If you were in the business of supplying heating oil in the Northeast, do you think it would be useful to know if a big winter snowstorm is likely to arrive with sub-zero temperatures in Massachusetts next month? How would fire chiefs in the brushy backcountry of Southern California react if they knew the odds of intense Santa Ana winds would increase dramatically in four weeks?

For all of meteorology’s satellite imaging and computer modeling, John “JP” Plavan and Stephen Bennett say it’s just about impossible to use current weather forecasting models to make more than general predictions about the weather more than two weeks in advance. That might be enough time for fuel oil suppliers to get a few extra shipments into local dealers, they say, but it’s not sufficient to make decisions at the highest levels of a big corporation or government agency.

But what if a weather forecasting model could “estimate” the likelihood of extreme weather events 30 or 40 days in advance? Would it be helpful, for example, to know if the odds a major winter storm would hit a particular region had increased from 33 percent to, say, 66 percent?

This, in a nutshell, is the promise of the innovation under construction at EarthRisk Technologies, a San Diego company that Plavan and Bennett founded less than two years ago. “If you’re Home Depot, you certainly want to have snow shovels in stock if you’re anticipating a big snowstorm,” says Bennett, a career meteorologist who helped create the company’s predictive analytics technology with scientists at U.C. San Diego’s Scripps Institution of Oceanography. Likewise, if you’re the Federal Emergency Management Agency, you’d certainly want to get a 30-day advance warning of the next Hurricane Katrina.

“We fancy ourselves as a software company, not as a weather company,” says Plavan, an investor serving as the company’s founding chairman and CEO. “We provide information that helps our clients make decisions of value.”

Bennett, who is EarthRisk’s chief science and products officer, says the highest value for the company and its customers lies in determining the likelihood of extreme weather—heat waves, cold snaps, and the kinds of storms that trigger destructive events like tornadoes, hurricanes, and flooding. “Extreme events are the ones that have the highest impact,” Bennett says. “The places where the opportunities are to be seized, and the risks managed, are at the extremes.”

JP Plavan

Plavan compares the startup’s predictive analytics to counting cards in Blackjack, a technique used by some gamblers to optimize their bets and to guide how they play each hand. “The odds change, depending on the cards already played,” Plavan says. Instead of six decks of cards in the dealer’s shoe, however, EarthRisk calculates the odds for extreme weather events based on correlations between existing weather patterns and historical patterns in a database that encompasses more than 60 years of detailed global weather data.

“The research question that Scripps Oceanography helped us answer is whether there are certain things that the atmosphere does that loads the dice, so to speak, in the way things play out,” Bennett says. “The data patterns have become so complex that it’s too much for a meteorologist—for one brain—to digest.”

Their focus on the statistical risks of extreme weather events also represents a fundamentally different approach from the long-range forecasts now issued by the U.S. Climate Prediction Center, which relies on … Next Page »

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Connect, the San Diego nonprofit group for innovation and entrepreneurship, says it has selected three finalists in eight categories for the region’s 24th annual Most Innovative New Product (MIP) Awards competition. The 24 finalists were culled from more than 140 nominations submitted, according to a statement from Connect. The finalists in each category are evaluated by San Diego experts and business executives in that category. Winners will be announced at an awards luncheon, set for Dec. 9 at the Hilton La Jolla Torrey Pines.

The finalists in each category are:

Clean Technology

Genomatica, for Process that produces high-volume industrial chemicals from renewable feedstocks.

Noble Environmental Technologies, for proprietary ECOR process to produce environmentally friendly building materials.

Wildcat Discovery Technologies, for electrolytic process that makes environmentally friendly materials.

Communications and IT

Ethertronics, for its Ether 1.2.1 technology for embedded antennas in mobile devices.

Kyocera Communications for Kyocera Echo, a dual-touchscreen smartphone.

Swarmology for Swarm.it, real-time contextual search and marketing technology.

Life Science – Diagnostics and Research Tools

Biocept, for OncoCEE-BR diagnostic screening technology to detect circulating tumor cells.

Life Technologies, for Ion Personal Genome Machine, technology for semiconductor-based DNA sequencing.

Targeson, for ultrasound contrast imaging of VEGFR2 receptor on lining of blood vessels.

Life Science – Medical Products

Hypnoz Therapeutic Devices, for Jaw Elevation Device used to maintain open airway during medical procedures.

IOS Technologies, for technology that enables dental professionals to create digital impressions and 3-D models.

Optimer Pharmaceuticals, for fidaxomicin (DIFICID), a new antibiotic treatment for C. difficile.

Software

FICO, for Falcon Fraud Manager 6 Analytics, used to detect payment card fraud.

MOGL for MOGL, online restaurant mobile rewards program.

SwoopThat, for online technology that helps college students find cheapest online price for every book they need to buy.

Hardware and General Technology

Aculon, for Aculon AL-X and Aculon H1-X products, nano-scale films and coatings for a variety of survaces.

LifeProof, for LifeProof case for the iPhone 4.

Memjet, for high-speed inkjet printing technology.

Action and Sport Technologies

Hydroflex, for flexing surfboard design.

KVA Stainless, for technology to produce seamless stainless steel tubing, pipes, stamping, and forming.

TaylorMade Golf, for R11 Driver with movable weight than enables golfers to customize to their swings more precisely.

Aerospace and Security Technologies

Geodetics, for positioning and navigation technology for dynamic platforms offering a variety of processing, global positioning system (GPS) and inertial measurement unit (IMU) options that can be configured to cover a broad performance spectrum.

Langford & Carmichael, for ScenGen, a software program that generates all possible scenarios for a given situation at a very high speed.

MicroPower Technologies, for MPT2500 Rugged-i, solar-powered wireless video surveilance camera technology.

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Managing complexity was a recurring theme at a global conference on data mining and predictive analytics held in San Diego last week, and sometimes it’s a recurring theme here at Xconomy as well. We’ve pulled together a lot of disparate elements for this roundup, for example. Your briefing begins now.

—In a ruling with broad implication for cloud-based music services provided by Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG) and others, a federal judge in New York sided largely with San Diego’s MP3Tunes in a patent infringement lawsuit filed by music record giant EMI. The judge found that MP3tunes mostly complied with rules of the Digital Millennium Copyright Act, but didn’t go far enough by deleting 153 accounts with copyright-protected songs.

—San Diego-based Confident Technologies, which recently extended its image-based sign-on verification system to smartphones and other mobile devices, said it raised an additional $2 million earlier this year to build out its business. The network security company also said it had developed technology to protect user accounts from automated “brute force” log-in attempts, and broadly based denial-of-service attacks.

—In a presentation at last week’s “Knowledge Discovery and Data Mining” (KDD) conference, Salford Systems CEO Dan Steinberg explained how the San Diego company’s predictive analytics technology can help retailers better predict consumer response to discount offers. With about 50,000 different items in a typical grocery store, Steinberg said retailers that operate more than 30 stores and offer hundreds of discount promotions have enormous difficulty forecasting consumer demand and managing their inventory. More than 1,100 experts in data mining, analytical software, and predictive modeling attended the conference in San Diego.

—PureForge, a Vista, CA-based startup focused on innovations in metal surfacing, raised $4.5 million through Series A financing. The company, co-founded by Nathan K. Meckel and longtime San Diego investor and executive Doug Wall, also named Wall as chairman and CEO. Meckel, an expert in surface sciences, physics, and metallurgy, previously founded Molecular Metallurgy, an engineered coatings services company, and Deposition Technology, an optical coating development company. A PureForge spokesman says today the round consisted of individual private investors who are not being identified.

—Silicon Valley’s Kleiner Perkins Caufield & Byers led a Series F round that raised $27 million for Awarepoint, a San Diego company developing real-time tracking technology for the healthcare industry. Since CEO Jay Deady joined the company at the end of last year, Awarepoint has expanded its strategy to become more of a full-service provider of health IT products and services.

—Qualcomm Ventures, the San Diego corporate venture fund, joined a Series A round led by Burrill & Co. of San Francisco that raised $3 million in funding for AliveCor, an Oklahoma City, OK-based startup developing an electrocardiogram recorder. AliveCor makes a device that enables iPhones and Android mobile phones—and eventually iPads and other mobile devices—to serve as low-cost heart monitors. Brian Dolan of MobiHealthNews was the first to report the deal earlier this month.

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More than 1,100 experts who analyze “Big Data” are gathered in San Diego today for the industry’s major conference on “Knowledge Discovery and Data Mining” (KDD). The registered attendance is a 22 percent increase over the 900 who attended last year’s KDD conference in Washington D.C.

“In this field, at least, we’re experiencing a recovery,” says Joe Milana, the global head of analytics at Opera Solutions, which was founded as a consulting firm in 2004 and has developed a specialized focus on helping big companies use predictive analytics. When the economy crashed in 2008-09, Milana says a lot of companies eliminated their data analytics services as part of their overall cost-cutting efforts. By 2010, however, he says the analytics industry was experiencing a recovery as financial institutions and corporations realized the growing importance of identifying customer trends and user patterns in the deluge of data that gets generated daily.

Opera Solutions, based in New York and Jersey City, NJ, has been a beneficiary of this resurgence, Milana says. While the company has about 550 employees worldwide, Milana heads the company’s San Diego-based analytics business—which had five employees three years ago, and has doubled its headcount to more than 70 employees in the past eight months.

“There’s this niche in machine learning, where San Diego is the place to be, and our company explicitly moved to San Diego to tap into it,” Milana says. Among the U.S. cities with technology clusters focused on software analytics, he estimates that San Diego ranks third—behind Silicon Valley, with its regional expertise in search engine applications, and the New York area, where Wall Street’s financial sector has a seemingly insatiable appetite for data mining and analytic technologies.

The focus of San Diego’s analytics and machine learning community seems to extend beyond search applications, and is focused more on Main Street than Wall Street. Many local companies are focused in various ways on helping big businesses take advantage of the terabytes of data being generated by their customers each month. More than 100 companies in the San Diego area are working on predictive analytics, Milana says, making predictive analytics one of the few cohesive communities in San Diego’s fragmented software industry.

Opera Solutions sees … Next Page »

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What started as a quiet week for San Diego technology news got busy at the end. We wrapped it all up for you here.

—San Diego’s Software Equity Group released its annual software industry equity report, showing the annual median valuation of 161 companies in its main index at the highest valuation since 2007—2.3 times trailing 12-months revenue. The report says software mergers and acquisitions are expected to ramp up significantly in 2011.

—Like other venture investors, Southern California’s Tech Coast Angels said its deals were up, but dollars were down in 2010. The angel investment group said its members provided funding for 31 startups last year, a 30 percent increase over 2009, but the group said the total amount invested by TCA and others dropped by more than a third, to $40.2 million over the same period.

—San Francisco-based Ecotality (NASDAQ: ECTY) has begun installing its Blink Level 2 residential charging stations at homes in Los Angeles, San Diego, Portland, Seattle, and Chandler, AZ.

—Michael Robertson, San Diego’s provocative Internet entrepreneur, launched his newest startup, DAR.fm. The company’s website provides a Web-based digital audio recorder that enables users to search through a catalog of 600 music and talk-radio programs and schedule the site to record up to four hours of any streaming audio broadcast.

—San Diego’s Zementis, which has developed a predictive analytics decision management system called ADAPA, formed a strategic partnership with Palo Alto, CA-based Revolution Analytics, the leading commercial provider of the open source programming language known as “R.” Financial terms were not disclosed.

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A common theme in last week’s technology news is how companies and entire industries continually remake their businesses, whether it’s the venture capital community, startup carmakers, or a San Diego company that specializes in data storage technology. Read on to see what I mean.

—As the venture capital survey data comes in from the three months that ended September 30, we’re seeing a nationwide rebound in first-time financings for startups. Data from CB Insights, the New York financial information firm, shows seed-stage deals increasing from 1 percent of the deals in the third quarter of 2009 to 11 percent of all deals during the third quarter.

—Venture capital surveys from CB Insights and the MoneyTree Report both show an increasing deal count, but a decline in the total amount of invested. In a year-over-year comparison, the MoneyTree Report showed a 7 percent decline in capital invested with a 9 percent increase in deal count during the third quarter, when venture firms invested $4.8 billion in 780 deals nationwide.

—V-Vehicle, the San Diego startup automaker, changed its name to Next Autoworks. The company, which has raised $87 million from investors that include Kleiner Perkins, Google Ventures, and T. Boone Pickens, also hired industry veteran Kathleen Ligocki as CEO.

—Overland Storage (NASDAQ: OVRL), the San Diego data storage technology specialist, acquired Sunnyvale, CA-based MaxiScale, which provides data protection and data management technologies. Financial terms were not disclosed.

—San Diego’s Qualcomm (NASDAQ: QCOM) acquired San Francisco-based mobile social networks software developer iSkoot Technologies. Financial terms were not disclosed.

—Biz Stone, a Twitter co-founder and the San Francisco-based company’s creative director, told The San Diego Union-Tribune last week that a new-and-improved version of the micro-blogging service should improve service worldwide. “It was re-architected to actually be snappier, faster – to deal with information faster,” said Stone, who was in San Diego to speak at the 2010 Tijuana Innovadora conference on innovation across the border.

—Predixion Software, based just across the Orange County line in Aliso Viejo, CA, said it had closed on $5 million in Series A financing, led by DFJ Frontier. Predixion, which specializes in low-cost, self-service in the cloud predictive analytics software, said it will use the funds to expand product development,increase sales and marketing initiatives, and expand its sales channel programs and strategic partnership activities.

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Overwhelming. Inspiring. Thought-provoking. These are all words that apply to the spectacle that was yesterday’s Mass Technology Leadership Council’s Innovation 2010 “unConference,” held at the World Trade Center Boston and organized by entrepreneur and investor Bill Warner, Matrix Partners’ Antonio Rodriguez, and MassTLC’s Tom Hopcroft. And one more word, ridiculous—that’s what it feels like to try to sum it all up in one post.

So I won’t do that. Instead, I’ll just give a few of the ideas and thoughts that my colleague Erin Kutz and I came away with from the discussions of the day. The basic format (or unformat): hundreds of entrepreneurs, tech executives, investors, and other business leaders broke out into about 100 organically created sessions on everything from customer development, startup resources, and how to generate social media buzz to alternative financing schemes, venture capitalist-entrepreneur dynamics, and education issues for engineers headed into industry and women in tech. I’d hazard a guess that a lot of strong connections were made during the course of the day, and we’ll be seeing the fruits of all that in the years to come.

Just a few of the people I saw as I flitted from room to room during the morning sessions: Shawn Broderick from play140 and TechStars, Mike Chin from Baydin, Ed Crawley and Ken Zolot from MIT, Wade Appelman from Harvest Automation, Carl Calabria from iRobot, Paul English from Kayak.com, Eric Paley from Founder Collective, Susan Hunt Stevens from Practically Green, Chris Sheehan and James Geshwiler from CommonAngels, John Landry from Lead Dog Ventures, Sim Simeonov from FastIgnite, Ziad Sultan from Marginize, Vineet Sinha from Architexa, Bettina Hein from Pixability, Gus Weber from Microsoft, and, of course, Bill Warner himself.

Here’s our top 10 list of observations:

1. MassTLC’s innovation conference, in its third year, has become a premier business event for tech entrepreneurs in New England. It has gained a critical mass of elite attendees, such that people now feel they have to be there. It has also found a way to blend the concerns of entrepreneurs, startups, and venture capitalists with those of big companies and other organizations to a degree that I’m not sure I’ve seen before. Kudos to the organizers and participants.

2. The World Trade Center Boston is a pretty good venue for this sprawling event. Although the day was fairly chaotic, that’s by design. The layout of the rooms and floors made it easy enough to find what you were looking for quickly. One logistical suggestion that might help things get started more smoothly—some advance prep and communication of what a few of the key topics will be (maybe this happened at the pre-party and I just missed it).

3. You’ve heard about co-working spaces; how about co-living? Cambridge Innovation Center founder and CEO Tim Rowe prompted a discussion on dorm-style entrepreneur co-living spaces, where a bunch of startups share common kitchen and bathroom space. The idea is to … Next Page »

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Datameer, a San Mateo, CA-based provider of data analytics, and Zementis, a San Diego-based analytics startup, have announced a strategic partnership to help customers integrate scalable standards-based predictive analytics. The partnership combines a proprietary decision engine developed by Zementis for real-time execution of predictive models with the power and scale of Datameer Analytics Solution (DAS), an end-to-end solution that includes data source integration, storage, an analytics engine and visualization. Financial terms were not disclosed.

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I didn’t really know what to expect when I sat down with Covario CEO Russ Mann recently over a lunch of fajitas and enchiladas. Many CEOs adopt a kind of taciturn presence to maintain their command authority, but words gush from Mann. Ask a question, and he responds at length. Yet the most-succinct explanation of Covario’s business and the potential market that Mann and co-founder Dema Slotin saw more than five years ago came when he was describing a typical Covario customer.

“Our clients are some of the largest companies in the world,” Mann says. “They may be operating 50 websites in 20 countries and they are paying for hundreds of thousands of search terms to lead prospective customers to their websites. They want to make sure that every single phrase works, and of course, they want to analyze which phrases and terms work best.”

And that, in a nutshell, is what Covario does. The three-year-old, venture-backed startup provides high-end analytical software and services for search engine marketing, or SEM, and search engine optimization, also known as SEO. Mann says an average client pays Covario from $100,000 to $200,000 a year; its Fortune 1,000 customers include Intel, Adobe and Procter & Gamble. If that seems pricey, Mann says Covario’s sophisticated analytics have helped some companies increase Web traffic such that their online profits surged between 30 and 300 percent. “Not their revenue,” Mann emphasizes. “Profitability.”

He explains that most of Covario’s clients “simply license our software to do the PPC (pay-per-click) and SEO work in-house, leveraging our software for analysis and optimization, or to better work with and keep track of the agency doing it for them. About 10 of our 65 clients outsource the entire buying and optimization work to us, and we in effect become the agency,” Mann says.

At a time when daily newspapers and other conventional publications are reeling … Next Page »

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Already you are probably asking yourself, “What the heck is predictive analytics?”

It encompasses a variety of disciplines and technologies, typically using software that applies advanced mathematics or statistics to analyze pools of data and make forecasts about current or future events.

Who would have predicted that San Diego would emerge as one of the global capitals in such technology?

The forecasts that predictive analytics offer are usually expressed in terms of the percentage or odds for or against a particular outcome—such as the likelihood that a particular credit card transaction is fraudulent. The technology also can be used to analyze data, such as traffic through a freeway interchange or visitors to a website, and identify key “predictors”—the factors that would help improve traffic flow or eliminate recurring accidents.

Predictive analytics are increasingly all around us, says Bob Slapin of the San Diego Software Industry Council. “Every transaction, every phone call, every mouse click is now a data point,” Slapin says. “We’re gathering information faster than we can process it, and that requires sophisticated technology. It requires analytics.”

Today, Slapin says, “If you’re in software or software as a service, you need analytics because you’re gathering all this online data about your customers.”

Qualcomm, Websense and Intuit’s San Diego-based consumer tax group are among those that specialize in such Web analytics, Slapin says.

Local defense contractors such as SAIC and L3 Communications are using analytical software to help identify terrorists. San Diego-based Kuity Corp. searches Medicare records for telltale signs of Medicare fraud and Detectent mines electric utility records in search of customers with illegal hookups to the power grid.

Slapin says his group has organized a forum on analytics, which is being held today at the Del Mar Marriott, to highlight the importance of analytics and to showcase San Diego’s leadership in the field.

Slapin attributes San Diego’s prominence in software analytics to UC San Diego’s Robert Hecht-Nielsen, who specializes in neural networks and pattern recognition software. Hecht-Nielsen founded HNC Software in 1986, initially to work on enhancing military target identification for the Department of Defense, but the company later adapted the basic technology to analyze credit card transactions. After the San Diego company was acquired by Minneapolis, MN-based predictive analytics giant Fair Isaac and Co. in 2002 for about $810 million, several key HNC employees launched their own analytics startups.

San Diego software developer William J. Proffer created a customized Google map listing almost 80 predictive analytics companies in and around San Diego, and has generously given Xconomy permission to republish it here. (You can see the names and addresses of each company by clicking on the green pushpins; be sure to scroll the map north and south to see additional companies. Click on the “View Larger Map” link for the full version, including a complete list of all the companies, at Google Maps.) Proffer says the origins of San Diego’s analytics cluster are even deeper. [Continued below map]

View Larger Map

Proffer cites Integrated Software Systems Corp., founded in San Diego by Peter Preuss in 1970, as one of the “world’s leading independent developers of visual information systems software.” It was acquired by Computer Associates in 1986.

Proffer also points to British economist Clive Granger, who joined UCSD’s faculty in 1974, for using similar techniques to develop revolutionary economic forecasting methods. Granger and collaborator Robert Engle were awarded the 2003 Nobel Prize in Economics for their work in the area.

“In my mind,” Proffer says, “Those two things are basically the genesis of predictive analytics in San Diego.”

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