Author: Gregory T. Huang

Swype Scores $1M Led by Docomo

deals, Mobile, Interfaces

Gregory T. Huang wrote:

Seattle-based Swype, a maker of text-input technology for touchscreen mobile devices, announced today it has raised an additional $1 million led by Docomo Capital. The money is an extension of Swype’s $5.6 million Series B round led by Nokia Growth Partners and Samsung Ventures, announced in December. NTT Docomo is Japan’s leading mobile operator, and the move should help Swype continue to expand into international markets, languages, and mobile platforms. The company says its text-input technology works for 30 languages, and a Japanese version is slated for release later this year. Last week, Swype said it is now available on T-Mobile USA touchscreen devices, including a new Android phone and an upcoming Windows Mobile phone.

Comments | Reprints | Share:

February 15, 2010
Inside the McKinstry Innovation Center: A First Look at Seattle’s Big Cleantech Hope

energy, startups, Business Community

Gregory T. Huang wrote:

Elsa Croonquist of McKinstry would cringe at the hype, but I’m here to say it’s at least partly true.

The Seattle alternative energy scene has been eerily quiet as of late. This is not to diminish the efforts of organizations like the Clean Tech Open, Washington Clean Technology Alliance, Clean Energy Council, Climate Solutions, and various local companies, but by and large the region still needs to build critical mass. Cleantech proponent Michael Butler of Seattle’s Cascadia Capital told me last fall, “We are falling further behind other regions, and the window will start closing if we can’t get the ecosystem built.”

McKinstry, the Seattle-based construction, consulting, and energy-efficiency firm, could play a big role in building that ecosystem. Croonquist is the managing director of the McKinstry Innovation Center, which she calls a “commercialization accelerator” for cleantech and energy-related companies. (Few people seem to like the term “incubator” these days, but “accelerator” is as popular as ever.) The $5 million center, which is slated to open in late April or early May, will house about 10 companies of up to eight people each. Croonquist says she is still accepting applications, and is working closely with four companies already.

The idea is for startups and small companies across a wide range of energy sectors—smart grid, energy efficiency, biofuels, hydro power, industrial, wind, and solar—to sign one- or two-year leases with McKinstry (up to three years max, which is still more flexible than the typical five-year office lease in Seattle). The vetting process involves making sure each company has strong technology that is out of the lab with at least a tested prototype; potential markets that are deep and strong; a clear plan to access these markets; a strong organizational team; and financing.

So this is not about incubating early-stage companies, and McKinstry is not funding them or buying an equity stake in any of them. “None of these companies are bright eyed and bushy tailed, fresh out of college with a brilliant idea right now,” Croonquist says. “Maybe they’ve gotten contracts and they need to gear up, and they need to develop the structure for their company and for their distribution, and the monitoring systems for, say, something electrical…We’re looking for companies that are ready to make a difference.”

On a recent visit to the company’s Georgetown headquarters, the 40,000-square-foot center was still being completed, with a construction crew installing beams and such. The center will have lots of open space and natural light (see artist rendering, left), as well as a nice view of downtown Seattle. The companies housed there will share conference rooms and a kitchen, and receive mentoring and exposure to business leaders through McKinstry.

In return, it sounds like McKinstry will gain new partners who are building …Next Page »

Comments | Reprints | Share:

February 12, 2010
The First Rule of FounderDating, and More Takeaways from the Group’s First Seattle Event

startups, people, entrepreneurs

Gregory T. Huang wrote:

The next big startup out of Seattle might have been conceived on the top floor of the Washington Athletic Club this past Tuesday. That’s where 35 carefully selected tech entrepreneurs and business people gathered over drinks and light appetizers for the first-ever FounderDating session in Seattle.

The idea, as we reported on a couple weeks ago, was to have an event dedicated to helping prospective co-founders meet new people who could be complementary in starting companies or at least talking about ideas. FounderDating started in the San Francisco Bay Area, and Brian Schultz—formerly of Seattle startups Ontela and Djinnisys, and now at Microsoft—helped bring it to the Northwest.

I asked Schultz yesterday how the event went. He says he is in the midst of surveying the attendees, who were culled from more than 100 applicants. “I’m really excited about the feedback,” Schultz says. “People were definitely passionate about it.”

The tech sectors represented that evening included mobile, enterprise software, advertising, commerce, and recommendation systems. Nametags helped distinguish business people from tech people (engineers), as well as their sectors of interest. Schultz says there was a big range in experience—some people were in their first jobs out of school, while others were former CEOs with multiple successful startup exits or executives at big companies.

The identities of the attendees are supposed to be kept secret to the outside world, because some have employers who might not appreciate hearing that they’re looking to start something new. As Schultz jokes, the first rule of FounderDating is you don’t talk about FounderDating. (Which makes me think, a CEO fight club in Seattle would be pretty awesome. I can think of some good matchups already.)

There was freeform mingling, a 60-second speed dating round, small-group activities, and more mingling. Early reviews seem to indicate most attendees weren’t recruiting for a specific startup, but were focused on meeting a variety of new people. Several wanted to see more younger and hungrier engineers. “It’s really about the people,” Schultz says—not necessarily their startup ideas.

In any case, it sounds like the event was successful enough that Schultz will try to organize them quarterly in Seattle, and create stronger linkages between Seattle participants and those in the Bay Area via the FounderDating website. The next Seattle event will probably be in May or June, Schultz says, and he’s looking for more help in organizing and screening applicants.

Schultz also says he wants to survey the same 35 people three to six months from now, and see what new projects have come about from their discussions. Because ultimately that’s what this is about—doing something new to help startups get formed. “Can you attribute anything to the people you met that night?” he says. “There were definitely some new connections made.”

Comments (2) | Reprints | Share:

February 12, 2010
Seattle Applying for Google Fiber Network

Internet, Broadband, Politics

Gregory T. Huang wrote:

Seattle mayor Mike McGinn announced today that the city will respond to Google’s request for information from communities across the U.S. that want to partner with Google to build ultra-high-speed fiber broadband networks. The experimental idea is to connect homes to the Internet via ultra-fast fiber optics (100 times faster than a conventional broadband network), and see what effect it has on user behavior and innovation. The Google project plans to offer service to between 50,000 and 500,000 people. The deadline for submitting applications to Google is March 26.

Comments (1) | Reprints | Share:

February 11, 2010
RealNetworks Acting CEO Bob Kimball Speaks on Rebuilding the Company, Transforming the Culture, and Spinning Off Music and Games

digital media, Leadership, strategy

Gregory T. Huang wrote:

In today’s RealNetworks earnings call, we heard from president and acting CEO Bob Kimball for the first time. Kimball recently took over from founder Rob Glaser, who stepped down as CEO a month ago.

Kimball originally joined RealNetworks (NASDAQ: RNWK) in 1999 and served for 10-plus years as the senior executive responsible for all legal matters and business development. Prior to Real, he was senior attorney and manager of business relations at IBM Global Services.

2009 was a rough year for Real financially, but Kimball is all about the future. And about getting things done quickly and decisively, starting now. He spoke on the call about the company’s retooled strategy and his plans to “transform RealNetworks” into a “far more focused and simple company” with a “strong new sense of purpose.” He also thanked Glaser for providing the leadership and innovation that “forms the bedrock of Real today.”

The bottom line is that Real is spinning out its music service, Rhapsody, as a separate company (announced earlier this week), and will separate out its games division soon after that’s complete. The ownership, financial, and legal structure of the gaming entity is yet to be determined. That leaves two main focuses for Real, both built around its media entertainment software platform: its software-as-a-service business for wireless carriers, and its RealPlayer business for consumers. (These two divisions create virtually all of Real’s cash flow today.)

Here are some more highlights from Kimball:

—“I know where our strengths are, and, perhaps more importantly, I know where our weaknesses are,” he said. “I know how we make money, and how we don’t.”

—“I haven’t seen this level of excitement in the hallways of RealNetworks in many years,” Kimball said. Besides the talent and determination of Real’s employees, he pointed to the company’s “pristine balance sheet,” which includes nearly $400 million in the bank, and no debt.

—“We plan to be content agnostic. We will make it easy and fun for consumers to enjoy their content anywhere, anytime,” he said.

—Kimball outlined a three-step plan for Real: simplify, restructure, and grow. Not necessarily one after the other, but in parallel. “We must move quickly,” he said. “By the end of the year, we will …Next Page »

Comments | Reprints | Share:

February 11, 2010
CEO Christian Chabot on Tableau Software’s New Consumer App for Making Data Social

startups, Software, Data Visualization

Gregory T. Huang wrote:

“I make the bold claim that this will be of interest to anyone who posts content online,” says Christian Chabot, the co-founder and chief executive of Seattle-based Tableau Software.

We were talking recently about his company’s big move into consumer software, which was just announced today. “The target is really bloggers, journalists, writers, critics, researchers, students—anyone who wants to put information online,” Chabot said.

Tableau is focused on data visualization and business intelligence. The company sells its software to businesses and organizations that need powerful tools to dissect large amounts of data and pull out trends and patterns more efficiently. That’s everyone from Microsoft, Yahoo, and Google, to three-letter government agencies, to Barnes-Jewish Hospital and the Dallas Cowboys.

And now the tools are being offered to consumers for free, at TableauPublic.com. The move fits with Tableau’s goal of becoming the “Adobe of data.” It also seems like a smart move to get the company’s tools in the hands of a much broader audience. “It’s for the public good, for the public Web, and for public information. If there’s anything mildly private, you’d want to use Tableau’s business product,” Chabot says. “We think it will flow back to us with exposure. It will expose people to our technology.”

Chabot puts data in perspective with the history of digital media on the Internet. “We’re finally going to make data on the Web as fun and useful as an online video,” he says. “The history of the Web is it started as a bunch of text, marked up, and then images finally became a first-class citizen, and Flickr exploded. Images are a properly respected object on the Web canvas. Now, thanks to Adobe Flash and YouTube and the Flip camera, video is a first-class citizen. We at Tableau, we’d say there’s only one more type of content that humans produce, and that’s data.”

Granted, the idea of playing with data seems more abstract and doesn’t have as broad immediate appeal as pictures and video. But Chabot says, “It needs its Flickr, it needs its Flip camera. Take any dataset. You can do two things—you can tell stories really well, and you can answer people’s questions.”

And that’s the key here—Tableau is trying to make data social and easy. “The real breakthrough here isn’t that you couldn’t have gotten to this destination,” Chabot says. “It’s not that we invented interactive visualization. It’s the ability to do it fast without any programming, and do it free and bring it to the whole world.” (That’s as opposed to hiring a team of Flash developers that might take $50,000 and 30 days to produce a high-end interactive visualization for CNN, say.)

Tableau is one of the fastest growing software companies in the country. It currently has 105 employees and is actively hiring in areas like software development, quality assurance, operations, and sales. Chabot says the company has had record sales the past two quarters, after a bit of a slowdown in early 2009. Tableau has roughly 6,000 business-level customer organizations. “We’re adding thousands every six months,” Chabot says.

Comments (1) | Reprints | Share:

February 11, 2010
SinglePoint Buys M2Junction, Wants to Become Mobile Advertising Leader in India

deals, Mobile, acquisitions

Gregory T. Huang wrote:

Bellevue, WA-based SinglePoint, a mobile messaging software company, announced today it has acquired M2Junction, a leading mobile advertising startup based in Hyderabad, India. Financial terms of the deal weren’t given. The move should make it easier for SinglePoint to connect with and sell its services to content publishers, mobile operators, brands, and ad agencies in India.

It looks like a significant step in SinglePoint’s global expansion strategy. India is one of the fastest growing text-messaging markets in the world, with some 525 million mobile subscribers as of December 2009. And in general, text messaging (SMS) is considered one of the most powerful channels for brands to reach new audiences and do mobile marketing. M2Junction, for its part, is already a SinglePoint partner, and a collaborator in terms of market positioning and knowledge of the Indian mobile ecosystem and culture.

Gowri Shankar, SinglePoint’s new CEO, noted in a statement that there is “an incredible mobile advertising opportunity” in India. “We at SinglePoint want to be a part of this growth and revolutionize the Indian industry with our offerings,” he said.

SinglePoint makes a Web-based software platform for handling transactions in contextual mobile advertising—delivering things like brand messages and interactive coupons within text messages. With its move into the Indian market, the company says it is looking to deliver more than a quarter of all the mobile advertising opportunities in India in its first year, and within two years, to become the nation’s biggest player in SMS advertising.

That sounds pretty ambitious, given what must be fierce competition among local companies in India. But in the past few years, SinglePoint has become a leader in helping publishers and brands reach mobile subscribers, and it has expertise in the Indian market. The company, formerly called Wireless Services, was co-founded by former Microsoft and McCaw Cellular veteran Steve Wood in 1996. It has been backed by a slew of venture investors and private equity firms including Ignition Partners, Madrona Venture Group, SeaPoint Ventures, Intel Capital, Northwest Venture Associates, and Rally Capital.

Last week, SinglePoint announced that Swedish mobile giant Ericsson had bought its mobile aggregation business, and that Shankar has become chief executive. Shankar succeeds Rich Begert, who led the company from 2004 until this year and remains on the board.

Comments | Reprints | Share:

February 11, 2010
A Good Start? WA Companies Raised $57M in January, Up from $22M in Previous Month

VC, deals, Internet

Gregory T. Huang wrote:

Last month, companies based in Washington state raised a total of about $57 million in venture capital, in eight deals. That’s up from about $22 million in December 2009 (four companies), and $44 million (10 companies) in the month before that.

The VC stats are courtesy of private company intelligence platform CB Insights. See the table below for a full list of January venture financings.

In terms of dollars, the trend is going upward, but it’s notable that only one of the deals was a Series A financing—Seattle-based Exponential Entertainment raising $1.45 million for social gaming services.

The biggest financing was Bellevue’s Visible Technologies raising a $22 million Series C round to expand its global presence in brand monitoring and online reputation management. Next up was DataSphere, also in Bellevue, raising a $10.8 million Series B round as it continues to help media companies make money from hyperlocal websites. Interestingly, Bellevue-based Ignition Partners was involved in both financings.

The venture deals for the month break down pretty evenly by sector: three in Internet, two in healthcare, and arguably three in cleantech—though you could also call Lagotek home automation software, and Verdiem business software.

All in all, it’s a decent start to the year for Washington state companies. But the innovation community does need some early-stage funding, and it needs it fast. Here is the recap of January 2010 venture deals in Washington:

.

Comments | Reprints | Share:

February 10, 2010
Propel Fuels Gets Cash for CA Expansion

cleantech, energy, Alternative fuels

Gregory T. Huang wrote:

Propel Fuels, the alternative fuel company founded in Seattle but now based in Sacramento, CA, announced today it has raised $12 million in Series C equity financing led by new investor Craton Equity Partners, along with $8 million in debt financing. Previous investors Nth Power and @Ventures also participated in the equity round. The money will be used to help Propel expand its network of fuel stations around California. The company currently owns and operates 11 stations around Seattle and Sacramento, selling ethanol and biodiesel fuels.

Comments | Reprints | Share:

February 10, 2010
Real Spins Off Rhapsody

deals, music, digital media

Gregory T. Huang wrote:

Seattle-based RealNetworks and MTV Networks announced today they will spin off their digital music service joint venture, Rhapsody, into a separate company. Under the terms of the deal, RealNetworks (NASDAQ: RNWK) will no longer be the majority owner and operator of Rhapsody; the new company will not have a single majority owner. Real says this is a significant first step in making itself more focused and profitable. More information on the restructuring can be found in the Form 8-K that Real filed with the SEC today. The deal is expected to close at the end of this quarter.

Comments | Reprints | Share:

Advertisement:

Comcast Business Class

Look at your bill and
find out how much your
business can save
with Comcast Business Class.

Internet, Phone & TV for $99.
Learn More

Ads by Pheedo

February 9, 2010
What’s Your Breakthrough Idea? Let’s Talk About How to Change the World on March 29

ideas, events, Xconomy

Gregory T. Huang wrote:

Whether you’re an entrepreneur, an investor, a researcher, a corporate executive, a journalist, or a patent attorney, you’ve heard it: an idea that will supposedly change the world. In fact, you probably come across someone trying to pitch you an idea like that every week, if not every day. Maybe you even have one you’re working on yourself.

Breakthrough ideas are catalysts of innovation and progress. Think Amazon and its online books, Google and its Web search algorithms, Apple and its iTunes and iPhone. But in the technology and business world, seemingly great ideas are a dime a dozen. For every Amazon, there are dozens of online retailers that have failed. For every Google, dozens of search companies that went nowhere. And so on.

What really counts, of course, is forethought, execution, and results. But that’s much easier said than done. So what makes for a true breakthrough idea? And how can startups and business leaders make their biggest ideas more marketable and scalable, and really change the world? (Thanks to Nick Hanauer of Second Avenue Partners for inspiring this thread in a talk he gave at an NWEN event in December 2008.)

We’re asking these big questions, and we’re going to try to answer them. On the afternoon of March 29, Xconomy is convening a special forum in Seattle called “What’s Your Breakthrough Idea?” The event (agenda and registration info here) will be at the University of Washington, in the atrium of the Paul G. Allen Center for Computer Science & Engineering. We are doing everything we can to make it a must-see for technology, life sciences, and business leaders who have a deep interest in the world’s biggest ideas—and how they will (or won’t) impact the future.

The centerpiece of the afternoon will be an in-depth discussion between two of the area’s top thinkers in innovation across broad realms of science, technology, and society: Nathan Myhrvold, the co-founder and CEO of Bellevue, WA-based Intellectual Ventures, and Leroy Hood, the co-founder and president of Seattle’s Institute for Systems Biology (ISB). They will tackle the important issues of how to think about big ideas, how to tell promising ideas from not-so-promising ones, and how to get maximum bang from ideas that survive. They will speak from experience.

Myhrvold comes from the worlds of physics and software. As Microsoft’s former chief technology officer and the founder of Microsoft Research and later Intellectual Ventures, his company focused on the business of invention, he knows a thing or two about evaluating global-scale ideas. Meanwhile, Hood comes from the worlds of biology, life sciences, and genomics. As the co-founder of ISB as well as a new company focused on early detection of diseases, called Integrated Diagnostics, Hood can speak with great depth on the progress and challenges in biomedicine and human health. Their combined perspectives should make for a tremendously revealing and entertaining cross-disciplinary chat and Q&A.

We’ll also do some deeper dives into specific breakthrough ideas from a select group of speakers, who will include: David Bluhm, CEO of Seattle startup Z2Live, focused on mobile social gaming; Mick Mountz, CEO of the Boston area’s Kiva Systems, a robotics firm working on warehousing and logistics applications; Steve Seitz, professor of computer science and engineering at UW, an expert in computer vision and graphics (he helped develop the technology behind Microsoft’s Photosynth); Dan Weld, UW computer science professor, the co-founder of Netbot, AdRelevance, and Nimble Technology, and a venture partner with Madrona Venture Group; and Norm Wu, CEO of Qliance, a Seattle firm that provides healthcare to thousands while circumventing insurance companies.

Of course, changing the world is never easy. But we’re hoping the discussions and talks on March 29 will inspire our audience to think big, and think realistically—while also making useful connections that otherwise might not happen. Plus we’re going to have an absolute blast with this star-studded lineup, and we think you will too. For more information, and to register for “What’s Your Breakthrough Idea?”, please visit our event page.

Comments (2) | Reprints | Share:

February 9, 2010
Amazon Buys Touchco, Infinia Raises More Cash, the Truth About Photobucket, & More Seattle-Area Deals News

Roundup, deals, VC

Gregory T. Huang wrote:

Another quiet week for deals in the Northwest as we head into the depths of winter. Nevertheless, there were a few notable deals in software, hardware, and energy.

—Kennewick, WA-based Infinia snapped up another $11.5 million in equity financing in a round that could total $75 million over time, as Luke reported. The investors in the round included Paul Allen’s Vulcan Capital and GLG Partners, both existing investors in the company. Infinia has raised more than $100 million, including a previous investment from Vinod Khosla, who says he is no longer involved with the company. Infinia, led by CEO J.D. Sitton, uses satellite dishes that capture rays of sunlight and channel them to a focal point that contains a single-piston Stirling engine, which uses the heat energy to produce electricity.

—Who bought whom in the Ontela-Photobucket merger announced in December? It turns out News Corporation, which previously owned Photobucket, sold the subsidiary to Seattle-based Ontela and its investors at a $29 million loss. Although News Corp. still owns a stake in the merged company (Photobucket), Ontela’s investors—Steamboat Ventures, Oak Investment Partners, Covera Ventures, and Voyager Capital—apparently control the firm now. Ontela, which had 23 employees as of December, was formed in 2005 and backed by about $15 million in venture funding. Last week, Ontela co-founder and former CEO Dan Shapiro said he is leaving his role as chief technology officer of Photobucket.

—Microsoft (NASDAQ: MSFT) formed a partnership with the National Science Foundation (NSF) to provide cloud-computing resources to selected researchers and research groups through its Windows Azure software platform. Financial terms of the agreement weren’t given, but NSF will be in charge of awarding and managing the projects through its usual review process. Microsoft will grant the selected researchers free access to Azure’s cloud-based tools for three years.

—Seattle-based Amazon has acquired Touchco, a touchscreen technology startup based in New York. The news was first reported by the New York Times. No financial terms were given, but according to the report, Amazon (NASDAQ: AMZN) will merge the New York University spinout’s technology and staff (about six people) into its Kindle hardware division, Lab126, based in Cupertino, CA. There is strong speculation that Amazon plans to add touchscreen capabilities to its Kindle e-reader device, in part to compete with Apple’s iPad.

Comments | Reprints | Share:

February 9, 2010
Voyager Capital’s Daniel Ahn on the Firm’s Refocused Clean-IT Strategy

VC, Software, cleantech

Gregory T. Huang wrote:

To Voyager Capital managing director Daniel Ahn, “cleantech” is just a buzzword. “Clean IT” is much more precise—and, to the point, it’s something a hardcore techie venture capitalist can get his hands around.

Last week, I spoke with Ahn by phone about Voyager’s recent investment in Coulomb Technologies, a Campbell, CA-based startup focused on electric vehicle infrastructure (networked smart chargers). The deal was a little different from what the Seattle-based VC firm is best known for investing in—digital media, software, and wireless—so I wanted to know if it’s a strategic shift, and whether this means we should expect more action at the intersection of energy and software. I particularly wanted to hear Ahn’s thoughts, since he is one of the Silicon Valley-based partners with Voyager who I don’t see as often as the firm’s local partners.

“It’s a very conscious focus rather than a huge shift,” Ahn says. “This is a big opportunity,” for the “long term.” Voyager has made two previous investments in clean-IT, including Tropos Networks (green, cellular Wi-Fi) and Sensys Networks (vehicle traffic detection), both based in the San Francisco Bay Area. Coulomb builds on Voyager’s favored theme of using smart networks to increase efficiencies—this time in the burgeoning electric vehicle market.

The Coulomb investment came about in part because of Jim Billmaier, the CEO of Seattle-based digital music firm Melodeo, which is also in Voyager’s portfolio. Billmaier is a founding investor in Charge Northwest, a five-person startup based in Woodinville, WA, which has a partnership with Coulomb to distribute its networked charging stations in Washington, British Columbia, Alaska, and a few other U.S. states. (At least one charging station has been deployed in Washington state so far.) Billmaier helped introduce Coulomb to the Voyager VCs, and once they understood the startup was solving a big software problem—not a capital-intensive energy problem—they were in.

Voyager is looking at the “whole energy distribution problem,” Ahn says. “How can IT networks be used to make this more efficient, and make the electric grid more efficient?” He emphasizes that a lot of cleantech-related companies are not right for VCs, because of the large amount of money needed to develop projects in solar or biofuels, for instance. (This sounds similar to what Rick LeFaivre from OVP Venture Partners told me almost a year ago about the sweet spot for cleantech venture investing.)

Ahn says he is looking at several other prospective clean-IT investments, in both Washington state and the Bay Area, which involve software and energy efficiency. “It really ties into our multi-location geography strategy,” he says. “It really helps to have a presence in all these different markets.”

Not surprisingly, Ahn sees a huge market for electric vehicles, especially in the Northwest. Besides the eco-friendly stereotype, fueled in part by things like having the highest penetration of Toyota Prius hybrids in the country, there are state mandates and incentives for electric vehicle use and infrastructure development in Washington. (Meanwhile, some other techies in the Seattle area, like Mark Aggar of Microsoft, have raised concerns about electric vehicles and the environment.)

Billmaier, who helps run the startup that sells electric charging stations locally, is naturally bullish on electric vehicles, too. “Washington and Oregon are going to set the model for how the nation does this,” he says. Billmaier also talks about his involvement with Charge Northwest with an eye toward the long-term sustainability of transportation and the environment. “We had the ‘a-ha,’” he says. “We’ve caused our children a lot of problems, so it’d be nice to solve a problem.”

Comments | Reprints | Share:

February 8, 2010
IdeaScale Used for 24 Government Sites

Internet, Software, startups

Gregory T. Huang wrote:

Seattle-based Survey Analytics has rolled out a total of 24 crowdsourcing websites for U.S. government agencies to help them solicit and manage feedback from citizens. Financial details of the current partnerships weren’t given. The sites are powered by IdeaScale, the company’s software platform for hosting and managing feedback from communities and customers. Last May, the White House announced it was using IdeaScale to power its Open Government Dialogue site. And this past weekend, California’s chief technology officer, P.K. Agarwal, said he is using IdeaScale to help gather ideas to improve the state’s IT systems. Survey Analytics has been bootstrapped since 2004 and is led by CEO and co-founder Vivek Bhaskaran.

Comments | Reprints | Share:

February 8, 2010
Sack Ballmer? Break Up the Company? How Microsoft Could Innovate

Software, culture, Analysis

Gregory T. Huang wrote:

Outside of official circles in Redmond, WA, the term “Microsoft innovation” is often thought of as an oxymoron, sort of like “Army intelligence.” People have been actively debating the issue of whether and how Microsoft can truly innovate in the tech world for at least the past decade.

Enter Dick Brass (great name), who was a Microsoft vice president from 1997 to 2004. His op-ed in the New York Times yesterday sharply criticized Microsoft’s lack of innovation and has stirred the pot considerably, even prompting Microsoft to post a response. But I haven’t seen many people talking constructively about how to fix the problems. And Microsoft doesn’t seem to admit that there are any problems, at least officially.

Brass used the peg of Apple’s iPad tablet announcement to highlight what he sees as Microsoft’s failings in tablet PCs, e-books, digital music, and mobile software. He calls Microsoft “a clumsy, uncompetitive innovator” that is “failing, even as it reports record earnings.” And he points to two problems with the company’s culture—problems that threaten Microsoft’s future, if not its present.

One is widespread political infighting that can doom innovative people and products that compete in some way with existing product groups. (The current Ray Ozzie situation comes to mind.) I’m sure there are benefits to this kind of competition, but you have to wonder whether the volatile mix of personalities and agendas at the company is stifling some of its more creative projects.

The other problem is a software mindset that Brass says is stuck in the 1970s. “Part of the problem is a historic preference to develop (highly profitable) software without undertaking (highly risky) hardware,” he writes. “This made economic sense when the company was founded in 1975, but now makes it far more difficult to create tightly integrated, beautifully designed products like an iPhone or TiVo.”

In his response, Frank Shaw, Microsoft’s vice president of corporate communications, gave the usual spiel about “innovation at scale”—the idea that the company reaches a huge …Next Page »

Comments (3) | Reprints | Share:

February 5, 2010
It’s Official: Ontela Bought Photobucket from News Corp.

deals, Software, Analysis

Gregory T. Huang wrote:

Back in December, we reported that Seattle mobile imaging startup Ontela merged with Photobucket, the Denver-based photo sharing site previously owned by News Corporation. Financial terms of the deal weren’t released, but News Corp. ceded some control of Photobucket to Ontela’s investors while retaining an equity stake in the merged company, which retains the Photobucket name.

Yet the full story, and its significance, never really came out. Before the companies announced the merger, rumors were swirling that Ontela was buying Photobucket. Well, I’ve done a little sleuthing, and can now confirm those rumors were accurate. Ontela did in fact acquire Photobucket, according to a Form 10-Q that News Corp. (NASDAQ: NWS) filed with the SEC yesterday.

The statement in the form (on page 9) reads: “In December 2009, the Company [News Corp.] entered into an agreement to sell its Photobucket subsidiary, a web-based provider of photo- and video-sharing services, to a mobile photo uploading platform in exchange for an equity interest in the acquirer. A loss of approximately $29 million on this transaction was included in other, net in the unaudited consolidated statements of operations for the three and six months ended December 31, 2009. As a result of this transaction, the Company’s interest in the acquirer, which is not material, was recorded at fair value and is now accounted for under the equity method of accounting.”

In any merger, of course, one company holds more cards than the other. In this case, it was Ontela, which is a bit surprising. The significance here is that a small Seattle startup has acquired a top-50 website (according to comScore) at what sounds like a pretty good price. TechCrunch reported the sale would be worth $60 million; News Corp. originally acquired Photobucket in 2007 for $250 million plus a $50 million earnout. Whatever the price for Ontela’s investors—which include Steamboat Ventures, Oak Investment Partners, Covera Ventures, and Voyager Capital—it was apparently $29 million less than what News Corp. had valued the subsidiary at. So maybe it’s time to call Photobucket a Seattle company.

As of December, Ontela had 23 employees. The company was formed in 2005 and was backed by about $15 million in venture funding. Earlier this week, Ontela co-founder and former CEO Dan Shapiro said he is leaving his role as chief technology officer of Photobucket in the next month, but will remain an advisor to the company. Photobucket went through a round of layoffs last June, leaving it with about 85 employees at that time.

Comments (2) | Reprints | Share:

February 5, 2010
Datacastle, with Aussie Connections, Moves Into Corporate Data Management

Software, IT, startups

Gregory T. Huang wrote:

Managing data on desktop and laptop computers is a perennial problem for businesses. That’s because IT managers and administrators don’t have control over individual machines the way they do the servers inside their own data center. So dealing with issues around each laptop’s security, privacy, and data backup and recovery tends to be costly and inefficient.

Enter Datacastle, a Seattle company that has been running quietly for almost five years. Originally focused on small-scale data backup and recovery, Datacastle is branching out into the broader business and enterprise market for all sorts of data management applications—encryption, automatic backup, recovery, read-write access, device tracing, and information shredding—all wrapped up in a single product it released last week, called RED.

Datacastle’s customers include companies in finance, retail, healthcare and insurance, says CEO Ron Faith. Its products are available as a Web service, or to be installed on company computers, through its partners in North America, Europe, and Australia. Currently the software works with Windows operating systems—XP, Vista, and Windows 7—but Faith hinted that the company is interested in exploring Windows Azure, Microsoft’s cloud-based operating system, as well as other platforms like Apple.

The enterprise market seems like the most likely way for a small company like Datacastle to get enough revenue to succeed. Faith says that it costs companies an average of $6.75 million each time they lose data. And last year was the worst on record, with some 220 million data records breached (some high-profile credit card company snafus come to mind).

Datacastle says it competes mainly against individual services for things like online backup (Iron Mountain, Symantec), encryption software (PGP), and remote data and device tracking (Absolute Software’s LoJack). Some other notable companies in the data backup space, like Mozy, aim to serve consumers more than businesses.

The key to Datacastle’s success will be the ability to put it all together in one package that minimizes the headache involved in installing all these separate data-related features. Faith has valuable perspective on this point, having worked at Apple and Qpass, the Seattle-based mobile commerce firm, where he had to worry about security with software-as-a-service. “If you put friction in place trying to implement security, end users will try to get around it or block it,” he says.

The company’s founder and chief technology officer, former Microsoftie Gary Sumner, is from Australia, as are some of the company’s developers. So it’s no surprise that Datacastle is backed by Aussie venture firm CM Capital Investments, which most recently put in $3 million in November (on the heels of a $5.3 million Series A round in 2008). Faith says he has gotten interest from Seattle and Bay Area investors as well, but the fit with CM Capital has been “fabulous.” He originally had some concerns about having board members and investors on the other side of the world, but says he now makes the trek Down Under twice a year.

Since he’s a former Apple guy, I also had to ask him about the iPad. “I like the product,” Faith says. “People had such high expectations. I think it has high potential. I’m a heavy Kindle user, but I think there’s room for [another]. I see it as a casual device. It has potential [as an e-book platform].”

More broadly, Faith has some inspiring words for companies in Seattle and beyond. “Startups that make it through periods like this end up being very nice wins for all concerned,” he says. “It’s times like this when members of the entrepreneurial community win their stripes. The companies that do well through this period, they’re well poised to succeed on the other side.”

Comments | Reprints | Share:

February 4, 2010
Microsoft, NSF Team Up in Cloud

Software, Internet, research

Gregory T. Huang wrote:

Microsoft announced today it has formed a partnership with the National Science Foundation (NSF) to provide free cloud-computing resources to selected researchers and research groups through Windows Azure. Financial details of the agreement weren’t given, but NSF will be in charge of awarding and managing the projects through its usual review process. Microsoft will grant researchers access to Azure’s cloud tools for three years.

Comments | Reprints | Share:

February 4, 2010
Isilon Posts First Profit, Gives Props to Its People and Partners

Data Storage, Leadership, strategy

Gregory T. Huang wrote:

Ding, ding. What’s that sound? It’s Isilon Systems ringing the NASDAQ market closing bell at 4 pm ET this afternoon.

The Seattle data storage company (NASDAQ: ISLN) is celebrating its first quarterly profit in its nine-year history. I caught up with CEO and founder Sujal Patel by phone from New York this morning after the company’s earnings call.

Isilon’s revenue for the fourth quarter of 2009 was $37.5 million, up 23 percent from $30.5 million in the previous quarter and up 18 percent from $31.8 million in the fourth quarter of 2008. That translated into a small quarterly profit of $140,000, as compared with a net loss of $4.9 million in the third quarter of 2009. The company’s revenue for all of 2009 was $123.9 million, up 8 percent from $114.4 million in 2008.

“It is a small profit, but it’s an important milestone for the company,” Patel says. “It provides validation for the business model.” That model includes an increasingly successful global channel strategy that targets sales in the $500,000 to $1 million range, he says.

The foundation for Isilon’s comeback was laid in the past two years, as I detailed in October. The company, which had come crashing back to earth after a high-flying IPO in late 2006, had a bit of a restart the following year, when Patel was renamed CEO. (He had previously been chief executive for Isilon’s first three years). Patel led the charge to reinvest in R&D, established a more cost-effective product distribution strategy, and brought in a more experienced senior management team.

But its technology has always been the company’s main advantage. Isilon’s network-attached storage system helps companies deal with huge amounts of unstructured data in a relatively cheap and easy way. (It also has products in virtualization, archiving, and cluster computing.) The company’s big customers include Sony, XM Radio, LexisNexis, Facebook, MySpace, Kodak, Adobe, and major movie studios and TV networks. But Isilon has also expanded a lot from its original focus on media and entertainment companies. Patel says in the last quarter, media made up only 32 percent of its business, while other sectors like online services (11 percent), government (10 percent), and biomedical research (16 percent) have become quite significant.

I asked whether we should expect to see Isilon go for higher profits this year. “This will be a growth year for us, and we will expand our operating margin,” Patel says. “We are a growth company, and we may make a tradeoff for further profitability and go for further growth.”

He says the big challenge for Isilon is that “there are far more opportunities out there” than it can successfully reach for. “We’re focused on building a scalable go-to-market strategy and a scalable partner model,” he says. He adds that he feels “very confident” in the company’s level of innovation, product roadmap, customer strategy, and especially its culture of customer focus and drive.

Now Isilon is looking to settle into its role as one of the few successful mid-size public companies in the Seattle tech community. It currently has about 360 employees and is actively hiring, with “a lot of jobs open,” Patel says.

Comments | Reprints | Share:

February 4, 2010
Amazon Said to Buy Touchscreen Startup: Implications for the Kindle and E Ink Display

deals, Hardware, Interfaces

Gregory T. Huang wrote:

Seattle-based Amazon has acquired Touchco, a touchscreen technology company based in New York, according to a report in the New York Times, which cites an anonymous source with knowledge of the deal. The acquisition raises some interesting questions about the future of the Kindle device, Amazon’s competition with Apple, and the role of technology firm E Ink out of Cambridge, MA, which makes the current Kindle display.

First of all, neither Amazon nor Touchco has confirmed the deal, and no financial terms were given. But according to the report, Amazon will merge the New York University spinout’s technology and staff (about six people) into the Kindle hardware division, Lab126, based in Cupertino, CA.

Second, nothing will happen right away. This kind of integration will take some time, probably at least a year. So don’t count on a touchscreen Kindle being available next Christmas, unless Amazon has other plans already underway.

Third, this doesn’t mean the E Ink display is going away in future versions of the Kindle. From what I can tell, Touchco’s force-sensitive resistance display (which can be transparent) could sit right on top of the current E Ink display, and would be separately connected to the microprocessor on the device. That would add touchscreen capabilities to an otherwise unchanged appearance and reading experience, while giving the Kindle on-screen controls similar to those found on Sony’s Touch Edition and Daily Edition e-readers. So then the keyboard under the current Kindle screen could potentially go away, and the device could get smaller, or Amazon could offer different screen sizes.

One issue is that the deal would mean Touchco’s technology, which hasn’t made it to market yet, won’t be available for a broad range of devices—it will be folded into Amazon’s proprietary tool chest before ever seeing the light of day. But if the integration goes well, it will probably boost Kindle sales—which would be good for all parties involved, including E Ink.

Unless, of course, Amazon decides to offer a full-color touchscreen device to compete more directly with Apple’s iPad tablet. Some prominent Seattle techies have weighed in recently about whether the iPad is a Kindle killer, and how Amazon needs to raise its game. Even before the iPad was unveiled, Amazon also announced that it wants software developers to create applications (“active content” like games and puzzles) for the Kindle Store, to be offered later this year.

Comments (1) | Reprints | Share:

February 4, 2010