Silicon Hill News

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Welcome to SXSW This is our second annual SXSW edition of Silicon Hills News.

We launched the magazine last year after a successful Kickstarter campaign. This year’s magazine features a lot of photos of local startups and some fascinating profiles on Bob Metcalfe, Honest Dollar, People Pattern, EvoSure and Vast.com and feature stories on perks, funding, women-led ventures and startups to watch.

Silicon Hills News held another Kickstarter campaign at the end of last year to produce two 2015 tech calendars with a focus on startups in Austin and San Antonio. The photo on the cover of this magazine is of the team at Austin-based OneSpot, an online advertising network for brands and companies. The company, founded in 2012, was featured in our last issue and that photo is displayed for the month of March in the Austin Tech Calendar.

John Davidson, a local Austin photographer, took that photo and many of the other ones of Austin startups in this issue of the magazine including the photo of Bob Metcalfe at UT, Henry Yoshida and William Hurley of Honest Dollar, Laura Bosworth with TeVido Biodevices, the team from Clarify.io and the founders of EvoSure.

And Gary Hartman in San Antonio took the photo of Magaly Chocano of Sweb Development and the photos of the Geekdombased startups Promoter.io, TrueAbility, YupiCal and Storific.

Thank you to everyone who contributed to our Kickstarter campaigns last year and to all of our advertisers and sponsors of Silicon Hills News. And thank you to the writers of this issue Susan Lahey and Tim Green. And I also did a few stories myself.

This year, Susan and I will be covering South By. So please look online daily at www.siliconhillsnews.com for our stories. Last year, nearly 33,000 people attended SXSW Interactive, which featured 2,400 speakers and 1,100 conference sessions. This year, the show takes place from March 14-17th and is expected to be even larger. Also, this year, the SXSW Startup Village has doubled in size and takes up the fourth and sixth floors at the Hilton Hotel across from the Austin Convention Center.

See you at the show!

Silicon Hills News Tech Startups Index 1 3 to 4 5 to 7 8 9 10 13 to 14

– Welcome to SXSW – Honest Dollar – Bob Metcalfe – 7 Women Led Tech Startups to Watch in Austin – 7 Women Led Tech Startups to Watch in San Antonio – Seven Tech Trends to Watch in Silicon Hills in 2015

16 to 17 19 20 23 to 24 25 26

– EvoSure – Texans for Economic Progress – Vast – Perks for Tech Startups – Nine Austin Tech Startups to Meet in SXSW – Funding Sources for Central Texas Tech Startups

– People Pattern

A business approach to legal risk.

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Photo: Henry Yoshida and William Hurley, founders of Honest Dollar, photo by John Davidson

Whurley’s New Venture,

Honest Dollar, Unveiled

By Susan Lahey, Reporter with Silicon Hills News

Signing up for a 401K or other retirement plan through a broker can feel like joining a religion: You’re trusting your future to a system you don’t entirely understand, managed by gatekeepers you’re giving money to but who aren’t always accessible, but you’ve decided to have faith that it’s all being done for your benefit. But there is another way, says serial entrepreneur Whurley (William Hurley). His new company, Honest Dollar, has created a low-rate, high transparency retirement plan app that small businesses—and eventually individuals—can sign on to right on their mobile devices, in minutes.

Honest Dollar, which launches at SXSW Interactive, will provide outsourced retirement plan services, enrolling them in index funds that will cost an average of .09 percent as compared to 0.50 percent up to more than 2 percent for traditional 401Ks. That may not sound like much of a difference, but with a $10,000 initial investment in the account and $1,000 added every year at 6 percent return, an account with a one percent expense ratio would cost nearly $27,000 over 30 years, whereas the one with a .09 expense ratio would cost less than $3,000. Honest Dollar will

leverage six portfolios of varying levels of risk for its users. While there is an option for minimal risk (i.e. cash), there are options, which can hold up to 70% equity stakes.

Another benefit is that small businesses don’t have to handle administration of the funds, which means they have no fiduciary responsibility, and extremely limited legal liability. The cost for businesses would be $10 per employee per month. And when an employee leaves the company, the company is no longer responsible for paying even that $10 fee. The account goes with the employee.

The Finance Nerd and Tech Geek Founded by Whurley and Henry Yoshida, who has worked in corporate retirement planning for more than a decade, Honest Dollar also has cool technological features. Employees, for example, need only to show the QR code on the back of their driver’s licenses to the app to begin their signup.

“If you’re a business owner and you’ve got to onboard 20 people it’s just like dink, dink, dink, then they have to enter the last couple 3

of pieces of information,” said Adam Lipman, CEO of Thoughtleadr and former COO for Chaotic Moon Studios—Whurley’s last venture.

Thoughtleadr is one of Honest Dollar’s beta customers.

“The interesting thing about Honest Dollar is you’ve got the combination of Whurley’s technology vision aspect and Henry’s super deep knowledge of the financial space. Financial service has this really stodgy, antiquated image and it has in large part earned that. There’s nothing particularly innovative about the technology. Whurley has a vision of disrupting that space.”

The partnership was a big inspiration for James Oury, founding partner of the legal and accounting firm Oury Clark in London, to invest. “ I was tasked a number of years ago by the International Bar Association to assist with the building of a mobile app that could act as an evidentiary tool for recording war crimes,” Oury said. “I reached out to Whurley as a highly respected systems architect on one of my many trips to Austin to visit businesses expanding into the UK and the EEA. At our core we both wanted to help people by using technology as an enabler and we also loved to skate board, so the human connection and bond was omnipresent from inception.”

“Whurley and Yoshida with their impeccable technical team are first class co-founders with deep domain complimentary expertises.

Prudence and discipline in the commercial execution coupled with a market that is open to high levels of scalable disruption from an enabling platform technology also guide (my investment choices).”

Whurley and Yoshida met because their wives had been trying to get them together for a long time. But Whurley “didn’t want to hang out with the finance nerd” and Yoshida “didn’t want to hang out with the tech geek,” Whurley said. But when they finally talked, they discussed the fact that there were over five trillion dollars tied up in 401K plans and both lamented the fact that the system was antiquated, expensive, and—as Yoshida pointed out—designed for people who had a lot of money. Not for the average American.

Financial Democracy A big part of Honest Dollar’s value proposition is transparency.

Typically, companies that manage funds take out fees and either

reduce them from gains or add them to losses before reporting quarterly earnings to account holders. Consequently most people don’t know what the management of their accounts is costing them. With Honest Dollar, all activities, including fees will be transparent and that transparency is required throughout, including from their partners who manage the funds. At any point, an account holder can log onto the site and find out what their portfolio is worth and what’s going on with it.

“Fintech is a great space, financial in conjunction with technology really has a chance to open up services that are typically available to a small minority of people to make more money to bring that down to everybody. And the current industry from the finance side isn’t structured that way,” Yoshida said. “It was an industry that was built on an infrastructure to serve the top five percent of America and then everyone else is just a person to receive a product or a service for which they have to pay a penalty.”

If you don’t have as much money, he said, you pay a higher interest rate for your automobile or mortgage insurance and the industry has always maintained that financial services are too complex to change that. But technology can serve to democratize financial services.

Whurley said the company plans to announce more technological breakthroughs in the spring and summer.

“On May 12 we’re going to be making an announcement at Finovate about an unbelievably huge technology surprise that’s coming, probably over the summer,” Whurley said. “We’re trying to revolutionize technology for what technology was meant for, to eliminate the complexity and cut through all the BS and get right to the point….” And the point, he said is “How much money at the end of the day will you have in retirement?”

His biggest endorsement of Honest Dollar, the founders are putting almost all their retirement savings (except some they couldn’t legally withdraw from existing accounts yet) into the Honest Dollar system.

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Photo: Bob Metcalfe, Professor of Innovation at UT, photo by John Davidson

Bob Metcalfe Wants to Create a Better Silicon Valley in Austin, Texas

By Laura Lorek, Reporter with Silicon Hills News

At 24 Diner in downtown Austin, Bob Metcalfe orders a large bowl of fruit with extra strawberries and coffee for breakfast.

Metcalfe, 68, is training to walk his first marathon. And it’s not an ordinary marathon either. He’s doing the Boston Marathon in April. His wife, Robyn, son, Max and daughter, Julia, are all running the race.

Metcalfe’s goal is to finish 26.2 miles in eight hours or under. He is part of the C/I team, which is raising money to help poor kids learn computer programming in Boston.

A few years ago, Metcalfe did his first triathlon – the Rookie Tri in Austin. And this past February he finished the Austin Half Marathon.

He doesn’t shy away from new challenges. He has summited Mt. Kilimanjaro and hiked through Patagonia.

And every ten years he starts a new career.

For the past four years, Metcalfe has served as the Professor of

Innovation, Murchison Fellow of Free Enterprise at the University of Texas at Austin. He has taught an undergraduate course on entrepreneurship with Joshua Baer, founder of Capital Factory and Ben Dyer, Entrepreneur in Residence at UT, called Longhorn Startup. It has spawned dozens of startups.

Metcalfe also runs the Innovation Center in the Cockrell School of Engineering at UT with Louise Epstein and Dyer. They’ve focused on nurturing UT faculty- run startups through the Longhorn StARTup Studio. Each month, Metcalfe and the Austin Chamber of Commerce host “The stARTup Studio,” an informal gathering to bring the faculty run companies in front of investors, entrepreneurs and other community members to talk about their newest products and inventions. The goal of the studio is to teach faculty the art of technology commercialization, Metcalfe said.

Austin is lucky to have Metcalfe here, Baer said.

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“The students learn a lot from him,” Baer said. He has got a lifetime of experiences, and Metcalfe shares his stories about double dating with Steve Jobs or being the first investor in PowerPoint with students, Baer said.

Metcalfe earned a bachelor’s degree in electrical engineering from MIT and a master’s degree in applied mathematics and a PhD in computer science from Harvard. He then worked at the famed Xerox Palo Alto Research Center early in his career. That led to his famous invention of Ethernet, a local area networking technology that lets computers communicate with each other. In 2013, Metcalfe was inducted into the Internet Hall of Fame for inventing Ethernet.

Metcalfe also co-founded 3Com and worked as a publisher and columnist at InfoWorld. He worked as a full time venture capitalist for a decade at Polaris Partners, a Boston-based venture capital firm.

So how did Metcalfe end up in Austin and at UT? “I met a saleswoman for NI,” Metcalfe said.

The saleswoman, he doesn’t remember her name now, attended a speech he gave in Boston and told him her boss, James Truchard, CEO and co-founder of National Instruments, wanted to meet Metcalfe.

The two then met for breakfast and Truchard invited Metcalfe to Austin to speak at NI week.

Not long after that meeting, Metcalfe attended the National Venture Capital Association convention in Los Angeles. He sat at an empty table. And Rudy Garza, a venture capitalist and founder of G51 Capital, joined him. Once Garza sat down, Metcalfe told him he was going “Meta on innovation” and he thought he might spend the next 10 years of his life in Austin, Garza recalled.

“I said Bob, as president of the UT Alumni Association, I think I can help make that happen,” Garza told him.

Metcalfe told Garza he would be in Austin in June of 2010 to give a speech during NI week.

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When Garza got back to Austin, he met with Greg Fenves, then dean of engineering at UT, to brainstorm how they could get Metcalfe to move to Austin. They arranged a dinner with local movers and shakers in Austin’s technology community to get together at Fenves’ house to meet Metcalfe.

“It was serendipity, timing and dumb luck,” Garza said. “I think Bob really felt a spirit of collaboration in Austin and a real hunger and a real passion about taking the city and the region to the next level. And that’s part of what attracted him.”

In fact, one of Metcalfe’s goals is to make Austin and the surrounding area of which he includes San Antonio, Houston and Dallas-Fort Worth, into a better Silicon Valley. He doesn’t want to keep Austin weird, a movement he associates with a left wing and anti-corporate faction, he said. Instead, he has adopted the new slogan of “Keep Austin Wired.”

Last year, Metcalfe sold his Boston condo and bought a house in Austin. He’s put down roots here now. He drives a giant black Suburban so his wife can easily transport her bike to various races, he said. His other car is a tiny red smart car.

“I feel like when Bob came to Austin you could just feel that rising tide effect,” Baer said. “The whole tide came up a few feet just from him being here. We’re still in the afterglow from that.”

Metcalfe has been a wonderful catalyst for growth in Austin’s technology community, Garza said. He recognizes opportunities for collaboration between angel investors, venture capitalists, universities, students, incubators and accelerators. He is able, along with some of his friends in the industry, to be the glue that makes everything stick together, Garza said.

“He arrived at the perfect time for the growth of the city as we are becoming more recognized as a technology hub,” Garza said.

Metcalfe shines a light on the innovative spirit of Austin and its powerful entrepreneurial ecosystem and helps to communicate all that is going on here to the world, said Michele Skelding, senior vice president of global technology and innovation at the Austin Chamber of Commerce.

The Austin Chamber of Commerce named Metcalfe its 2014 Volunteer of the Year for Technology & Innovation.

Metcalfe doesn’t just give advice. He gives his time, Skelding said.

In 2014, Metcalfe led a fireside chat with Mike Maples Jr., managing partner of Floodgate, at the Austin Chamber’s 2014 A-List awards ceremony. He also served as an A-list judge, reviewing more than 100 emerging company applications in Austin. And he gave the opening keynote with Skelding at the Innotech Technology conference. He has also led panels and had multiple speaking roles representing Austin nationwide and worldwide, Skelding said.

And it’s not unusual to find Metcalfe at 24 Diner holding one of his “Night Owl” sessions with local entrepreneurs like Henry Yoshida and William Hurley, who just launched a fin-tech startup Honest Dollar.

Metcalfe is also always learning, Dyer said. In 2013, he completed a Massive Open Online Course, known as MOOC, from MIT: Introduction to Computer Science and Programming in 2013 with his son. He has also done two “Ask Me Anything” sessions on Reddit.

And Metcalfe has a great sense of humor.

“Every time I go to a football game with him he reminds me has four years left of eligibility for a tight end position,” Dyer said.

Metcalfe is a huge fan of Longhorn sports and often attends football and basketball games. He also tweets about the women’s volleyball team and other sports to show his support.

He also shows up early in the morning and is a fan of Damon Clinkscales’ Austin Open Coffee, a bi-monthly get together of entrepreneurs at Houndstooth Coffee.

“He does have a great gift of nonstop curiosity about things,” Dyer said. “He’s got great energy. He also has a willingness to show up and be counted. And he’s actually engaged in everything he attends. He gets mentality focused on it and participates.”

“With his variety of experiences, people listen when he talks,” Clinkscales said.

Metcalfe is so accessible and he’s happy to talk to lots of different people, Baer said.

In addition to Open Coffee, it’s not unusual to see Metcalfe at the Capital Factory. He recently attended the “Intro to Startup Scene” session there. He also signed up to be a “baller” at Capital Factory’s SXSW Startup Crawl.

“The biggest impact he has made is just inspiring people,” Baer said. “He listens to students, believes in them and encourages them.

That makes a big difference in affecting thousands of students at the

Metcalfe has also planted the seeds of entrepreneurial thinking in hundreds of students through the Longhorn Startup Lab, Dyer said.

“We’ve had a number of teams go on to become companies,” Dyer said.

Burpy, a grocery delivery service, Lynx Labs, 3D camera imaging startup, Clay.io, an online gaming platform and MicroMulsion, which is developing microgels for cell cultures and landed an investment from Billionaire Mark Cuban, are just a few of the companies to launch out of Longhorn Startup Lab. Since Metcalfe joined UT, there’s been a groundswell of interest in entrepreneurial activities across the campus with organizations like Founders Group and Longhorn Entrepreneurship Agency, Dyer said.

“The real impact of our program is something we can measure in ten or fifteen years when one of our students starts a multi-billion company and puts his or her name on a building,” Dyer said.

Metcalfe and Dyer are contemporaries in the microcomputer revolution that occurred in the late ‘70s. While Metcalfe built 3Com, Dyer hunkered down in Atlanta creating Peachtree Software. Amazingly, the two never met until they both ended up at UT. “Bob is always teaching,” Dyer said. “Every time I’m around him I learn something.”

And he’s a prolific social media poster on Twitter and Facebook, Dyer said.

“Bob can out Tweet me,” Dyer said.

Metcalfe has more than 17,500 followers on Twitter and has posted more than 17,500 Tweets since joining in 2009.

University of Texas.

He lives life to the fullest, Baer said.

“I love that he is still going full speed,” he said. “He hasn’t slowed down at all by having a few gray hairs.”

In the summer, Metcalfe hosts several male friends on an Island property he owns off the coast of Maine for “Big Boys Camp.”

Metcalfe said he has been criticized for only inviting men, but the U.S. Constitution gives him the right to do that. His wife also has her own “Big Girls Camp.”

Baer has attended the Big Boys camp. Garza and Larry Walker from Austin have also been there for week of camping.

“He’s an organizer and he brings people together,” Baer said.

“Personally one of the things I really appreciate about him he is the person I turn to when I don’t know what to do. He’s not afraid to call bullshit on me. That’s a really valuable thing to have in life. Constructive feedback.”

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WOMEN RUN TECH STARTUPS TO WATCH IN AUSTIN

By Laura Lorek, Reporter with Silicon Hills News

The stats don’t bode well for women-run tech startups nationwide. Less than 3 percent of venture-backed startups have a woman as a CEO. But things are changing. Groups like Women@Austin, Women Who Code and Women in Technology are shining a spotlight on female tech entrepreneurs locally. And crowdfunding, bootstrapping, government grants and angel investors are helping more women entrepreneurs to launch and grow their ventures.

In fact, Nerd Wallet named Austin as one of the top 10 places for female entrepreneurs. And here’s seven women run technology startups in Austin to keep an eye on as they expand their ventures: Spot on Sciences – Dr. Jeanette Hill founded her medical device startup in 2010. It creates a blood collection device called HemaSpot. It lets people take a blood sample safely, securely and easily from a remote location and send it to their doctor for analysis. The company is bootstrapped but has received about $2 million in research grants.

TeVido Biodevices – Laura Bosworth is the co-founder and CEO of this life sciences startup that is making nipples from human cells using 3D printers. The company recently completed a successful crowd-funding campaign and received a Small Business Innovation Research grant from the National Cancer Institute of the National Institute of Health and a grant from the National Science Foundation.

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Photo: Laura Bosworth, co-founder of TeVido Biodevices. Photo by John Davidson

Fashion Metric –Daina Linton is a CEO and co-founder of the startup that acts as a virtual tailor. Her husband, Morgan Linton, is also a co-founder.

They founded the company in Los Angeles and moved to Austin last year to participate in Techstars. They decided to permanently relocate and they recently closed on $1 million in financing. The company makes software and has a special algorithm to help people find the right-sized clothes online.

Testlio – Kristel Viidik is one of two co-founders of this startup that is a community of test engineers that test mobile apps to find bugs. The company, originally from Estonia, relocated to Austin to participate in the first Austin Techstars program in 2013. The company has raised $1 million.

Wisegate – CEO Sara Gates founded the company in 2010 and has since raised nearly $9 million. Wisegate has created a platform for IT leaders to interact and share information.

Double Line Partners – Zeynep Young founded the company in 2009 and has since grown it to $20 million in revenue and 120 employees. The startup makes software, data system dashboards and other tools to help schools improve the performance of their students in grades K-12.

9W Search – Susan Strausberg founded this next generation financial search engine that delivers financial data on mobile devices. Its database has more than five years of data on more than 12,000 U.S. public companies.

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WOMEN RUN TECH STARTUPS TO WATCH IN SAN ANTONIO

By Laura Lorek, Reporter with Silicon Hills News

San Antonio is the nation’s seventh largest city, yet it doesn’t have a lot of tech startups run by women and backed by venture capital.

But San Antonio’s booming life sciences industry holds a lot of promise for women-led ventures. Two women, both biotech industry veterans, lead two of the startups on this list.

San Antonio has also had some successful technology companies run by women. In 2008, Nancy Kudla sold dNovus, a company she cofounded with her husband Frank, to Kforce for $38 million, and Janie Gonzalez, an early Internet pioneer, founded Webhead Technologies in 1994. The web design and consulting firm is still going strong.

Bluegrass Vascular Technologies – Dr. Gabriele Niederauer took over the reins of this life sciences startup last September as president and CEO. The company is creating devices and methods for doctors to more easily access veins. Last year, the company moved from Kentucky to San Antonio and landed $4.5 million in venture funding.

VentureLab - Cristal Glangchai, CEO and Founder of VentureLab, created the startup with the goal of increasing the participation of girls and women in entrepreneurial activities and the Science Technology Engineering and Math fields in San Antonio. She also wants to fill the gap of women in the workforce by reaching girls earlier and encouraging them to pursue STEM fields. The startup conducts workshops, camps and other programs targeted at girls as young as five.

InnerAlly – Cynthia Phelps co-founded this startup, which created a platform that lets people perform simple actions to stabilize their mental

Photo: Magaly Chocano, founder of Sweb Development. Photo by Gary Hartman

health. “Every year billions of dollars are forfeited to lost productivity of employees suffering from depression, anxiety, and other mental health issues,” according to the company. “By empowering workers to maintain their mental health we can dramatically reduce those losses.”

Firecat Studio - Susan Price founded this Web design and online marketing company. She also runs First Friday Co-Working in San Antonio and the annual TedXSanAntonio conference.

Sweb Development – Magaly Chocano founded her startup in 2008. She saw the market developing for iPhone apps. She launched the first do it yourself platform online for creating iPhone apps. She also landed some major clients and developed native apps for them. Her firm also does social media marketing.

Webtegrity – Kori Ashton co-founded this web design firm. The startup also offers technical classes and training. It also specializes in search engine optimization, consulting services and social media marketing. She also organized the first Wordcamp San Antonio along with Michelle Lowery.

Leto Solutions – Becky Ariana serves as CEO of this medical device company that spun out of the University of Texas at San Antonio.

The startup, led by a team of four engineers, created the Aquilonix Prosthesis Cooling System. The thermoelectric cooling device fits into the socket of a prosthetic limb and runs on a five-hour battery which can be turned on or off by the wearer.

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SEVEN TECH TRENDS TO WATCH IN SILICON HILLS IN 2015 3D Printing – The roots of this industry can be traced, in part, to innovators at the University of Texas at Austin. And it’s growing by leaps and bounds every year. Austin-based startup MakeXYZ. com aggregates 3-D printers worldwide, with the goal of being the Kinkos of 3D Print shops. Other companies include Structured Polymers, re:3D and Zebra Imaging.

Wearables – The Austin-based portal Wearables.com aggregates and keeps tabs on this emerging industry. Atlas Wearables, a Techstars company based in Austin, also sells a wearable fitness device. And Wisewear in San Antonio is developing one. At the University of Texas at Austin, Nanshu Lu, an assistant professor in the Department of Aerospace Engineering and Engineering Mechanics at the Cockrell School of Engineering has created a patch or electronic tattoo that monitors all kinds of information from heart rate, muscle movement to dehydration.

Wearables are here to stay and will become an increasingly integrated part of our daily life.

1G High-Speed Fiber Internet - Google is rolling out high-speed Internet in Austin. AT&T, Time Warner and Grande also have competing high-speed Internet services. And Google is considering San Antonio for the next wave of rollouts of its 1G Internet speeds.

Cloud Computing - Rackspace and Dell are both investing a lot of money in data centers and cloud services. John Engates, chief technology officer of Rackspace, provides this 10

blog post on trends in cloud computing for the coming year. They include big data, sensors; cybersecurity needs all driving the demand for cloud storage.

Life Sciences Startups – The Dell Medical School at the University of Texas at Austin is expected to spur growth in biotechnology, medical device and drug development startups in Austin. The life sciences industry with the University of Texas Health Science Center at San Antonio is already the largest industry in San Antonio with an overall economic impact of $29 billion. The central Texas region stands to become a powerhouse in the life sciences industry.

Big Data – With more and more devices to connected to the Internet and to our homes, cars and bodies, the amount of data being generated is going to continue to grow and grow. The smart startups that can make sense of all that data already stored and the new stuff will find a huge market in providing data analysis, dashboards and analytics to make sense of all that data for companies and individuals.

Cybersecurity - Big security breaches this year at Target and Sony have created greater awareness for the need to secure all the information stored in the cloud, on the Internet and at point of sale retailers. Luckily, Cybersecurity is a strong point in this region. San Antonio has one of the largest concentrations of security experts outside of the Washington, D.C. area. And startups like Infocyte in San Antonio are helping companies identify security breaches and protect all their information.

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People Pattern Digs Marketing Data Out of Social Media

By Tim Green, reporter with Silicon Hills News

Twitter emerged with a splash at South by Southwest in 2007, unleashing an ever-growing barrage of tweets, posts, photos, and other social media interactions.

They started the company in early 2013. Now it formally launches at SxSW with an open house at its Pedernales Street offices in East Austin and an invitation-only party at Franklin Barbecue.

People Pattern, an Austin startup, is fittingly staging its coming out party at this year’s SXSW.

People Pattern looks to catch a rising wave of corporate spending on digital marketing. The Gartner Group reported that while digital marketing is still a fraction of traditional marketing spending, more companies are transitioning to digital channels and increasing spending to address them.

The company is developing software that mines the oceans of information embedded in social media to provide insight that companies can use to develop sharply focused digital marketing campaigns quickly and efficiently.

People Pattern applies data science to analyze indicators such as the words people use and the people they associate with – their patterns – to identify specific segments and sub-segments of customers. With that information companies can tailor messages for specific groups, develop content, generate sales leads and in media planning.

“We’re able to scale it, collapse the timelines and you’re able to take action directly,” Ken Cho, a People Pattern co-founder and chief executive, said of the market research process.

Cho, a founder and former chief executive of social marketing company Spredfast, brings the digital marketing expertise to People Pattern. The data science comes from co-founder Jason Baldridge, an associate professor of linguistics at the University of Texas who conducts research in computational linguistics.

“Historically, hundreds of billions of dollars have been spent annually on marketing, yet businesses had no real way to measure its true impact and return on investment,” said Bryan Stolle, a partner in the Mohr Davidow venture capital firm and an investor in People Pattern. “It was also very difficult to give attribution to which marketing program or dollar actually resulted in a sale.”

Using computational methods in marketing, called quantitative marketing, provides accurate feedback on what works and enables precise understanding of customers, Stolle said.

With a venture investment, he’s betting on Cho’s marketing and entrepreneurial acumen and Baldridge’s computational expertise.

“I immediately saw them as a very powerful team that could build something game-changing in the quantitative marketing field,” he said.

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Mohr Davidow invested $250,000 of seed money in early 2013 and came back at the end of that year with a $4.5 million Series A round.

matches him step for step on the technology side. He researches computational linguistics, particularly natural language processing and machine learning. He’s on leave from UT Austin during the 2014-2015 academic year to work on People Pattern.

In the past two years, the company has been developing its software, which involves natural language processing and analytics. And it’s putting together a track record serving a range of customers, including some Fortune 500 companies.

His boss at UT said Baldridge brings strong skills to People Pattern.

As an example, Cho and Baldridge recounted work People Pattern did for a large fast food company known for its hamburger restaurants arching across the world.

“Jason is doing fundamental work in machine learning and geotemporal grounding of natural language, among other things,” said Anthony Woodbury, chair of the Department of Linguistics at UTAustin. “There is therefore a very close connection between Jason’s research and teaching, and his work with People Pattern.”

The company hired People Pattern to figure out switchers, a segment of customers who go back and forth between its restaurants and those of competitors.

Cho said that within eight days People Pattern pulled in 600,000 social media profiles, harvested relevant information from posts and tweets and other interactions, and analyzed it.

People Pattern found that the hamburger chain shared 25% of its switchers with a chain of sandwich shops. The switchers subbed in sandwiches for burgers because of health perceptions.

Cho said that the switchers should be targeted with messaging highlighting the hamburger chain’s healthier options.

Beyond that core task, Cho said People Pattern matched research about customer categories that the company had learned over 35 years of market research. People Pattern also uncovered a group of “breakfast only professionals” in Sacramento, which led to a market test of all day breakfast in the California capital.

People Pattern delivered validation and contributed to product development as well as fulfilled its assigned task, Cho said.

“All in eight days,” he said. “Their CEO was blown away.”

Cho can talk marketing, personas and market all day. Baldridge 14

Cho and Baldridge had met six years ago and Cho had kept track of Baldridge. (“He was stalking me,” Baldridge joked.) When Cho shared his ideas with Baldridge, the professor, as he’s called around People Pattern, was on board.

“This guy knows what he’s doing,” Baldridge remembers thinking.

“He’s got a business problem that needs to be solved by Fortune 500 companies. Cool! That’s exactly what I was looking for.”

The program that Baldridge and the other data scientists at People Pattern have developed taps into social network databases to gather information, classify words, associate people in groups, and analyze the data.

With the databases and the tools of data science People Pattern can do in days what takes months for traditional marketing campaigns to do.

“We have the potential and have shown several times that within a week we can collect hundreds of thousands of profiles and run it all through this automated pipeline that then leads into something akin to personas,” Baldridge said.

Cho said other companies are working in a similar area but none possess People Pattern’s hard-core science approach.

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EvoSure Solves an Ancient Insurance Problem

By Susan Lahey, Reporter with Silicon Hills News

Talk to the founders of EvoSure for 30 minutes and even if you thought insurance was the province of wary gray men in gray suits, you’ll come away convinced that it’s an exciting, complex maze of chance and judgment, fraught with risk in every direction, from human frailty to Acts of God. It’s breathtaking.

But, because of all of this complexity and danger, it can be a huge challenge, especially in the commercial lines, to find an insurance underwriter willing to cover specific clients. Some insurance situations are boilerplate, but others have variances that make them unsavory to particular insurance underwriters.

And since, according to EvoSure advisor Michael Boyle, CEO of Perseus Technical Strategies LLC, processing a request for a quote costs around $200 each, 80 percent of brokers’ requests for underwriting are declined without even being quoted.

Finding an underwriter who will cover your particular client’s risk, Boyle said, is like being put in a room with a handful of darts and a dartboard that’s allegedly on the other side of a sheet. There’s a guy standing in the middle, repeating: “Darn, you missed.”

Carriers might tell brokers that they will underwrite manufacturing, but when the broker comes back with a manufacturing firm client in Michigan, the underwriter says they don’t handle manufacturing in Michigan. When the broker returns with an Ohio manufacturer it appears a go, until it turns out the company manufactures yogurt and this underwriter doesn’t handle food manufacturing. Then if the 16

broker shows up with a sheet metal manufacturing client in Illinois, it looks hopeful until the broker tells the underwriter it’s a $110 million plant and the broker doesn’t handle sheet metal companies over $100 million.

EvoSure, Boyle said “Seemed like the single most revolutionary approach to this problem anyone had ever taken.”

Calling itself the Match.com of the insurance industry, the EvoSure platform lets subscribing insurance brokers get online, type in what they’re looking for and instantly access a list of underwriters who are interested in covering that kind of business. From there, the brokers just have to connect with the list of underwriters to drill down which one is the best match for the company.

According to J. Brandon Foster of Walker Myers Insurance and Risk Management, it takes “Massively less time,” than the old system, and creates much better relationships between brokers and underwriters.

Birth of a Solution EvoSure co-founders Matt Foran, CEO and Brian Wood, COO, met in 2008 when both were working for Marsh & McLennan and both were contacted in their respective home towns and asked to move to New York immediately to head up the project restructuring Marsh USA. Foran had always loved business. As a kindergartener

he wanted to be a stockbroker. He started investing at the age of 14 and was a broker who “could sit with CEOs of investment firms at 22 and I thought that was very cool.” Wood studied psychology but while working on his master’s degree worked at a bank call center and wound up getting promoted so rapidly he ended up managing a call center at Bank One and later being recruited by Trilogy to work on a startup, InsuranceOrder.com

Photo by John Davidson

When they were put in charge of restructuring Marsh USA, they had to eliminate $260 million in costs in three months.

“You learn a lot, very quickly, about the right sizing of business models,” Wood said. “We both believed the company should not have to do this again, if we do it right.” That meant focusing on the core business and making careful decisions as they went through to keep what was central and eliminate what was peripheral.

After that project, Wood went on with Marsh & McLennan and Foran went on to become director of strategy and operational planning and execution for Zurich Financial Services, which owns Farmer’s Insurance.

“I was head of strategy for specialty products and I got to see the brokerage side, all the challenges they face, and the underwriting side, and to understand the pain and the root cause,” Foran said.

Both Foran and Wood are big into understanding the root cause.

“If you look at the challenges between the brokerages and carriers by themselves you can’t solve a lot of them. But if you take three steps back you can solve the initial, big problem.”

Foran had kept in touch with Wood over the years and when he came up with the idea for EvoSure, he called him and told him he wanted to fly from Chicago to Austin to talk to him about it. Wood agreed, hung up the phone and said: “What did I just do?”

A self-described “person of faith,” Wood had already co-founded a startup and was racked with guilt over agreeing to meet with Foran. One day, before the meeting, his co-founder said “You seem like something’s weighing on you, what’s up?”

When Wood told him about the impending meeting, his cofounder reminded him “Remember I told you about three weeks ago that I had a strong feeling you were going to wind up doing something else?” Wood recalled the comment, but at the time he had dismissed it, it came so out of the blue. Now it looked like a sign.

Austin, Cheap and Friendly Their first order of business was to hammer out the company culture.

“The bigger thing for me was what kind of company do you want to build?” Wood said. “How do you want to support your clients?

How do you want them to think about you? How do you want employees to think about their days? We were focused on the cultural things—what it was going to be like.”

“Austin is really competitive from a personnel standpoint,” Foran said. “It’s all about relationships. People have to trust you. People have to know that you know what doing…and they have to know how they fit in and where you want to take the company. Brian built an incredible team. He added one person and they’ve added another person…. Every single personality drives your culture so

it’s critical that your very diverse personalities are driven toward a singular vision of serving clients and serving each other.” Team members include Josh Peterson, vice president of product who worked at Marsh & McLennan, Google and Bazaarvoice, who they credit with developing a lean approach to creating the business.

Some of their advisors had said it would take $10 million to $15 million to get the company off the ground. They were thinking in terms of onsite servers and custom security. Instead, they went with cloud solutions that had top level security at a fraction of the cost.

They bought used office furniture and only spent money on people and travel. Many people in the Austin tech community advised and coached them, helping them build a company frugally. That was one of the extraordinary things about building the company in Austin, the community really wanted to help them succeed.

The company operates on an access model, Foran said.

Underwriters pay $75 per underwriter per month. Brokers’ fees are based on the size and complexity of the brokerage. Founders didn’t say exactly how many companies had signed on but that they were confident of reaching critical mass. If the top 10 carriers join, Boyle said, the other 30-50 have to follow. And EvoSure benefits them as well as brokers. Currently they’re missing out on a lot of opportunities because of how much it costs them to analyze them.

Finally, a Solution Since this problem has been around so long, it seems odd that no one has solved it before. Boyle said others have tried. One, created by LexisNexis was trying to create a system for electronic submissions to be possible between every carrier and every broker but it required the companies to put “all this plumbing in place” and many carriers wouldn’t support it. EvoSure’s user experience is simple.

“It really delivers value from day one to the brokers using it. It doesn’t require them to rebuild the entire ecosystem of technology.”

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Texas Fosters a Climate for Technology Innovation

By Chelsea McCullough, Texans for Economic Progress Chelsea@TexasProgress.com

In his first State of the State address, Governor Greg Abbott “laid out an ambitious agenda for the next two years” and outlined five top priorities.

Two of Abbott’s priorities are directly related to technology including tax relief for Texas businesses and an emphasis on education, including in the fields of Science, Technology, Education and Math, known STEM. Governor Abbott also lauded Texas’ robust economy - and for good reason. The Lone Star State has created nearly one of every four jobs nationwide since 2009 and it is no coincidence that Texas ranks 11th in the Tax Foundation’s State Business Tax Climate Index.

These were the key topics discussed I discussed in February in Houston on a panel titled “Continuing the Economic Miracle” hosted

by Marketplace Houston. In an audience of about 100 executives from a variety of industries, including oil and gas, I outlined TEP’s commitment to identify legislation, especially tax policy that is relevant to the technology sector.

There is a lot to celebrate and Governor Abbott seems primed to continue the legacy of economic development. Texas legislators have long had a commitment to sound tax policies that support economic growth. As the economy shifts and technology becomes a more dominant force, we will see this factor become increasingly important.

business positively reacts to predictability and transparency when it comes to regulatory and taxation issues. When the foundation is uncertain, businesses freeze spending, hiring and investment.

In our modern tech economy where high-speed broadband is the currency of innovation, it is critical that we encourage providers to build greater, faster, better infrastructure as fast as possible.

The private sector reacts positively when there are appropriate tax rates across the board – for businesses both large and small in multiple industries. Likewise, consumers win when state and local leaders embrace regulatory policies that stir innovation and competition as opposed to government mandates that do the opposite. Texas’ commitment to pro-business policy provides the business community a sense of comfort in a wildly dynamic market and their customers reap the benefits. With rate of change in the world accelerating at breakneck speeds, predictable tax and regulatory policy should be the steady in the storm.

We want to ensure that we are creating a level playing field. No matter if you are a new arrival, bringing innovation and creating new jobs, or you are a long-time Texas corporation, we support an equal distribution as well as opportunity to benefit from the ecosystem.

Stable, fair tax policies, that offer low tax rates for a broad tax base, can support economic growth. Our job is to continue to welcome and encourage all companies, as well as the larger tech stakeholders that provide the foundation of this ecosystem.

This post is sponsored by Texans for Economic Progress

One of the key takeaways from the panel discussion is that 19

Vast is Creating Better Search Tools to Find Homes and Autos

By Laura Lorek, Reporter with Silicon Hills News

Vast, which makes search and analytics tools for homes and autos, started out in Silicon Valley in 2005.

Naval Ravikant, now CEO of AngelList, founded the company to create a better search site to help people find and discover items online. He wanted people to use technology instead of advertising to find a better match between buyers and sellers, said John Price, now Vast’s CEO. Today, Vast, under Price’s direction, has evolved into a highly sophisticated technology platform that uses artificial intelligence, patented algorithms, big data, analytics and more to match buyers with sellers in the automotive and real estate markets.

Price, a co-founder of Trilogy in Austin, joined Vast in 2007 to help build the automotive and real estate search engine and analytics tools.

In 2011, Price moved the company to Austin. He started recruiting out of the Trilogy alumni network and rapidly created a presence for the company in Austin’s tech scene. Vast is based at Sixth and Congress in the three-story Buttrey Building, built in 1885. They have 40 local employees, half of which are ex-Trilogy workers, Price said. They have another 100 employees in Belgrade, Serbia.

Vast markets its search tools under two brands, Carstory for automotive and Homestory for real estate. Carstory helps consumers discover and decide what car is right for them with artificial intelligence, data and analytics. Homestory does the same for people looking for a home. It distributes its products through partnerships with America Online, Southwest Airlines, Volkswagen and USAA. The Homestory and Carstory apps are available in the Apple Store and are aimed at real estate agents and their customers and car dealers and their customers. An Android version is also in the works, Price said.

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Vast’s 100 employees in Serbia work on the data behind the apps. They have been doing the work since 2005 and they have perfected the sourcing, classifying and cleansing of big data in automotive and real estate, Price said. Today, Vast’s technology powers more than 350 marketplaces.

“Think of how Google does ad words and they know everything and can tell you all the analytics around an ad,” Price said. “We’re doing that for cars and homes. We have all that demand data for cars and inventory for automotive. Take the demand and supply data and that allow us to build unique analytics. “ That way Vast’s technology can tell a consumer looking for a car that people like them have also looked at these other cars. Price says its technology is like Pandora, the Internet music service, it likes to suggest alternatives that the consumer might not have considered, he said.

“We think search is broken in real estate and automotive,” Price said. “We think discovery is the new search tool.”

A lot of dealerships now provide consumers with Vast’s Carstory market report which contains all kinds of data on the car they are looking it. Vast’s Carstory reports will be in more than 5,000 dealerships by June. It also provides the technology behind marketplaces like AOL Auto.

The Carstory market reports are free to all dealerships and then Vast has some add-on products that it sells to dealers that generate revenue for Vast.

Vast plans to tackle the travel market next, Price said. And the company is growing. Vast plans to double its employees in Austin this year from 40 to 80, Price said.

“We want to bring excited motivated buyers into brokerages and dealerships armed with valuable data,” Price said. “We fundamentally think the right car and the right home exist for you and they can be found at the right price.”

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Perks Help to Attract and Retain High Tech Talent

By Laura Lorek, Reporter with Silicon Hills News

Back in the highflying dot com days, the perks at high tech companies flowed as freely as the beer from onsite kegs on Fridays.

Today, the competitive landscape for tech workers has meant another resurgence of perks to lure employees and keep them happy. And whiskey Fridays and beer bashes are back.

The perks have gone as high-tech as the companies. Last year, Apple and Facebook added egg freezing to its employee benefits package.

An informal survey of tech workers in Austin, shows some of the popular local perks include flexible work hours, comprehensive healthcare benefits programs, free lunches, fully stocked refrigerators and a pantries full of snacks, telecommuting, gym memberships, pets in the workplace, standing desks, free parking and liberal vacation policies.

With more companies setting up shop in Central Texas every year, the demand for high-tech talent continues to grow.

In Austin, high tech workers make up 9 percent of the workforce or about 100,000 jobs, but the tech industry supports more than one third of all jobs in the economy, according to the Austin Technology Council. The ATC reports the tech sector contributes $21 billion annually to the local economy and tech workers, with average salaries of $155,000, are a big part of that.

BigCommerce, which provides websites and services to more than 55,000 stores, has been growing like gangbusters in Austin. It

now has 280 employees One of her favorite perks is breakfast in the company kitchen.

She bonds with her co-workers over oatmeal and coffee.

“It’s like being at home and being productive,” she said.

Throughout the day, she’ll pop into the snack room for Topo Chico water, nuts, fruit, cheese and little things that keep her going.

And when she needs to de-stress, she goes to the “Chillax,” relaxation room equipped with a massage chair, noise cancellation machine and dim lighting.

When she wants a little more activity, she might hop on one of the swings suspended from the ceiling near the game room.

The employees decide what kind of perks BigCommerce offers, said Steven Donnelly, its human resources director. And perks do help attract talent, he said.

“If you look at any high tech company in Austin they are touting perks on their website,” he said. Employees expect them, he said.

Yet not all wishes get granted. When Big Commerce raised its latest funding round, some employees suggested the company get a helicopter, but that didn’t seem like a good use of investor money, Donnelly said. on Fridays and the swings.

BigCommerce also offers good medical insurance coverage, an open vacation policy that lets people take as much time off as they wish, maternity and paternity policies, Tuesday catered lunches, 23

“We wanted to bring the playground into the office,” Donnelly said. “It’s OK to have a little fun when you’re at work.”

culture, she said. Its CEO Chuck Gordon has fireside chats with employees about every six weeks.

At its headquarters in San Antonio, Rackspace has a two-story spiral slide that’s quite popular with employees. It also has four Gondolas from Breckenridge Park that workers use for meeting places. The company also has food truck days in which employees can dine outside at picnic tables.

At Capital Factory, the downtown incubator, accelerator and coworking space, employees get four weeks of paid vacation, a parking spot and a benefits package. But the real attraction is the opportunity to meet people like Peter Thiel, Slash from Guns & Roses and President Barack Obama, said Josh Baer, Capital Factory’s founder.

One of the popular perks at SpareFoot in downtown Austin is bring your pet to work day, said Cathy Gutherie, the company’s human resource director.

Capital Factory has 25 employees. But many more employees work at its startups based there. And they all get Capital Factory’s premiere downtown location, inspiring space and great views along

“Perks absolutely play a big role in how we are able to recruit in a hot market,” Gutherie said.

And another popular perk is its food. Everyday, the company has a chef prepare a hot meal. Recently, the chef prepared Italian sausage; herb roasted chicken, roasted new potatoes and a squash casserole for vegetarians.

SpareFoot also pays 100 percent of its employees’ health insurance premiums and offers an overall competitive benefits package and gym membership. And every employee is a stockholder.

“We have a no vacation policy, policy – you take what you need and schedule it as an adult – you self-manage,” Gutherie said. “We believe that you can balance your real life and your work life in a harmonious way.”

SpareFoot is also active in the Austin Startup Games, which it has won several years in a row. It hosts game nights and has more than 30 social and service events on its calendar for employees to participate in outside of work.

The company is hiring and expects to have 280 employees by the end of the year, Gutherie said. In the face of tremendous growth, SpareFoot also strives to maintain its fun-loving company 24

with a stocked kitchen and catered meals twice a week, Baer said.

Perks are important in attracting talent, but companies ultimately don’t compete on perks, he said.

If a company doesn’t have a great workplace and culture, it will be hard to attract and retain employees in Austin’s hot tech market, Baer said.

“The big attraction of working at Capital Factory is you are plugged into this energy and all of this stuff going on,” he said.

Nine Austin Tech Startups to Meet At SXSW Graham Christensen and BalaKrishna Kolluru, Photo by John Davidson

Photo: Clarify Team: Ivo Rothschild, Paul Murphy, Keith Casey

Looking for a taste of the Texas tech startup scene during South by Southwest Interactive? Check out these nine innovative tech startups that call Austin home.

People Pattern – has created software that analyzes data in social media feeds to help companies learn more about their customers so they can create highly targeted digital marketing campaigns.

Able Lending – Launched last year, this startup offers low-cost loans to entrepreneurs. It requires its applicants to raise 25 percent of the loan amount themselves and then it provides the remainder with interest rates ranging from 8 percent to 16 percent.

Spreadfast – this spunky startup merged with Mass Relevance last year to create a massive social marketing company. It sells a social media platform to its customers that let them manager all of their social media channels including Facebook, Twitter, LinkedIn, Google+, YouTube and other blogging services.

Aceable - offers driver’s education and defensive driving apps on a mobile phone. Aceable is available on iOS and through the Aceable website to all Texas drivers as an alternative to classroom-based and web-based defensive driving courses.

SpareFoot - a Capital Factory accelerator graduate, this startup operates a marketplace that lets customers find and reserve storage units online. It has the largest inventory of storage units in the U.S.

Clarify.io – this innovative tech startup has created technology that lets people easily search audio and video files by keywords. It’s a graduate of the Techstars London program, Fintech Innovation Lab and the BBC Media Lab.

TrendKite - has created a software as a service platform that uses data to create predictive analytics to measure how well an online marketing campaign is doing so that customers can adjust it to get a better return on their investment.

Honest Dollar – this newly minted startup launches at SXSW. It provides outsourced retirement plan services with low administrative fees so that people can earn more money on their 401K retirement funds.

WP Engine – specializes in hosting WordPress websites. It has more than 23,000 customers and it recently expanded to San Antonio and opened an office at Geekdom. It also has an office in San Francisco.

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By Laura Lorek, Reporter with Silicon Hills News

The funding landscape for startups in Central Texas has changed dramatically in the last five years.

New firms have launched like LiveOak Venture Partners in Austin and the Geekdom Fund in San Antonio.

And old firms have faded away like Austin Ventures, the big daddy of Austin’s venture capital firms.

Earlier this year, Austin Ventures reported it would not be raising another fund.

And Fortune Magazine published an article titled “The Death of Austin Ventures.”

“For decades, Austin Ventures was more than just the largest and most powerful venture capital firm in Texas. It was one of the largest and most powerful venture capital firms in the world,” according to the Fortune article. “But now it’s a zombie, slowing decaying into little more than a memory.”

Austin Ventures raised its last fund of $900 million in 2008.

And while overall venture capital deals in Austin have been on the rise, Austin Ventures’ participation has been on the decline, according to CB Insights, a venture capital research firm.

“In 2010, Austin Ventures accounted for 15% of new investment deals in Austin but, five years later, that figure had fallen to 4%,” CB Insights reported.

Despite Austin Ventures’ pullback, overall, venture capital funding is on the rise. Venture Capitalists nationwide invested $48.3 billion in 4,356 deals in 2014, up 61 percent in dollars and 4 percent increase in deals, compared to 2013, according to the MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association.

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Austin had 114 deals, which raised $620.5 million in venture capital last year, and San Antonio had nine deals with $109.5 invested.

“The change at AV isn’t failure, it’s evolution,” Joshua Baer, founder of Capital Factory, wrote in a post on Medium.

Other funding diversified sources have taken root in Austin to fill the needs of tech entrepreneurs looking to launch ventures. A few of those sources are listed below.

Equity-based crowdfunding – The Texas State Securities Commission has approved several new portals that allow entrepreneurs to raise money directly from the public for their ventures. Mass Venture in San Antonio is the first portal to receive approval. It focuses on real estate investment. The state has approved two other portals: Crudefunders and TruCrowd, both are based in Houston.

Central Texas Angel Network - one of the nation’s top five most active angel investment groups. CTAN’s investments range from $250,000 to $2 million or more. CTAN has invested more than $45 million in more than 100 companies since 2006.

LiveOak Venture Partners – Focuses on early stage tech startups throughout Texas with its $100 million fund. Its minimum investment is usually $250,000.

Silverton Partners - an Austin based company that mostly invests in tech companies. It has a partnership with Capital Factory to provide select Capital Factory accelerator startups with funding.

Silverton generally invests between $200,000 and $2 million.

Geekdom Fund – a new fund, launched this year, has raised nearly $3 million to invest in early-stage tech startups in Austin and San Antonio.

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Geekdom-based Startups Promoter.io, Storific, YupiCall and TrueAbility photos by Gary Hartman

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