First of all, students should be studying what they are passionate about. Clearly, computer science will continue to spread into all aspects of human life. Within computer science, I believe machine learning and AI are perhaps the biggest study opportunity today. Biology and medicine are also undergoing vast changes. Personalized medicine will become a big issue; the understanding of the human genome and cell chemistry will open up entire new opportunities for innovation. So any study in the area of life sciences that connects to those new opportunities will be important. The will be amazing bioengineering opportunities, e.g., by developing materials and systems that connect with human tissue. Nanotechnology will become a major driver of new technologies in the future, with tons of great things to study at the intersection of new materials and human life.

I also believe some of the mundane aspects are ripe for overhaul, such as transportation and manufacturing. Studying robotics, rapid prototyping, autonomy in fields such as Aero-Astro, mechanical engineering, or computer science, should position students today to become the technology leaders of tomorrow. For students studying in humanities, I urge them to connect to the digital revolution that is unfolding right now. I am less excited about studying finance, since too many of us are already too creative in inventing new financial instruments that make society less stable.

Comments | Reprints | Share:          

[Editor's note: As a New Year's exercise, we asked a select group of Xconomists to answer this question: "What's the craziest idea out there that just might succeed?"]

All-electric commercial boats, ships, railway engines, and aircraft. The hyper-convergence of energy generation, battery storage, electric vehicle systems development, and electric charging infrastructure has first focused commercially on cars, and now trucks. These advancements may, sooner than we have expected, transition into other highly polluting vehicle markets. As the economies of the all-electric automobile industry are understood and realized, the specific systems and technologies will migrate quickly into these other markets. Air and noise pollution will be dramatically reduced, and everyone on board will enjoy a much smoother ride. And pilots and other EV operators will love the hyper-responsiveness of their electric motors.

Comments (1) | Reprints | Share:          

A decade ago, scooters and mopeds made up the bulk of motorized transport in India. Today, motorcycles and cars of all makes are a common sight, from Harley Davidson and French carmaker Renault to Suzukis. India is undergoing important socio-economic shifts that are resulting in the segmentation of existing markets and the opening of previously nonexistent ones.

Even though India seems full of opportunities and market potential for almost any foreign product, it requires a lot of sensitivity and awareness because the complexities arising from its heterogeneity make it a challenge for companies looking to copy-paste business models from abroad. In addition to experiencing growth in the consumer market, India is also the stage for an emerging entrepreneurship sector.

Big retail is a prime example of how the diversification of India’s class structure is creating new market opportunities. As little as five years ago, the viability of giant retail stores operating in India would have been seriously questioned. In her book Winning in the Indian Market, published in 2006, India’s leading market strategist and consumer analyst, Rama Bijapurkar, explains that large discount retail outlets in Indian cities have failed for multiple reasons. The principal one being that supermarkets cannot cater to India’s lower income groups because they live day by day and do not have the discretionary income for volume purchases, even at a discounted price. The model adopted by manufacturers of fast moving consumer goods (FMCG) is small quantity at an even smaller price. An example of such would be hotel-like sachets of shampoo for two rupees (0.04 USD); these small packaged goods accounted for 40 percent of the sales of FMCG. Nonetheless, India’s rapid growth has given rise to a new socio-economic group that is filling the demand void, allowing hypermarkets to set up shop in India.

India’s middle class has grown tremendously over the years, due in part to substantial investment in education, and a booming job market fueled by foreign investment. India is outputting almost half a million engineers a year, amongst others skilled employees. Salaries are on the rise with 11.7 percent hikes in 2010 and a projected growth of 12.9 percent in 2012, according to consulting firm Aon Huwitt. Devinder Mahna, general marketing manager at Mechelonic Engineers, explained that it is no longer infrequent for engineers graduating from top schools to find jobs with salaries closely matching those they would find in the U.S. Even though this is not the norm and many will only earn between 400 and 700 dollars a month, it is still preferable for them to buy their groceries at a one stop-shop location rather than waste time purchasing their goods in the various specialty stores.

Even though many of these young wage earners shop at big retail outlets and drive a Chevrolet, it does not translate into a general infatuation with western goods, for the simple reason that Indian and western consumers have diverging tastes. Satya Bonala, head of Delhi-based market research firm Vox Populi, argues that many multinational companies have often made this mistake. India, having 20 officially recognized languages, with dozens more regional tongues, each with its own culture, is an extremely heterogeneous market requiring products tailored to each segment’s needs. Bonala went on to explain that The Coca Cola Company learned this lesson when it attempted to re-introduce its product in India after almost a 20-year absence, by … Next Page »

Comments | Reprints | Share:          

As we turn the page on the year 2011, there is no shortage of topics about which the entire world seems to be debating. One that interests me the most is the renewed debate on the role of government in the energy sector, specifically in the United States. Budget shortages, deficit increases, front-page analysis of public-backed private enterprises, and a particularly bitter political climate have combined to push this topic to the forefront more so in 2011 than in recent years. It’s as though we are back in the smoky classrooms of the University of Chicago in the ‘50s and ‘60s where economists engaged in frequent Keynes Vs. Friedman (Milton not Thomas, mind you!) debates.

Energy is always a popular topic in the U.S., given its strategic importance to national security. All this recent debating has been interesting to follow but a bit confusing. Economists, reporters, business folk, and politicians do not seem to agree on what constitutes a government subsidy, let alone which sub-sector is the recipient of how much. While I do not want to take any sides, I thought it would be worthwhile to examine what constitutes a government subsidy, and what subsidies and how much were provided by the U.S. government historically.

As I began to think about what sectors to focus on, it made sense to examine those that have been of significant strategic importance to U.S. economic growth in the past. The rise of the U.S. to be the largest economy in the world was driven to a large extent by what some refer to as the second industrial revolution constituting the rise of the railroad, steel making, telecommunications, petroleum, and the automobile industries. This article attempts to capture the subsidies provided by the U.S. government to some of these industries at different stages of their growth cycle.

What is an energy subsidy?

I am no economist, but it seems to me that we can all agree on what constitutes a government subsidy without too much debate. Table 1 (below) attempts to summarize the different forms that energy subsidies can take. Most of these subsidy types are immediately recognizable. The “type” that has generated much debate so far is the “Failure to include Externality Costs.” No matter where you stand on the climate change debate, it is not that hard to see that pollution has at the very least caused smog and acid rain—ask the residents of the Los Angeles from the ‘80s and, more recently, those from Beijing. There has not been a worldwide accepted externality cost measure yet, but as we move forward the chances of that happening are higher.

Regardless, it is safe to say preferential tax treatments and price controls are as much a government subsidy as a cash grant or a low-interest loan. The U.S. government wallet is a bit lighter in both cases.

Historical U.S. government subsidies

The growth of the U.S. economy after the Civil War to become the world’s largest economy was driven by increasing commercialization of technologies including the railroad, iron and steel making, petroleum, and the internal combustion engine. Besides private capital and resources, an important catalyst behind the development and growth of these industries were U.S. government subsidies at different stages. Table 2 summarizes the amounts, types, time period, and stage at which government subsidies were provided to these industries.

Railroad and transportation

U.S. railroad companies laid more than 35,000 miles of track between 1867 and 1873—more than three times that laid in the previous 30 years. Congress gave the railroad companies more than $64 million ($8 billion in 2011 US$ at 3.5 percent inflation) in loans and tax breaks and more than … Next Page »

Comments | Reprints | Share:          

Waltham, MA-based A123 Systems (NASDAQ: AONE), the lithium-ion battery maker, has laid off about 125 employees at its manufacturing facilities in Livonia and Romulus, MI. The news originally broke the week of Thanksgiving and was reported by media outlets including the Observer & Eccentric and Crain’s Detroit Business.

The layoffs are apparently the result of lower demand from Fisker Automotive after its plug-in hybrid sports car ran into production delays. A123 invested in Irvine, CA-based Fisker early last year. Media reports quote Jason Forcier, the vice president and general manager of A123′s automotive group, and PR manager Dan Borgasano as saying the layoffs are temporary and the workers should be hired back within six months.

Forcier spoke with me last year around the opening of the Livonia plant. At the time, he noted that “the battery industry is really a rejuvenation for the whole area. This is extremely important for Michigan from an economic standpoint.”

A123 still employs about 600 people at its two Michigan plants and its research and development center in Ann Arbor, according to the Crain’s report.

Comments | Reprints | Share:          

If you want something done right, the old saying goes, do it yourself. That’s exactly what XL Hybrids, a Boston-based transportation tech startup, is up to these days.

Despite a thin layer of gloom that pervades much of the cleantech industry, XL Hybrids is advancing in its quest to make commercial vans and trucks greener and more fuel-efficient. The two-and-a-half-year-old company is announcing today it has appointed Richard Canny, a longtime Ford Motor exec and electric vehicle expert (former CEO of Think Global), to its board of directors. Canny is based in the Detroit area and gives XL Hybrids some more gravitas and deeper connections in the auto industry. But there are a lot of other things going on under the hood at this ambitious startup.

“We’ve been hard at work not only in technology development but also in re-examining our market,” says Justin Ashton, the company’s co-founder and vice president of business development.

Part of that re-examination includes ending a partnership that XL Hybrids had formed about a year ago with U.K.-based Ashwoods Automotive, which makes a vehicle retrofitting kit. The plan had been for XL to adapt the kit for the U.S. market. But XL found the process was taking too long, in part because European vehicles are so different from American ones. “It made sense to work on our own,” Ashton says.

So, XL Hybrids is handling the technology for commercial fleets by itself now. “Our strategy has shifted to doing all systems development [ourselves] but working with tier-one suppliers for components,” Ashton says. That means employing large battery makers and established electric motor manufacturers, he says. “Our role is to build the hybrid architecture from the ground up.”

The architecture consists of a hybrid electric powertrain (for which XL has patents pending) that can be installed on either existing vehicles or new ones. It includes a lithium ion battery, electric motor, and control software. The computer-aided design drawing of the system (see left) resembles a space-age tuba, or maybe a Star Wars pod-racing engine, but the point of the powertrain is to store energy wasted in braking and reapply it during acceleration. XL says this results in about 20 percent lower fuel consumption and emissions for high-mileage city driving, in standard cargo vans (typically made by GMC or Chevy).

Starting in January, XL Hybrids is working with commercial fleet companies to start pilot tests of retrofit cargo vans in the Boston area. If all goes well, there will be a couple dozen vehicles on the road around New England by June, Ashton says.

But he emphasizes that there is a bigger opportunity. “This business is not about retrofit. Long term, it’s about creating a unique hybrid powertrain for a large market,” Ashton says. “We can do retrofits where they make economic sense for our customers. But we have a lot of interest from customers in what’s called ‘upfitting’”—putting the technology into new vehicles.

Of course, this could be a difficult journey for a small startup—but XL is focusing on a market it thinks it can handle. “The real challenge in transportation is finding your path to get your product to market. And dealing with some of the largest companies in the world with long product cycles,” Ashton says. “We don’t want to wait. You have to find a business model that is relatively capital efficient, that leverages existing infrastructure.” He adds, “Right now we’re focused on a niche within a niche. The commercial vehicle side is dwarfed by the consumer segment. Our strategy is to position ourselves.”

XL Hybrids was founded by a team of MIT grads in 2009 and has about 10 employees. The company has raised roughly $4 million from angel investors and the Massachusetts Green Energy Fund. It says it plans to raise more money next year.

Comments (1) | Reprints | Share:          

Semi-trailers suck. Literally. As these boxy shapes barrel down the freeway, they leave a vacuum in the air behind them, and this area of turbulence and low pressure generates suction that accounts for at least a quarter of all aerodynamic drag on a tractor-trailer rig. If you could do something to disrupt the vacuum and reduce the drag, then the truck engine wouldn’t have to work as hard to maintain highway speed, and you’d save a lot of diesel fuel.

Those are the facts of physics, anyway. Whether the facts can be translated into a real business is the question that ATDynamics is now testing. The South San Francisco, CA, startup, which was born as part of a business plan competition at Dartmouth’s Tuck School of Business in 2006, sells a collapsible tail for semi-trailers that’s designed to smooth out the air flow behind a trailer, reducing drag and improving fuel efficiency by 6 to 7 percent.

ATDynamics founder and CEO Andrew Smith says rigs with the $2,000 “TrailerTail” burn 8 gallons less fuel for every 1,000 miles driven. Suppose diesel costs you $3.75 per gallon at the pump-you’d only have to drive your TrailerTail-equipped trailer about 66,000 miles to earn your money back. “If you’re driving over 25,000 miles a year, this becomes a no-brainer,” says Smith. (For a different take on making trucking more efficient, see this story today by my San Diego colleague Bruce Bigelow.)

So far ATDynamics has sold more than 5,000 TrailerTails—mostly to commercial fleets, but a few to individual owner-operators. This month, Smith set a goal of shipping another 50,000 tails by 2014. While that’s an ambitious target, it would still represent only a 2.5 percent penetration rate, given that there are 2 million semi-trailers on U.S. roads.

The trucking industry is notoriously slow to adopt new technologies. But with fuel prices unlikely to come down, and with more companies demanding that their shippers use green technology to reduce carbon emissions, Smith reasons that the economic incentives to trucking fleets to install TrailerTails and their close cousins, trailer skirts, will become irresistible.

“Four years ago, I went and sat down with the senior vice president of engineering at one of the top U.S. trailer manufacturers,” he recounts. “I presented all this stuff about rear-drag aerodynamics, and he responded that they had been building square boxes for 50 years and they planned to build them for another 50 years, and that was the end of the meeting. But in the last two years, the market for trailer skirting has taken off—from a couple thousand units in 2009 to 60,000 or 70,000 this year—and trucking companies now get that trailers can be modified to be more fuel-efficient. I would be shocked if in the next five years, the majority of fleets don’t have rear-drag technology.”

Here’s a 24-second video showing how the TrailerTail works; story continues below video.

So how did we end up with two million semi-trailers in the form of giant boxes—”the least aerodynamic shape” possible, in Smith’s words? When semi-trailers were invented at mid-century, the Interstate system wasn’t finished yet, trucks couldn’t drive very fast, and the price of diesel fuel was low, Smith notes. But “now we have a world where … Next Page »

Comments | Reprints | Share:          

This is not your average cab company. In fact, it’s not a cab company at all. It’s a tech startup enabling urban luxury car services to function a bit more like cabs, while retaining their swank.

It’s called Uber (formerly UberCab but renamed to avoid confusion) and it is up and running in Boston as of tomorrow. Why?

“It’s a smart city,” says Uber general manager and vice president of operations Ryan Graves. “Uber is a smart kind of service for someone who wants to live in this evolved, on-demand-service world. Plus there’s transportation nightmares galore here.”

Uber recruits professional luxury drivers to join its network. Consumers, meanwhile, can book rides on the spot, pushing a button on a mobile app to find the nearest driver. Their geographic coordinates are sent out and translated into an exact address for the drivers, who then make their way over for the pickup. Consumers can trace their drivers’ progress as they’re waiting for the rides, and no cash is exchanged. (Consumers input their credit card information for billing when they sign up for the service.) The aim is get a driver to the passenger’s location within five minutes of booking, though it may take longer initially during the break-in period in Boston, Graves says.

Uber was founded in San Francisco, and now has services in New York, Seattle, Chicago, and next, Washington, D.C. The plan is to hit a total of seven cities this year and climb to 20 to 25 cities next year.

Graves says the team aims to make the luxury car service market a bit more accessible to consumers and a bit more lucrative for drivers. Traditionally, to get a nice ride to an event like New Year’s Eve festivities, consumers would have to spend upwards of $800, booking a luxury car service for a minimum of a few hours, with drivers spending much of that time waiting. With Uber, Graves says, passengers can book a car for just … Next Page »

Comments | Reprints | Share:          

San Diego’s high-tech sectors did not escape unscathed from the great recession of 2007-2009, but a new study says local technology industries have had a disproportionate effect in boosting the regional economy in recent years.

Using state employment data, the study released yesterday by the National University System Institute for Policy Research counted just over 6,000 high-tech employers in this region last year—or about 6 percent of all employers (with payrolls) in the San Diego region.

Yet these 6,000 companies directly employed 138,800 workers, or 11.2 percent of the total regional workforce in 2010. Using standard economic modeling, the institute estimated that San Diego’s technology industries indirectly created an additional 103,800 jobs last year, and induced another 120,400. The total—363,000 technology-dependant jobs—represents more than 29 percent, or close to a third of all jobs in the San Diego area.

Wages paid by technology companies have had an even-more disproportionate effect on the regional economy in recent years, according to the institute’s analysis. It shows the average annual wage of workers directly employed by technology companies in San Diego at $93,800 in 2010, more than double the $45,000 average annual wage paid by non-technology companies.

Accordingly, overall labor income generated directly by technology jobs reached $15.7 billion in 2010. The study found another $12.3 billion was generated by indirect and induced labor income, totaling $28 billion—or 45 percent of all labor income generated in the San Diego region last year.

San Diego’s technology sectors shed some jobs during the Great Recession of 2007-2009, contributing to a county unemployment rate that still stands at slightly more than 10 percent, according to August unemployment data. (The statewide unemployment rate in California was nearly 12 percent in August.) But technology employment held up much better than the overall  job market, according to the study. Employment in most tech sectors had returned to 2007 levels by 2010—except in computer and electronics manufacturing, which declined 8 percent, from 13,700 to 12,600 jobs throughout San Diego County.

In contrast to all other technology sectors, the number of biotechnology and pharmaceutical jobs actually increased by almost 21 percent in San Diego County during the recession—from 17,300 jobs in 2007 to 20,900 jobs in 2010.

The institute analyzed economic trends in nine high-tech sectors, based on a standard federal job classification system. The nine sectors are biomedical products, biotechnology and pharmaceutical, communications equipment, computer and electronics, defense and transportation, environmental technology, recreational goods, software, and technology consulting services.

Comments | Reprints | Share:          

Written on the whiteboard on the first day of my entrepreneurship class at Tufts was a sobering statistic: 80 percent of startups die in their first four years. There exist a variety of factors that can kill a business. Luckily, Boston is full of programs and organizations designed to help entrepreneurs navigate through the startup process. The National Collegiate Inventors and Innovators Alliance’s Sustainable Vision VentureLab, led by James Barlow, is a five-day intensive incubator program for companies doing business in emerging markets (it ran August 26-30). I initially thought that it would be an abbreviated version of a conventional business class curriculum, somewhat similar to what I had experienced in the five-day boot camp organized by MassChallenge: what are the best ways to structure a company, to manufacture, distribute, and market product X in market Y, and how to go about getting VC funding?

On the contrary, it is a back-to-basics introspective program that emphasizes the human element of a business, such as being able to communicate your value proposition in an effective and clear manner. This may sound elementary. The reality is that this is the foundation for any business. James compared it to humming a song in your head. When vocalized you can clearly hear the tune and the words, even though the person across from you may be shooting you a puzzled look. This is a problem many entrepreneurs unknowingly struggle with. Having become so familiar with the intricacies of their businesses, they have lost the ability to break it down into its simplest and most coherent forms. When hearing these entrepreneurs pitch, the listener finds himself unable to understand the core of their idea, akin to listening to a hummed song.

Oftentimes, the founders themselves are confused and are unknowingly in disagreement about what the value proposition of their businesses is. Even if they are aware of the value proposition, they are unable to translate it in a way that speaks to the wants and needs of their market. That is why the VentureLab program focuses so much on deconstructing the human element aspect of your business. This is often a tricky process because it requires you to examine your business in a manner in which you are unaccustomed to and uncomfortable doing. At Roof For Two, we looked at all the factors that could sink our company and discovered the need to connect with different influencers in our product market. It became an exercise in stitching together our business and value proposition in a manner that resonated with each one of these individual actors. For example, our company provides a motorcycle weather accessory for riders in India to shield themselves from the monsoon rains. It saves them time in their commute and increases the efficiency of businesses whose employees lose time when seeking shelter from the downpour. When we started looking beyond our end user and examined other people potentially impacted by our product, we began asking ourselves very different questions from the ones we had originally posed. We had initially asked: What do Indian motorcyclists look for in a product? How will our product affect their lifestyle?

However, during VentureLab we looked beyond the commuter towards businesses, institutions, and society. We asked ourselves very different questions: What businesses stay open during the heavy monsoon season? Would small businesses have incentives to subsidize our product for their commute sensitive employees? How do we best communicate our value proposition to both the commuters and the businesses that depend on them?

Besides the introspective portion, part of the learning process in programs such as VentureLab comes from the interaction between participants who can help one another, despite operating … Next Page »

Comments | Reprints | Share:          

If you see a couple of guys riding around on a motorcycle with a weird contraption over their heads, don’t worry, it’s not the latest fraternity hazing ritual. You might have caught a glimpse of a local startup testing out what could be a very global product. Especially if it’s raining.

Boston-based Roof For Two is developing a collapsible, detachable roof that can be pulled over a motorcycle in a few seconds to protect the rider(s) from heavy rain. Yes, it’s kind of a quirky idea. But it just might work. The seven-person startup, which is a finalist in the MassChallenge incubator program, came out of Tufts University, where it won first place in the Tufts $100K business plan competition this spring.

The idea came from founder and CEO Karan Randhawa, a native of New Delhi, India, and a recent Tufts grad. He was working in New Delhi and noticed that his colleagues were coming in sopping wet during monsoon season. Many people there rely on motor bikes to commute, yet there isn’t much they can do to shield themselves from the incessant rain except to use a poncho, umbrella, or other improvised method (see photo above). So Roof For Two is targeting Indian consumers exclusively for now.

The company’s bike roof is designed to protect up to two riders from the top, sides, and back, says co-founder Max Pinto, who serves as chief marketing officer. Pinto says the material is “very lightweight,” and the system is designed to be safe for speeds of up to about 100 kilometers per hour (and maybe faster in the future).

Roof For Two has just filed a provisional patent on the technology. Until now, it has been pretty cagey about the details. The startup is in the process of finishing its third prototype and has been testing and tweaking various models—hence the bike rides around the Boston area. (The team bought a motorcycle that resembles the most popular bike in India to do its tests here.)

Pinto might not have the best last name to represent a transportation-related company (as those of us alive in the ‘70s will attest), but he makes up for it with his drive, enthusiasm, and general worldliness. He’s a native of France and has lived in the U.S. and Argentina. And he says the Tufts competition, entrepreneurship classes, and all-night work sessions helped the team learn how to craft its business plan and better understand the market it is going after.

The dynamics of the Indian market make it “drastically different from how you would market to Americans,” Pinto says. “They think differently,” he says, pointing out that the Indian middle class is broken up into many tiers, and each has a distinct mentality. (He didn’t get into specifics yet about how the company will sell its hardware to the different tiers, but I presume that as usual, it’s about understanding the problems of each customer and solving them in a reliable and affordable way.) About his current incubator experience, he says MassChallenge is “fantastic” and has opened a lot of doors for the startup.

By late August or early September, Roof For Two plans to build about 25 prototypes and ship them off to Delhi, where Randhawa is based, for consumer testing. If all goes well, the company will then look for a first round of outside investment to help it produce 100 to 200 prototypes for further testing.

For now, the startup has a simple goal, which is reflected in its tag line: “making monsoons manageable.”

By the way, it looks like rain is expected in Boston on Sunday and Monday. So keep your eyes peeled.

Comments (1) | Reprints | Share:          

The economic deep freeze is thawing for IPOs on U.S. exchanges, according to a quarterly report issued today by the Ernst & Young accounting firm.

The number of companies in registration for an initial public offering increased to 140 during the three months that ended June 30, according to the latest the “Ernst & Young U.S. IPO Pipeline” study. That’s almost 24 percent more than the 113 companies that were registered during the same quarter last year, according to Ernst & Young’s data. Beneath story, I’ve put together a list of companies in the IPO pipeline for each Xconomy city as of June 30.

Ernst & Young says the 140 companies now in the lineup represent a potential total of $23.7 billion in estimated market valuation. That’s down from the $25.3 billion in total value during the same quarter last year, but the highest number of companies registered to go public since late 2007, when the financial crisis was beginning to engulf the U.S. economy. Just 28 companies were in registration at the end of the second quarter in 2009, one of the darkest periods of the recession.

A total of 42 companies went public on U.S. markets during the second quarter, a 13.5 percent increase over the 37 IPOs during the second quarter of 2010.

The warming trend is good news for the venture firms and other investors that view IPOs as a key way to keep the capital flowing to new companies, and to exit from startup companies with a return on their investments. Of the 140 companies in the IPO pipeline, venture capital firms back 40 percent, 31 percent are backed by private equity firms, and 23 percent are backed by both.

Technology-related IPOs accounted for 25 of the total companies in the pipeline at the end of the quarter, and they are trying to raise a total of $4.4 billion. The oil and gas industry was the next bigger sector, with 17 companies trying to raise a total of $4.6 billion. Other active sectors include financial companies, retail and wholesale, and diversified industrial products. Here’s a breakout of companies in the pipeline for each Xconomy city: … Next Page »

Comments | Reprints | Share:          

[Updated at 2:10 pm] Traffic data provider Inrix, born out of the team that developed Microsoft’s SYNC in-car software system with Ford, plans an aggressive global expansion and a public-market debut “sooner rather than later” after landing a $37 million round of investment led by top Silicon Valley venture capitalists.

That’s the word today from Inrix CEO Bryan Mistele, who was understandably buoyant about the news of his seven-year-old company’s oversubscribed Series D round—the largest we’ve seen this year for a tech company in Washington state, topping the $30 million hauls notched by humor website operator Cheezburger Network and gamified social network startup Lockerz.

Kirkland, WA-based Inrix says it has been profitable for about two years and would have been just fine without the extra cash, saying its annual revenue growth rate over the past three years has been about 85 percent. So why take the money while claiming you don’t need it? Mistele says it allows Inrix to get big faster, and take advantage of some acquisition targets in a sector that increasingly prizes global reach.

“As you look at the market, our customers—folks like Ford and Toyota and companies like MapQuest and mobile application companies—they want traffic data everywhere,” Mistele says. Major competitors include Nokia’s Navteq in the US and Europe, and GPS company TomTom in Europe, Mistele says.

Inrix provides those companies and others with real-time traffic data culled from its “hundreds of public and private sources,” particularly its own network of more than 10 million GPS-connected vehicles and cellular phones. Inrix partners with commercial fleets such as taxis and delivery trucks to cull data, and also gets some information from government road-sensor networks.

The data is used by a long list of customers, including state transportation departments, automakers Audi, Ford, and Toyota, and consumer brands like MapQuest and Inrix’s own consumer smartphone apps. Overall, Inrix says its information is used by 150 companies and more than 100 million people worldwide, in more than 20 countries in Europe and North America.

Inrix’s Microsoft legacy doesn’t stop with Mistele and co-founder Craig Chapman, who is still a board member. The company also uses technology developed at Microsoft Research, although Mistele says the licensing deal is set to expire next year when Inrix hits the cap on royalties … Next Page »

Comments (1) | Reprints | Share:          

General Motors launched its first venture capital fund—GM Ventures—last summer. We covered the news, and in December, still early in the $100 million fund’s life, I did a Q&A with GM Ventures president Jon Lauckner. At the time, the fund had invested in just two startups—battery maker Sakti3 and Bright Automotive, which offers a new approach to hybrid electric vehicles. GM Ventures was really just getting going—and Laucker was limited in what he could tell a reporter.

Now, things have changed somewhat—and the fund is definitely heating up. It has closed four deals—with Powermat (wireless charging technology) and Envia Systems (materials for increasing the storage capacity of lithium ion batteries) joining the initial two. Four more have been approved and should be announced relatively soon. Another pair of GM investments that predate the founding of GM Ventures, Coskata and Mascoma (both biofuels companies), were also transferred over to Lauckner’s charge. All told, GM has put about $30 million into those six companies, with investments typically running between $3 million and $7 million per deal. And Lauckner says a half dozen or so more deals are in the works.

Meanwhile, the GM Ventures head and his colleagues seem to have settled into a groove. They are swamped in deal flow—more than 350 prospective deals have already crossed Lauckner’s desk—and finding that being associated with GM gives the firm some real leverage that not even the best traditional venture funds can match. This includes the ability to help startups evaluate their technology on highly sophisticated equipment in one of GM’s vast R&D operations, and to offer a mega customer in General Motors if things pan out.

I recently sat down with Lauckner in GM Ventures’ headquarters in Detroit’s Renaissance Center. I’ve long been fascinated by corporate venture arms—most of which quickly fade away due to such factors as shifting priorities within the parent company and the difficulty of adapting to changing conditions in the fast-paced startup world. The presence of a corporate investor like GM might even discourage orders from rival automakers looking at a portfolio company’s products or technology, for instance.

In short, it’s early days for GM Ventures. But Lauckner believes he and his team have some special things going for them that give the fund great power and, presumably, longevity. Some are quite different from what traditional venture firms bring to the table—and, if he’s right, provide an added dimension to the innovation ecosystem that should help get new technology to market, faster.

Lauckner and I spoke about the mandate for GM Ventures and how it evolved, what the firm looks for in startups, and how deals actually work. Here are highlights from our conversation.

Why GM Ventures? Why Now?

“After we came through bankruptcy, the order was this is a new General Motors and we need … Next Page »

Comments | Reprints | Share:          

Oh là là. Pronouncing the European market far more primed for a transportation revolution than the U.S., Zipcar cofounder Robin Chase has quietly left GoLoco, her Cambridge, MA-based ride sharing company, to fend for itself and launched a car sharing startup in Paris. Called Buzzcar, the company began pilot testing in two French cities a few weeks ago and plans to open for business in France later this month.

“It’s the project of my dreams,” says Chase, Buzzcar’s CEO or Directrice Générale. She launched the company with the help of husband Roy Russell, who serves as CTO (Directeur Technique), a similar role to what he had with both Zipcar and GoLoco.

Think of Buzzcar as a mix of her two previous startups. Zipcar is essentially a twist on car rentals, allowing rentals by the hour from easy-to-access neighborhood lots or stations, while GoLoco is (or was, since the site is apparently out of service), a ride sharing startup in which people pay to ride along with others in the network, and the drivers take a cut of the fees. Buzzcar, by contrast, is a car sharing service whereby citizens allow their idle cars to be used by others in the network—also for a slice of the pie.

“It’s peer-to-peer car-sharing. We’re leveraging excess capacity of individuals and giving them a platform for participation,” is how Chase describes it. As such, Buzzcar is much like UK-based Whipcar or RelayRides, which started in Cambridge last year but has since moved to Silicon Valley—and Chase says she has no illusions about Buzzcar being first of a kind. “It’s a space that has exploded over the last year, so it’s not a novel thought,” she says. But, she adds, there are many differences between Buzzcar and other car sharing services that set it apart (read on for details).

I’ve actually been following Chase’s progress off and on for months. There was a hint of what she was up to in a tweet last summer: “Looking to rent a furnished 2-3br apt in Paris (1,2,3,4,9.10.18e) contact me…” I met her last August for fresh-squeezed lemonade at the Andala Coffee House in Cambridge’s Central Square, where she gave a brief sketch of her plans while declining to provide any specifics. And I’ve been checking in periodically ever since. Finally, earlier this week, she was ready to parlez.

Indeed, Chase, who terms herself “all but fluent” in French, says she moved to Paris in September, and even though she already had financing lined up for Buzzcar took until last month to launch the company. “That’s how long it takes to make a company live in another language,” she quips. “I’ve been experiencing the French bureaucracy—that was the fall. Here we are in the spring and finally things are moving at a much faster pace.”

Chase says she has been thinking about car sharing for roughly a decade. “Ten years ago, I had an e-mail stalker who was constantly telling me this is what I should be doing with Zipcar. And I would listen to him and say, ‘Let me just do one thing at a time.’” In 2007, after leaving Zipcar, she launched GoLoco, which offered ride sharing rather than car sharing. The company apparently never gained the traction to become self sustaining, and the website now appears down—although Chase says she left GoLoco to operate “without attention” and thought it was still functioning.

Truth be told, the world wasn’t ready for car sharing 10 years ago. But a lot has happened in recent years to make it far more feasible, Chase says. For one thing, technology has advanced to the point you can do almost everything, including reserving a car, with a smartphone. For another, the rise of social media and Web 2.0 companies has gotten people far more used to sharing information and services amongst their friends and even people they don’t know. That’s why car sharing is finally starting to gain traction. A few months ago, for instance, RelayRides attracted $5.1 million from a mix of investors who include Google Ventures and August Capital. “I had to watch them launch in my own back yard when I was full on negotiating [Buzzcar], which was fine,” Chase says of RelayRides.

So let’s get to those differences between Buzzcar and other car-sharing companies.

“I look at all those companies worldwide, and I have couple observations,” Chase says. “One, … Next Page »

Comments (1) | Reprints | Share:          

For anyone who’s ever stood in the rain waiting for a cramped bus, or wondered if that hurried call to the taxi dispatcher was going to pay off, there’s now a quick way to book a pricier, but more luxurious ride by tapping a few times on your smartphone.

I’m not talking about Uber, the San Francisco town-car booking service that’s attracted big investment dollars and tons of positive press. Nope—it’s Pinpoint Pickup, a bootstrapped Seattle-area startup that’s already way ahead of Uber in market share, and even has its eyes an international expansion.

Pinpoint Pickup is run by a trio of entrepreneurs—two here in the Seattle area, a third in Southern California—who still have their day jobs while growing their new company. Pinpoint Pickup just released its “Ride in Style” app for Android smartphones, joining existing apps for iPhone and BlackBerry.

And while flashier competitor Uber is making its first major expansions—testing in New York City and planning to hire in Seattle, Boston and elsewhere—Pinpoint Pickup is already operating in Seattle and a half-dozen other metropolitan areas, and expanding to more cities in the coming weeks.

Co-founder Desiree Phair says the Los Angeles area is the company’s busiest market so far, but she wasn’t sharing many detailed statistics yet—”We have earned revenue, I can go on record saying that,” she says with a laugh. Pinpoint Pickup also serves Boston, Las Vegas, the San Francisco Bay Area, Phoenix and Tucson, AZ, with more cities queued up.

That’s a pretty rapid pace for a company that started in late 2009. And it’s meant a lot of airports, fast food joints, and test-rides for Phair, an economist by trade whose day job is analyzing labor markets for the state government. Before Pinpoint Pickup started, Phair says she always thought those wild founder stories were probably a bit exaggerated. But now she gets it.

“Oh my goodness, I just had no idea how much there was to learn,” Phair says. “I don’t think I’m a super-duper cocky person. But I went into it a little bit cocky.’”

The company’s smartphone app automatically detects the user’s location and guides them through a simple four-step booking process. The price is quoted in a round figure, tip included—think “about $50″— with a disclaimer that some fees could be added for tolls or long wait times. There’s a pretty broad … Next Page »

Comments (2) | Reprints | Share:          

Far too much has been written about Boston versus New York City. Sports rivalries and cultural differences have a way of coloring our world view to include startup companies and venture capital. However, the past few years tell about a much closer relationship. The real story is Boston and New York City, particularly versus Silicon Valley.

This week, we welcome Xconomy’s most recent addition to its coverage, New York City! While having started in Boston and expanded across the country, Xconomy’s newest addition reflects the growing ties and teamwork between New York and Boston.

Let’s start with a few data points. It’s always been easy to think about Boston and New York as separate worlds. After all, it’s 225 miles between downtown Boston and Manhattan—a journey that takes typically takes 3 ½ hours. In contrast, the trip from San Francisco to San Jose is only 48 miles along the 101, which in the middle of the night is under an hour. With traffic, well, that depends and can take as long as the Boston-NYC trip.

Somewhat ironically, the technology created by entrepreneurs and the VCs that back them have been shortening these distances. Wi-Fi on the Acela and 3G mobile networks let entrepreneurs and venture investors stay productive on the Boston-NYC journey, making the trip seem a lot shorter. Personally, I love working on the Acela. It’s some of my most productive time, and I feel like I’m in the office. I can even have meetings, particularly if I secure the seats facing each other with the table between them. Web networking and collaboration tools make sharing information and coordination much more effective as well, not only between these two cities but across the world.

Venture capitalists and angel groups are expanding and coordinating financing activities between Boston and New York City. “New York is clearly on a roll here. If anything we’ve seen the presence of several Boston firms either opening offices or having affiliations,” said long-time New York venture capitalist and founder of Greycroft Partners, Alan Patricof. Matrix Partners recently opened an office, headed by Nick Beim. New firms like Founder Collective operate fairly seamlessly between the two cities. TechStars’ recent expansion to New York has been a great success. The Golden Seeds angel group several years ago opened chapters in New York City, Boston, and Philadelphia that systematically collaborate. Syndication among angel groups more broadly in New England and New York got started around 2005 and has been going through various iterations and improvements.

How does this then play out in the numbers? Silicon Valley may have had the lead for many years, but looking at emerging companies, the Boston-New York team looks like it’s been running a fast break. According to the most recent PwC MoneyTree data, the gap between New York/Boston and Silicon Valley for seed and early-stage companies has closed, whether looking by total deals or by dollars.

Five years ago, Silicon Valley did nearly twice the number of seed and early-stage venture deals compared to Boston and New York combined, 338 versus 178 in 2005. For 2010 the two regions are essentially tied with 400 for Silicon Valley and 392 for New York/Boston. Dollars tell a similar story. For 2005, the ratio was 1.3:1 in favor of Silicon Valley, growing to 2.2:1 by 2007. By last year, that gap had closed to 1:1 with $2.16B invested in Silicon Valley seed and early-stage companies and $2.05B invested in those in New York/Boston (see charts above.) “The startup and entrepreneurial environment in New York is the strongest I’ve seen in the past 40 years,” says Patricof.

But it’s not just adding numbers. The rapid growth of consumer-oriented, ad-tech, and fin-tech ventures makes Boston and New York City highly complementary and drives increasing … Next Page »

Comments (4) | Reprints | Share:          

Besides snow and rain (and other April Fool’s jokes), ‘tis the season for business plan competitions around Boston. You might know all about MIT’s $100K contest and Harvard Business School’s equivalent, but there’s a lot more going on out there—and a lot of talented young people vying for a taste of entrepreneurial success.

Here’s a quick sampling of five university-based contests going on around town, and their finalists (certainly not a comprehensive list):

—Tufts University is running its seventh annual $100K business plan competition. The final pitches are happening next week, April 6. Here are the five finalists in the social entrepreneurship bracket: Educate Lanka (student scholarships, Manjula Dissanayake), Give 2App (smartphone apps for nonprofits, Artem Efremkin and Shabazz Stuart), Kabuk (earthquake kits, Mustafa Tuzcu), Saathi (sanitary pads, Nithyaa Venkataramani), and Sanergy (green toilets, Gaurav Tiwari).

And the six finalists in the classic competition: InstaCard (cash in gift cards, Warren Davis), Rentcycle (local business rentals, Kevin Halter and Sean Zinsmeister), Roof For Two (motorcycle accessories, Andrew Altman), RxCap (smart pill containers, Nathan Scott), Salary View (college career services, Kenny Berlin), and Saves on a Plane (airfare deals, Ade Baptista).

—Babson College, which says it founded the first college business plan competition in 1984, is in the midst of its $100K+ undergraduate and graduate business plan competitions. The final round takes place on April 14. Here’s a rundown of the three graduate finalists: Atiken Renewables (agricultural waste to energy), Golden Health Guide (online reviews of home medical products), and SkyCrepers (fast-serve crepe franchise).

And the three undergrad finalists: Down to Earth Waste Solutions (small-business waste collection and composting), Nodes (online collaboration and group social networking), and Redeemr (business intelligence and customer retention for small to businesses).

—Boston University’s $50K “new venture competition” is down to its final four, just like March Madness. The BU finals are next week, April 6. Here are the four finalists: ACCEasy (accounting software for Russian businesses, Katsiaryna Akhlopkava), Handlebikes (better bicycles, Fredrik Fjellsaa), Nyumba (pneumonia diagnostics by cellphone, Andrea Fernandes), and RayVio (efficient ultraviolet LEDs, Yitao Liao).

—The MIT Entrepreneurship Competition’s $100K business plan contest is well underway. The semi-finalist teams (five teams in five tracks, plus wild cards) are currently in their mentorship program hurtling towards the finish line on May 11. You can see a full list of the semi-finalists, which were announced in early March, here. A few that caught my eye, mostly because they have interesting names: SaferTaxi (mobile track; cab rating and registration system), iHelmet (products and services; no idea what they do), Boss (life sciences; bone graft tool), Waste to Watts (emerging markets; sounds self-explanatory for power generation), and All Cows Eat Grass (music lessons) and VisualizeMe (social graph), both in the Web/IT track.

—Lastly, Harvard Business School’s business plan contest is just getting started. Business plan entries are due next week, April 7; there’s a “business venture” track and a “social venture” track. The whole competition is done by the evening of April 26.

Comments (3) | Reprints | Share:          

Cambridge, MA-based Zipcar, the auto-sharing company, plans its initial public offering of 8.3 million shares to be priced at $14 to $16 per share, according to an amended filing with the SEC. The company expects net proceeds of $89.2 million, which it will use for repaying debt, expanding the business, and other purposes. Goldman Sachs and JPMorgan are the lead underwriters. Zipcar originally filed to go public last June, with an initial target raise of $75 million. The company then closed $21 million in Series G financing from Meritech Capital Partners and Pinnacle Ventures in December, prompting rumors that the IPO was dead.

Comments | Reprints | Share:          

RelayRides, a San Francisco-headquartered person-to-person car-sharing startup with an office in Boston, has raised $5.1 million of an equity-based funding round that could total $5.9 million, according to an SEC document filed yesterday.  The company, which started in Cambridge and last year participated in the Boston incubator program MassChallenge, announced in December that it had nabbed an undisclosed amount of funding from Google Ventures and August Capital and was relocating its headquarters to San Francisco as it launched its car-sharing service there. Howard Hartenbaum of August Capital and Google Ventures’ Joe Kraus are listed as RelayRides directors on the SEC filing, which also notes that the funding comes from 19 investors.

Comments | Reprints | Share: