Just came back from the Washington Biotechnology & Biomedical Association’s annual meeting in downtown Seattle, where 500-plus biotechies and distinguished guests (including more than a few local politicians) gathered for a quiche-and-berries breakfast and some keen networking.

The keynote speaker was Elias Zerhouni, the former director of the National Institutes of Health and now a senior fellow at the Bill & Melinda Gates Foundation. Just a few highlights from his talk here:

Zerhouni laid out the top five challenges in public health, as he sees it. Nothing too surprising, but a good way to frame the whole healthcare discussion:

1. The shift from acute to chronic conditions. (“This is a worldwide issue,” he emphasized. “This is the new global health horizon.”)

2. Aging population.

3. Health disparities.

4. Emerging and re-emerging infectious diseases. (Pandemics, for example.)

5. Emerging non-communicable diseases. (Things like obesity and depression, the latter of which the World Health Organization predicts will be the No. 1 cause of disability and dysfunction for people aged 25-44.)

As a world-class radiology researcher, Zerhouni also spoke to the scientific challenges the industry faces. He said the fundamental scientific barrier to doing “translational” research—that which leads to new products like drugs or devices—is the complexity of biological systems involved in diseases. “The explosion of data does not equate to explosion of knowledge,” he said. (This is a common theme across all fields of science and technology.)

On this front, Zerhouni stressed the importance of both external and internal sources of innovation. Meaning, the state of Washington should “find ways of bringing in collaboration on the translation or creation of knowledge.” He pointed out that “building relationships with the Asian Rim is probably your strategic advantage.”

For the politicians in the audience, Zerhouni noted, “Today when you get elected or not elected, the main driver is jobs, jobs, jobs.” He said his dream is that in a few years, biomarkers and healthcare stats will impact political campaigns, to the tune of, “In my district, Body Mass Index has dropped from X to Y.” (Luke previously reported on the issue of jobs being the driver of public support for biotech.)

The last issue Zerhouni addressed was a particularly interesting one: culture wars around science and technology. “Don’t be oblivious to the political, cultural, and moral aspects” of biotech and biomedical work, he said. “Be careful to not assume that everyone in the world believes what you do is holy and good.” Having dealt with the profound issues of evolution vs. creation in Washington DC—most notably in the context of stem cell policy—Zerhouni was sharing some hard-earned wisdom that everyone in the room could take home with them.

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Some tech companies seem to be at their best when things are at their worst. Those are the ones you really need to keep an eye on, especially in a recession. Isilon Systems is one of those companies.

The Seattle-based data storage firm (NASDAQ: ISLN) is announcing its third-quarter earnings this afternoon, and it will be interesting to see how well its products are selling across a wide range of industries—everything from movie studios and media companies to financial institutions and biomedical research organizations. I recently sat down with Isilon’s founder and CEO, Sujal Patel, for a wide-ranging interview about the nine-year-old company’s technology and business strategy. It makes for a pretty compelling case study of a tech startup’s growing pains, and how it has bounced back from adversity to become a leading player in a crowded and competitive field.

In case you don’t know all the twists and turns in Isilon’s history, here’s a quick recap. Patel, a former engineer at Seattle-based RealNetworks (NASDAQ: RNWK), co-founded Isilon in January 2001. The basic idea was to provide cheaper and more efficient data storage for companies needing to host or deliver video, music, and other multimedia content that requires a lot of storage space. In his previous role as chief architect of RealNetworks’ media delivery software, Patel had seen many customers struggle to upgrade their storage capabilities. So there was a real problem to solve. But the tech bubble had collapsed, so customers weren’t necessarily in the mood to buy. Patel says he “pretty much timed the worst spot of the decade to start a company.”

What’s more, there were already about 250 venture-funded storage companies out there, Patel says, and about 50 of them sounded just like Isilon. Patel says he built his business plan around solving the specific problem Real’s customers had, and “how that problem would be pervasive across all mid-range to large enterprises over the next decade.” To start with, he set an incredibly narrow customer focus on photo-sharing and streaming media websites, and media companies.

Isilon’s technology approach was to cluster together a large number of storage “bricks”—each one includes disks, memory, processing, and networking—into a single storage unit. It was a novel approach in the field of network-attached storage, which today is a $4 billion industry with big players like NetApp, EMC, and Hewlett-Packard. Isilon’s technology requires solving some very tough software problems, but the payoff is better storage performance that is also cheaper and easier to manage, for companies dealing with huge amounts of unstructured data. “We can build one gigantic network drive, and we can scale it as the customer’s needs change over time,” Patel says.

Venture capitalists were sold. In August 2001, Isilon closed an $8.4 million funding round …Next Page »

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Seattle-based Decho, which is an EMC (NASDAQ: EMC) company, and China Telecom announced today a partnership to deliver cloud-based data services to Chinese Internet users. The companies’ first offering is called eYun, and is based on Decho’s Mozy online backup service. Financial terms of the partnership weren’t given. Decho was formed in November 2008 by Hopkinton, MA-based EMC, in a merger between Utah-based Mozy and Seattle-based Pi.

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From the seas to the stars, Microsoft Research is trying to increase its impact. The Redmond, WA-based computer science research organization is releasing new software tools aimed at helping scientists manage and visualize huge amounts of information, and make discoveries in fields as diverse as astronomy and oceanography. The announcement of the free tools, called Project Trident, is being made today at the 10th annual Microsoft Research Faculty Summit in Redmond.

Everyone knows information overload is a huge issue. Just try being a scientist these days. With increasing amounts of data available from the Internet, satellites, telescopes, cameras, gene sequencers, and networked sensors, researchers—and organizations in general—are looking for ways to cut through the deluge and focus faster on doing the analysis and getting results, rather than sorting through data.

It’s also a problem faced by big companies, financial analysts, and medical institutions. So, ultimately, Project Trident is not aimed at spearing purely scientific research problems—it’s software that also could yield big results for business down the road. “If we look back at the challenges faced in business, scientists were facing them years if not decades before,” says Roger Barga, a Microsoft researcher and principal architect on Project Trident. “We’re getting an early look at what our business customers will expect in their products in 3-5 years. It’s pushing another Microsoft [Windows] platform into new areas.”

Project Trident started around 2006, when Barga began collaborating with legendary Microsoft researcher Jim Gray (who was lost at sea in January 2007) on tools to help oceanographers make sense of volumes of data on things like temperature, salinity, and the physics of seafloor hydrothermal vents. “There’s a clear understanding of the science and how to put instruments in the ocean, but there’s a gap in how to convert data streaming in from the ocean to useful analysis,” Barga says. “Jim had this vision of …Next Page »

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In case you missed it over the holiday, an electrical fire and power outage at Fisher Plaza near Seattle Center late on Thursday night disrupted a number of websites and services, including those of local tech companies Redfin, Survey Analytics, and Big Fish Games, as well as Microsoft’s Bing Travel site (formerly Farecast), Verizon’s DSL service in the Seattle area, and local television and radio stations including KOMO.

There were no injuries, and most operations were back to normal by the weekend, though Bing Travel was down until late Saturday morning. The news was reported by local and national outlets, including TechFlash, The Seattle Times, The Seattle P-I, and CNET.

Internet companies were directly affected as far away as Marlborough, MA-based Authorize.net (now owned by CyberSource), a credit-card service for online merchants that uses a data center at Fisher Plaza. And there was a ripple effect from there. Annette Tonti, the CEO of Rhode Island-based MoFuse, a network of build-it-yourself mobile sites, says her company’s service was disrupted on Friday because it uses Authorize.net to process credit cards. “The issue for us was getting customers signed up,” Tonti says. “However, we were not affected too long and everything appeared to be working fine by later in the day.”

“Companies should have servers at various physical locations, spread far apart, to keep isolated incidents like a fire from taking down a service,” says David Berube, MoFuse’s founder and chief architect. “I’m sure Authorize.net does have a redundant system, and their quick response to get service back up shows to me that they do have some sort of redundancies in place.”

Closer to home, there has been quite a lot of discussion about what went wrong, and how companies can better prepare for such outages, which seem rather inevitable. The cause of this particular fire is still under investigation.

Praerit Garg, co-founder of Symform, a data storage startup in Seattle, agrees it’s important …Next Page »

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There was a lot of discussion about the top trends in energy, biotech, and computing at last week’s technology summit in Seattle hosted by OVP Venture Partners. The afternoon breakout session on information technology, attended by a few dozen IT leaders, focused on the theme of “big data.” This was all about the opportunities and challenges faced by companies, research organizations, and IT departments who need to handle very large amounts of complex data, or sell software and services to do the same.

OVP managing director Mark Ashida kicked things off by talking about how managing data in the Internet cloud fits into OVP’s investment themes. “It has become much easier to link data together at a higher level, and get higher value,” Ashida said. “We’re very excited because big data and biology are converging. Lots of startups are dealing with huge amounts of data.” (By “huge amounts,” think terabytes of data per day, which is roughly the amount of information in a human genome.)

A lively panel discussion ensued, with presentations from a half-dozen tech companies from around the country that are trying to solve different parts of this problem. The list of firms—most of which are not in OVP’s investment portfolio—included Specific Media, Complete Genomics, Cloudera, Vertica Systems, and Aster Data Systems.

Then it was the godfather of cloud services’ turn to speak. Werner Vogels, Amazon’s chief technology officer, gave an overview of where the industry is headed, and what kinds of new problems will be solved. Vogels came to Amazon in 2004 after 10 years as a research scientist in the field of distributed computing at Cornell University, and has led Amazon’s considerable efforts in Web services, among other things.

Vogels first defined “cloud computing” as he sees it—a term that didn’t exist when his company launched Amazon Web Services in 2006. “There is a definition I actually like: cloud computing is a style of computing where you have massively scalable IT-related capabilities that are available as a service, over the Internet, to multiple customers.” He added that the storage and computing resources also …Next Page »

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Seattle data-visualization firm Tableau Software announced its 16th consecutive quarter of record sales, and a host of new customers acquired in the last three months of 2008. Tableau’s new customers include AAA Allied Group, Active Network, Mitel Networks, the University of Texas at El Paso, and U.S. Auto Parts.

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If not for a reprieve granted in mid-November by the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR), most businesses in the Bay State would be spending these last two weeks before the New Year rushing to meet state mandates requiring the encryption of personal data about Massachusetts residents stored on laptops or transmitted across public networks. But while businesses now have until May 1—rather than the original January 1 deadline—to comply with the new regulations, which are designed to combat a recent epidemic of corporate data breaches and identity theft in the state, the burden on companies to protect personal data hasn’t gotten any lighter. Local companies, including Web-based businesses that collect information about their users, need to start thinking now about how they’ll comply with the new standards, or face increased liability later, say local security industry leaders.

“The Massachusetts regulation is extremely broad in scope and potentially covers every business of every size, even mom-and-pop joints that do credit-card transactions or just write someone’s name and account number in their ledgers,” says Nagraj Seshadri, head of product marketing at Utimaco Software, a security subsidiary of Burlington, MA-based antivirus company Sophos. “It’s also got a lot of implementation-related specifications. Many of the earlier regulations simply said ‘protect the data,’ but this gets into the details about encrypting data on your laptops, ensuring your wireless networks are encrypted, and verifying that your operating system patches and antivirus signatures are up to date. It is something that can potentially be quite far-reaching.”

Published in September, the Massachusetts regulation defines “personal information” as a resident’s last name and first name or first initial whenever it’s stored in combination with a social security number, a driver’s license number, a bank account number, or a credit or debit card number. The new rules make Massachusetts one of only two states that require all businesses to encrypt such data whenever it’s stored on a laptop hard drive or transmitted electronically. (The other is Nevada.) And as Seshadri notes, the rules affect pretty much every business in the state—even those that don’t collect consumer financial data—since they apply to employee data, such as tax withholding data and automatic deposit information, as well as consumer data.

In at least two ways, however, the new regulations could become a boon for the local economy. After massive and well-publicized incidents of data loss at area companies, including the 2006 theft of some 45 million credit card numbers from Framingham, MA-based TJX (NYSE: TJX) and the revelation last spring that intruders had place credit- and debit-card-scooping malware on hundreds of servers owned by the Scarborough, ME-based Hannaford Bros. supermarket chain, the new measures may help to restore consumers’ confidence that companies can protect their personal information.

Moreover, because only 20 to 30 percent of business already own the software needed to protect data on laptop hard drives and wireless networks, according to a study by Forrester Research, the new regulations could also mean a bonanza for security software companies, which happen to be one bulwark of the Massachusetts technology economy. OCABR has estimated that the average small business with 10 employees will need to spend about $3,000 up front on the required software and up to $500 a month for ongoing administration, while bigger organizations could end up spending hundreds of thousands of dollars.

Local security companies are already stepping up to offer their services. Utimaco, for example, sells a system called SafeGuard that’s used by administrators to enforce encryption policies and manage encryption keys across a company’s entire collection of PCs, laptops, PDAs, and e-mail systems. “The thing about this regulation is that it doesn’t simply say ‘encrypt it and forget it,’” says Seshadri. “It says you need to …Next Page »

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Seattle-based Amazon Web Services announced today it is providing free access to centralized data sets in the Internet cloud. The Amazon subsidiary will host large data sets from genomics, bioinformatics, economics, U.S. Census information, and other areas, which researchers and developers can access from the Amazon Elastic Compute Cloud software platform. The effort is intended to fuel innovation, accelerate the pace of new discoveries, and, of course, bring more users into Amazon’s cloud computing services.

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Automatic Internet-based backup services—the first form of “cloud computing” to hit the mainstream market—have been making news lately. Last Wednesday, the Mozy division of Hopkinton, MA-based EMC (NYSE: EMC) announced that its software will power an online backup service available to buyers of Thinkpad SL notebook computers, the newest line of business laptops from Lenovo. Not to be outdone, Boston-based Carbonite is expected to announce soon that it has formed an even broader partnership with the Chinese computer maker: All Lenovo IdeaPad and IdeaCentre computers—the company’s lines of home and home-office laptops and desktops, respectively—will now come with Carbonite’s online backup software pre-installed.

If IdeaPad and IdeaCentre owners give Carbonite an e-mail address and password, they’ll get 30 days of free backup service on Carbonite’s servers, after which they can elect to continue the service at $49.95 per year. The arrangement is a coup that could bring Carbonite tens of thousands of new users at a time when the competition for customers of online backup services is all about exposure, branding, and name recognition.

At the same time, Carbonite is about to announce formally that it has closed a $20 million financing round, the third since the company’s founding in 2005. (It raised $2.5 million in Series A funding in February, 2006, and completed a $15 million Series B round in May, 2007.) Carbonite co-founder and CEO David Friend, a veteran of the Boston technology scene with five previous startups to his name, calls the new financing round “a real achievement for the company,” given the general sense of caution prevailing in investment markets. All of the company’s existing investors—including Menlo Ventures, 3i Group, and CommonAngels—came back for the latest round, but it also included a new institutional investor, Performance Equity of Stamford, CT.

For the Series C round, “We were looking for somebody with their feet more in Wall Street than in Sand Hill Road, to show that we have a working business model,” Friend says. “This is no longer venture capital that we’re raising—it’s expansion capital, and the people who gave us term sheets did so because they looked at Carbonite and saw that we have a marketing engine where we can put a dollar in the top, turn the crank, and get four or five dollars out the bottom over the next two or three years.”

Whether online backup services really turn into that kind of money machine—and who ends up with the profits—will depend to a large extent on how quickly consumer awareness of the technology spreads and which company can get its name in front of computer users first.

Most computer users are aware of the possibility of losing the data on their local hard drives, whether through theft, hardware failure, or some other disaster. And most make at least desultory efforts to back up crucial business or personal data, often on DVD-RW discs or on a second, external hard drive. But relatively few people so far are aware of services like those from Carbonite and Mozy, which copy the data on PC hard drives to far-away data centers over broadband Internet connections. These backups occur automatically whenever there is new data to be duplicated. In the event that local data is lost, it can be restored by …Next Page »

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Overland Park, KS-based Sprint, which is building a nationwide WiMax network called XOHM, has picked Boston’s uLocate to power the local information and mapping services for XOHM subscribers. XOHM, a so-called “4G” network, will cover entire metropolitan areas with broadband wireless data at speeds approaching those of cable Internet service. In an announcement yesterday, uLocate said developers will be able to use its Where platform to build information services that use the location information built into WiMax signals.

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When I pulled up to 35 McGrath Highway in Somerville, just a couple of doors down from Sav-Mor Liquors, all I found was a squat, brown, windowless concrete building and an unpaved parking lot. It was a hot day in mid-July, and I was searching for a new data center company with the geeky name [2N+1] (the brackets are part of the name). But there was very little about this old building, wedged between the McGrath overpass on one side and weed-lined railroad tracks on the other, that looked high-tech.

But in the computing world, I reminded myself, data centers are about as unsexy as it gets. They aren’t about software—the flashy Web-based games, social networking and media-sharing services, or business systems we often write about here. They aren’t even about the hardware that runs the software—the gleaming, blinking racks of blade servers from the likes of HP or EMC. Data centers simply provide space, electricity, cooling, and connectivity for that hardware. They are, in other words, the technology behind the technology behind the technology; as long as the power is on, nobody notices them. The less flash, the better.

Which is why I concluded that I must be in the right place. I stepped over some construction detritus, went in the unmarked door, and met two of the founders and principals at [2N+1], Vincent Bono and Will Locandro. They showed me into the conference room. As it turned out, this was one of the only finished spaces in the five-story building. But the flurry of remodeling would soon be over, Bono assured me. “We are 30 days from launch, and we have customers ready to move in on day 31, literally,” he said.

The construction didn’t faze me, since I was visiting [2N+1] to find out what it takes to put together a brand-new data center—or, to be more exact, a “colocation center” (also known as a “carrier hotel”) where multiple companies that have run out of room or power in their own facilities put their extra server, network, and storage gear. Though I’ve been writing about information technology for a decade, this is one corner of the business I’ve never really explored. I’ve been wanting to fill that gap recently—in part because data centers are now at the heart of so many companies’ IT infrastructures, and in part because the idea of “cloud computing,” or trusting computing jobs to far-away resources that are administered like utilities, is catching on so fast.

But there’s also another, more personal reason: our recent experience with hosting provider The Planet, which suffered a huge electrical explosion on May 31 at its main data center in Houston, where Xconomy’s own servers are located. We got through the crisis okay, but it left me wondering how the heck data centers work, anyway, and what can be done to make them more reliable.

Bono and Locandro seemed pretty qualified to educate me. Not only do both gentlemen have a long history working for local infrastructure providers—Bono as a network and data center designer for data centers HarvardNet and Boston Datacenters and fiber network operator Global NAPs, Locandro doing sales and business development at Cabletron, Riverstone Networks, and Enterasys—but they’d just spent months retrofitting this hulking pre-computer-age building for up to 22,000 square feet of server equipment, largely on their own dime.

The most important thing about the former furniture factory, Bono and Locandro explained to me right away, isn’t the fact that it’s virtually fireproof, or that its steel-reinforced concrete construction can support bone-crushing loads of 400 pounds per square foot on the upper floors and 2,500 pounds on the lower floors, or that it has its own 15,000-gallon diesel fuel tank, big enough to keep backup generators running for four days. No, the most important thing about it is its location. The neighborhood may look inauspicious to passers-by, but it turns out that underneath those weedy railroad tracks runs a valuable resource—fiberoptic cable. “Here’s Boston and here’s Cambridge,” says Locandro, gesturing at a map. “Pretty much every ounce of fiber between the two cities runs down these tracks.” That enables [2N+1] to tap into fibers owned by every major network provider, making its facility carrier-neutral—which appeals to customers who may already have a contract with the likes of Verizon, Qwest, Lightower, Cogent, or Level3.

Just across the tracks, moreover, is a facility owned by NSTAR, the Boston area’s largest electrical utility. “There is a lot more that goes into looking for a location than just finding a big, empty, concrete building,” says Bono. “Not only do you have to be proximate to fiberoptic resources for multiple carriers, but you need to …Next Page »

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In February 2006, Swedish physician, statistician, and global health expert Hans Rosling brought down the house at TED (the Technology, Entertainment, and Design conference in Monterey, CA) with a presentation on health and economic trends in developing nations. But it wasn’t the content of the presentation so much as the software he was using that grabbed the audience: called Trendalyzer, the program converted Rosling’s data into colorful animated graphs. By representing countries as dots of varying size that moved against the x and y axes over time, Trendalyzer brought vivid life to changes such as the last century’s general improvements in income and life expectancy—and highlighted how health and wealth in once-lagging regions such as Asia have surged ahead, while they have improved much more slowly in areas such as sub-Saharan Africa.

To many in the audience (and to me, when I watched the online video of Rosling’s TED talk), the Trendalyzer presentation was a revelation, seemingly heralding a new era in which clever design choices coupled with serious graphics-processing power would cause all sorts of interesting trends in complex data to leap out at computer users. Indeed, the next year, Google announced that it had acquired the Trendalyzer software from Rosling’s non-profit Gapminder Foundation, saying that it hoped to improve and expand Trendalyzer and make it “freely available to any and all users capable of thinking outside the X and Y axes.” Unfortunately, like many other early-stage technologies that get anointed by the massive buzz amplifier that is TED, Trendalyzer has since receded from view. Google hasn’t done much with the software, beyond making a Trendalyzer-like gadget called “MotionChart” available as part of Google Spreadsheets.

Meanwhile, there’s a company in Newton, MA, that has spent the better part of this decade quietly applying many of the same design principles behind Trendalyzer to business problems—and selling its software, to boot. It’s called Visual I|O, and I spent some time recently learning about the company’s remarkably beautiful Web-based business analytics software, called DecisionIris, from company co-founder, president, and CEO Angela Shen-Hsieh.

Now, that’s probably the first time I’ve ever used “beautiful” and “business analytics software” in the same sentence. While Visual I|O markets DecisionIris as a business intelligence tool, and making sense of complex business data is certainly one of its strengths, it would be grossly unfair to lump the program in with the kinds of graphical tools offered by traditional business intelligence companies like SAP and Cognos, which are closer to the primitive chart wizards in Microsoft Excel than to anything a professional information designer might conceive. If you’re an aficionado of the work of Yale information designer Edward Tufte—author of The Visual Display of Quantitative Information and Visual Explanations and the man the New York Times has described as “the da Vinci of data”—then you will immediately feel at home with the way DecisionIris represents logical relationships and changes over time, and with the innate sense of color and proportion built into the software.

I’m gushing, I know, but bear with me. The program’s beauty is undoubtedly traceable to the fact that Shen-Hsieh and her fellow co-founder Mark Schindler are both Harvard-trained architects, not software engineers. The pair created Visual I|O as a spinoff of Chicago-based consulting firm Schindler + Associates (where Mark was a partner) in 2002; they wanted to take the visualization software the firm had created to help clients such as pharmaceutical companies get a high-level view of their data and turn it into a commercial product.

Shen-Hsieh (pronounced “shen-shay”) and Schindler felt sure that there was a larger market for software that would help business managers visualize data more flexibly—switching between space-based and time-based representations, for example—depending on the kinds of insights being sought. After all, why go the trouble of collecting terabytes of data about a company’s performance and assembling it into huge, expensive databases and data warehouses if you can’t play with it at will? “If you look at the history of information technology, so much of it is focused on storing and accessing data,” Shen-Hsieh says. “We focus in the last 18 inches–from the screen to the brain. We’re about the cognitive piece.”

Since a picture equals one kiloword, I’ll refer you at this point to the picture at right. It’s a screen shot from a demo Shen-Hsieh walked me through, based on real data about residential properties for sale in the Boston suburbs of Brookline, Newton, Waltham, and Watertown. It illustrates how DecisionIris can help users draw meaning from a mess of data by bringing out multiple dimensions of the data simultaneously; an example about real estate seems easier for most people to relate to than heavy business analytics. (Click on the picture for a larger version.)

Each dot in the chart represents a house. The size of the dot represents the house’s asking price, and its color shows which town it’s in—Brookline is purple, Newton is blue, Waltham is green, and Watertown is yellow. The horizontal axis indicates the year the house was built, and the vertical axis indicates its square footage. (Notice how that’s already four dimensions of data, packed into a type of graph usually used for no more than two dimensions.)

What observations can be drawn from the chart? Well, right away, it’s obvious that houses for sale in Newton are older, bigger, and more expensive than houses in the other cities. That makes sense, given that Newton (where Visual I|O happens to be located) was one of Boston’s first major suburbs, and is still home to …Next Page »

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Reflecting the general economic slowdown, venture investment in U.S. companies decreased moderately in the second quarter of 2008, according to reports released over the weekend by Dow Jones VentureSource, a unit of the financial news giant’s enterprise media group, and by the MoneyTree division of PricewaterhouseCoopers. Total funds shelled out by venture firms in the quarter amounted to $6.64 billion, down 8 percent from the first quarter’s $7.21 billion, and down 12 percent compared to the $7.58 billion that venture-backed companies raised in the second quarter of 2007, according to VentureSource.

But given the fact that 2Q07 was the second-biggest quarter ever recorded for venture investment—and that so many other economic indicators have turned south more severely—this quarter’s totals don’t look so bad.

“While the U.S. investment total is down compared to last year’s impressive second quarter, we still saw steady deal activity and investment in the first half of the year, which is encouraging,” said Dow Jones VentureSource’s director of global research, Jessica Canning, in a statement. Venture capitalists are “focusing on what’s next,” she added, “and that’s reflected in the healthy early stage investment we’re seeing in areas like renewable energy, information services and business support services.”

In fact, energy and utilities startups raised a record $817 million in the second quarter, a 160 percent increase over the 2Q07 figure of $314 million. The three biggest venture rounds of the quarter all went to solar energy companies: Beltsville, MD’s SunEdison ($131 million), Pasadena, CA’s eSolar ($130 million), and Oakland, CA’s BrightSource Energy ($115 million).

Venture investments in information technology companies, by contrast, dropped 26 percent from year-ago levels, from $3.50 billion in 2Q07 to $2.60 billion this quarter—the lowest quarterly total since 2003. Healthcare and life-sciences companies fared almost as badly, with investment declining from $2.53 billion in 2Q07 to $1.98 billion this quarter, a 22 percent drop.

In what may be a reaction to the shortage of exit events for startups—the number of IPOs among venture backed companies declined to zero in the second quarter, as we reported a couple of weeks ago—venture firms seem to be putting more of their money toward later-stage companies that may produce faster payoffs for investors. Some 54 percent of the quarter’s total investments were part of Series B or subsequent rounds.

VentureSource also offered a breakdown of the venture investment data by region. The moderate decline in investment was seen in every major region except the two Washingtons: the Washington, D.C. area actually saw an 11 percent uptick in venture activity, to $268 million, while Washington state recorded a 4 percent increase, to $275 million. San Francisco Bay Area companies, as always, attracted the most venture money overall ($2.17 billion), with Southern California in second place ($868 million) and New England in third ($714 million). We’ll publish separate articles shortly detailing second-quarter venture investment in the Boston and Seattle areas.

“The most encouraging part of this quarter’s report is that early stage investing is holding relatively steady thus far in 2008,” Canning summed up. “It may be harder for entrepreneurial companies to raise venture capital these days but it’s by no means impossible.  Continued early stage deal flow is a good sign that the venture industry is prepared to weather the economic downturn and will continue to back the next wave of disruptive technologies.”

The MoneyTree report, issued by PricewaterhouseCoopers and the National Venture Capital Association using data from Thomson Reuters, reached similar findings, though its numbers varied in minor ways. For example, going by Thomson Reuters’ definition of energy/cleantech firms, the amount of capital raised by that sector was $884 million (VentureSource pegged it at $817 million), up slightly from the first quarter’s $871 million. The MoneyTree report’s overall totals were also somewhat higher than VentureSource’s: VC firms invested $7.4 billion in 990 deals in 2Q08, according to the MoneyTree report, which is almost a billion dollars more than the the figure reported by VentureSource.

But the trend line was the same: VC investments in the second quarter were essentially flat. “Despite the turmoil in the markets, the pace of investing in the first half of 2008 indicates that venture investing is on target to reach the $30 billion level this year, putting it on par with 2007 when $30.7 billion was invested,” Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers, said in a release accompanying the MoneyTree report. “VCs are continuing to find and fund new deals, and the increase in Later stage investments demonstrates that VCs are committed to funding their portfolio companies until the public markets open up or opportunities for M&A present themselves, allowing them to achieve liquidity.”

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Oh, for the days when we all thought the Library of Congress was big.

Said Library is estimated to contain about 20 terabytes of information. (A terabyte is 1,024 gigabytes.) And these days, when just about everything is recorded digitally, it seems like you can’t go through a single day without accidentally creating or replicating that much information in the form of work documents, e-mails, digital photos and video, financial records, search engine records, voice mails, medical images, DVR recordings, BitTorrent downloads, surveillance video, and the like.

Okay, I exaggerate. It still takes longer than a day to create 20 terabytes of data. But not as much longer as you might think. According to Framingham, MA-based International Data Corporation (IDC), the market-research subsidiary of International Data Group, yours truly is responsible for creating a “digital shadow” of about 250 gigabytes just since January 1 of this year. So locate just 80 people like me, and together we will already have created a 20-terabyte shadow in 2008. That’s according to the Digital Footprint Calculator, a free program IDC has released in concert with an update to its big 2007 white paper, “The Expanding Digital Universe.”

I downloaded the calculator a few days ago and gave it some estimates about the number of e-mails I send every week, the number of digital photos I take, the hours of TV I record, and the like. It shows a ticker on my desktop, like the old National Debt Clock in Times Square. At last count, I was responsible for creating 271,904,050,609 bytes of information. Oops—that’s 271,904,051,117. Damn! 271,904,051,348.

The truth is that to slow down the ticker, I’d have to stop writing this article. And you’d have to stop reading it. The point of IDC’s updated white paper—the 2008 edition has the more dire title “The Diverse and Exploding Digital Universe”—is that every tiny individual act in a cyber-community creates expanding ripples of data.

Consider IDC’s example of “a day in the life of an e-mail.” Say you send out a message containing 100 kilobytes of text and a 1-megabyte attachment to four people. Now there are 10 copies (the original plus the copy on your e-mail server plus the four copies on your recipients’ computers and the four copies on their e-mail servers), totaling 11 megabytes. Then there are the backups of all of those copies, and all the communications overhead (such as e-mail packet headers) generated as e-mails pass through the network. At the end of the day, IDC estimates, the original 1.1-megabyte e-mail has racked up a 51.5-megabyte shadow.

But only about half of our digital shadows arises from our individual actions. The other half is what IDC calls “ambient” content—”digital images of you on a surveillance camera and records in banking, brokerage, airline, telephone, and medical databases…information about Web searches and general backup data…copies of hospital scans.” It’s true, there are some scary things about having a digital shadow—the millions of credit and debit card numbers stolen from local retail giant TJX by hackers are a disturbing reminder. But most of the data that institutions have on us really is there so that they can serve us better. I think it’s kinda nice that because I purchased a book called You Are a Dog: Life Through the Eyes of Man’s Best Friend, Amazon believes I might also like Planet Dog: A Doglopedia.

Of course, all that data about us has to be stored somewhere. And in 2007, for the first time, the total amount of information generated worldwide—some 281 exabytes (an exabyte is 1,024 petabytes, and a petabyte is 1,024 terabytes)—exceeded the capacity of all the hard drives, tapes, CDs, DVDs, and volatile and non-volatile memory created to hold it, according to IDC. Fortunately, some of the data, like voice mails, doesn’t really need to be stored forever. But the IDC report creates the impression that the race is on between information creation and information storage—and storage is going to lose, unless companies pick up the pace. (The report’s exact words: the “mismatch between creation and storage, plus increasing regulatory requirements for information retention will put pressure on those responsible for developing strategies for storing, retaining, and purging information on a regular basis.”) So maybe it’s not a total coincidence that the sponsor of both the 2007 and 2008 white papers is EMC (NYSE: EMC), the Hopkinton, MA-based maker of corporate data storage networks.

By the way, I never thought I’d need to know what comes after an exabyte, but by 2010 or so, according to IDC, the world will be generating more than 1,000 exabytes of information annually, and IDC says the word for 1,024 exabytes is zettabyte. Which is a terrible word for such a grand amount of data; it sounds like a variety of pasta, but it’s actually more than 1,180,591,620,800,000,000,000 bytes. Multiply that by just 510 and you’ve got Avogadro’s number: the number of atoms in 12 grams of carbon-12. When I was taking high school chemistry, I thought Avogadro’s number was unimaginably large. But it turns out we humans have bigger imaginations than I thought.

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With the wrong visualization tools, data can be deathly boring—just think of all the dry, meaningless PowerPoint presentations and Excel spreadsheets you’ve endured in darkened lecture halls and conference rooms. But with the right tools and context, data can come alive, as Yale information designer Edward Tufte has famously argued and you’ll understand yourself if you’ve seen the inspiring 2006 and 2007 TED videos of Swedish researcher Hans Rosling using his Trendalyzer software to illustrate global demographic trends.

The folks at IBM’s Lotus division also seem to understand the power of good data graphics, and last week I had the opportunity to walk across Rogers Street from the Xconomy world headquarters to the division’s Cambridge lab to talk with the brains behind Many Eyes, the company’s grand experiment in collaborative data visualization.

At the Many Eyes portal, anyone can register for a free account, upload a data set, and select one of about 16 ways to display it, from a traditional bar chart or fever chart to a sophisticated scatter plot, tag cloud, or treemap. For example, here’s a tag cloud I created in about 15 minutes, by pasting the text from last week’s Xconomy blog posts (excluding news briefs) into the Many Eyes upload page.

Click on this graphic to go to a live version of the tag cloud, where you can mouse over individual words to see how many times they turned up in our stories. Be sure to try visualizing using both the one-word and two-word modes by clicking the radio buttons. In one-word mode, you’ll see that the most common word in Xconomy stories last week—and probably every week—was “company,” followed by “Taylor” (Eons CEO Bill Taylor was the subject of a long profile by Bob on October 30) and “EMC” (which has captured a lot of mindshare recently due to a string of acquisitions and the mind-boggling rise of share prices in its subsidiary VMware). The most common two-word phrases were “Virtual Iron” (a VMware competitor), “gene therapy,” and “operating systems.”

None of that is particularly earthshaking, of course. But it’s fun. It’s the kind of information that would have been hard to obtain before Many Eyes came along without resorting to specialized software. And most importantly, it’s shared. If you clicked on the tag cloud graphic above, it took you to a public Many Eyes page, where anybody can view it and opine upon it.

“The traditional view of data visualization is that it’s solitary, like looking through a microscope,” says Martin Wattenberg, leader of the Visual Communications Lab at IBM Lotus’s Collaborative User Experience (CUE) Research Group. “But really, it’s the stories people tell around visualizations that make them interesting. We wondered if that is something you can design around. And we decided the best way to test that was to build a site and deliberately design it around collaborative visualization.”

Wattenberg’s group launched Many Eyes in January as part of IBM’s Alphaworks, a Web environment where early adopters can test specific IBM software innovations before they get incorporated into products (and 40 percent of them do). Since then, users have uploaded more than 8,700 data sets and saved more than 6,000 visualizations based on them.

Often, the conversations about the visualizations are as interesting as the visualizations themselves. That’s partly because of the community customization features built into the Many Eyes interface. Even if someone else uploaded a data set, for example, a visitor can select a customized view of that data, then save and share a snapshot of that view for discussion. For one dataset, giving a breakdown of federal spending from 1962 to 2004, a visitor isolated a view showing a huge spike in spending on “deposit insurance” from 1987 to 1992 and asked what had caused it. Within days, other visitors had provided an answer: “Appears to be the savings and loan bailout cost,” one wrote. Wattenberg calls this exchange an example of “social data analysis in motion.”

But as any veteran Washington watcher knows, quantitative data can be fuel for political as well as social discussion, and Many Eyes has seen its share of polemics. The Sunlight Foundation, a nonprofit organization in the nation’s capital devoted to using technology to ensure greater transparency in government, has made extensive use of visualizations from Many Eyes to illustrate the epidemic of congressional earmarks. For fun, in September Wattenberg posted Alberto Gonzales’s testimony to Congress regarding the firings of U.S. attorneys. Users immediately used the data to create word trees, which showed that the word “don’t” in Gonzales’s testimony was most frequently followed by the word “recall,” giving a rather blunt illustration of the former attorney general’s self-serving memory lapses. But within 90 minutes, Wattenberg says, someone else (presumably a Republican) published an equally damning word tree of Bill Clinton’s testimony in the Monica Lewinsky scandal.

Of course, new tools are always vulnerable to abuse. Many of the thousands of visualizations published by Many Eyes users are mystifying, nonsensical, or just plain painful. “We definitely see people make visualizations that just aren’t the right type for their data,” says Wattenberg. “But I make an analogy to the early days of the Macintosh and desktop publishing, when people would use twelve different fonts in the same document, just because they could. Nowadays most people are very typographically literate. I think we’re likely to follow the same course with visualization tools.”

I asked Wattenberg what unexpected findings were emerging from the Many Eyes experiment so far. Most important, he said, was the way Many Eyes visualizations have become part of a larger conversation going on across the Web. “Most of the conversation is happening on blogs around the site, rather than on the Many Eyes site itself,” he says. That’s still important data for IBM, Wattenberg says, because the company is interested in helping people use data in the ways that feel most natural to them. “These are all cases of people talking about numbers—which people do in business all the time.”

“We had expected to create a conversation” within the Many Eyes site, Wattenberg says. “But at this point we feel like it’s enough to be a component of the larger Web community.”

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