The Seattle biotech community got an energetic new leader this week, but there was also some more grim news about budget cuts coming at one of the biggest local life sciences employers.

—Amgen (NASDAQ: AMGN), the Thousand Oaks, CA-based biotech giant, is looking to “improve focus” and “re-allocate resources” in its $2.9 billion R&D budget, according to a company spokeswoman. The company will have more to say in its quarterly earnings report on Oct. 24. Sounds like there will be some long days of grim speculation for the people at Amgen’s Seattle R&D operation.

—Seattle-based NanoString Technologies rolled out the next-generation version of its genetic analysis instrument at a big scientific conference in Montreal. The new tool is supposed to be able to churn out 50 percent more data, and it’s paired with a more flexible software program. The Broad Institute of Harvard and MIT, one of the world’s leading centers for genomics research, has signed on as the first customer for the Version 2.0 tool from NanoString.

—For the first time, I made an early morning call to Iceland for a story. This was to talk with Kari Stefansson, the prominent geneticist and CEO of deCODE Genetics. The company made the news this week by announcing by announcing a partnership with Pfizer to look for new lupus drug targets. The Seattle angle here is that Arch Venture Partners and its indefatigable managing director Bob Nelsen helped rescue deCODE from bankruptcy in 2010 in a wager that deCODE could thrive in the era of ultra-fast, ultra-cheap gene sequencing.

—Seattle-based Qliance Medical Management, the company that provides direct primary care services on a monthly subscription basis, said this week it has done some management shuffling. Co-founder Erika Bliss, a primary care physician, is stepping up to become president and CEO, while co-founder Norm Wu is stepping aside to serve as a “strategic advisor” working on partnerships. Qliance probably has the investment syndicate with the highest television Q-rating in town—Jeff Bezos, Drew Carey, Michael Dell, and Nick Hanauer are among its backers.

—This week in BioBeat, I offered up a list of five things that the pharmaceutical industry could (and should) do to help the FDA reform itself and restore public confidence in the agency. There are some good comments piling up at the bottom of this story, and you’re always welcome to add your own two cents there.

—Thong Le, the well-wired venture investor at WRF Capital, is going to take on a higher profile in the community next month when he becomes chairman of the Washington Biotechnology & Biomedical Association. Le is replacing Tom Clement, the founder of Pathway Medical Technologies, who is now working to get a couple new startups off the ground—Aqueduct Neurosciences and Cardiac Insight.

—Drew McUsic, a University of Washington graduate student in bioengineering, offered up his view of the opportunity for biotech startups in the world of stem cell R&D. This post was based on a WBBA event in which officials from Geron and Fate Therapeutics offered their view from the trenches.

—Lastly, we had a guest post for the biotech crowd inspired by the life of Steve Jobs, the Apple co-founder who died last week at 56. Christopher Bowe, a healthcare analyst with Informa, sees some lessons in Jobs’ life that might be healthy for a life sciences industry that’s starving for some really exciting new innovations.

Comments | Reprints | Share:          

It’s time to close the books on the first quarter of 2011. As the editor around here, that means it’s time to look back at the journalism we did that broke new ground, shed some new light, or otherwise exemplified what we think is the best stuff we did to serve our readers the past three months.

We know people are very busy, and it can be exhausting keeping up with news on the Web, especially with so much half-baked, recycled, or aggregated content out there. We try to keep the quality of the journalism around here consistent, and high. My friend and colleague Greg Huang summed up our approach pretty well earlier today in his roundup for Boston readers:

“Every so often, we like to take a breath and look back at some of Xconomy’s top stories from the past few months. These are not necessarily the ones that generated the most traffic (though in some cases they are). They are stories that exemplify what we try to deliver to our readers day in and day out—real stories behind the companies, people, ideas, and trends that are shaping the future of innovation in our network of cities. What’s more, they help distinguish us from the media pack.”

Below you’ll see our top 20 tech and life sciences stories from the past quarter. But I’m actually leaving out Xconomy Seattle’s single most important story in the first quarter of 2010. It was the one where I introduced our new senior editor here in Seattle, Curt Woodward. He started on February 14—just seven weeks ago—and you can already feel he’s making an impact on our coverage, with scoops and in-depth insight on the local tech scene. The dude can flat out report and write, and he’s just getting warmed up. If you aren’t already following him, check out @curtwoodward and @xconomyseattle. And watch for more from this team in the second quarter and beyond.

The Top 10 Tech Stories

“Zaarly’s Wild Ride, Winning a Weekend, Quitting a Job, and The $100 Midnight Cheeseburger“

“Seattle’s Tech Job Crunch: How Long Can Valley Invaders Poach From Microsoft, Amazon, Before the Talent Well Runs Dry“

“Cheezburger, With Dreams of Domination in Internet Humor, Grabs $30M from Foundry Group, Madrona, Madrona, Softbank“

“Jeremy Jaech Leaves CEO Post at Seattle’s Verdiem“

“Obama’s Earmark Ban Could Ripple Through the Northwest Makers of Vaccines, Biofuels, Clean Water Technology“

“Nick Hanauer and Rich Barton’s Stealth Startup, King of the Web, Inches Closer to Revealing What’s Under that Crown“

“Geoffrey Moore: Why Middle Managers Are the New Kings, Stiff-Arming Shortsightedness, and the Money Chasm in the Mobile Social Sphere“

“Skytap, Fresh Off Boston-Led $10M Financing, Seeks to Make Cloud Computing Work Better“

“Amazon’s Multi-State Sales Tax Battles Are a Sideshow to the Real National Solution, and the Politicians Know It“

“Photorocket, Led by Amazon and aQuantive Vet Scott Lipsky, Uncloaks Its Not-Another-Photo-Sharing Service“

The Top 10 life sciences stories:

“Clarisonic Cracks Big-Time With $100M in Sales, Riding Rave Reviews From Lady Gaga, Oprah“

“Dendreon’s Warhorse, Chief Scientific Officer Dave Urdal, to Retire at Year End“

“Gates Foundation Makes First Equity Investment in a Biotech Startup, Liquidia Technologies“

“Mobisante Wins FDA Approval for Ultrasound on a Smartphone Technology“

“Gilead Pursues Cancer, Inflammation as Next Step to Diversify Beyond HIV“

“The Immunex Alumni: Where Are They Now?“

“NanoString, Snapping Up Genomic Health Veteran, Seeks to Prove Economic Value of Cancer Diagnostic“

“Calypso Medical’s New CEO Seeks to Steady Ship After a Rough Couple of Years“

“How ZymoGenetics Coulda Been a Contender: The Big Break That Came Too Late“

“Biogen Idec’s New R&D Boss, Doug Williams, Spurns the Corner Office for a Return to Science“

Comments | Reprints | Share:          

[Updated at 4:10 p.m. with more statistics and a correction, see below] Washington is one of the few states where Amazon.com collects sales taxes and sends the money to the government. But Washington is still losing hundreds of millions of dollars each year to sales tax “leakage” from online retail sales.

In Thursday’s forecast of public finances, Washington’s Economic and Revenue Forecast Council said state government is missing about $740 million in uncollected sales taxes during the next two-year budget cycle, which runs from mid-2011 to mid-2013. (Here are the relevant slides.) That represents about 5 percent of projected retail sales tax collections in the budget cycle. It’s also equivalent to about 14.5 percent of the projected $5.1 billion budget deficit over the same period. [Added percentage of projected sales tax collections.]

As we’ve previously written, Seattle-based Amazon (NASDAQ: AMZN) is currently engaged in a multi-state game of chicken with officials in other states who want to get a bite of the online sales taxes they’re missing under the current national sales-tax rules. The Wall Street Journal had an update on the situation Thursday, looking at the role that brick-and-mortar retailers have played in the political campaigns to press Amazon toward collecting taxes in more states. Amazon has largely resisted.

Amazon does have a clear obligation to collect taxes on its sales within Washington because its headquarters are here, and the company fulfills that responsibility. But even with that presumably significant stream of sales tax (the state can’t discuss individual taxpayer information), Washington’s Revenue Department estimates that it’s missing out on about half of the revenue that should be collected for online sales.

If a shopper buys something online and doesn’t pay sales tax, they’re still technically required to pay the equivalent “use” tax. Individuals are supposed to fill out a form and send in a check, but almost nobody does. The state performs audits on a slice of businesses to enforce use tax payments on that half of the equation, but there are surely some businesses that aren’t paying use tax on the things they buy online or out-of-state.

The issue for online retailers, however, isn’t whether they pay the sales taxes themselves. It’s whether they collect sales taxes from the consumers and send that money back to the state. Long story short: Federal law says a retailer has to have some presence in a state before the government can deputize that retailer as a tax collector. This policy generally pre-dates online sales—think catalogs.

Thursday’s state revenue report also says the pace of Internet purchasing in Washington is on a steady climb—it’s responsible for about a fifth of the nation’s overall retail sales growth in the past year. You can see the entire forecast from the state’s chief economist, Arun Raha, at the council’s website—it’s usually a good high-level review of where the state’s economy is headed. [Corrected that online retail purchasing growth statistic is on a national basis, not state.]

In Washington, one of the few states without an income tax, government basically lives on sales taxes. Sales taxes are the biggest single stream of state tax revenue in Washington—projected at about $14.8 billion over the next two-year budget, a little less than half of all tax revenue, according to the state Office of Financial Management. The state’s other two main tax streams are property taxes, which voters have slapped limits on, and a business-and-occupation tax on the gross receipts of businesses. [Added specific statistic about projected state sales tax collections over the next biennium.]

The latest effort to establish a personal income tax—as many readers surely remember well—was shot down last year, after notable disagreements among major tech-business figures like Bill Gates, Nick Hanauer, Jeff Bezos, and Steve Ballmer. It will be interesting to see if state officials here try to get more aggressive about a national-level solution for collecting more online sales taxes, as lawmakers seek ways to plug some gaping budget holes.

Comments (5) | Reprints | Share:          

Every now and then—pretty much whenever I feel like it—we here at Xconomy like to invite our readers to come out and shoot the breeze with us over a beer.

These are some of my favorite events, and I have a really good excuse to schedule a new one now—it’s time to introduce readers to my new colleague here in Seattle, Curt Woodward. So mark your calendars for happy hour, 4 pm to 6 pm, on March 22 for the next Xconomy Meetup at the Streamline Tavern at 121 West Mercer St. in Seattle.

Curt, who joined us last month after a distinguished run as the Associated Press statehouse reporter in Olympia, has been getting to know who’s who and what’s what in the local tech, venture, and cleantech scene. He’s already broken a few tasty little scoops that you couldn’t find anywhere else. One last week was about how Amazon’s state-by-state brouhaha over sales taxes is a sideshow to a real national issue. Other exclusives focused on what Facebook is doing here in Seattle, and what the heck Nick Hanauer and Rich Barton are up to with their stealthy “King of the Web” startup.

So stop on by and dish us some hot inside info, or just come over to say hi and maybe tease Curt about how he quoted The Rock on Twitter in reference to an Amazon story. I think I need to brush up on my knowledge of World Wrestling Entertainment if I’m going to keep up with this guy.

Please shoot us a note at cwoodward@xconomy.com and ltimmerman@xconomy.com if you plan on stopping by The Streamline on March 22, so we know how many chairs to set aside (and how much to tip the bartender).

Comments (2) | Reprints | Share:          

Competition in the crowded daily-deals market got a little more pugnacious recently with an acquisition by group discount site BuyWithMe. The Boston- and New York-based company purchased LocalTwist, boosting BuyWithMe in San Diego and putting the company in a new market—Seattle.

The latter city, of course, is the home base of competitor Tippr, the Martin Tobias-led company that is currently suing BuyWithMe in federal and state court over two different issues. As my colleague Greg Huang notes, it’s all part of the “life-and-death struggle for third place” in daily deals.

Other stories that made the rounds at Xconomy in the past week or so:

—Amazon.com (NASDAQ: AMZN) had another confrontation with state government over the company’s extreme aversion to being deputized as a sales-tax collector. Illinois Gov. Pat Quinn signed into law that state’s version of an “Amazon law,” trying to make the sales in Illinois subject to sales tax by targeting Amazon’s marketing tie-ins with affiliate websites.

With a steady drumbeat of regulation attempts happening in the states, I took a look at why these efforts are really a side issue in making a big national policy change. Long story short: More aggressive state regulations aren’t likely to make Amazon heel, but they could serve as another prod for Congress to finally act on a broader solution.

—Kirkland, WA-based wireless provider Clearwire (NASDAQ: CLWR) saw more top names hit the bricks, just a few months after founder and local wireless legend Craig McCaw left his post as chairman of the board. Chief Executive Bill Morrow, Chief Information Officer Kevin Hart, and Chief Commercial Officer Mike Sievert are out in the latest shake-up. As The Wall Street Journal’s Russell Garland noted, Sievert’s last public words on Clearwire’s behalf were very likely at our big Mobile Madness event, where he sounded optimistic: “We lack for nothing except cash.”

New board Chairman John Stanton, another titan of the Seattle-area wireless landscape, was immediately tapped as interim CEO while the board searches for a long-term replacement. Asked whether he’d take over as CEO permanently, Stanton gave The Seattle Times’ Brier Dudley an unequivocal no. Clearwire also said that it believes a resolution is near in a dispute over wholesale pricing with majority owner Sprint (NYSE: S).

—The center of gravity in the tech world shifted temporarily to some college town in Texas for the interactive portion of South by Southwest. Plenty of well-known names from the Seattle tech scene were … Next Page »

Comments (1) | Reprints | Share:          

King of the Web, the social gaming startup led by some big names in Seattle tech, is opening up the private beta I speculated about earlier this month. Passwords were doled out to Twitter and Facebook followers today, and I took a peek under the hood.

From what I can see so far, King of the Web is a humor-oriented social networking site that pits everyone against each other in a quest to amass votes for the best profiles. The site says its “election cycles” are on a monthly basis, and the current cash prize right now is $1,000.

Here’s a screengrab from what looks to be the page of co-founder Nick Hanauer, who really does not need another $1,000 (I presume he’s not eligible to collect). Other top names at King of the Web include former Expedia CEO Rich Barton and Hanauer’s former aQuantive colleagues Maggie Finch and Scott Howe.

I’m reminded right away of Funny or Die, the comedy-video ranking site started by Will Ferrell and friends (although that has professional comedy content). There’s also a bit of pop-culture DNA recalling the meme factory over at Cheezburger Network, and even the ratings feature on plain old YouTube videos.

But it’s not just about comedy. The leader when I checked in was “Pwn Star,” who is actually campaigning on a platform of making female characters in video games better—less sexpot cliché, more butt-kicking awesome. Her page gives good and bad examples of what she’s talking about. The previous “king” was someone who posted a ton of puzzles to their page.

Other people are making it more of a straight-up popularity contest by posting videos of themselves doing funny things. That includes someone’s dog chasing a radio-controlled truck. The site is putting an emphasis on video as a means of getting your face and candidacy out there.

So let’s count the Internet trends being weaved together here: The social graph, gamification, and user-generated content. I’m not sure where to file the cash prizes part, but that’s really timeless.

As for the business model, we’ll have to see about that later. The people running the site are heavy Facebook and Twitter users, and I would guess this really will rely on lots of integration with those portals.

But you have to like the candor of the top guys: Barton told TechFlash last year that “It’s one of those ideas that’s totally binary. It will be huge or it will be nothing.”

As a side note, it’s interesting to see such a big elections angle from a guy like Hanauer. He lost big-time on his last foray in elections, when he vocally came out in support of Initiative 1098, which sought to establish a Washington state income tax on the rich.

Comments (1) | Reprints | Share:          

From the drip-drip-drip department comes this little update on what some big names in Seattle tech are planning with their latest company. King of the Web, a stealth-mode social gaming startup led by aQuantive founder Nick Hanauer and former Expedia CEO Rich Barton, says it’s heading for a private beta this month.

The company currently is reaching out to people to join its Twitter and Facebook pages, saying in an e-mail that King of the Web plans to “embark on a social quest to find the web’s most engaging personalities, content, and talents.” The Twitter bio also says King of the Web is an “online reality entertainment website.”

I’m just guessing here, but those descriptions combined with some excerpts from the company’s social feeds leads me to believe King of the Web is aiming for something like a crowd-based entertainment hub focused on remixing, mashing up and ranking content from around the Web—more like Funny or Die than Farmville.

Something in that area could be interesting—or it could just get lost in the shuffle. King of the Web’s top people have not shied away from this uncertainty: Hanauer previously told The Seattle Times that “if it works, it will be huge.”

Cheezburger Network is an obvious cross-town example of how user-generated humor and entertainment communities can become a big deal. The gamification element (implied not least of all by King of the Web’s name) also is a hot theme in tech companies these days—last year, Xconomy’s Greg Huang predicted it could be one of the five areas where Seattle tech could jump ahead of everyone else.

I guess we’ll see more soon. King of the Web does have a notable stable of people at the top—along with Barton and Hanauer, the chief executive is former aQuantive vice president Maggie Boyer Finch, and fellow aQuantive alum Scott Howe is listed as a co-founder and adviser. Former Microsoftie Wassef Haroun is listed as chief technology officer—King of the Web’s bio says he “built many products for Microsoft but played no role in the Kin, Vista or Live Search.”

In the meantime, you can check out this video of some meme-conscious King of the Web workers celebrating their 400th Facebook fan by parodying an unintentionally hilarious instructional dance video known as “Double Dream Hands.”

Comments (1) | Reprints | Share:          

Let’s get caught up on some Seattle tech gossip, shall we? It’s on my mind as I come back to town for the second time in as many weeks. Man, I miss this place and all its back-channel intrigue…

—Nick Hanauer of Second Avenue Partners told me a little more about the new social gaming startup he’s working on with his friend Rich Barton (and former aQuantive employees Scott Howe and Maggie Finch). King of the Web, as it’s called, is totally different from Zynga, the San Francisco maker of hit games on Facebook such as FarmVille and Mafia Wars, he said. Hanauer wouldn’t give many specifics, but he said the company’s games (the first of which might be released as early as January 2011) would include a real-world component. And that it will compete not with Zynga or Playfish, but with “anything you’d do on the Internet that would entertain you.” (The word “game” doesn’t do it justice, he said.)

—Sparkbuy raised $1 million in angel and venture capital last month. This is the new stealth startup from Dan Shapiro, the co-founder of Ontela (now Photobucket). Shapiro declined to comment on what his team has been building. If I had to hazard a guess, based on rumblings in the grapevine, I’d say it’s something like a price comparison engine for consumer electronics—laptops, mobile phones, and so forth. Maybe something like Kayak for laptops. Who wouldn’t use that? (Well, maybe Mac users.)

Shapiro did comment about the experience of being a second-time entrepreneur: “The luxury and terror of doing your second startup is you have only one item on your worry list: can I make this business work? It’s not necessarily much easier, but it sure does focus the mind.”

—PhotoRocket, the online photo-sharing startup led by Scott Lipsky, the former Amazon and aQuantive exec, has raised some more money ($1.3 million) and is in private alpha trials. From what I can tell, PhotoRocket makes it super easy to share photos with people in your network, just by clicking on the pictures. It’s hard to tell whether this really represents a breakthrough technology, and whether it could go mainstream. Still, would you bet against a guy (Lipsky) who sold his last two companies, one of them (aQuantive) for $6 billion-plus?

—TechStars Seattle demo day is finally here. Which companies will wow potential investors? Which ones could change the world? A few of the startups I’ll be looking at (no disrespect to the others): Giant Thinkwell (social game based on virtual celebrities); Deal Co-op (like Groupon, only different); and Cabin Fever Toys (led by former Cranium exec and Microsoft manager Adam Tratt). I’ll also be looking to evaluate the broader impact of this seed-stage mentoring program on the Seattle tech scene. That might take a while though.

—It sounds like Seattle-based Isilon Systems’ (NASDAQ: ISLN) rumored acquisition by Boston-area data storage giant EMC (NYSE: EMC) has stalled over pricing, at least for now. Sources outside the companies tell me the deal will probably still go through eventually, because Isilon’s network-attached storage technology fills a big need for EMC in its competition with NetApp, IBM, and other big firms. But Isilon’s price (rumored to be north of $2 billion) is too high. Will another bidder emerge to put pressure on EMC?

—Speaking of acquisition rumors, I’m hearing that Seattle-based Widevine Technologies might get bought by Google (NASDAQ: GOOG). This would make some sense, as Widevine’s digital rights management, streaming, and copy protection/tracking technology (for content owners and cable/Internet service operators) could fill a hole for Google TV in its competition with Apple and other companies looking to get ahead in online video distribution. But any deal is just speculation for now. Mostly.

Comments | Reprints | Share:          

By his own estimate, Nick Hanauer makes 500 times as much money as me. So why is he angry?

Easy. Because it’s looking like Initiative 1098, Washington state’s proposed income tax on people making more than $200,000 a year ($400,000 for couples), probably won’t pass at the polls tomorrow. Hanauer and Bill Gates, Sr. are strong proponents of the measure, as is Microsoft co-founder and chairman Bill Gates. Opposing them are Steve Ballmer, Paul Allen, Jeff Bezos, and what Hanauer estimates to be 70 percent of the wealthy people in the state.

This is an issue that has divided the technology and business community at all income levels. Indeed, it seems obvious that rich people like Hanauer, an early investor in Amazon.com (and many other lucrative ventures), have the most to lose if the measure passes. But he sees things very differently, as he explained when we met last week in Seattle.

Hanauer is a founder of Second Avenue Partners and has been an investor in some very successful companies besides Amazon, including aQuantive (acquired by Microsoft for $6.4 billion in 2007), and Insitu (acquired by Boeing for some $400 million in 2008). Ever the contrarian, Hanauer has become increasingly active in Democratic Party politics over the years, and is working on a new book with Eric Liu about reinventing government and economic thinking. (The two co-wrote The True Patriot, which was released in 2008.)

As Hanauer sees it, the argument over I-1098 boils down to two things: a moral issue and an economic prosperity issue. Forget the moral argument for now (although I think that’s where his heart is). Opponents of the measure—including prominent Seattle venture capitalists Bob Nelsen and Matt McIlwain and big companies like Microsoft and Boeing—have argued that instituting the tax will make Washington state less competitive in its quest to recruit high-tech talent. They have also argued that new taxes on the rich would eventually lead to new taxes for everyone.

Hanauer counters that this is part of the longstanding fallacy that as regulation, government activism, and taxes on the rich go up, business and the economy go down. “The limited government story just isn’t true,” he chides. “If it was true, Somalia would be a garden spot, and Canada a hellhole.” What’s more, he says, all of the richest and most tech-competitive states have high taxes, including California, New York, and Massachusetts.

So what’s his economic prosperity argument, as pertains to Washington’s innovation ecosystem? In fact, the new tax “will lead to more prosperity for me,” he says.

If Washington’s wealthy citizens paid their fair share, he says, more money could go into government for crucial infrastructure like education and health care. Ideally, that translates into a bigger pool of healthy, talented workers to drive growth at businesses. It would create better jobs, and more prosperous consumers who would spend more money on new products, Hanauer says. And that means more money for the companies Hanauer and others invest in—and ultimately greater returns for them. Asked to quantify this return, Hanauer estimates he’d get 10 times his money back on … Next Page »

Comments (8) | Reprints | Share:          

Early Amazon investor and aQuantive founder Nick Hanauer is teaming up with Zillow co-founder and former Expedia CEO Rich Barton on a new social gaming venture, according to Brier Dudley of The Seattle Times.

The company, called “King of the Web,” will reportedly roll out in December. Until then, all we know is that the gaming startup will be part of the new wave of social gaming—a young canon that includes titles like FarmVille, and provides something of a hybrid experience between casual and metagaming.

Hanauer confirmed the plans for the company with The Seattle Times, but didn’t expand much on what the gaming startup will specifically be doing.

“Rich and I think it’s a really really cool idea. The space is really big and growing fast,” he told The Seattle Times. “Great content which entertains will for a very long time be a growth industry on the Internet.”

Nick Hanauer

Rich Barton

The Seattle-area has grown into a stronghold for casual gaming pioneers, such as like WildTangent, PopCap Games, Big Fish Games, and GameHouse (RealNetworks). But with the emergence of startups like Zynga (the maker of FarmVille and other popular social games), many casual gaming companies are struggling to stay relevant in the new social gaming space. In fact, even more traditional massively multiplayer online games (MMOs) have followed suit. Redmond, WA-based Novel rolled out the alpha of its first social MMO, Empire & State, last week.

As for “King of the Web,” Hanauer tells The Seattle Times the company is being started with the help of a group of aQuantive veterans, adding, “It’s definitely an idea where if it works it will be huge.”

Comments | Reprints | Share:          

There has been plenty of tech-business news in the past week to put Seattle on the national radar. But it takes years to understand the innovation community here; I’ve only scratched the surface so far. So, in honor of my colleague Thea’s first week on the job, I thought it would be useful to look back at some of the more interesting stories I wrote (if I do say so myself) in Xconomy’s first six months in Seattle, back in 2008—and to think about what they mean now.

The stories span software and IT, advanced materials, energy and cleantech—and coffee. Many of you didn’t see them the first time around, but perhaps they’ve become more interesting with a couple years of hindsight. Here they are in chronological order:

1. Modumetal Grows Nanotech Metals for Military, Aiming to Make Parts for Your Car

This Seattle company has burst onto the scene in the past couple of years, with a method to produce a new kind of metal that could potentially disrupt the steel industry. Modumetal continues to grow, accumulate new customers and partners, and just closed a second round of venture funding this month.

2. With Intellectual Ventures, Nathan Myhrvold Out to Create “Invention Capital” Industry—and Reinvent Invention in the Process (Part 1)

My first sit-down with Nathan Myhrvold for Xconomy was an eventful one. He laid out his plans for Intellectual Ventures in great depth, showed me the company’s new lab, and talked about everything from the physics of ping-pong and quantum cosmology to “invention capital,” global expansion, and a nuclear power project (what would become TerraPower). In part two of the interview, he spoke for the first time about his team’s far-out approach to stopping hurricanes—and about new kinds of malaria intervention, and geo-engineering to combat global warming.

3. Tableau Raises $10M in Second Venture Round, Wants To Be the Adobe of Data

This is one of the fastest-growing and most successful startups that people around town need to know about. Tableau makes data visualization and analytics software for companies, organizations, and consumers, so they can make sense of increasing amounts of data and pull out useful trends and patterns. CEO Christian Chabot told me the story of the company and where it’s headed. So far, he’s been pretty much on target.

4. Second Avenue Partners’ Keith Grinstein Dies at Age 48

Obviously this was not one of our favorite stories. Nevertheless, this tragedy is part of the fabric of the innovation community, and we need to report this kind of news with urgency and sensitivity. Nick Hanauer and Michael Butler wrote in with their thoughts on Keith Grinstein’s passing.

5. Founder’s Co-op Gets Warm Reception, Wants Startups That Will Survive Cold Recession

An increasing amount of early-stage tech startup activity these days is centered around Seattle-based Founder’s Co-op, started by Andy Sack and Chris DeVore. In 2008, Sack told me about the goals of the group, and its plans to invest in small companies and provide mentorship to … Next Page »

Comments (1) | Reprints | Share:          

The big news in local academic circles this week is that University of Washington president Mark Emmert is leaving after almost six years to become head of the National Collegiate Athletic Association (NCAA), based in Indiana, effective November 1. The move surprised many in the academic and business communities.

Emmert, 57, has a reputation as a charismatic leader who has been successful at fundraising and recruiting top faculty. He is also a sports enthusiast, and has put major resources into improving the UW football program, among other things. One of his main responsibilities at the NCAA will be meeting with university presidents on athletic policies.

But what about his impact on the Seattle business community? As the news starts to sink in, Luke and I have begun asking local leaders what Emmert’s legacy will be on the innovation scene around Seattle and in Washington, and how the region will move forward.

Emmert was instrumental in providing support for the unorthodox hiring of an entrepreneur and venture capitalist, Linden Rhoads, to be the UW’s senior-most commercialization officer in the summer of 2008. Emmert has also been using his bully pulpit to educate community leaders on UW’s potential to become an “entrepreneurial university,” over the past 12 months.

Earlier this week, at the UW’s Business Plan Competition, Connie Bourassa-Shaw of the UW’s Center for Innovation and Entrepreneurship noted that Emmert’s leadership helped provide a vital endorsement that said startup activity was not just OK, but desirable, on campus. Under Emmert’s watch, there haven’t been any major controversies that put the academic traditions of research and teaching in conflict with the desire to make those ideas into practical products that create jobs and economic growth.

“Mark has been an excellent president in many ways. He will be a superb head of the NCAA. This is a huge loss for UW,” said Ed Lazowska, a professor of computer science and engineering at the school, in an e-mail. “At the same time, I feel jilted. Those of us who have spent large parts of our careers at UW feel a great loyalty to the institution—it’s about UW, not about us.”

He continued: “Mark had a good relationship with the VC/entrepreneurship community. He clearly ‘got it’ and he liked hanging out with those folks. It used to be that I was the only UW person at the holiday parties hosted by Jon Roberts, Nick Hanauer, etc. Then there was Mark. Now there’s Linden [Rhoads] too.”

Rhoads, the vice provost of the UW Center for Commercialization, says Emmert’s impact is measured by the people he has helped recruit.

She wrote in an e-mail: “President Emmert will leave a university led by new and talented leaders with the critical mass to adapt to a changing environment and keep the UW vital, and on the vanguard of even the most prestigious research universities. These appointments ensure a legacy that will be serving UW well for years after President Emmert starts sitting courtside at the Final Four. Our commercialization team has been able to make big changes quickly with support from relatively new Deans of Engineering, Law, Nursing, and energetic and sophisticated leadership in the Office of Research, Sponsored Projects, and Advancement. This month, Provost [Phyllis] Wise is in the midst of recruiting three new deans, including a Dean for the new College of the Environment. She’s led a campus-wide survey and dialogue on our values and what we need to do to position the UW to be an increasingly important, relevant place over the next decades. Everyone knows about the UW’s successful fund-raising campaign and President Emmert’s accomplishments with respect to our endowment. President Emmert is also leaving the UW with great people in place.”

I’m sure many others in the innovation community outside of UW will have thoughts on what the transition will mean for entrepreneurship, and state and local businesses. I hope to have more on this soon.

Comments (1) | Reprints | Share:          

Qliance Medical Management isn’t the richest startup in Seattle, but it may have the most star power behind it. The company, which deals directly with patients and doesn’t accept health insurance for primary care medical services, has nailed down another $6 million in venture capital from a group led by Amazon founder Jeff Bezos, and which included Dell Computer pioneer Michael Dell and actor Drew Carey.

Besides those three famous names, Qliance attracted more cash from its existing investors Second Avenue Partners, New Atlantic Ventures, and Clear Fir Partners. The company got started in 2006 with a $3.5 million venture round, followed by another $4 million last July, bringing the company’s total to $13.5 million since inception. Rich Barton, the founder of Expedia and co-founder of Zillow, is another one of the big names that have put money to work at Qliance.

The big idea at the company, which we first profiled in December 2008, is a simple and disruptive one to the current U.S. healthcare system. Qliance runs what it calls a “direct practice” in downtown Seattle, which doesn’t accept any health insurance and deals directly with patients. The patient hands over a credit card, and agrees to pay a $44 to $84 monthly membership fee to Qliance for unrestricted access to its primary care medical services. The model allows Qliance to avoid spending its time doing things to get insurers to pay for primary care, which frees up the doctors to spend more time with individual patients.

Routine primary care—things like women’s health exams, flu shots, X-rays—make up almost 90 percent of the medical issues that prompt people to see a doctor, Qliance says. Going through an insurer to get these routine things done is sort of like asking your car insurance provider to reimburse you for an oil change; insurance is really needed when you’ve been in a serious accident, Qliance CEO Norm Wu said last month at an Xconomy event. Once people use “direct primary care” that avoids insurance, Qliance says consumers can get a catastrophic health insurance policy to cover them in case of a serious accident, or a cancer diagnosis, that is beyond the scope of what a primary care doc can treat.

Norm Wu

By combining the monthly fee of primary care with the secondary insurance, Qliance contends employers and patients can save as much as 50 percent on their overall health spending, and improve overall health by making it easier for people to see a primary care doc who can help them focus on prevention and wellness.

“It’s not often you come across a business model that is truly transformational and disruptive in a sector ripe for reform, but that’s how we view Qliance in health care,” said Melinda Lewison of Bezos Expeditions, in a company statement. “We see significant long-term opportunity in Qliance as it’s easily scalable to other communities and health care reform has added wind to its back with the ability to compete in the insurance exchanges.”

The Amazon connection is a pretty clear one. Nick Hanauer of Second Avenue Partners, an early and enthusiastic backer of Qliance, was one of the early investors in Amazon.

Encouraging as the financing is, Qliance has had to clear a number of legal hurdles … Next Page »

Comments (3) | Reprints | Share:          

If you live in Seattle and follow technology trends, you know who Brian McAndrews is. If you’re a Boston techie, though, it’s possible that you don’t. Luckily, you have Xconomy to help bridge the gap between East and West. (Bear with me here.)

McAndrews is a relatively new managing director at Madrona Venture Group, a Seattle-based VC firm, and he led the $7 million investment in Beverly, MA-based Searchandise Commerce announced last week. It is his first deal with Madrona. In a previous life, McAndrews was the chief executive of Seattle-based aQuantive, the digital advertising and marketing company, before becoming a senior vice president at Microsoft.

I’m always surprised by how many people outside Seattle don’t know the story of aQuantive (myself included, until I moved here). This company built some of the pillars of online ad-placing and tracking technology, went public in February 2000 (talk about good timing—any later and it might have folded), and was bought by Microsoft for $6.4 billion in 2007—the largest acquisition Microsoft has ever made. McAndrews led aQuantive for eight years and was in charge of the sale and integration. He ran the advertiser and publisher solutions group at Microsoft before leaving the firm in early 2009.

Last week, I spoke with McAndrews about a range of topics: what makes Searchandise Commerce a compelling company for Madrona; his personal investment philosophy; the broader future of venture capital; and a little more about the aQuantive and Microsoft story.

McAndrews (see photo below), a Harvard University alum, says he first became aware of Searchandise Commerce through its current CEO, John Federman, and his board members Ross Goldstein, co-founder of DFJ Gotham Partners, and Sarah Fay, the former CEO of marketing agencies Carat, Isobar U.S., and Aegis Media North America; Fay had been an aQuantive customer for years.

What intrigued McAndrews about Searchandise is that it combines e-commerce and online product search with the kind of display advertising and positioning found in offline retail, where you’ll walk into a Best Buy or Whole Foods and see certain products or shelves arranged to make them more prominent to consumers. (Manufacturers and advertisers pay some $20 billion a year for this kind of positioning.) With Searchandise Commerce, a manufacturer of flat-screen TVs, say, can bid to improve its ranking within a paid search engine like Buy.com.

This pays off in the real world as well as online. “A huge number of people search online even if they buy offline,” McAndrews says. “What’s appealing to retailers is that the vast majority of people who come to their sites don’t make a purchase.”

Searchandise aims to change that. As my colleague Wade previously reported, the company was founded in New York in 2000, and was formerly called Decidia and Guidester. In 2008, Federman started as CEO and moved the company to the Boston area. The firm’s strategy also shifted away from product navigation tools and towards paid search. McAndrews calls the company’s recent direction “an important wave of product search,” and he notes that it’s the kind of approach that would make sense to a huge e-retailer like Amazon.com. “It’s a very ripe area, though … Next Page »

Comments (1) | Reprints | Share:          

The Seattle area’s hippest celebration for local software and technology startups is gearing up for its big night. After receiving nearly 7,000 nominations for 11 “best of” categories in Seattle tech, media company Seattle 2.0 is announcing today the finalists for its annual awards show. (Disclosure: I am one of the 36 judges who helped select the finalists.)

Now you, the public, are invited to vote on the finalists starting today, to determine the winners. Community voting will be open until midnight on May 11; anyone can vote on the awards website.

The winners will be announced at the second annual Seattle 2.0 Awards event on May 19th at the Bell Harbor International Conference Center in Seattle. Last year’s event was a smash hit and featured an inspirational talk by Glenn Kelman from Redfin. This year, the keynote speaker will be Jonathan Sposato, the former CEO of Seattle-based Picnik. Picnik, the popular Web-based photo editing startup, was acquired by Google last month in one of the biggest deals of the year. (You can read my interview with Sposato right after the acquisition here.)

Here is the complete list of categories and finalists (there are a lot of them). Good luck to all:

Best Startup: Apptio, BlueKai, BuddyTV, Cheezburger Network, Redfin.

Best Bootstrapped Startup: BigOven, Biznik, Bonanzle, HasOffers, Survey Analytics.

Best Nonprofit Startup: Jolkona, One Bus Away, Startup Weekend, TisBest, Vittana.

Best Startup CEO: Rich Barton (Zillow), Sunny Gupta (Apptio), Glenn Kelman (Redfin), Andy Liu (BuddyTV), Dave Schappell (TeachStreet).

Best Startup Technologist: Damon Cortesi (Untitled Startup), Joe Heitzeberg (WhitePages), Darrin Massena (Picnik/Google), Daryn Nakhuda (TeachStreet), Scott Porad (Cheezburger Network).

Best Startup Designer: Alex Berg (ex-Wetpaint), Greg Bowers (TeachStreet), Aviel Ginzburg (Untitled Startup), Jenny Lam (Jackson Fish Market), Matt Lerner (Front Seat).

Best Venture Capitalist: Geoff Entress (Voyager Capital), Michelle Goldberg (Ignition Partners), Greg Gottesman (Madrona Venture Group), Nick Hanauer (Second Avenue Partners), Andy Sack (Founder’s Co-Op).

Best Angel Investor: Bill Bryant, Clark Kokich, Andy Liu, Dan Rosen, Kelly Smith.

Best Service Provider to Startups: Pearl Chan (CFO Selections), Geir Hansen (Silicon Valley Bank), Eric Koester (Cooley Godward Kronish), Craig Sherman (Wilson Sonsini Goodrich Rosati), Joe Wallin (Davis Wright Tremaine).

Best Entrepreneur Blog: Inspired Startup by Andy Liu, Quick Sprout by Neil Patel, Redfin Blog by Glenn Kelman, Startup Front End by Tony Wright, Untitled Startup Blog by Damon Cortesi & Aviel Ginzburg.

Best Event for Startups: Hops & Chops by Dave Schappell & Daryn Nakhuda, STS Meetings by Chuck Groom & Gaurav Oberoi, TechFlash Live by John Cook, Todd Bishop & Eric Engleman, Ignite Seattle by Brady Forrest et al., Seattle Open Coffee by Andy Sack.

Comments | Reprints | Share:          

Kirkland, WA-based Market Leader (NASDAQ: LEDR) announced today that Mike Galgon has joined its board of directors. Galgon is the co-founder of online advertising technology firm aQuantive (along with Nick Hanauer and Scott Lipsky) and the former chief advertising strategist for Microsoft (NASDAQ: MSFT). Hanauer is also a board member and investor in Market Leader, which was formerly known as HouseValues, and makes marketing software and tools for the real estate industry. (History lesson: rumor has it that Galgon was about to join Pacific Coast Feather, Hanauer’s family business, when they hatched the plan for Avenue A Media, which became aQuantive.)

Comments | Reprints | Share:          

At the pace of today’s news, it can be hard to maintain perspective on what all the important stories are. Sure, the iPad is dominating headlines today, but remember when Google bought Picnik just a month ago? That deal is still resonating in the startup community. What’s more, headlines fly off the page so fast that not everyone can catch them the first time. Luke and I wanted to find a way to help readers discover more of the stuff we’ve been busily producing for the past few months.

The first quarter of 2010 is in the books. So we thought it would be fun and useful to recap our favorite stories of the year so far—everything from Alder to Z2Live, with Amazon, Apple, Cell Therapeutics, Dendreon, and Microsoft in between. These were sometimes our most popular pieces, but not always. In every case, they highlight the kind of in-depth analysis and exclusive reporting that we are bringing to bear on the Seattle-area innovation community. Enjoy.

.

Greg’s Top 10 technology stories:

Cowboys Like Us: Investor Nick Hanauer on How to Think About Breakthroughs in Business and Society (Part 1)

Nick Hanauer, a “High-Functioning Contrarian,” on How to Think About Breakthroughs in Business and Society (Part 2)

Bill Gates’s Nuclear Miracle? John Gilleland Says TerraPower Needs Discipline, Not Divine Intervention

Picnik CEO on Getting Bought by Google, and How It Affects Startups and Consumers

How Amazon Innovates: Lessons in Strategy for Microsoft and Others

How to Win the Future of Social Mobile Gaming: The Z2Live Story

The Apple iPad’s Impact on Mobile, Gaming, and E-Books: Local Techies and Startups React

Friend or Foe: How Apple Is Forcing Microsoft, Amazon, Google, and AT&T to Raise Their Game

MIT MBA Students: Amazon, Google, and T-Mobile Are Hiring, Expedia Isn’t; Microsoft “Super Interesting,” Apple Is “Sterile”

Stephen Wolfram Talks Bing Partnership, Software Strategy, and the Future of Knowledge Computing

.

Luke’s Top 10 biotech and life sciences stories:

The Dendreon Alumni: Where Are They Now?

Joe Eichinger, Top Medical Device Entrepreneur and UW Volunteer, Dies From Cancer

Cell Therapeutics Offers Bigger Cash Bonuses for 2009 While Stock Languishes

Ekos, Swedish Aim to Shake Up Stroke Treatment with Ultrasound Brain Clot Buster

Geospiza Runs in the Black as Scientists Turn to Software to Help Crunch Genomes

Microsoft Fleshes Out Health-IT Portfolio, Waits (and Waits) for Market to Materialize

Medical Device Entrepreneurs Converge on Wings, a New Angel Investing Network

Dendreon’s New Operations Man, Hans Bishop, Aims to Keep Provenge Trains Running on Time

Halosource Nails Down $10M for Global Expansion of Water Purifying Technology

Alder Rises from Ashes of Layoffs, Overcomes Skeptics to Become Seattle Biotech Force

Comments | Reprints | Share:          

This week, I’ve learned a lot about game-changing ideas and how to think about making them work. Like anything meaningful, some of the lessons will take more time and effort to sink in. But here are five lessons to take away from our Xconomy Forum (“What’s Your Breakthrough Idea”) held at the University of Washington on Monday:

1. Not everything is, or should be, a breakthrough idea. Nick Hanauer of Second Avenue Partners framed the whole discussion by pointing out that entrepreneurs have different motivations: some might want to make a lot of money whether or not they change the world; others may want to change the world whether or not they make much money. Either approach is perfectly valid; just be true to yourself.

2. Venture capital alone won’t sustain breakthrough ideas. VCs don’t fund new ideas or the invention process, said Nathan Myhrvold of Intellectual Ventures. Instead, they fund “zillions of ‘me-too’ ideas,” he said. Which is why Myhrvold is trying to create a new “invention capital” marketplace—and why his company has awarded $315 million to individual inventors in the U.S. and has deals with more than 100 universities to support the invention process.

Meanwhile, Hanauer told me last week that most VCs don’t take risks anymore because the VC business model rewards those who can simply avoid a major screw-up. “The business model is toxic to risk-taking, because it’s so unbelievably profitable for the partners just if it doesn’t fail,” he said. (Of course, VCs will tell you that their model isn’t broken—because it isn’t.)

3. The proper mindset of breakthrough-idea thinking is to be “narrowly insane but not a total whack job,” as Myhrvold put it. By narrowly insane, he meant that inventors need to be crazy enough to think they can do something unprecedented, without being delusional. Put a different way, it’s helpful to be a “high-functioning contrarian,” as Hanauer says Jeff Bezos has described him. (“A low-functioning contrarian means you’re in prison,” Hanauer adds.) In other words, try to see the world differently, and imagine what would happen if things were arranged in other ways. Amazon.com, for example, delivered more than 10 times the selection of a brick-and-mortar store at a cost savings of more than 25 percent. That’s the kind of thinking that can transform an entire industry—in this case, those who sell books (for starters).

4. Part of being a good entrepreneur means not listening to your critics, or the entrenched interests. As Lee Hood from the Institute for Systems Biology and Integrated Diagnostics put it succinctly (I’m paraphrasing), people have seriously doubted him six or seven times in the past—and he’s been right every time. (He didn’t say how long it took to be proven right.) But the basic message was that if you want to change the world, you will meet with resistance—the people and companies in power don’t want things to change—but don’t let that deter you. Hanauer stressed the importance of … Next Page »

Comments (2) | Reprints | Share:          

More than 200 people gathered yesterday at the Paul G. Allen Center for Computer Science and Engineering at the University of Washington to talk about changing the world. We had a stunning lineup of speakers across different disciplines—including Nick Hanauer of Second Avenue Partners, Nathan Myhrvold of Intellectual Ventures, and Lee Hood from the Institute for Systems Biology—and an equally diverse crowd of entrepreneurs, investors, executives, researchers, students, and service providers. Huge thanks to our event host—the UW computer science and engineering department—as well as to all of our event sponsors, partners, underwriters, and venture capital members, for making this event possible.

I hope to follow up soon with my takeaways from the conference. In the meantime, TechFlash has posted detailed writeups of the keynote speakers here and here. And we’ve also put together a slide show of the participants, the audience, and some of their potentially game-changing ideas (photos courtesy of Tracy Cutchlow and Robert Wade):

CLICK HERE FOR SLIDE SHOW (22 images)

You can also check out more pictures of the event from Seattle photographer Robert Wade (includes some good shots of attendees that I missed).

A few things jumped out at me from the discussions. One, a relatively small proportion of the audience (maybe 10-15 percent) thought the Apple iPad should be considered a “breakthrough” idea. Two, the things that turn out to have huge impact (e.g., the Internet) are usually not thought to be breakthroughs when they first emerge. Three, if you think you have a breakthrough idea, don’t listen to your critics. And four, nobody knows the future. Stay tuned for more deep thoughts.

Comments | Reprints | Share:          

Yesterday, we ran the first part of a sit-down interview with Nick Hanauer, a noted entrepreneur, investor, and co-founder of Seattle-based Second Avenue Partners. Hanauer, who has been involved in the early stages of such prominent companies as Amazon, aQuantive, and Insitu, spoke about the importance of new metaphors in recognizing and understanding breakthrough ideas; why venture capitalists don’t take enough risks; and the challenges of healthcare reform.

In what follows, Hanauer talks quite a bit more about Amazon, Insitu, and how to think about solving the biggest problems in business and society (hint: don’t conform). He also touches on why he’s generally bored with the online advertising sector (except for Seattle-based Marchex), and the one key area in which he would seek omniscient advice.

Here is part two of our interview:

Xconomy: What are the prospects for another big tech company like Amazon to come out of the Seattle area?

Nick Hanauer: I think the prospects are very good. It’s a very dynamic, creative, and risk-tolerant business culture here. There’s a fabulous ecosystem of people who understand technology in all sorts of ways. There’s software, Internet, biotech, aerospace. Insitu, as an example, is a big company now. And in 10 years, that could be a huge company. I think they employ 600-700 people now. We [Second Avenue Partners] don’t own it anymore, Boeing owns it, sadly. We have as good a shot at creating more big technology companies as almost any place on planet Earth. Probably not as good as Silicon Valley, but better than most places.

X: Tell me more about Second Avenue’s involvement with Bingen, WA-based Insitu, and when you first invested in it. (This company makes unmanned aircraft systems for surveillance and intelligence applications.)

NH: It wasn’t the first round of financing, but they were a teeny tiny company, employed half a dozen people. We looked at it in June or July 2001, and they were like, “Fishing, we’re going to find tuna with cool planes.” We thought it was really interesting technology. [CEO] Steve Sliwa was so good. We got that if they could pull off this technology in this domain, there are an infinite number of applications. And then [September 11, 2001] hit. And we said, oh. The military’s going to buy a lot of these. OK, we’re in. We led that round, and kept on backing them. I’m sad that we sold it, because it was such a civic achievement; it made such a difference in the lives of so many people. It’s maybe the single biggest thing to happen to that region of Washington and Oregon economically in decades. We were very lucky [with the Boeing sale], there was this incredible global bidding war going.

X: How should one learn to think about solving big problems in business and society?

NH: I think the capacity to think creatively isn’t gated by your intellectual abilities so much as your psychological ability to not conform to what other people want you to believe about … Next Page »

Comments | Reprints | Share: