfaces so new applications can automatically inspect and bring new value to undiscovered social patterns. The semantic trend is to add standardized metadata to everything under the sun, think Twitter Annotations, RDFa, Linked Open Data Cloud, Data.gov, etc. These two trends actually need to come together. Social network relationships without links to real world entities are superficial, and metadata about real world entities without the social contexts in which they are relevant is kind of boring. For truly useful and exciting services you need a close link between the two. We will debate how relational databases (MySQL, Oracle, etc) are too inflexible to deal with these information trends and NoSQL databases (Casandra, Hadoop, etc) are far too shallow for deep analysis. We will explore ideas around new solutions that are scalable and offer the ultimate in flexibility. We will demonstrate a research project where we track VIPs and U.S. politicians by combining information from their Tweets, daily newspaper articles, content from Data.gov, Facebook’s Open Graph, and Linked Open Data.

http://panelpicker.sxsw.com/ideas/view/5978

Nine Web 3.0 Technologies Marketers Must Learn Fast

Tony Shaw – Semantic Universe
Web 3.0 is admittedly an ill-defined term, but there’s general agreement that it represents numerous technologies that will make the web “smarter.” This includes the semantic web, text analytics, natural language processing and reasoning engines. These technologies are here today, though still flying under the radar. That won’t be the case much longer, and marketers need learn about them now, before they get blindsided. – RDFa – Linked Open Data – Ontologies – Semantic Publishing – Contextual Advertising – Deep Web – Listening Platforms – Sentiment Analysis – Data Branding

http://panelpicker.sxsw.com/ideas/view/7754

Left brain search = Google. Right brain search = ???

Nik Daftary – Moodfish.com

Ever wonder why Google isn’t very helpful in finding something fun to do tonight? Search engines have gotten really good at finding information, but they haven’t been equally great in helping us to use that information. Enter mood-based search. By focusing on searching how we naturally think, talk and feel about the matter at hand, we can begin to find information that’s relevant to us both logically and emotionally.

In this presentation, we will focus exclusively on the world of live entertainment and how mood-based search technologies might just be the next big thing for this industry.

http://panelpicker.sxsw.com/ideas/view/5738

RDFa, Microdata and Microformats: Gateway Drugs to the Semantic Web
Jay Myers – Best Buy

Semantic technologies are experiencing a “coming of age” and are more accessible to web developers than ever before. The big guys like Facebook (OpenGraph), Yahoo! (Search Monkey) and Google (Google Rich Snippets) are utilizing semantic markup to improve search results and more easily index key data on the web. With the amount of total digital information estimated to hit 10 zettabytes in 2015 and 25 zettabytes in 2020, building a strong web of data for both human and machine consumption is an emerging need — a need that can be addressed by any web developer, using current semantic technologies.

This presentation will cover the basics of the semantic technologies, from research and concepts to RDFa and popular ontologies. We’ll look at examples of semantic markup currently in use, exploring how these technologies are starting to solve real world challenges and problems. We’ll also take a futuristic look at the possibilities and power of a very rich web of data.

http://panelpicker.sxsw.com/ideas/view/5613

Semantically Yours: Dating Tips for the Semantic Web
Kevin Lynch – TriviumRLG
Christine Connor – TriviumRLG

“For LTR, Symmetry. Dependent graphs welcome. Physical location irrelevant. Stability critical: will only respond to persistent URIs. Query my namespace to begin the adventure of a lifetime!”

Can you help your data find Miss Right? Yes, because you now have smarter data to create user experiences. The data has become so smart that the development of its own persona becomes valuable. Discover how smart data personas can be part of your development toolbox. By anthropomorphizing smart data, a persona based on the properties of the data and relationships reveals possibilities typical personas do not. See the smart data persona, the underlying semantics that made it possible, and how to make smart data a first-class citizen in your design process.

“Smart data” carries meaning with it, enabling machines to make better decisions with less processing. When those meanings are well-defined and shared, such as in the case of the extremely simple and popular Dublin Core vocabulary, the data itself creates powerful
relationships.

We designed a search application using the Dublin Core, FOAF (Friend- of-a-Friend), and SIOC (Semantically-Interlinked Online Communities) vocabularies. We show the data persona, the application, and what makes them “smart” in this presentation, geared towards intermediate-level web developers who want to semantically-enable their social applications.

http://panelpicker.sxsw.com/ideas/view/7625

Twitter Annotations and the Real-Time Semantic Web
Josh Shinavier – Rensselaer Polytechnic Institute / Franz

There’s more to the real-time Web than snippets of text. Real-time services such as Twitter and Facebook have, additionally, begun to provide rich, structured metadata for use by applications: data about places, events, web pages, and, with Twitter Annotations, anything else describable in JSON or XML. This data opens the door to mashups with the large bodies of linked data already deployed on the Web, enabling new and smarter applications. Instead of a stream of tweets tagged with #sxsw, for example, how about a stream of tweets by anyone attending SXSW, about films by young French directors or presentations by anyone the user has co-authored an article with.
In such scenarios, the Semantic Web offers a shared information space in which applications can simultaneously interact with data from disparate datasets and real-time services, cutting down on case-by-case application logic and manual integration of data sources.
This session will explore the intersection of Twitter Annotations with the Semantic Web, including
1) interlinking Annotations resources and vocabularies with the Web of Data
2) using graph databases for geospatial and temporal search on the Semantic Stream
3) Annotations and the Internet of Things
4) social network anaysis enabled by Annotations and linked data
5) tools and techniques for end-user application development
See also ReadWriteWeb, “How Twitter Annotations Could Bring the Real-Time and Semantic Web Together”: http://bit.ly/cmLw3A

Web 3.0 and Human Computation: Ancient Mayan Legacy
Javier Gramajo-Lopez – fundaTICs

The small country of Guatemala is contributing positively to the advent of web 3.0? This panel will share some of the research and projects from Guatemalan Artificial Intelligence Scientists and how a small group of a few hundred young engineers have churned out dozens of prototypes and concepts for semantic web ontologies that solve real world problems and dilemmas. The prototypes combine Semantic searches and Semantic Databases which are the base of Web 3.0. One can argue that “it was not in vain” that the Ancient Mayan people of Guatemala are known to have been the pioneers in the use of “zero” amongst all the great World civilizations. General theme of Web 3.0 to be covered by the panelists: The rapid growth and development of the Web has made it be unequally divided, ranging from Web 1.0 to Web 3.0, and even Web 4.0. Still today the main challenge is the “searching and presenting” of information. The explicit representation of the semantics underlying web resources will enable a knowledge-based web that provides a qualitatively new level of service. Automated services will one day assist humans in achieving their goals by “understanding” more of the content on the web and thus provide more accurate filtering, categorization, and search of information sources. Ontologies will play a key role.

http://panelpicker.sxsw.com/ideas/view/8164

Conclusions

The SXSW Interactive organizers are looking for high quality and more technical presentations. There is a larger emphasis in solo/duo presentations. I personally believe that we have high quality submissions that appeal to a broad general audience. What is the next step? The PanelPicker is live, which is the way for everybody to vote for their favorite submission. Therefore, I urge this community to vote for all these submissions so we can help the semantic web get broader traction.

“Facilitated Contact with Reality:” The 2010 SEAL Program Decision Day

This was originally posted on the Austin Technology Incubator blog

The following post was written by Bart Bohn, Director of ATI-IT/Wireless

This past Thursday marked a major milestone for some incredible student entrepreneurs–the ATI SEAL Decision Day.  The ATI Student Entrepreneur Acceleration and Launch (SEAL) program provides a structured summer program for UT student-led companies to make a gritty “Go or No-Go” decisions.  UT has numerous programs to foster the initiation and early validation of an entrepreneurial idea, but it is a big leap for students to make the “all in” decision to turn down job offers and pursue a startup.  The 2010 participating companies include:

1. AstraPilot – provides wireless navigation guide for sight-impaired individuals
2. Fatometer – measures fat layer thickness
3. Ordoro – provides web-based order management solutions for small and medium size web retailers
4. SpectraPhase – real time, continuous glucose monitoring for ICU patients
5. Wibole – multihop wireless communications to improve network capacity and device performance

Starting on June 9^th, the five teams progressed through a program structured to drive them to address the potential deal killer issues that stand in the way of a successful company – not just a good idea.  The teams have gone through multiple strategy sessions, interviewed customers and partners, built financial models, crafted a high-level pitch, and developed leadership and organizational capabilities.

On Thursday, the SEALs decided if their companies were viable or not – or at least worth pushing to the next major milestone.  Each SEAL team delivered a ten-minute pitch followed by an intense question and answer session, where audience members, including many UT faculty and investors, asked tough questions and pressed the students on various elements of their business plans.  It turns out that Fatometer, amidst design and IP problems, decided to shut down while all the other companies decided to move forward to the next stage.

Regardless of their decisions to continue or not, all of these companies involved significant innovations that dealt with legitimate problems or “pain points” in their respective fields.  ATI is incredibly proud of these student entrepreneurs and the amazing companies that they formed this summer.  Stay tuned for more news from these companies and their student founders!

Bootstrapping to Traction, Then VC Funding: The Case of Gendai Games

This was originally posted on the Austin Technology Incubator blog

The following post was written by Bart Bohn, Director of ATI-IT/Wireless

Many entrepreneurs come to ATI with a plan that requires VC funding from Day 1.  Unless you have done 5 startups—all VC funded with success—this is not realistic.  A very frequent early conversation we have with both companies applying to join ATI and newly admitted members is to restructure their initial funding plans to focus more on a bootstrapping approach, building towards a later VC round.  This echoes a recent conversation I had with Bijoy Goswami ofBootstrap Austin about how bootstrapping and VC-driven approaches are not necessarily contradictory, but can instead be sequential.  This does not apply for many of the “heavy lift, hardcore IP companies” – e.g., clean energy, biosciences, telecommunications, etc., that need significant investment to even build a product, let alone enter the market.

The point was driven home by ATI member company Gendai Gamesannouncing they raised over $1 million in funding from a great group of investors– this amazing syndicate was led by DFJ Mercury, wow!  What they did was bootstrap the company well past initial traction and then raised a Series-A.  Below is an illustrative chart (meaning I made up the figures, except for the 70,000 figure from the press release) based on the number of times GameSalad, their development platform, was downloaded:

As you can see, they raised money many months after they hit the traction inflection point.  The magic of web 2.0 startups is that they can launch a commercial solution with minimal capital AND survive the initial ramp.  The ability to survive the initial ramp is hugely valuable – they did not have to raise funds to float inventory or pay vendors or other up-front costs; instead, the revenue per customer covered the variable cost to serve the customer, which meant Gendai Games could spend the next “6 months” learning about the actual business and not product delivery.  The net is that when they eventually raised the Series-A, they had significantly more leverage, control, influence on participants, ability to retain executive roles, etc. than if they had taken the $1M on day one or just after the traction inflection point.  Furthermore, given the glut of super-angel, seed fund, and accelerator-funded companies, they also took the time to build a sustainable company that did not require them to raise funds in a very narrow window.  I am sure they prefer having a financial cushion and money to grow faster, but they bootstrapped themselves into a viable company – a tremendous feat of entrepreneurship.

At ATI, we frequently discuss with our member companies how to build a company in an intentional, controlled manner that constantly reduces risk and provides options.  The best way to do this is to build a sustainable underlying business which also tends to preserve room on the cap table and reduces dilution – and we believe this applies to web 2.0 and internet companies.  Congratulations to Michael, Tan and the entire Gendai Games team, your success thus far is well deserved and we are very proud and excited to have you part of the ATI family.

Numbers Don’t Lie. Really?

This was originally posted on the Austin Technology Incubator blog

The following post was written by Bart Bohn, Director of ATI-IT/Wireless

Recently ATI brought on several new interns for the summer – most of them are graduate students from the University of Texas at Austin.  Since they are so heavily involved in due diligence of companies applying to join ATI, we spent part of the orientation session on performing due diligence.  One topic generated a good conversation and I want to share it – financials.  I told them that whenever I see the hockey stick financials slide that I just drop it into the shredder.  The output of the financial model doesn’t matter; it is all about the assumptions that go into it.  In every good financial model, there are really 3 – 5 key assumptions that drive everything – typical ones include:

• Customer acquisition costs
• Revenue per customer
• Cost per unit (sometimes called BOM – bill of materials)

These three make up the “unit economics analysis” that every company must understand.  Until each unit sold produces a profit, there is no point in moving forward with other analyses.  The other typical ones include:

• Sales calls and conversion rates per sales person
• Revenue split with partners or distribution fees with distributors or retailers
• Revenue / staff (more for service oriented companies than product ones)
• Cost per product generation (think designing, taping out and manufacturing chips or massive software releases)
• Customer growth rates – can break down into either count of customers or spend per customer

Each business is different, but each one will have only a handful of metrics that matter – and they frequently blend operational and financial issues.  This post is biased towards B2B, but either these or similar ones apply to B2C as well.  One of the hardest parts about generating decent assumptions is having defined your market correctly.  Many entrepreneurs identify a very big market because it is measured in billions of dollars, and they think investors need markets that large.  While that is true, what is more valuable is segmenting your market to the point where the above assumptions are generally consistent from potential customer to potential customer.  This does require the entrepreneur to have extensive knowledge about their target market, almost to the point that they must have been part of it in the past – or they could fake it really well at a trade show.

My personal bias in evaluating very early stage companies is to generally relegate financial analyses to second tier – aside from unit economics, as I am a qualitative decision maker.  This corresponds, I think, with being an Intuitive on the Myers Briggs framework.  Although I have undergraduate degrees in chemical engineering and finance (with a minor in math) and a MBA focused on finance, I make decisions based on qualitative, narrative oriented methods.  The reason is that I have built so many models, especially ones with feedback loops, that I can create numbers to support almost any conclusion.  I can frequently take an entrepreneur out behind the financial modeling woodshed, and have done so enough times  — when in a grumpy mood (sorry) — that I have become extremely cynical.  I suspect many other investors are the same.

The models that I do like have real world data points to justify each assumption – and how the assumption changes over time.  One entrepreneur did a customer acquisition cost analysis and used cost of sales for Salesforce to justify the cost of sales curve as his company scaled.  That is good – while his company may not perform like Salesforce, understanding the potential shape of the curve and resulting operational implications (hiring requirements, cash flow timing, etc.) is extremely valuable and shows the entrepreneur is really thinking through the business.

Entrepreneur’s Lounge at SXSW Interactive – March 16, 2010

The following blogpost was written by Bart Bohn, ATI’s IT/Wireless director.

During SXSW Interactive, Unwired Nation, the Austin Technology Incubator and Porter Novelli host the Entrepreneur Lounge.  It is the best networking at SXSWi and a great event.  We host it at the roof top deck of Fogo de Chao (www.fogodechao.com) which is next door to the Austin Convention Center.  The meat and cheesy bread are legendary for attendees by now.  We invite entrepreneurs, investors, media, analysts and industry VIPs and expect about 250 people each night this year.  It runs nightly from Friday through Tuesday of SXSWi – yes, that means five nights of some of the best meat and drinks you can get in Austin.  Each night, I will provide a short recap capturing some of the highlights.

Celebrity Guest Host – Sarah Smith, Facebook Austin

Seen and Heard

• Sarah Smith from Austin’s Facebook office putting up with me introducing her to everyone I could find – welcome Sarah and Facebook!
• ATI’s Clean Energy Director talking with an LA film executive – I know Austin is all about convergence, but this might be extreme
• Ticket City giving away at least $500 of gift cards for tickets – thanks Ticket City!
• The rain stopped and the sun came out at exactly 5 pm – 15 minutes before the tent arrived
• Smooth Stone finally connecting with Stacey Higginbotham from GigaOm
• The Siri team basking in the glow of their Microsoft Bizspark Accelerator win – and getting congratulations from fellow competitors Spredfast, Gendai Games, RecylceMatch, Daily Grommet, and GuruStorms

Showcase Companies

• Famigo Games – we believe spending quality time with your family is good for everybody, so we’ve created a way to make it fun and easy to play with your family again.
• Moodfish – when you are in the mood to go out, you can finally search by how you naturally think and feel about entertainment – by mood!
• qcue – reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time.
• Ticket City – provides our clients the ultimate in customer service to provide an unforgettable experience from start to finish. That means we help you find the tickets you want, we make the purchasing process secure and easy, we get your tickets to you on time, and we help you enjoy an unforgettable experience, no matter what event you’re attending.
• Uvumi – empower artists, promote widespread creation and consumption of art, and add value to the artistic community

Thanks to all who came and made this a great night.

Thank you to the sponsors – Nokia, City of Austin, LifeSize, CloudFlower, UKTI, KnowMore, Austin Chamber of Commerce, Digital Media Council, Bracewell & Giuliani, Texas Film Commission

Entrepreneur’s Lounge at SXSW Interactive – March 15, 2010

This was originally posted on the Austin Technology Incubator blog

The following blogpost was written by Bart Bohn, ATI’s IT/Wireless director.

During SXSW Interactive, Unwired Nation, the Austin Technology Incubator and Porter Novelli host the Entrepreneur Lounge.  It is the best networking at SXSWi and a great event.  We host it at the roof top deck of Fogo de Chao (www.fogodechao.com) which is next door to the Austin Convention Center.  The meat and cheesy bread are legendary for attendees by now.  We invite entrepreneurs, investors, media, analysts and industry VIPs and expect about 250 people each night this year.  It runs nightly from Friday through Tuesday of SXSWi – yes, that means five nights of some of the best meat and drinks you can get in Austin.  Each night, I will provide a short recap capturing some of the highlights.

Seen and Heard

• CloudFlower pitching to Don Dodge while not really knowing who he is – until the second CloudFlower person walked up
• Metrology equipment executive talking with an iPhone app company, hmmm.
• Party crashers getting tackled on the stairs by our amazing “bouncer” – Jessica Linnemeyer!
• Axelo giving away a controller because someone asked such good questions during a demo
• RCR Wireless video interviews of entrepreneurs and investors

Showcase Companies

• Phunware – an enterprise branded mobile application infrastructure company.  It specializes in navigating the complexities and challenges inherent in corporate and university centric mobile initiatives, charting a roadmap and course for success in capturing consumer “screen share” and separating enterprise brands from the underlying noise of today’s mobile marketplace
• HippoBubble Games – create and sell educational software in the action-adventure genre. Our software applications emphasize creativity and promote technical learning, preparing kids early for real-world success.
• Axelo – develops advanced movement detection technology enabling innovative devices for Home Entertainment. Axelo’s technology provides a self-contained and accurate device which in turn provides a simple and easy manufacturing process that is critical for the consumer market
• PetsMD – providing broader access to comprehensive pet health information and pet care resources that will help pet owners take a more active role in managing their pet’s health
• InfoChimps – open catalog and marketplace for the world’s data. You can share, sell, curate, and download data about anything and everything

Thanks to all who came and made this a great night.

Thank you to the sponsors – Nokia, City of Austin, LifeSize, CloudFlower, UKTI, KnowMore, Austin Chamber of Commerce, Digital Media Council, Bracewell & Giuliani, Texas Film Comm