Software-as-a-service provider GlobalOne in New York said in a press release Wednesday it secured an initial funding commitment of more than $25 million from Columbia Capital. Four-year-old GlobalOne plans to use the funds to expand its services and market coverage. GlobalOne also appointed David Northington as its CEO. He previously served as chief operating officer of IT consulting services company Capgemini in North America.

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Mix one part consultancy with another part incubator and then toss that with an entrepreneur’s passion project. Sprinkle on some academia, too. And there you have New York-based Churnless.

The firm’s founders, Matt Wallaert and Avi Karnani, come from Thrive, a company focused helping consumers make better financial decisions. They sold it to Lendingtree.com in 2009. Wallaert left his PhD program to join Karnani at the startup, and used his behavioral psychology background in his role as lead scientist there. The duo spent several months at LendingTree after the acquisition, but then “came together to start Churnless to create products and partnerships that create behavior change in more than financial services,”says Karnani. They started Churnless in October 2009.

Churnless focuses on companies and products that don’t just offer solo interactions with customers, but long-term engagement and satisfaction. The name is a nod to a business’ churn rate, or rate at which they lose customers. Churnless is looking to slice that for its customers. Churnless started by coaching brands like American Express and AARP, then they began working on their own passion project, GetRaised. The algorithm-based service takes government data and information from job boards to help users determine if they deserve a raise, and then proposes the right way for them to go after it.

Then came the incubator portion of the whole operation, called Churnless Ventures.

“Because we spent so much time thinking about ideas that change behavior, we became a magnet for startups [focused on the same thing],” Karnani says. The team’s goal is to incubate about four pre-seed stage companies per year, offering them workspace, cash, and access to staff. They keep the classes small, and instead get directly involved in launching ventures. So, for example, rather than giving a talk on business development, Karnani will go to customer meetings with Churnless-incubated companies. Or, rather than … Next Page »

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Serial IT entrepreneur Chris Greendale is taking a crack at another company, which is involved in what he calls “carbon reduction by cloud computing.

It’s not exactly the most commonly thought of means to sustainability, but his new firm, Boston-based CloudTP, is focused on helping firms reduce the need for their own physical data centers in favor of doing their data storage and processing on private Internet clouds, which provide computing services for a particular enterprise behind a secure firewall. The startup’s business is a mix of software and services, much like Cambridge Technology Partners, a consulting firm for client server systems integrations that Greendale helped found in 1991.

Cambridge Technology Partners went public in 1993 and hit a market cap of $5 billion, and is the inspiration for his new company’s name and mission. “It’s a major asset for us to be using this name,” Greendale says. “People get it, they say, ‘You’re Cambridge for the cloud.’”

With CloudTP (which is officially launching today), Greendale and his team are looking to help mostly large enterprises move their computing applications from running on their own physical data centers over to private cloud infrastructures managed by CloudTP. “It’s a fundamental shift in the way enterprise computing is going to be done,” he says. Most of CloudTP’s customers will have to be early adopters, as cloud computing for big enterprise data hasn’t hit the mainstream yet, due to security concerns. Setting up private cloud systems for these customers is important because existing, public cloud computing infrastructures such as Amazon Web Services don’t enable the customers to fully protect their data or work within company firewalls, he says. CloudTP is … Next Page »

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In recent years, doctors, scientists, and experts who consult with pharmaceutical companies and hedge funds have come under increasing scrutiny from the media and their fellow professionals. The truth is, it’s a case of caveat emptor—both for the experts and for the organizations hiring them.

Biotech or medical device companies that are trying to promote new products, for example, could undermine a medical expert’s perceived objectivity if financial ties are not clearly disclosed up front. Experts providing information to hedge funds must be particularly careful not to disclose non-public information about publicly traded companies and run afoul of insider trading restrictions.

Venture capitalists also commonly rely on personal and business expert networks to help gather investment information to make smart investments in private companies. Because early-stage venture firms do not invest in public stocks or promote independent projects, experts can work with VCs and VCs can normally work with experts without risk to their reputation or objectivity.

Here is how I and other venture capitalists use outside experts:

• Personal networks, by far, tend to be most valuable. For example, sometimes I contact a childhood friend who is now an orthopedic surgeon at the Cleveland Clinic. If my firm, Clarement Creek Ventures, is thinking about investing in a product related to surgery, I ask his opinion. His input is good—and it’s free counsel from a valuable source.

• Like other VCs, I also look for expert guidance inside existing portfolio companies. I’m currently working on a project related to a software system for gene sequencing, for example, and I have consulted a chief technical officer at a CCV portfolio company who is highly knowledgeable in this space.

• Sometimes I do pay for advice, as do other VCs, and it is often worth the price. At one point, I was looking at a diabetes-related startup that focused on glucose intolerance and hired a diabetes expert from Abbott Laboratories who understood the market, the competition, and what would be required to make this startup successful. Ultimately, CCV decided against making this investment, partly because of his input. Advice that helps dissuade a venture capitalist from making an investment is every bit as valuable as advice that prods him to make an investment—because more startups ultimately fail than succeed.

When a VC does pay for advice, he has to be careful who he seeks it from. In particular, I avoid people who have skin in the game by virtue of having published work in the area of interest, or by having invented a product similar to what I am considering financing. Information from these people can be biased and hence hazardous to a portfolio company. The upshot is that outside experts, including those who are paid, are often valuable as long as a VC makes sure they are objective, as well as well-informed.

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[Corrected, 4:40pm. See below] Last month, Jon Medved, the founder of Jerusalem-based Israel Seed Partners, a multi-million dollar venture capital fund, came to the University of Michigan to give a lecture on high-tech development. But Medved wasn’t there to talk about Silicon Valley or another U.S. startup hub. Instead he was meeting with a group of students to discuss the future of Israel’s high-tech economy.

Medved’s visit to Michigan was made possible by TAMID Israel Investment Group, an organization founded three years ago by two U-M students. The goal of the group, which has already expanded to a handful of campuses across the U.S., is to give business-minded students a way to connect to the Israeli economy, according to TAMID’s executive director Brett Siegal, a senior in Michigan’s business school. [An earlier version of this story reported that Medved had visited UC Berkeley, not Michigan. We regret the error---Eds.]

Though there are hundreds of campus organizations that connect Jewish students to Israel through cultural or academic activities, Siegal says that before TAMID (which translates to “always” in Hebrew), there was no outlet for students to make connections in a more business-oriented way.

And through a three-phase program, the group’s members get to do just that. The students get a crash course in important business concepts, and the chance to invest the group’s fund of Israeli securities or to do consulting work for a variety of Israeli companies. In addition, TAMID sends the students to Israel—and pays many of their expenses—for internships with Israeli companies or multi-national corporations with offices in the country.

Though the group works with companies ranging from a startup focused on solar housing to big firms like Thomson Reuters, Siegal says the nature of the Israeli economy means that much of TAMID’s work is focused on startups and the high-tech sector. “It’s about a 30-year-old economy, essentially, as a developed economy,” Siegal says. “The economy, for a number of different reasons, sort of spawns a lot of startups.”

According to Siegal, the Israeli government sponsors about 20 startup incubators and also participates in institutionalized venture capital programs that match private investments.

Though Israeli government involvement plays a large role in the proliferation of startups in the country, Siegal says the nature of Israeli culture also helps to foster self-starters. Compulsory military service “creates these very self-motivated people,” Siegal says. In addition, many of the immigrants that came to the country in large waves from the Soviet Union during the 1970s and 1980s were scientists in their home countries, and the Israeli government attempted to help these immigrants commercialize their ideas.

It’s for all of these reasons that Israel “has the highest level of startups outside of Silicon Valley,” according to Siegal. In addition, the country is home to between 3,000 and 4,000 high-tech … Next Page »

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The MassChallenge global startup competition is in full swing. The 110 chosen companies have been pitching their wares over the past few days, trying to make the cut down to the 26 or so that will advance to the next round and compete for a piece of the $1 million prize.

Architexa, a three-year-old company led by ex-Microsoftie and MIT alum Vineet Sinha, was slated to present yesterday at the competition. I caught up with Sinha beforehand to get a quick snapshot of his company and its progress through the program. Architexa’s story is not necessarily representative of all MassChallenge entrants, but it provides a window into the proceedings—and a look at how much work goes into a company before it even enters such a competition.

First, some background. In the early 2000s, Sinha was working at Microsoft and wishing he had better software design tools—better than IBM Rational software, at least, which has become the industry standard but which Sinha says can be “useless” for developers. He decided to work on building better software tools by going back to school as a PhD student in MIT’s Computer Science and Artificial Intelligence Lab. By 2008, he had graduated and also had been a semifinalist in the MIT $100K business plan competition. Over the next couple of years, he and a small team bootstrapped Architexa, did consulting work, and built out their product using technology based on his PhD research. The product has been commercially available for just over three months now.

I won’t get into the technical details, but basically the tool gives developers a new way of “understanding” how software works at a deep level, instead of being focused on code generation and design, Sinha says. It’s all part of the burgeoning field of “unified modeling language,” which is a method developers use to visualize and construct code using diagrams and other tools for managing complexity. The sector took off with IBM’s purchase of Rational Software in 2003 for $2.1 billion, and Borland’s acquisition of TogetherSoft in 2002 for $185 million. But, according to Sinha, there’s still plenty of room for innovation.

Architexa currently has four employees. Sinha says it has been getting a lot of interest from big companies—Disney, Google, Motorola, and VMware are some of the ones trying out Architexa’s software. He says the product has more than 900 users, but wouldn’t say who’s actually paying for it yet. The company’s revenue model is subscription-based, which is different from competing software products that have perpetual licenses. “We want to make sure the developer benefits on a day-to-day basis” and therefore will renew his or her subscription regularly, Sinha says.

A key benefit of participating in MassChallenge has been the mentorship, Sinha says. “It’s been great to get feedback to refine our pitch,” he says. The kinds of lessons that have helped most: branding, intellectual property, customer development, and, more generally, being inspired. Mentors like James Woodward, Alec Karys, and Michael Shumann have helped Architexa with its priorities and timing—things like “you’re not ready at this time for this, focus on these other things,” Sinha says—as well as understanding customers and sales channels.

It’s still early days for Architexa. The company doesn’t need venture capital yet, for instance. As it heads down the home stretch in the startup competition, what it needs is to gain traction, and to raise a little bit of money so it can afford to hire experienced sales and marketing people.

“We’re trying to do it slowly and carefully,” Sinha says. “We’re working hard, we’re building a company, and we’ve made a huge amount of progress.”

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“Why not have a high-tech company in Michigan?”

This is the question Bill Hamilton asks of those incredulous of the possibilities of success of a software company based in Okemos, MI. Hamilton, an Ann Arbor native, started TechSmith in 1988, and the company, best known for its screen-capture software, has weathered the challenges of a startup from the rust belt state.

“We see a lot of positives being here in Michigan,” Hamilton said in an interview last week. “The one problem we have is more of a psychological problem than a real one. And that is when we go to recruit people from outside of Michigan, the press is so bad on Michigan right now, so we get people who have a lot of pause.”

Working in a state known more for blight than innovation hasn’t seemed to hold TechSmith back. Hamilton expects the company will end the year with about $41 million in sales.

TechSmith first introduced its flagship product, Snagit, in 1991. And since then, the technology—which allows users to take a shot of their PC screen, save the snapshot, manipulate it, and share it with others—has taken off. But it hasn’t always been steady success for Hamilton and the company. TechSmith has faced challenges common to many startups. The company developed a variety of products, some commercially successful, some not, before finding a viable business model.

Hamilton and a business partner co-founded TechSmith in February 1988, knowing they wanted to develop and sell software products, but they had to start by focusing most of their time on consulting, instead of developing software. “Mostly what we did was help people get PCs to talk to many computers and mainframes,” he said. “We did that for some time. It was partly to put food on the table, but it was also partly to understand what people were looking for.”

After the founders consulted for a few years on the side, they were able to develop their first product—a gateway for local area networks to connect to databases—and were selling it with some success. But an unfortunate partnership stalled the company’s trajectory, at least temporarily. “I made a bad business decision and got into a business relationship with a company that turned out we didn’t have a level of compatibility that we thought,” Hamilton said.

As part of the “divorce,” as Hamilton calls it, TechSmith gave the other company the technology for local network interfaces and was forced to start from scratch, about seven years after the … Next Page »

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Mobile presents an enormous opportunity. Pick your supporting statistic—from 2013 as the tipping point for mobile to eclipse the desktop (comScore) to Gartner’s prediction that 2010 will see the mobile advertising market grow to $1.6 billion. However you want to look at it, mobile is an opportunity that can’t be missed.

Unfortunately, mobile is also the most misused medium we’ve ever experienced, and the misuse, I believe, will unfortunately continue.

The danger in misusing mobile is that your application (or whatever you are putting “on” mobile) will simply fail to attract users. Many have shared with me that their app has been used once or twice and abandoned shortly thereafter. That is not surprising given that only 5 percent of mobile applications are used 30 days after the initial download. Others that have chosen the mobile web approach have seen visitors but little to no real engagement from mobile users.

In short, making the wrong assumptions while creating your mobile strategy can doom your mobile application to the app store graveyard and your mobile website to languish somewhere on the internet.

Over the past year working with companies on mobile strategy, we have seen (and helped create) three nifty ways to overcome these pitfalls:

—Don’t make mobile a mirror of your online experience. The pitfall: A company tries to cram everything on its website into their mobile offering, because they can’t figure out which part of their website to give up on. Instead, you need to research and identify the top 2-5 activities that users need when they are using a mobile device. Eliminate the clutter and you’re giving your target customers a better, richer, more meaningful mobile experience.

—Tailor your mobile offering to the scenarios in which your customers will use it. Typical purchase scenarios differ; for example, when potential customers turn to mobile e-commerce, they have less time for browsing, shopping, and buying. In most cases, the mobile user is multi-tasking; shopping while waiting in line somewhere, walking, etc. This mobile user can be interrupted at any time. Therefore, a quick and easy experience is most vital to completing a mobile e-commerce sale, even if you have to make a trade-off on options or other bells and whistles.

—Clearly identify what the unique mobile needs of your customers are (hint: different from how you sell to desktop users). The same customer acts differently using mobile. Do you know what your target, prospect, or existing customer wants from your mobile offering? If you don’t, you’re likely to spend time, money, and energy creating a mobile offering that sits unused.

Succeeding with a mobile offering should not be left up to serendipity. Success takes forethought, planning, research, and most importantly, an understanding of your unique, specific mobile customer. Tremendous potential exists in mobile offerings, but these offerings need to be carefully tailored to the unique mobile environment.

[This post also appears on the High Start Group blog---Eds.]

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Thomas Thurston is a startup predictor. Tell him about your company, and he’ll tell you whether it will survive or fail.

No, he’s not an investor, or a psychic. By day, Thurston is a mild-mannered researcher and consultant whose training is in law and business. He’s the founder of Portland, OR-based Growth Science International, a research firm that works with entrepreneurs, investors, and corporations on their business strategy. By night, though, he’s testing every possible angle of a theory that could change the way a lot of people think about startup strategy.

Here’s the upshot of Thurston’s recent research, and why it’s important. Pretty much every startup you’ll ever meet will say it is better than its competitors. However you want to measure it—speed, technology, revenue model, whatever—a young company will say it outperforms others in its class. What’s more, it’s smaller and nimbler than the big companies, so it will be able to innovate faster and stay ahead of the curve.

Just one problem: That’s exactly why it will fail.

What a startup should do instead—to give itself the best chance of surviving—is enter the market at the low end of performance, Thurston says. That is, offer a product that’s not necessarily as good as its competitors, but is cheaper and more accessible. “Lower cost, lower performance, and gets better over time,” is how Thurston puts it.

If this sounds familiar, you’ve probably read Clayton Christensen’s books on business innovation. Christensen, a Harvard Business School professor, is the author of The Innovator’s Dilemma, The Innovator’s Prescription, and Disrupting Class, and he is coming to Seattle on May 17 to give the keynote at the Technology Alliance’s annual State of Technology Luncheon. The connection to Thurston is that he and Christensen have collaborated on testing predictions about startups and other companies.

In 2005, Thurston was working at Intel Capital when he got interested in whether a mathematical model could predict startup success or failure better than chance. He plowed through obscure academic papers and popular books, tried different things, and settled on building a sophisticated model based on Christensen’s principles of “disruptive innovation” (more on this definition shortly). Thurston got a hold of 48 business plans from within Intel—new businesses that had corporate funding—and checked how they did (survive or fail) against what Christensen’s model would predict. To his surprise, the model made accurate predictions more than 85 percent of the time, and the results were highly statistically significant.

Thurston decided to take a year off from his job in 2007 to continue the research with Christensen in Boston, co-sponsored by Intel and Harvard. They expanded their analysis to include all new businesses Intel has supported (roughly 100), as well as hundreds of outside companies across different industries and geographies. The result was the same: 85 percent accuracy.

Skeptics would say the model was tested by its own proponents, so it’s not surprising they would find it accurate. But Thurston maintains he is an independent researcher; he would happily switch to another model if it worked better, he says. He has since returned to Portland and continued the work at Growth Science, where doing the modeling is part of his consulting gig. He says he’s been getting lots of interest from companies and venture capitalists seeking advice.

So here’s how the predictions work, in a nutshell. First, a company is classified according to whether its market strategy is “sustaining” or “disruptive.” Sustaining means it is positioned as … Next Page »

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

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

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

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

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

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

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

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Every once in a while, I sit down with a businessperson who brings a unique perspective to a huge global trend—and helps me see things in a profound new light. In this case, that person is Kelly Jo MacArthur, and the global trend is the explosion of social media and its broader impact on corporations.

MacArthur was the former general counsel, senior vice president, and chief of staff at Seattle-based RealNetworks—and she also did a stint at Linden Lab, creators of the virtual world Second Life—so she has her digital media and Internet technologies down cold. A 10-year veteran of Real, she left the company in 2007 and has been focusing on consulting work with startups, big companies, and other organizations across the fields of social media, networking technologies, cleantech and sustainability, traditional media, and arts.

We were talking recently about the future of companies like Twitter and Facebook, and what struck me was the way MacArthur thinks of social media as an inevitable—and inherently predictable—evolution of communication technologies on the Internet. That means smart entrepreneurs and executives should be able to anticipate how all of this is affecting societal behavior, and what the new opportunities will be. What’s more, she’s finding that these technologies are forcing big companies and organizations to completely rethink their core strategy and value proposition—indeed, their very existence.

Here’s an edited transcript of our conversation:

Xconomy: So what are you hearing from companies out in the field?

Kelly Jo MacArthur: In my own work as a strategic advisor to CEOs, various boards, and executives on their corporate strategy, the inevitable conversation is, “What should we be doing with social media?” I’m not a marketing person—they work with their advertising and marketing agencies—but it leads you to the conversation that each business, especially in more traditional, entrenched industries, should be thinking about how they’re relevant in the future. And how we as citizens and consumers are demanding more, and also participating more, in the offerings and opportunities that these businesses have.

There’s a huge opportunity, no matter what business you’re in, if you’re constantly thinking ahead about how we as societies are shifting. Versus focusing on, “Should I be using this tool, or should I have a Facebook page?” You should be using these tools for your … Next Page »

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Don’t think of Seattle-based SEOmoz as a consulting firm. It’s all about software and tools now—and pretty much has been for a couple of years.

That’s the message from founder and CEO Rand Fishkin, who spoke with me last week about the search engine optimization company’s strategy. SEOmoz announced today it is officially handing over its consulting business and existing consulting customers to Distilled, a small search marketing firm based in London, U.K. As part of the deal, Distilled is setting up a Seattle office in the next few weeks, its first in the U.S. The estimated revenue from the consulting business for the first year is $1 million, according to the companies. Meanwhile, the former SEOmoz consulting team is switching over to marketing within the company.

SEOmoz and Distilled have worked together informally since 2007. Their mutual customers include Microsoft, RealNetworks, Avvo, Evogear, Etsy, and Scribd. The new partnership will allow SEOmoz to focus solely on its core software products, which should please its investors. “We have an impetus to maximize the shareholder return and investor value,” Fishkin says. He adds that the move is being made, at least in part, to “maximize the multiplier on an exit.” (Since consulting is essentially a steady fee-for-service business, it has less growth potential than software, which can tap into a much bigger market and therefore command a premium from investors.)

Some quick background on SEOmoz: The company was founded in 2004, originally as a consulting shop, and is backed locally by Ignition Partners and Curious Office. It has 21 employees and generated just over $4 million in revenue last year, up from $1.4 million in 2008. And it has been generating more than 85 percent of its business from its software and tools, which it offers primarily to small and medium-sized businesses to help improve their marketing and Web traffic. (One differentiation from companies like Seattle’s Optify and San Diego’s Covario is that those firms … Next Page »

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Nexamp, a North Andover, MA, company that helps clients design, finance, build, and analyze clean energy projects, has raised $6.5 million in equity-based financing, a regulatory filing revealed today. The four-year-old company, formerly known as NexGen Energy Solutions, originally focused on solar panel installation projects, but has grown to offer other services such as feasibility studies, design and engineering, permitting, and construction. The investors in the funding round weren’t named,  and Nexamp vice president Jonathan Abe, reached by phone, said the company can’t comment on the funding until an official announcement is released next week. However, Nexamp’s directors include Michael Ware, managing director at venture firm Good Energies, which has offices in Washington, D.C.; David Martirano, a general partner at Point Judith Capital in Providence, RI; and Henri-Claude Bailly of Somerville, MA-based RCG Ventures.

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The smell of startup incubators is in the air. Adeo Ressi from TheFunded recently announced that his Founder Institute training program for entrepreneurs is coming to Seattle this winter. And next week, TechStars, the seed-stage investment fund with operations in Boulder, CO, and Boston, is holding its annual reunion event in Seattle amid increasing buzz around the potential for similar programs in the Northwest.

While those incubators seek to launch mostly new tech companies, I’ve also been hearing quite a bit from entrepreneurs and investors about the cleantech and green-energy startup incubator announced last week by McKinstry, the Seattle-based construction, consulting, and energy-efficiency firm. The new innovation center will be housed at McKinstry headquarters in Georgetown, and is slated to be complete next spring.

“We are on the forefront of creating some of the most innovative solutions to eliminate energy waste in the built environment,” said Dean Allen, CEO of McKinstry, in a statement. “Now with the Innovation Center we will have the opportunity to quickly advance new technologies that are working toward that goal, as well as partnering with innovative entrepreneurs to bring new technologies to market.”

I haven’t had a chance to sit down with McKinstry yet, but I’ve already heard some strong reactions from the local cleantech community. Here are a few:

Michael Butler, CEO of Seattle-based investment bank Cascadia Capital and a strong supporter of Northwest energy companies, says the new incubator is a “big deal, I think and hope.” He adds, “The Puget Sound marketplace is not creating a critical mass of clean tech companies. We don’t have the ecosystem in place. I am really hopeful that the McKinstry effort can fill some of the void. We are falling further behind other regions, and the window will start closing if we can’t get the ecosystem built.”

Rick LeFaivre, managing director at Kirkland, WA-based OVP Venture Partners, says the incubator “could be very interesting” but that “it’s still early,” and details are still being worked out. “I’ve talked several times to the McKinstry folks about what they want to do and I think it could be very helpful to kick-start cleantech companies in the region,” he says. “A truly effective incubator needs more than access to space. It needs access to capital and business acumen to help the startups develop and get ready for venture financing (if necessary and appropriate). This, of course, is what Accelerator does in the biotech space. I have offered to work with the McKinstry team to help develop this concept, and I’m excited about what it could become. I think back to the two years I spent working with the EnerG2 team [energy storage startup in Seattle] to get them ready for venture funding, and they would have been a good candidate to go into an incubator while fleshing things out.”

Burt Hamner, entrepreneur and founder of Hydrovolts, a Seattle-based water-energy startup, stresses the importance of communication between the people running the new innovation center and local entrepreneurs and financiers. “Incubators can be great things,” Hamner says. But it “depends on how they are set up and their connections.” He says he “must wait and see,” and that in the meantime, it’s important for McKinstry to “inform the clean tech community what they are doing.”

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Seattle-based McKinstry, the construction, consulting, and energy firm, announced today it is developing an innovation center for new and emerging cleantech and green energy startups. The 24,000-square-foot incubator will be housed at McKinstry headquarters in Seattle’s Georgetown neighborhood, and is slated to be finished in the spring of 2010.

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If you spend much time in the business or legal world, “due diligence” is a phrase you hear a lot. It’s the polite term for the time you have to spend figuring out whether a potential client, vendor, investment, acquisition, or partner is legit or phony, smart or just slick.

Part of the process involves discreetly (or not so discreetly) calling around, trying to find people who know the person or entity you’re “diligencing.” But what if due diligence weren’t such a guessing game? What if there were a central marketplace where you could declare which type of information you need, pick an expert, and—for a reasonable fee—get an hour of private telephone consultation?

That’s the whole idea behind Zintro, a Web-based client-expert matching service being rolled out in beta form by serial entrepreneur Stuart Lewtan. The founder of Lewtan Technologies, a maker of financial analytics software sold to UK-based DMGT in 2004, Lewtan believes there’s a problem with existing professional-networking services such as LinkedIn. They’re great for staying in touch with your acquaintances, he says, but they aren’t really designed to bring about conversations between people who don’t already know one another.

“LinkedIn is an excellent tool, but it doesn’t’ really provide a good mechanism for reaching an agreement to talk,” Lewtan says. “Everything Zintro does is built around trying facilitate introduction, qualification, payment, and all the other aspects of connecting two people and creating a safe environment for them to communicate and exchange information for a fee.”

Here’s how Waltham, MA-based Zintro’s Web service works: Say you’re an investor and you’re thinking about buying a big chunk of stock in A123Systems, the Watertown, MA-based battery maker that went public last week, but first you want to know more about lithium ion batteries. You sign up for a “client” account at Zintro.com and fill out a form describing your information needs. Zintro uses what Lewtan calls “fuzzy search” algorithms to comb its database of experts, who all fill out detailed profiles when they sign up for the service. Zintro sends your inquiry to appropriate experts who indicated they know something about batteries, electric cars, or material science.

These experts are then free to respond with a brief proposal outlining their rates and their qualifications for talking about A123. From your Zintro dashboard, you can sort through their proposals; if you need more details, you can request them from the experts via Zintro’s internal e-mail system.

Once you settle on an expert, Zintro helps you schedule a phone call, and charges your credit card or PayPal account for the amount of the expert’s fee, plus Zintro’s 30 percent introduction fee—say, $100 for the expert plus $30 for Zintro. The funds go into an escrow account, and Zintro provides a dial-in number that both parties can call at the agreed time.

Once the call is over and both parties confirm how much time was used, the fee is released to the expert. There’s also an escape hatch: if you … Next Page »

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Xerox (NYSE: XRX), the document-management giant headquartered in Norwalk, CT, said today that it will buy Affiliated Computer Services (NYSE: ACS), a Dallas, TX-based business process outsourcing firm, for $6.4 billion in cash and stock. The acquisition will turn Xerox—like IBM or Dell—into a hybrid technology and services firm; ACS has 74,000 employees focusing on IT support, human resources, finance, and customer support for clients in government, healthcare, and other industries.

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It may be one of the great untold success stories of the Seattle technology scene. For the past decade, R.W. Beck, an engineering and business consulting firm, has been quietly making a name for itself in key technical areas like energy and water management.

Now the Seattle-based firm with 550 employees is becoming part of the closely guarded empire of SAIC (NYSE: SAI), the government contractor also known as Science Applications International Corporation. The companies did not disclose financial terms under the agreement they announced two weeks ago. But Xconomy has learned from a source familiar with the deal that the price was $155 million.

That amounts to 1.5 percent of SAIC’s $10.1 billion in annual revenue, and it seems unlikely SAIC will interpret R.W. Beck’s price tag as a “material event” requiring disclosure. Still, at $155 million, the deal represents one of the biggest acquisitions—if not the biggest—of a Seattle-area firm since Bellevue, WA-based SnapIn Software was bought by Nuance for $180 million last summer.

Even though SAIC’s core business is contract research and engineering, R.W. Beck’s focus on energy and water infrastructure represents a somewhat unusual foray into civil engineering for the San Diego conglomerate, which generates most of its revenue from defense and intelligence contracts. (A more characteristic deal for SAIC was last week’s acquisition of Atlan, a cybersecurity product testing firm based in McLean, VA, that specializes in validating cryptographic modules, including software and hardware components, to meet federal standards.)

If nothing else, though, SAIC has been extraordinarily adept at catching the big waves in government contracting—and right now, energy is huge. One of the biggest clues to SAIC’s plans for R.W. Beck was a contract that my colleague Bruce Bigelow noted in February, which basically pre-qualifies SAIC to compete for energy conservation contracts throughout the federal government.

Another noteworthy energy-related deal that SAIC landed was a $14.9 million contract to develop economical methods for making JP-8 grade jet fuel from algae. It turns out the Pentagon is interested in developing alternative sources for all that jet fuel that U.S. military aircraft use.

When I reached R.W. Beck president and CEO Russ Stepp last week, he said the deal with SAIC is expected to close on August 1. He had no comment on its size, but did speak freely about what the deal means to both sides.

First of all, the acquisition does not mean R.W. Beck employees will be relocating en masse to San Diego, nor will there be downsizing of the firm’s business operations, Stepp says. Most employees … Next Page »

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The old joke about management consultants is that they’ll look at your watch, tell you what time it is, and hand you a bill for $50,000.

But if you’re a healthcare company and you hire Scientia Advisors, here’s what’s more likely to happen: they’ll look at your watch, notice that it’s running slow, take it apart, fix it, put it back together, and tell you how—if you tweaked the design—you could make millions selling a different kind of watch.

Not literally, of course. The Cambridge, MA-based consulting firm works only on life-sciences strategy questions, not timepieces. But after a recent visit to Scientia, I came away feeling like it was one of the most unconventional consulting firms I’d ever seen.

Do you expect your consultants to spend months learning about your business? Forget it—Scientia will send people who already understand your industry, and they’ll spend only 5 percent of their time on site, according to Harry Glorikian, the firm’s co-founder and managing partner. Are you used to consultants who finish an engagement by doing a big PowerPoint show, handing over a few thick three-ring binders, and leaving you to ponder how to use the information? Forget that too. Glorikian says Scientia’s goal is to give clients the data and context they need to make a strategic decision about their problem, then and there.

“We want to be able to walk in and not have to learn a lot from the client to be able to add value,” Glorikian told me. “We bring a lot of knowledge that our clients are not used to consultants having.”

In that respect, the 30-person firm takes its cue from Glorikian himself. Prior to founding Scientia in 2006, the Boston University MBA graduate spent 20 years in the healthcare and life sciences business, including senior management stints at X-Cell Laboratories, Signet Laboratories, and Applied Biosystems (NYSE: ABI). Co-founding partner Arshad Ahmed worked on healthcare, life sciences, financial services, and other areas for Boston Consulting Group, Integral Inc., and McKinsey spinoff Potomac Partners. The third co-founder, Amit Agarwal—who runs Scientia’s West Coast operations from Palo Alto, CA—also has a deep background in the consulting and financial services worlds. And among its crew of consultants, the firm counts both youngsters with fresh science and business degrees and industry veterans from places like Millennium Pharmaceuticals and the dialysis division at healthcare giant Baxter.

Scientia’s signature style, according to Glorikian, is to bring a deep understanding of the markets and technologies relevant to its clients; to build its own data from the ground up, rather than relying on market research purchased from other companies; and to analyze markets using proprietary software tools, mostly developed by Ahmed.

It’s a style that seems to be working so far. In the two and a half years since Agarwal, Ahmed, and Glorikian started the company, it has only had one consulting proposal turned down by a potential client. “One customer said, ‘You’re the most cost-effective firm I’ve ever used,’” says Glorikian. “I said, ‘You’re calling us cheap!’ And he said, ‘No, you don’t understand. When I ask you guys a question, I usually get an answer. If I ask another firm the same question, I get back a project.’”

The clients coming to Scientia usually need answers fast. The typical customer, Glorikian says, is a company looking to expand into a new market, or get rid of products that aren’t selling well, or take a cyclical business and transform it into something less beholden to economic shifts. Scientia can help clients understand which markets hold the biggest opportunities, and how those opportunities match up with their existing capabilities.

I asked Glorikian to walk me through a real example. (He left out identifying detals to protect the client’s confidentiality.) “We had a Fortune 50 company come to us and ask us to look across a number of industries to determine what areas they should be playing in,” he recounted. “So we took them through a number of screens. One of them was for simple things like the size of the market, its growth rate, and profitability; you obviously don’t want to be in low-growth, low-profitability markets. Then we did a quick spin of their R&D groups to understand their competencies. And then we went back and … Next Page »

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Reading, MA-based Vitalize Consulting Services, which manages IT implementation projects for big healthcare companies, announced today that it has acquired rival r3 Health Partners of Santa Ana, CA. Financial terms of the deal were not disclosed. Vitalize is backed by SV Life Sciences, Ferrer Freeman and Company, and Bank of America.

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