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Ten Years in Tech MAJOR MILESTONES POINT TOWARDS A FASTER FUTURE

It’s easy to take tech for granted. We want to be instantly connected 24/7 from wherever we are to whatever we want. So in order to appreciate this massive move to all things digital, we’ve thrown a little timeline together for you.

2004

2007

2009

2010

2012

2014

Facebook founded

iPhone introduced

The “pound sign” becomes a hashtag

iPad introduced

1B smartphones sold worldwide

1st move to an all digital network

Oh and by the way, YouTube used more bandwidth in 2010 than the entire Internet did in 2000.

We can get used to this level of innovation, as

transition to an all-digital network. That means

long as we have the infrastructure to support it.

instead of spending almost $14 billion a year on

This requires a careful conversation between tech

maintaining outdated technology, carriers could

and government, and we’re starting to see some

then invest that capital into the broadband

good news on this front. Congress is starting to

networks consumers want and dedicate that

consider how our laws can be modernized and in

money to modernizing our communications

2014, the FCC announced trials for a nationwide

infrastructure.

Contact us to learn more, get involved and connect.

ADVANCE TECHNOLOGY l ADVANCE TEXAS

www.TexasProgress.com @Tx4EconProgress

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Welcome to SXSW S

outh by Southwest has been called Spring break for nerds and TED’s unruly southern cousin.

No matter what the label SXSW has grown to become one of the largest technology, music and film festivals in the world. It’s a celebration of creativity and ideas and the conference always attracts some of the most interesting people on the planet. For the past two years, Susan Lahey and Laura Lorek have covered SXSW for SiliconHillsNews.com. But this year, we did something different. We decided to publish the first print and digital magazine edition of SiliconHillsNews.com, which is our technology new site covering entrepreneurs, tech startups, technology companies, issues, events and more in Central Texas. Silicon Hills refers to Austin and San Antonio. This region is booming with Forbes naming Austin and San Antonio the two cities with the most momentum going into 2014. And we can’t disagree.

Marcia Pounds, Nicolia Wiles, Dean Cruse, Joel Bush, Dee Copeland Patience, Fran Kenneley Stephenson, Jim Pyle, Robert Miggins, Desk Rail, Michelle Lowery, Susan Strausberg, Joshua Baer, Rajeswari Kallasam, Jose Ancer, Andrew Overby, Dara Quackenbush, Max Gorbatenko, Joshua S., Sue, Heresy, Bonnie DiPacio, Nicole Brochu, Mate Zgombic, Damon Clinkscales, Johan Borge, Barbara Gref, Luke Carriere, Brain Curliss, Ilene Markowitz Haddad, Natalie Silva, Jorge Amodio, Andy Aguiluz, Melissa Conley Tyree, Clay Selby, Jacqueline Hughes, Joe Milam, Gary Forni, Grover Bynum, Leslie Modisett, Frank, Laura Beck, Nicole Portwood, Zac Maurais, Colleen Pence, Magaly, Franklin Rugeley, Chelsea McCullough, RC Mosier, Karla Schuster, Erika Davis, Pat Matthews, Dirk Elmendorf, Ivan, Peter Harris, Gisela Girard, Sherry Lowry, Jan Schaffer, Stephanie Zimmermann, Donna Taylor, John Yarbrough, Philip Nelson, Henry Halff, Don Philbin, John Egan, Josh Kerr, Cynthia Phelps, Seth Black, Robin Fields, Yusuf Chowdhury, Jeff SKI Kinsey, Michael Girdley, Rosental Alves and Alan Weinkrantz.

We hope you will enjoy this slice of Silicon Hills News. It’s our first print magazine, but we have a feeling it will not be our last. We want to thank our Kickstarter backers who made this possible. Please send your suggestions and comments to Laura Lorek at Laura@ SiliconHillsNews.com. A big thank you to: Jan Ryan, David Cooper, Melissa Pickering, Jae Lee, Claire England, Jordan Hoefar, Lauren Pacek, Grant Helmer, Tom Hochstatter, Hans, David Kulwin, Francisco Acosta,

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idealAsset is Match.com for IP

I

ntellectual property should be a sexy asset to sell. After all, you’re peddling pure potential: “Take this patent and make yourself a star...or at least solve some problem faster and more cheaply than you would have been able to yourself.” But in reality, IP sellers and buyers have to contend with a veritable ocean of patented ideas, many of which are worthless or irrelevant to what you’re doing. All of which are written in legalese so you can’t quickly ascertain what they do or how it might help you. And by the time a buyer and seller connect, the idea may be obsolete. And if you’re someone with only a couple of patents to sell, fuggedaboudit. The way IP has always been sold, as idealAsset CEO Tom Hochstatter says, is like trying to sell a house by leading with the concrete’s tensile strength. What the buyer wants to know is “How many bedrooms? How big is the kitchen?” But Hochstatter’s new product, idealAsset, aims to change all that. His company calls it the Match.com for IP. Individuals or companies join and list their IP; idealAsset creates listings with more “buyer empathy,” matching the patented idea with what a buyer is looking for. Within moments, IP assets are matched to interested buyers. idealAsset doesn’t guarantee a marriage, but it gets the conversation going. idealAsset is one of the companies pitching at the 2014 SXSW HATCH Pitch Competition.

Marketing IP Correctly “IP licensing and commercialization is hard,” said Mike Millard, Director of Innovation, Seton Hospital/Ascension Healthcare. “It’s not like a widget. It’s a one relationship sale and just finding that person, even that part is hard.... idealAsset really cuts down on the research time needed to strike a deal. You want to get to the face time.”

By SUSAN LAHEY, Reporter with Silicon Hills News

“IP is usually commercialized by the top 10 percent of inventors,” said Courtney Landers, Director of IP, Calavista Software and previously VP of IP for Emergent Technologies—also an idealAsset customer. “For the most part, people in the industry don’t have a background in sales and marketing and don’t want to do the legwork to pick up the phone and make 100 calls to find out who might want this IP,” Landers said. And a broker takes 30-to-50 percent of the profit. “I like the fact that I can put assets in there to scale and within minutes of loading them up with idealAsset, I’m sitting there with warm introductions to interested buyers,” Landers said. “I don’t know of any other tool that even comes close to that.” idealAsset was incubated at Fluid Innovation, an IP brokerage started in 2005. When Hochstatter came on in 2007 with his tech background that includes Microsoft, IBM, Yahoo and a couple of startups, he suggested the company create tools and solutions for the IP commercialization industry, such as its licensing platform. dealAsset was one of the tools they conceived that will become its own company. Hochstatter likes to think of Fluid Innovation as an innovation accelerator. “If we find another cool idea we might pull it into Fluid, fool around with it, incubate it for awhile and spin it out.”

Like Amazon for IP “It takes almost an entire year to do an IP deal,” he said. “It’s hard and silly and there’s no good reason for it. It takes 347 days on average, if it ever gets done. It’s like pandas mating, and you really have to help them or it’s not going to happen.” This is especially true for people with one or a few patents whose chances of finding a buyer and making a profit from their IP is miniscule. idealAsset offers a relatively fast, inexpensive 3


alternative. Subscriptions range from $199 per person per month to $10,000 a month for an enterprise customer with unlimited access. Transaction fees range from 5 percent to 15 depending on your subscription level. idealAsset also uses scrapers and crawlers to aggregate IP from companies that are not signed customers. If a buyer bites on one of these properties, idealAsset informs the owner of an interested buyer and invites it to become a member. One of the huge benefits of idealAsset, Landers said, is that it provides a way for IP sellers to attach a reasonable value to the patents they’re trying to sell. “More deals fall apart (at pricing) than anything,” Landers said. “With idealAsset if you’re looking for a technology you can start gathering a fair price point on the commercial data.... That’s a huge value...at the end of the day your IP really is worth what someone is willing to pay for it.” But another benefit is the partnerships and ideas that may emerge from idealAsset. Being able to see various patents on the market may spark ideas. “I’m an ideas advocate,” said Hochstatter. “I’m centered on the idea, not who owns it. I want to find the best home, the next place for that idea in that continuum...that’s my responsibility.”

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Burpy’s management team (L-R): CTO Sharez Prasla, CFO Safan Abdul, founder and CEO Aseem Ali, COO Alishah Momin and CMO Azim Momin Photo by: Chat Hamaran used with permission.

By Amy McCullough, Reporter with Silicon Hills News

A

seem Ali was a carless freshman at the University of Texas at Austin living in an apartment complex. When he could work around friends’ schedules and borrow cars to get to the grocery store, he could get fresh food and produce. But due to the inconvenience, he found himself eating a lot of Ramen noodles. And he got tired of it. Thus, the seeds of online grocery delivery service Burpy.com, for which Ali now serves as CEO, were planted. Burpy has had fast success: It officially launched in Austin in fall 2013 and will become profitable this quarter. Burpy also serves San Antonio, Dallas and Houston and plans to expand elsewhere in the Southern United States. While Burpy has some Austin competitors, like Couch Potato and Munchy Mart, those services only offer convenience store products on wheels, while Burpy will bring you anything you can find at Costco, HEB, Wal-Mart and Whole Foods, including meat and fresh produce. In addition to groceries, Burpy also delivers products from Office Depot. Ali, now a senior in mechanical engineering, said many of Burpy’s consistent customers are “elderly folk, young professionals—people that don’t have the time (to shop)--and working mothers.” When Burpy began, it charged a delivery fee of $15 to $20. More than two months ago, the fee was dropped. Now, profits come

from product markup. Customers can select items from more than one store with a minimum order requirement of $35 per store. “Let’s say I order products from Costco and Whole Foods. If you order $35 from Costco and $35 from Whole Foods, there won’t be any charge,” Ali said. “We’re seeing a trend of more and more people coming back using the site. The biggest challenge (to getting customers) initially was when we did have a delivery fee. People were hesitant to pay a delivery fee and a markup. Now we only have a markup fee, and people are getting addicted.” One satisfied downtown Austin customer recently praised the company in a Yelp review for the store and product variety it offers. “Jose A.” wrote on Feb. 2: “We’ve used (Burpy) several times so far for delivery to our downtown office and have been very pleased. Drivers communicate status and ask you questions about substitutes via text/e-mail, and if there are delays, they’ll let you know. And we LOVE the fact that you aren’t limited to one particular store, or to a bunch of local, organic stuff (we do order that too, though) when someone wants Diet Coke! “Growing pains? Maybe a few. I’ve noticed a few minor website glitches, but I know they’re a growing startup and have always listened to our feedback. It can only get better from here, and everyone in our office has become huge fans!” 5


Nationally, there are competitors more similar to Burpy: Instacart is an online grocery business that serves Boston, Chicago, D.C. and San Francisco, and FreshDirect serves New York City. Ali said Burpy is able to be successful because of today’s technology. Many well-funded grocery startups failed in the 1990s because of pricey investments in infrastructure like delivery vehicles and warehouse space. Now, “everyone has a strong piece of technology in their back pockets now. Drivers have smart phones. … Whenever an order comes in, we send out texts to shoppers in an area with the order number, zip code, cost of delivery. There’s an accept or decline button. If they accept, a text comes with a link to shopping orders and delivery information.” Burpy launched its beta version targeted at UT students in March 2013. During its official launch in Austin in September 2013, Burpy brought in $4,500 in revenue. The company has grown every month and will be profitable this quarter. They are on track to bring in more than $80,000 this month. So far, the company has had only one investor—Azim Makanojiya— who has put $500,000 into Burpy. Ali and Makanojiya met threw a family connection, and like Ali, Makanojiya became an entrepreneur as a college student. While at the University of Houston, he first entered the e-commerce space in 2007, with wrist-band.com, a manufacturer of custom-made silicone wristbands. He now also serves as CEO of CorporateRecycles.com, which recycles and disposes of company IT appliances. Makanojiya is not surprised at Burpy’s success and plans on participating in a Series A funding round that will likely occur this year. “The hardest part about startups is actually grinding it out for a good

6

year,” he said. “You lose motivation. A lot of roadblocks come your way—things you never even anticipated. … I always though if Burpy was actually executed correctly and done correctly, it would be a great success. … I think the execution was the big X factor in this business, and I think the team is doing a phenomenal job with that.” In addition to Ali, Burpy’s management team comprises students who worked together in a UT Longhorn Startup class: CTO Sharez Prasla, CFO Safan Abdul, COO Alishah Momin and CMO Azim Momin. In addition to finding more delivery drivers, a challenge for Burpy is finding the best payment platform for its employees. The company tried a direct-deposit method but dropped it due to the two-tothree-day transfer time. Burpy also tried prepaid VISA debit cards, but, like PayPal, the inherent fee structure made it unpopular with drivers. Burpy is currently working with Google Wallet, which provides about 80 percent of the features they want. “I think technology in the next year or so will catch on and cater to these type of business product lines where there needs to be a platform where an instant transfer of funds can happen,” Makanojiya said.


By Amy McCullough, Reporter with Silicon Hills News

Analytics Market While the science behind Austin’s Adometry might be complex, the company’s goals are simple: To help marketing executives answer the questions, “How’s my marketing doing?” and “What should I do different?” Sales executives have Salesforce.com. Financial executives have Oracle Financials. But marketing officers have never had a single, digital dashboard to help them assess their business efforts. Enter Adometry. Adometry specializes in “channel attribution” and helps more than 60 clients—including Citigroup, eBay, KIA, Levi’s and Mitsubishi—determine which marketing tactics lead which customers to the point of sale. Chief Marketing Officer Casey Carey explained: “We capture all of what we call ‘marketing event data,’ and that is information we can get about which ads, which e-mails, which search terms you were exposed to and the actions or non-actions that were associated with those exposures. … So whether it’s a credit card application, or a purchase in store, or a scheduled test drive for a car, we marry that up with conversion data and associated cost data and answer the question, ‘How’s my marketing doing?’ To put it in context, we’re processing about 20 billion marketing events per month right now for our customers.” All this data gives Adometry insight into what their clients should do differently. For example, one client, a big box hobby and craft retailer, recently learned it should shift money in its marketing budget to different channels to increase sales without having to make big, new investments.

The client “didn’t believe in display advertising,” Carey said. “They were spending a whole lot of money on paid search. They did not believe that display was a good place for their money. Most of their advertising is Sunday circulars in the newspapers. They were investing quite a bit of money online in paid search. We brought the point of sale transactions in, ran our model, and came back and said: ‘Did you look at your digital marketing and how it’s driving sales at the point of sale?.’ Your search performance is awful; it’s not helping at all. It is money wasted. That was a major insight for them. But even more interestingly, of both the conversions that occurred at point of sale that we could attribute to digital media, 68 percent of them were influenced by a display ad. That basically said they were way underinvested in display, and there’s a huge opportunity to reconsider that. They actually took two weeks and stopped their free-standing inserts in Sunday papers and moved that money into display.” A satisfied Adometry customer in the agency category is Dallasbased Adaptive Audience, a media trading company that seeks to fill the void between advertising technology and digital marketing strategy. Much of Adaptive Audience’s work is aimed at retailers, and President Brandon Bethea said Adometry has been a “gamechanger” for his company. Adometry data helps them track the specific channel mix that best targets certain client customers for both on- and offline sales. “We’re tagging everything at such a granular level that I’m actually able to see: Is it that (market) segment? Which channel did they reach? And within that channel, which targeting tactic? What key word search or what targeting type in display, or what publisher in display … That helps us optimize the total media budget so we can allocate more of our budget to those tactics that are working,” he said. “This simply wouldn’t be possible without Adometry.” 7


Growth “We kind of have two businesses: our Click Forensics business and our marketing analytics business, which more that doubled last year,” Carey said. “We’ll continue to see strong retention and maintaining of our Click Forensics business and expect to see triple growth on our marketing analytics business.” Adometry closed an $8 million round of funding in 2013, again from Austin Ventures, Shasta Ventures and Sierra Ventures, and added 100 employees. In September the company moved to larger quarters in the Lakewood Center Building II on Capital of Texas Highway.

Senior

management team in place

Adometry has passed the early startup stage and transitioned from a founder-led model to leadership from a well-rounded senior management team. Investor Austin Ventures says the company now has the technology as well as the leadership to aggressively move forward. Austin Ventures General Partner Tom Ball said: “I think for the first time, at the end of 2013, we kind of had all the pieces in place with respect to the management team … We’ve always had the vision for what the product needs to be. The product is in a really solid place right now. We feel it’s a great time for them to be aggressive and step on the gas here and continue. They’re already the leader in this space. We want to make sure they increase their lead on the competition. … Sometimes, when things are so technical, it’s actually quite hard to sell, because you’re selling science. And these guys have figured out how to make it simpler. … We have the full senior team now.” Relatively new senior team hires include Carey, Vice President of Sales Paul Dodd, and Vice President of Client Services Nikhil Kumar. Austin Ventures has been with Adometry since the beginning. The firm provided $500,000 in seed money to Adometry, back when it was called Click Forensics. Overall, Austin Ventures has invested about $10 million in Adometry. Click Forensics was founded in 2007 in San Antonio with a series A funding from Austin Ventures and Shasta Ventures and receive series B funding from Sierra Ventures in 2008, for a total of around $21 million. It focused on reducing the click fraud that burned up dollars spent on Google Adwords campaigns. As Google began tackling click fraud in 2011, Click Forensics bought then-Washington-based Adometry to launch its suite of online marketing analytics.

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The current total employee count is about 135. More growth is expected this year, although there are no plans at the moment to seek additional funding. That could change as the year evolves, Carey said. If Adometry did want to raise more this year, Ball feels confident they wouldn’t have any trouble: “The good news is you already have three solid venture capital firms behind it. You’ve got a bunch of other later-stage venture investors who constantly call us about this company. It’s kind of the prototypical Austin company of software as a service with a team that we’ve worked with before that has figured out a really hard problem, and now it’s really scaling. If they needed more money, I’m sure we would be there; I’m sure a lot of people from the outside would figh very hard to invest.” Market dominance, not profitability, is the company’s current priority. With the exception of Boston’s Visual IQ, there aren’t a lot of competitors to Adometry at the moment, but it won’t be this way for long. “Like any successful company in a market, it’s going to get crowded over the next couple of years,” Carey said. “Once you have this kind of growth and success, other people start to poke their heads up and take interest. We’re super excited to be a leader and be successful. We’ll work hard to keep driving that and keep new competition at bay.” Google has recently stepped up is analytics game, offering similar services to Google Analytics premium customers, which Carey sees as calling attention to the entire industry.


TrueAbility Showcases the Talents of IT Workers By Jonathan Gutierrez, Reporter with Silicon Hills News

W

hen the founders of TrueAbility were searching for a domain name, they wanted to find something that truly represented what they hoped to accomplish. The four of them wanted a name that spoke to not only the recruiters that used their product for screening job candidates, but also spoke to the IT professionals coming to their company to showcase their technical skills. “We felt like (TrueAbility) worked for everyone involved, so we were excited about the name,” said Luke Owen, Co-Founder and CEO at TrueAbility.

Owen, Marcus Robertson, Dusty Jones, and Frederick “Suizo” Mendler are all former Rackspace employees, and together founded the San Antonio-based startup in 2012. TrueAbility is a startup that provides IT professionals with a platform to demonstrate their abilities and make it easier for companies to see how qualified they are for a desirable tech job. Their offices are located at Geekdom, a coworking space and technology incubator, in San Antonio. TrueAbility calls its product “AbilityScreen.” It is a job simulator that assesses IT professionals and their ability to perform in a live server environment. Over the past year, TrueAbility sought

companies to purchase its product and allowed those companies to administer the tests themselves. TrueAbility has decided to reposition its product and have companies purchase a job post on their website. This new method lets IT professionals browse through a list of companies and interview directly with any company who has a job posted on the job board. Each company listed offers the chance to interview on demand, so job seekers can take the assessment from anywhere at any time. Within seconds of completing a live technical interview, the job seeker’s results are sent to an employer for review. TrueAbility is one of San Antonio’s home-grown technology companies with roots at Rackspace Hosting. The four founders claimed the top prize at the San Antonio Startup Weekend in July of 2012 after impressing the judges with their business model and experienced team. Before teaming together for this new business venture, they had 30 years of combined experience hiring talent and were responsible for more than 1000 recruits at Rackspace, an IT hosting company based in San Antonio. They were also finalists in the SXSW Interactive Accelerator last March and placed third among the 500 companies who applied to compete.

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By the beginning of 2013, TrueAbility received seed funding with an investment of $750,000 from Rackspace Chairman Graham Weston and Rackspace Co-founders Patrick Condon and Dirk Elmendorf. In July 2013, TrueAbility closed on $2 million in additional funding led by Austin Ventures, a venture capital firm that helps entrepreneurs build companies in Texas. Part of the additional funding came from the Cloud Power Seed Fund 2013, a special San Antonio fund set up to invest in Techstar Cloud companies. TrueAbility is a graduate of the Techstars Cloud Program, a thematic accelerator that will fund companies focused on cloud computing and cloud infrastructure. The company’s first employee was BJ “Derks” Dierkes. He is the Senior Linux Engineer for TrueAbility. He worked at Rackspace for nine years while the founders were there, so he joined the team already knowing them on a personal and professional level. “I had a lot of trust with them, so it was a comfortable transition, even though it was a big move for me,” Dierkes said. “But, really what sold it for me was that I’ve been on both sides either hiring someone or being the person interviewed, and I recognized every single time I went through that process that it had to change. For a technical person, it just really didn’t make sense to sit in a room and draw something on a board or talk through a résumé.” “You want to be able to prove your skills. Give me a task and I’ll show you I can do it, so it was just the perfect fit for me,” Dierkes said. TrueAbility currently has a goal of reaching 100 companies using its product. Since the group set that goal in December, they have added 49 companies. The staff spent a majority of the past year developing its product in the beta stages, while also working with specific customers, Owen said. “We’ve worked with a handful of customers and screened over 3000 candidates that are applying to jobs and we feel very strongly about our product,” he said. “We’ve expanded our skills bank and the types of jobs we can screen and help companies with.” Among the customers TrueAbility currently serves is TeamSnap, a software company based in Boulder, Colorado. H. Wade Minter, Chief Technology Officer at TeamSnap, said running job applicants through TrueAbility has revealed a few surprises during their recruiting process. “We found some applicants with stellar résumés, but who completely bombed the same evaluations that existing employees were able to pass,” he said. “We found people whose paper experience wasn’t amazing, but who were able to solve the practical problems with ease. We even uncovered situations like applicants who didn’t follow directions or applicants who objected to the very idea of demonstrating skill versus just talking about it, which gave us a heads-up about possible culture fit issues.”

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One thing True Ability is seeing is that AbilityScreen is making it easier for recruiters to go through a slew of candidates before making a hire. “(Recruiters) are estimating that they’re getting about 15 to 20 per cent more time to go do more proactive recruiting and getting people in the system,” Owen said. “They’re not spending hours and hours screening every candidate.” This saved time allows more applicants to get a chance, which improves the odds of an employer finding candidates who are perfect for a job opening. “The typical process is they go and find 50 candidates that they think might have the skills for the job and then they’ll spend the next two or three weeks screening those people, spending thirty minutes on the phone with each of them to see if they have the skills for the job,” Owen said. “People they may have not called before because they didn’t have time, they’ll go ahead and send them the True Ability assessment. That’s giving these IT pros a chance to prove themselves.” Dirk Elmendorf, co-founder of Rackspace, is also an advisor for TrueAbility. He said he has seen many people try to attack the problems with traditional recruiting, but they are often more concerned with what happens in the interview room than the process it took to get those applicants there. “The technical market is an area of growth for the economy,” Elmendorf said. “As a result, it is sucking people in to apply for jobs they are not really qualified for. The real opportunity is to have an objective way to filter people based on their actual skills, not just what acronyms they put on their résumé to please résumé reviewers. That is what makes TrueAbility so exciting to me.” Elmendorf said TrueAbility is the perfect team to have developed a product that assists IT recruiters in searching for job candidates. “A lot of times when I talk to startups that are working on disrupting an industry, it turns out that they don’t know very much about the industry they have targeted,” he said. “Luke and his team have a ton of experience making technical hires for Rackspace. They got to see all the problems firsthand. That experience in the trenches has really helped them understand what is needed to help people make better hiring decisions.”


Other Helpful Tech Resources Top 8 Blogs Brett Hurt – Lucky.io Ben Dyer – TechDrawl.com Joshua Baer – Austinpreneur.com Bryan Menell – AustinStartup.com Gordon Daugherty’s Shockwaveinnovations.com Josh Jones-Dilworth josh.jones-dilworth.com Jason Cohen – blog.asmartbear.com Ricardo Sanchez’ The Techmap Blog at blog.thetechmap.com

Other sites to watch: WeAreAustinTech.com 3DayStartup.com Austin Technology Council – AustinTechnologyCouncil.org Great Austin Chamber of Commerce’s AustinTechSource.com Austin Startup Week at atxstartupweek.com RISE at Riseglobal.org Women@Austin at https://www.facebook.com/womenataustin

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Austin Tech Startup Incubators and Accelerators

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o many central Texas start-ups have taken off recently and some of them may need a boost to get to the next level. This list of Austin and San Antonio incubators and accelerators help companies with a leg up in the marketplace. Some of them have rigorous application and screening processes. Check them out to find the one that’s right for your venture. Tech Ranch - is a for-profit incubator founded in 2008 by Kevin Koym and Jonas Lamis. Claire England joined Tech Ranch last year to head up its international outreach efforts. It offers coworking space for start-ups, consulting services and specialized programs to help entrepreneurs launch their ventures. Its flagship programs are Camp Fires, which are informal gatherings on Friday, Venture Forth, an 8-week program, and Pioneer Program, a weekly meeting coupled with monthly rent for office space. Capital Factory, founded in 2009 by Joshua Baer and Bryan Menell, is a seed-stage technology accelerator for startups. It has a startup fund that invests in startups. It seeks to invest in startups that can get profitable with less than $1 million in investment. It also hosts events and meetups. And it rents desks and private offices as well as general common room space for coworking. Techstars Austin – Jason Seats heads up this program in Austin. It formerly took place in San Antonio as the Techstars Cloud. It moved to Austin in 2013 with the first class debuting last October. The three-month long program is currently accepting applications for the second class set to kick off this summer. Incubation Station - is an accelerator focused on consumer product goods companies. It runs a 12-14 week program for selected startups. DreamIt Austin - Kerry Rupp, managing partner at DreamIt Ventures, runs the the DreamIt Austin program. It is now on its second class of companies in Austin. It’s a three-month long entrepreneurial program which provides selected companies with a $25,000 stipend and access to thousands of dollars worth of free services. Austin Technology Incubator, founded in 1989, has helped more than 200 companies. It’s part of the IC2 Institute at the University of Texas. Texas Venture Labs at the University of Texas helps accelerate startup companies in central Texas.

SXSW Accelerator 2014 – this competition features startup companies pitching to an audience of investors and experienced entrepreneurs. The judges then choose 18 finalists who give a final pitch and then the winners are chosen. Longhorn Startup - at the University of Texas at Austin features student run companies. The semester ends with students pitching to investors at a Demo Day. Professor of Innovation and Murchison Fellow of Free Enterprise Bob Metcalfe, Joshua Baer of Capital Factory and Ben Dyer, Entrepreneur in Residence, head up the program. 13


Coworking Options for Yogis, Dog-Lovers and Everybody Else By SUSAN LAHEY, Reporter with Silicon Hills News

P

icking a co-working space is like a cross between choosing a place to work and finding your favorite hangout. What’s important to you? Ergonomic chairs? Community? The vibe? The snacks? Or, as one Yelper explained, the fact that they “play the same tunes I have on my iPod?” And considering that the people around you might become your friends, clients, business partners and tribe what do you want them to be like? Older professionals? Hackers? Hipsters? Artists? Do you want to bring your dog? Do you want to share a coffee machine with investors? Do you want a yoga class in the same space? Austin has a great array of coworking places that offer all of the above and more. We’ve compiled a directory of some of the area’s hottest co-working spaces for you to find your spot.

Capital Factory In many ways, Capital Factory is the hub of all things startup. On the 16th floor of the Omni building, this is where you can rub elbows with many of the area’s most promising new companies, and the investors and successful entrepreneurs who mentor them. You get access to giant pillows and snacks like candy, chips, fruit, and the occasional pizza. Co-workers don’t get all the designer ergonomic office systems. They share long tables in a common room. But they are at hand for many cool events and meetups that happen in Capital Factory space. Membership Fee: $150 for 15 hours a month; $350 for unlimited access Address: 701 Brazos St., 16th Floor, Austin Website: capitalfactory.com/work/coworking

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Conjunctured Conjunctured is a funky work space in an old house on the East Side. Started by a couple of geeks, Conjectured prides itself on the community its co-workers have created. Members not only work at the space during the day but also have happy hours, volleyball games, board games at one another’s homes and go tubing and group skydiving. Conjunctured plays music from its members’ iPods but also has a quiet room for people who need minimal distractions. And it’s dog friendly—if you call first. Membership fee: $25 to $275 a month Address: 1309 E. Seventh St., Austin Website: conjunctured.com

Center61 Center61 in East Austin, is where you might want to be if the focus of your work is social good. Like, if what gets you up in morning is the environment or global justice or racial harmony and you’re looking for likeminded people to collaborate with, this would be the place to work. Modern, airy and quiet, Center 61 is scientists, artists, business owners, technologists and more. Membership fee: $10 to $200 a month Address: 2921 E. 17th St. #4, Austin Website: center61.com

GoLab Austin In an old building on groovy East Sixth, the GoLab is a combination art gallery and coworking space. Founder Steve Golab offers lunch and learns and encourages the software and social platform developers to birth new ideas through collaboration and community.


Membership fee: $250 to $350 a month Address: 621 E. Sixth St., Austin Website: golabaustin.com

Link Coworking Link Coworking is one of the best known and longest-lasting co-working spots in Austin. With a funky, modern space with ergonomic Turnstone furniture, Link has private, dedicated spaces as well as open working spaces. If offers a place for experts to come and give free consulting to members and the community and it holds and myriad events for networking and for fun. Membership fee: $200 to $500 a month Address: 2700 W. Anderson Lane, #205, Austin Website: linkcoworking.com

Opportunity Space Started by startup veteran Erica Douglass, Opportunity Space is specially designed for startups, rather than freelancers or solopreneurs. Operating out of a charming old house on Caesar Chavez, on the East Side Opportunity Space offers each startup a dedicated desk and, if they want, a dedicated room. And it has one thing few co-working spaces offer...a shower! Membership fee: $500 a month for a dedicated desk Address: 2125 E. Cesar Chavez St., Austin Website: opportunityspace.com

Perch Coworking Perch coworking in East Austin offers ergonomic chairs, mail delivery and a community of what it calls “self-contained business people.” Perch has clean, modern space and focuses hard on the business aspect of getting work done and meeting with likeminded people who might also be good business contacts. Membership fee: $175 a month; drop-ins are $25 a day Address: 2235 E. Sixth St., Austin Website: perchcoworking.com

Posh Coworking Posh is the first Austin co-working space specifically for women. Elegant, if a little girlie, Posh not only provides co-working spaces but quiet meeting areas—named Elizabeth, Audrey and Marilyn--for members to meet with clients. Members rave about the warm feel, the writing lab, and the help of the owner, Blossom.

Tech Ranch Austin Tech Ranch is another major startup hub in Austin, north of downtown. It’s an incubator that helps businesses from seed to scale. In a quiet office park off 183, Tech Ranch offers a range from general co-working in a modern setting to a dedicated desk, chair and locking cabinet space. Another great place to rub elbows with entrepreneurs and investors who are making new things happen. Membership fee: $150 to $300 a month Address: 9111 Old Jollyville Road, Suite 100, Austin Website: techranchaustin.com

Vuka The owners of Vuka envisioned the space as a co-working place, event venue and all around community gathering space. A giant, open warehouse with incredible tree light fixtures and funky furniture, Vuka is the perfect place for people who want to combine art with work. The venue has almost no parking, however, and some members report that all that combining of art, work and community can be a little distracting. Membership fee: $150 to $300 a month; drop-ins are $15 a day ($5 on Fridays) Address: 411 W. Monroe St., Austin Website: vukaaustin.com

San Antonio Coworking Space Geekdom Geekdom is the place for San Antonio coworking. The local startup hub, Geekdom is steps away from the Riverwalk and offers month to month membership as well as dedicated desks and office spaces. Because it’s the hub of entrepreneurship, it’s also the place to encounter the up and coming companies and the investors and mentors who are helping them. The coworking space is moving into the historic Rand building downtown in late March and will have a specially designed space featuring showers, bike racks, kitchen, postboxes, phone booths and a special events center. Membership fee: $50 to $200 112 East Pecan, 10th & 11th Floors San Antonio, Texas 78205 Website: http://geekdom.com/san-antonio

Membership fee: $125 to $400 a month Address: 3027 N. Lamar Blvd., Suite 202, Austin Website: poshcoworking.com

Soma Vida So what if your requirements go way beyond ergonomic chairs and snacks? Soma Vida is a wellness community described by several Yelpers as “Nirvana.” It’s a yoga collective, a wellness center, a veritable Vallhalla of work life balance in an old house in East Austin. And best of all, it’s way less expensive than most co-working spaces. And memberships come with free yoga classes and entrance to networking events. Namaste. Membership fee: $25 to $65 a month Address: 1210 Rosewood Ave., Austin Website: somavida.net

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How to Tap into Austin’s Investor Landscape

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ccording to the PWC Money Tree, Texas was the sixth highest investment region in the country in 2013. With $1.3 billion invested it was a small player compared to Silicon Valley’s $12 billion in investments. A fact that continues to gall Austin’s startup community. The good news for startups is that, in a lot of ways, Austin is still a small town which means it’s easier to meet investors here than in it is in many markets. Angels and venture capitalists attend pitch competitions, Startup Week events, SXSW and even crazy things like Startup Olympics. But even in Austin, walking up to an investor and launching into your pitch is considered a major faux pas.

Austin Ventures

We’ve seen founders walk up to investors who are three bourbons into a networking event and launch into a pitch. We’ve seen founders joining conversations and scattering participants like roaches by putting on their “sales” voices. We’ve seen founders looking at investors they just met like guys who have been at sea for a year meeting the first woman on shore. No. Most investors want an introduction from someone they trust before they hear your pitch. In addition, while one investor admitted: “We want to find startups pretty much when they roll out of bed in the morning, before they’ve made too many mistakes” they don’t want to waste time with startups who have no business model, no idea how much it costs to acquire a customer, no revenue model, no sales strategy, no idea of their valuation, no measure of their competition and so forth. So we’ve included a list of some of the leading area investors. Some of the kinds of companies they invest in, and rules they have about approaching them.

LiveOak Venture Partners

Central Texas Angel Network Central Texas Angel Network is one of the top five most active angel investment groups in the U.S. CTAN angels come from numerous industry backgrounds and invest in companies from tech startups to consumer packaged goods. Many of them work with startups at the local incubators as mentors as well as investors. CTAN has more than 130 members who are commonly spotted at pitch events put on by the University of Texas, Capital Factory, Incubation Station, Techstars and other startup institutions, usually looking for early stage companies to make seed investments. In 2012, the angel group invested $8 million in 25 companies. CTAN has quarterly “office meetings” to informally meet and pitch to investors to get feedback on their pitches. The group also has five annual funding cycles. Startups apply at the group’s website, and those that are accepted have the opportunity to pitch and get feedback from investors. An average investment for a single investor is about $25,000.

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By SUSAN LAHEY, Reporter with Silicon Hills News

Austin Ventures is the largest firm in Austin with a $3.9 billion fund. Austin Ventures invests in both early stage and middle market companies AV Investors have been quoted as preferring to meet startups interested in pitching them through an introduced from someone they trust. Early stage investments range from Our investments typically range in size from $500,000 proof-of-concept projects and seed financings to $40 million venture growth rounds. $25 million to $100 million. Austin Ventures is a very hands-on investor. Among its portfolio companies are Bazaarvoice, RetailMeNot, Spiceworks and Spredfast.

A relatively new venture firm, LiveOak Venture Partners has expressed that it’s more open to early stage companies than some other investors. Partner Krishna Srinivasan said he doesn’t require an introduction and is interested in talking to a number of seed stage startups. Live Oak recently announced a $100 million fund for early stage companies. Its minimum investment is usually $250,000.

Silverton Partners Silverton Partners is an Austin based company that mostly invests in tech companies. Though it has invested in several Capital Factory companies already, the company recently announced a partnership with Capital Factory whereby every Capital Factory accelerator startup with an initial $50,000 from two angel investors would receive another $25,000 from Silverton. This is on top of a $50,000 match from Capital Factory. Generally, Silverton’s initial investments range between $200,000 and $2 million.

Triton Ventures Laura Kilcrease, one of the managing partners of Triton Ventures, helped found Austin Technology Incubator and formerly served as Entrepreneur in Residence for the University of Texas Herb Kelleher Center for Entrepreneurship. She can frequently be seen at University of Texas pitch events and mentors many startups. Triton focuses on spinout companies, including technology licensing spinouts, tech commercialization and early stage companies. Average initial investments range from $500,000 to $4 million. Triton also supports companies in its portfolio with additional investment and often introduces its portfolio companies to other investors.

Mercury Fund Mercury invests in lean, early stage startups with small scientific teams and software based businesses. Initially the fund invests between $50,000 to $1.5 million and usually invests between $4 million and $6 million over the life of the company.


Need a Caffeine Fix? AUSTIN COFFEE HOUSES Juan Pelota - Lance Armstrong owns this coffee shop which shares a building with Mellow Johnny’s bicycle shop. Great coffee and a fun place to visit. 4th & Nueces Streets Austin, TX 78701 512 – 473-0222 Caffe Medici - Three locations in Austin, and the downtown one is in the Austonian. It’s has a sleek, modern hip look to it but it’s atmosphere is laid back and it’s a great place for a meeting. 200 Congress Ave Austin, TX 78701 512-827-2770 Jo’s Coffee – A great people watching place on Congress Ave. It’s outdoor café with spectacular coffee and good sandwiches too. It’s building sports some interesting graffiti too. 1300 S. Congress Ave. Austin, TX 78704 Halcyon – Coffee, bar and lounge that serves chocolate espresso martinis, tableside s’mores, and grilled paninis. 218 W. 4th St. Austin, TX 78701 Lola Savannah Coffee Lounge – This West Lake Hills coffee shop is a great place for meetings and serves up delicious coffee. 6317 Bee Caves Road Austin, TX 78746

SAN ANTONIO COFFEE HOUSES Halcyon Southtown – This coffeehouse, lounge and bar is part of the same ownership as the Austin one. It serves chocolate espresso martinis, tableside s’mores, and grilled paninis. 1414 S. Alamo St. No. 101 San Antonio, TX 78210 Olmos Perk Coffee – Serves up great lattes and a good selection of pastries. It’s a comfortable place to hang out and work with a row of dedicated cubicles available on first come, first serve basis. 5223 N. McCullough Ave. San Antonio, TX 78212 210-858-2956 Local Coffee – With locations in Stone Oak to the North and the Pearl Brewery closer to downtown and Alamo Heights, this locally owned coffee shop has become a locals favorite. 5903 Broadway San Antonio, TX 78209 210-267-5494 Revolucion Coffee + Juice – Serving up a wide variety of coffee drinks as well as cold pressed juices. 7959 Broadway #507 San Antonio, TX 78209 210-701-0725 La Taza Coffee House – A favorite place for coworking and having meetings over a cup of excellent coffee. It’s located at the Brookhollow Shopping Center in North Central San Antonio. 15060 San Pedro San Antonio, TX 78232 210-494-8292

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San Antonio’s Top Bars The Friendly Spot – A Texas Ice House with a relaxing twist. This outdoor bar in Southtown has 76 beers on tap. And 250 bottled beers. It’s kid and pet friendly. 943 South Alamo Street San Antonio, TX Thefriendlyspot.com

AMERICA’S ORIGINAL CRAFT VODKA

The Esquire Tavern – Opened in 1933, this swanky bar is the oldest drinking establishment on the River Walk and a favorite of locals. It also has the longest bar in Texas. 155 East Commerce Street San Antonio, TX Esquiretavern-sa.com

Ocho - In the historic Havana Hotel, built in 1914, the upstairs has a small bar with a terrace overlooking the River Walk. The downstairs bar is dimly lit with comfy couches and chairs. 1015 Navarro Street San Antonio, TX HavanaSanAntonio.com/ocho

Bar1919 – In the Blue Star Arts complex, this bar harkens back to a time before bootleggers, speakeasies, moonshine, bathtub gin and rum runners. 116 Blue Star San Antonio, TX www.1919Bar.com

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Joey’s - A neighborhood bar with 17 beers on tap, 50 bottled beers and lotsY of pool tables. This is a great place to hang out with friends. 2417 N. St. Mary’s St. San Antonio, TX-

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Austin’s Top Bars

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The Ginger Man – This pub offers 75 beers on tap and is a great place toK meet up with friends and hangout. 301 Lavaca St. Austin, TX Gingermanpub.com

Hotel San Jose Bar – A private patio bar in the middle of the hotel grounds serving beer and wine. A nice place to escape the hustle and bustle of South Congress. 1316 S. Congress Ave. Austin, TX Sanjosehotel.com

Handlebar – A mustache themed neighborhood bar offering up cocktails, craft beers and more. 121 E. Fifth St. Austin, TX HandlebarAustin.com Easy Tiger – An indoor/outdoor venue that offers a full bar, beer and wine. 709 E. 6th Street Austin, TX Easytigeraustin.com

CU29 Cocktail Bar – Handcrafted cocktails in the heart of downtown. 720 Brazos Street Austin, TX Cu29cocktailbar.com

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2014


1. Longhorn Tech - Bob Metcalfe, inventor of

Ethernet, is professor of Innovation at the University of Texas at Austin and heads up Austin Longhorn Camp, to inspire undergraduates to become tech entrepreneurs, along with serial entrepreneurs Ben Dyer and Josh Baer.

2. Bryan Menell heads up AustinStartup.com and

RENT YOUR HOME, MAKE MONEY

3. Damon Clinkscales leads several tech efforts in

During X-Games, ACL and F1

runs the popular Austin High Tech Happy Hour every month.

town including Austin Open Coffee, a semi-monthly meetup for entrepreneurs and investors, which is having a SXSW Edition on March 6th. More info at OpenCoffeeAustin.org.

4. Jacqueline Hughes is one of the masterminds

behind Austin Startup Week, an annual week of startup activities including a startup crawl, now in its fourth year.

5. Joshua Baer is not only co-founder of Capital

Factory and several companies, but he also spearheads WeAreAustinTech.com, which shines a spotlight on some of the city’s tech innovators.



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6. Bijoy Goswami is known for BootstrapAustin.org

and the fact that in Austin you can “Be Yourself.” He also created the Austin Mind Map and ATXEquation. com.

7.

Ricardo Sanchez’s TheTechMap.com provides a list and map of the tech startups in Austin. 19


1. Rackspace Hosting is based in what once was an old

dilapidated Windsor Park Mall in northeast San Antonio. It’s now a vibrant tech campus with 3,200 employees working there. The mall’s old food court is now the lunchroom complete with San Antonio Gondolas from Breckenridge Park, a two story circular slide and more.

2. The NSA, yeah that one – No Such Agency, has one

of its largest campuses in the country in San Antonio. The NSA took over Sony’s chip manufacturing plant on the West side of San Antonio a few years ago. It’s officially known as the Texas Cryptologic Center, but little information is known about how many employees work there or what they do.

3. San Antonio has a strong biotechnology industry led

by the University of Texas Health Science Center at San Antonio, University of Texas at San Antonio and BioMedSA. Companies include DPT Laboratories, Kinetic Concepts, Mission Pharmacal, BioNumerik Pharmaceuticals, Vidacare and AirStrip Technologies.

4.

The city is also known for its Cybersecurity industry. The University of Texas at San Antonio has the Institute for Cybersecurity. The 24th Air Force Division employs thousands of people in San Antonio focused on cybersecurity.

5. Geekdom is heading up the effort to spur more tech startups in

San Antonio, particularly in the Internet and Cloud computing industry. And its also focused on partnering with Mexico through the San Antonio MX Challenge encouraging more interaction between San Antonio and Mexican tech entrepreneurs.

6. The City of San Antonio is on the shortlist to get Google Fiber, high-speed 1 Gigabit Internet.

7.

San Antonio is emerging as a leader in “Clean Tech” with a focus on oil and gas production with the boom in the Eagle Ford Shale, south of San Antonio.

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202 Bal�more Ave. San Antonio, TX 78215 (210) 225-6322 www.bigmentor.org

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Aus�n Office 1400 Tillery St. Aus�n, TX 78721 (512) 472-5437 www.bigmentoring.org


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Startups Vie to Win the SXSW Pitch Competition By SUSAN LAHEY, Reporter with Silicon Hills News

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ilicon Hills News, Austin Technology Incubator and Central Texas Angel Network have picked the ten semi-finalists for a South by Southwest pitch competition to be held March 9 at the Austin Chamber Offices. They are: Pristine.io, Embrace Customers, Spot On Sciences, Mahana, Filament Labs, EyeQ Insights, SegURWay, Fosbury, Lucid Tour and Articulate Labs. “What an amazing group of applicants this year,” said Kyle Cox, Director, IT/Wireless & University Development portfolio for ATI . “Our round 1 judges had a difficult time narrowing the field down to the 10 semi-finalists. The caliber of these local Austin firms is up there with any nationwide competition out there.” The winners were chosen not only on the strength of their ideas from an investor standpoint, but also on their ability to tell their story in a manner compelling to the media. Frequently, it’s the back story that makes a startup stand out. That may mean stumbling upon the idea in an unusual way, enduring a remarkable struggle to bring it to fruition, embarking on an epic customer validation journey and the like. Each of the ten finalists will receive one SXSW Interactive badge and be given the opportunity to pitch in front of a panel that includes Pat Noonan of Austin Ventures, Monique Maley of Articulate Persuasion, and Gary Forni of Central Texas Angel Network. Round one will take place at 9:30 a.m. The five finalists from that round will go on to round two at 11 a.m. where they’ll pitch before Venu Shamapant of LiveOak Venture Partners, John Stockton ofMayfield Fund and Tom Chederar of VentureBeat.

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The prizes include: • A series of profile articles in Silicon Hills News, following the company’s growth journey. • A three month membership in ATI’s Landing Pad portfolio. • A free spot in CTAN’s next investor pitch day. • Three hours coaching from professional pitch coach Monique Maley • Three hours consulting from ValentineHR on issues like hiring and recruiting and compliance. The top winner will get a series of Silicon Hills articles and one other prize of his/her choice. The second place winner will also choose two prizes from those leftover and the third place winner will take the remaining prize. This story originally was reported on SiliconHillsNews.com


Geekdom Ignites San Antonio’s Tech Industry By LAURA LOREK, Founder of Silicon Hills News

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ounded in late 2011, Geekdom has served as a catalyst for San Antonio’s technology startup industry.

Graham Weston, chairman of Rackspace and Nick Longo, founder of CoffeeCup Software, founded Geekdom. Lorenzo Gomez now serves as the director of Geekdom. It hosted the Techstars Cloud program, which graduated two classes of companies from its three-month accelerator including Par Level Systems and TrueAbility, which are both still based at Geekdom. Other startups operating out of Geekdom include Pressable, Remote Garage, Monks Toolbox, CodeUp, VentureLab and Health eDesigns. It has helped more than 200 startups so far.

Geekdom last year launched a San Francisco office. For the past two years, the collaborative coworking space, technology incubator and accelerator, has occupied the 10th and 11th floors of the Weston Centre downtown. But at the end of March, Geekdom will move to its new home in the historic Rand building, a former bank and department store building, on Houston Street. The sixth floor will be for established companies with large numbers of employees. The seventh floor will be for the general membership. Eventually Geekdom will takeover the entire building as its current tenant Frost Bank moves out. The new offices will have bike racks, showers, and lockers, changing rooms, a nap room, a kitchen and more.

Geekdom membership costs $50 per month or $200 monthly for a dedicated “tech startup desk” in an office.

The space will contain a lot of white boards and other writeable surfaces and it will have reliable high-speed Internet with lots of outlets for wired service as well as Wi-Fi. It will also have a vault of mailboxes.

Geekdom also hosts all kinds of events including a monthly Master’s Series featuring accomplished speakers in the technology industry, hackathons, 3 Day Startups, Startup Weekends, the monthly San Antonio Startup Grind and Health 2.0.

The main floor of the building features an events center where Geekdom will hold member and public events. The events will be livestreamed online from there using NewTek’s Tricaster equipment. The space is two stories and has a balcony and has doors that are accessible from the street. 23


By SUSAN LAHEY, Reporter with Silicon Hills News

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ilverton Partners and Floodgate’s new partnership with Capital Factory is offering the incubator’s startups a chance to take their companies to the next level, according to Mike Maples Jr., Floodgate’s managing partner. “When I moved to California, one of the things I noticed was that the cost of starting a company or validating an idea had collapsed,” Maples said. “It doesn’t cost very much to start a company or try out an idea…. But if you’re not careful you can go too far with that. People throw a whole lot of ideas against the wall and see what sticks. This will help serious entrepreneurs working on real ideas have enough funding to make a real go at it.” With the new matching program, companies in Capital Factory who have $25,000 in support from two mentors will receive a $50,000 matching grand from Capital Factory’s fund. Then Silverton and Floodgate will both kick in $25,000 for a total of $150,000. That’s enough to let people quit their jobs, said Morgan Flager of Silverton. Previously, said Flager, companies could come into the incubator’s matching program with lower dollar amounts, like $10,000, with a matching grant from Capital Factory. “If you look at the west coast, incubators are offering more like $100,000 plus,” Flager said. In addition to enticing top companies who might otherwise choose incubators outside of Austin, offering $150,000 investment gives entrepreneurs the opportunity to work on a new idea full time, which having $20,000 in funding generally doesn’t. “This gives them more runway, more confidence to pursue their entrepreneurial ambitions. That kind of money can attract better people.” In fact, said Josh Baer, executive director of Capital Factory, many companies in the matching program come with a $25,000 investment from angel/mentors. That’s the average investment. Most companies, he said, use a two-step process. First they engage in the incubator program by trading a two-percent equity

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stake for benefits like free office space, free hosting services and access to investors and mentors who frequent Capital Factory. Then they enter the matching program. But the new partnership gives startups access to Silicon Valley money as well. “A lot of Capital Factory companies have been funded by Silverton Partners,” Baer said. Silverton has invested in companies such as Sparefoot, which started at the incubator. “And Mike Maples is the Austin guy. It makes so much sense having them involved. It gives the companies a lot of credibility both here and (in Silicon Valley).” Maples identifies Baer as the “single most important force for leveraging the trend” of democratizing entrepreneurship. “By adding our time and money and expertise to Capital Factory we can help them get involved with even more startups and more entrepreneurs, hopefully with result of greater numbers of successful companies.” Floodgate and Silverton will take equity positions with the companies they invest in, in the form of convertible notes. But the exact terms will be negotiated with each company. “Investors either help grow the pie or help claim a bigger slice of the pie,” Maples said. “At Floodgate, we believe it’s all about making the pie massively bigger. We’ll be working with Silverton and Capital Factory so that a whole bunch of new companies can get funded with the probability that the pie that gets created grows massively, offering a whole lot of opportunities.” (This story was originally published at SiliconHillsNews.com)


By Jaime Netzer, Reporter with Silicon Hills News

T

he word “disrupt” has become a start-up buzzword, but Zebra Insurance COO and cofounder Joshua Dziabiak said it’s overused, and he’s not always sold when he hears it. “I don’t know if I ever really buy most of it,” he said. But when Dziabiak, already the successful founder and CEO of ShowClix, saw Adam Lyons give the pitch for Insurance Zebra, he was convinced. The venture, a digital auto insurance agency that lets consumers compare unbiased quotes in real time from more than 200 carriers, could do more than disrupt the insurance business: It could turn it on its head.

“The industry is ripe for a modern tool like the Zebra,” Dziabiak said. The mechanics are straightforward enough. Insurance Zebra uses state insurance filing data to replicate insurance company models and estimate rates within a few dollars accuracy. “We were able to do something no one else has done before, by combining all of the different companies on one platform,” said Adam Lyons, co-founder and CEO of the Austinbased company. The result is something new, too: transparency in the insurance industry. Lyons and Dziabiak are both young, and the East Austin warehouse where Zebra does its work boasts a mural on one wall and a buzzing energy that’s far from corporate. Though they’re selling insurance, which Dziabiak and Lyons say is a “stodgy, old, old money business,” Zebra wants to inject a new set of descriptors to the conversation. “We want to throw ‘sexy’ into that,” Dziabiak said. “We want to throw ‘rebel,’ and ‘easy.’” They said in 2014, consumers now expect to be able to be able to make informed decisions about their purchases online, even from their phones. Sites like Kayak make this possible for air travel, but the insurance industry was missing an equivalent. Sites that claimed to, Lyons said, only compared a few, and

still required consumers to fill out extensive questionnaires and provide contact information. “What happens is you get done, [the site] just says someone will contact you shortly,” Lyons said. “Then your phone gets blown up, your inbox gets flooded, and you never got anything.” As for companies like Geico? “Companies spend hundreds of millions of dollars marketing and saying you can go to their site and save, but that’s the equivalent of going directly to American Airlines and asking them to find you the best fare,” Lyons said. The company has caught early attention from big name investors, including Mark Cuban, Austin’s Silverton Partners, and Simon Nixon, UK tech entrepreneur and owner of juggernaut comparison site moneysupermarket.com. In Austin since last year, Zebra held its national launch party in December of 2013. They’re now licensed in all 50 states—and D.C., too. Morgan Flager, Partner at Silverton Partners, said the ambition of Zebra’s vision is part of what drew him to the company. “This is the company where, if they’re successful, it’s going to put Austin on the map,” Flager said. “It would become a consumer Internet town as well, and that would be pretty exciting.” Early returns look good for Zebra. Using the site, customer Chiko Barnabas Abengowe, who owns Perfect Staffing Solutions in Austin, found that he was overpaying on his car insurance by nearly $80. “I love it,” Abengowe said. “I love that it’s smooth, it’s easy, and I just like how it has the whole breakdown and compares other insurance right on there.” Abengowe said often employees will ask his company for auto insurance recommendations, and he wouldn’t hesitate to send them to Zebra. “I’ll definitely mention it if they’re looking,” he said. With website traffic increasing, Insurance Zebra is expanding, hiring insurance agents, a project manager, and software engineers. Find more at www.thezebra.com. 25


The San Antonio MX Challenge Launches

By Laura Lorek, Founder of Silicon Hills News

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he first HeroX challenge, an offshoot of the X-Prize, officially launched in San Antonio in January. It’s called the San Antonio MX Challenge, a two-year $500,000 prize to foster entrepreneurship between San Antonio and Mexico. “XPRIZE was a grand idea for very lofty things at an ivory tower aspiration level,” said Graham Weston, co-founder of Rackspace. He has put up the money for the San Antonio MX Challenge. “What I love about HeroX is it takes what we learned about offering big grand prizes and it brings it down to a city-level. We are not going to Washington, D.C. to change the world; we can change it in our city. The most important unit of economic action is the city. The HeroX prize is about bringing that innovation and technology to the city level.” San Antonio has the opportunity to be the gateway to America for the entrepreneurs in Mexico and the San Antonio MX Challenge will serve as that catalyst to make it happen, Weston said. San Antonio has so much of the infrastructure to offer entrepreneurs in the startup world, Weston said. “Mexican entrepreneurs can come to America to launch their products and then go back to Mexico to build their companies,” Weston said. San Antonio is the first city to launch a HeroX prize, but soon it will be everywhere, Weston said. “HeroX is going to be in every city around the world from London to Lubbock,” he said. HeroX democratizes innovation, said Christian Cotichini, HeroX co-founder and CEO. He sold his software company, Make Technologies, based in Vancouver, to Dell in 2011. He soon became immersed in studying the world’s problems. It almost made him become depressed until he read Peter Diamandis’ book Abundance, which paints an optimistic view of the future. Cotichini then knew he wanted to be part of making that vision become a reality. “This is the very first HeroX branded challenge,” Cotichini said. “The Internet is creating new models that allow us to be far more powerful as a species. These new models are going to change the world.” Open innovation can change cities and companies. It’s a tool for anybody who needs innovation, he said. HeroX is an online crowdsourcing platform that allows people to realize visions and live out dreams, said Emily Fowler, co-founder and vice president of possibilities for HeroX. HeroX plans to launch hundreds of competitions worldwide. Whereas the XPRIZE challenges offer prizes from $10 million to $30 million and last from five to eight years, the HeroX challenges offer

prizes of $10,000 to millions and last from six months to a few years, Fowler said. Anyone can take on a challenge or offer one up, she said. “We’re stimulating a new generation of entrepreneurs and it’s really interesting,” Cotichini said. “The millennial generation really gets the power of crowdsourcing and collaboration.” One of those is Tito Salas, project manager of San Antonio MX Prize. He was born in Northern Mexico and graduated from the University of Texas with a double major in marketing and business management. “The San Antonio MX Challenge wants to make it easy for Mexican entrepreneurs to move to San Antonio to launch their business,” Salas said. His role is to help provide Mexican entrepreneurs with Visas, mentors, business services, access to capital and more. “We’re also looking to get together all of the entrepreneurs from Mexico in San Antonio and bring them to Geekdom to make something bigger,” Salas said. Walter Teele and Luis Pablo Gonzalez are both from Mexico. They came to the U.S. to go to college. They graduated recently and launched ParLevel Systems, a company that connects vending machines to the Internet to monitor them remotely. ParLevel last year graduated from the Techstars incubator program. Teele and Gonzalez are building their company at Geekdom. Teele sees the San Antonio MX Challenge as a way to fill a need that exists in helping Mexican startups. “I think it’s going to give entrepreneurs in Mexico awareness that there are people here that want to support them and help them realize their dreams,” Teele said. “We don’t have a startup culture in Mexico. You have it here.” Mexican entrepreneurs can benefit from the infrastructure that already exists in San Antonio, Teele said. Lots of people have expressed interest in registering for the San Antonio MX Challenge, said Lorenzo Gomez, director of Geekdom. The organization provides the criteria a company needs to meet to win the prize, but they don’t provide any seed stage capital or predetermined solutions, Gomez said. Early registration ends on Aug. 25 and final registration is Jan. 14, 2015. “The beauty of the prize models is it’s always the person that didn’t know they could win it that wins it,” Gomez said. “It’s probably going to be someone you never thought or maybe it’s someone that was very obvious. That’s one of the exciting parts of the prize is to see who steps up to solve it. It might just be one person with a magic Rolodex that makes it happen.“ A version of this story originally appeared on SiliconHillsNews.com

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