If you want to understand the important local and national trends in talent flow, you need to know Davis Bae. The founder and managing attorney of the Bae Law Group in Seattle, which specializes in immigration law, works with many local startups and employers in the tech community on their immigration and recruiting plans.

I’ve been hearing rumblings lately that high-tech talent is leaving the Seattle scene at an ever-faster pace, in part because of layoffs of foreign workers. Foreign nationals on H-1B visas are having a particularly hard time in this recession. That’s because if they get laid off, they (and their families) usually have to leave the country immediately. What’s more, getting the visas in the first place has become such a pain that companies are increasingly opening offices in places like Vancouver, BC—where Microsoft and Big Fish Games have recently set up shop, to name a couple of cases I’ve previously reported on.

Bae emphasized that the situation is indeed dire, but the issue is much bigger than Seattle—in fact, the Northwest actually has it pretty good compared to other parts of the country. “We have been creating a brain drain in the U.S. for innovation,” Bae says. “A key way to stimulate the economy again is by embracing talent from other countries.” As for the Seattle area, he says, “my clients and the region are reasonably stable. But the real problem we have is that the entrepreneurial community is the most locked out. They can’t wait six months for a visa.”

He is referring to the process by which companies can apply for H-1B visas for their employees as early as April 1, but have to wait until October 1 to get the results. Which brings us to the big trend Bae is seeing now. In 2009, the demand for new H-1B visas has dropped around the U.S, he says. There is an annual quota of 65,000 new visas available for the whole country, and in recent years there have been around 150,000 applications for those slots. “For the first time in many years, usage was so low they didn’t run out on Day 1,” Bae says. “It’s a huge drop.”

Nationwide, the number of H-1B visa applications is down to around 30 percent of what it has been in recent years, but Bae says he has still filed 60 to 70 percent of his usual business, mostly for companies based in the Northwest. Although that may be an encouraging sign for the Seattle area, …Next Page »

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Seattle-based TalentSpring, a developer of semantic-search software that helps recruiters better match job candidates to open positions, announced today it has closed a $1.6 million round of funding from Second Avenue Partners and private investors. TalentSpring, led by founder and CEO Bryan Starbuck, plans to release its product to the public next month.

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California’s jobless data for January is set for release Friday, but there’s little reason to expect much improvement since December, when the statewide unemployment rate hit 9.3 percent, with more than 1.73 million California residents out of work. In San Diego County, overall unemployment was at 7.4 percent in December, with 117,000 people jobless.

For the tech sector job market specifically, Xconomy’s layoff trackers offer another barometer of a generally grim situation (You can find our San Diego layoff tracker here). Greg and Wade provided another perspective last month by talking to some of the MBA students at MIT’s Sloan School of Management in Cambridge, MA, during their annual “tech trek” to meet with companies in Silicon Valley, as well as Seattle and Boston.

But I sensed more anxiety—or maybe it was less confidence—when I dropped in at UC San Diego Friday for an annual job fair organized by students at the Jacobs School of Engineering.

“Everyone’s worried about the economy,” says Dat Kieu, a third-year undergraduate studying mechanical engineering. He was looking for an internship or part-time job.

UCSD says its Disciplines of Engineering Career Fair (DECaF) is the only annual, student-managed, multidisciplinary career fair on campus. and this year 71 companies participated. A public relations coordinator, eager to convey the idea that companies are hiring, even provided a survey (with 30 of the 71 companies responding) that shows 40 percent of the companies attending the fair say they plan to hire the same number of full-time positions in 2009 as they hired in 2008—although 33 percent say they plan to hire fewer entry-level engineers. The same survey shows 53 percent expect to place the same number of engineering interns this year, with 23 percent planning to recruit fewer interns in 2009.

“It’s an interesting hiring climate,” says Qualcomm recruiter Vince Walker. “We’re not going full throttle, but we’re still bringing people on board.” Yet Walker and other recruiters told me the tough job market enables them to be far more selective.

Bob Balderas, a recruiter for New Jersey-based BD Biosciences, which employs about 400 in San Diego, says the company plans to start …Next Page »

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The Seattle search startup Positronic has been acquired by eBay for an undisclosed sum. The news was first reported on Mary Jo Foley’s Microsoft blog last week, and was later confirmed on eBay’s company blog. It’s an interesting and somewhat sad story, as it means the departure of prominent Seattle-area tech executives, as well as the loss of some potentially intriguing (if stealthy) Internet technology.

Positronic was founded in 2007 by a pair of former Microsoft search execs, vice president Christopher Payne and general manager Dane Glasgow. As far as I can tell, they never released a product, but had been working in the areas of data mining, machine learning, and predictive models, all applied to Web search. Now, after less than two years, Payne and Glasgow are headed back to the corporate machine—and going with them is any progress they’ve made in improving search.

According to eBay, the execs are relocating to headquarters in San Jose, CA, where Payne has assumed the new role of vice president of search, and Glasgow is vice president of engineering. The goal of the Positronic acquisition, eBay says, is “to help with efforts at leveraging machine learning to provide a more predictive and compelling customer experience.”

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Want to know who’s hiring the top young business talent around town? Just ask Saleem Hussain, an MBA student from Boston. In a brutal market for tech industry jobs, he gave me a fresh perspective on the next-generation talent pool and where it’s headed, in terms of both big companies and startups.

Hussain is a first-year MBA student at MIT’s Sloan School of Management in Cambridge, MA. He is one of the organizers of a 16-student Sloan contingent that made a “tech trek” to Seattle last week, on Thursday and Friday. It’s part of an annual program that takes 150 Sloan MBA students to companies in Seattle, Silicon Valley, and the Boston area to make job and internship contacts and learn about the respective markets.

In the Seattle area, the group visited Amazon, Microsoft, Expedia, Adobe, Starbucks, and Digeo. The students met with recruiters and executives to ask about business challenges the companies are facing, and to learn what MBAs need to do to land jobs in the current market. “As far as internships go, there are lots of opportunities at big companies,” says Hussain.

Despite the economy, he says, Amazon and Microsoft “seem to be really hiring in full swing” on the MIT campus. Adobe has a lot of openings in Silicon Valley, he adds, but not as many in Seattle. Interestingly, Google and Yahoo usually host the Sloan students (in Silicon Valley), but did not this year. “A lot of companies are delaying,” says Hussain. “They’ve held back interviews, putting hiring on hold.”

I also asked Hussain about Sloan’s contacts with Seattle-area startups. If there’s one hiring issue I hear about in the innovation community, it’s the relative dearth of top management, sales, and business development talent—so tapping programs like Sloan’s seems like an obvious way to address the matter. The Sloan tech trek focuses on bigger companies that tend to hire on campus, but Hussain says organizers would embrace meetings with startups as well. “In Boston, we have a lot more access to small companies and strategy consulting firms, because of neighbor relationships,” he says.

As for broader impressions, some in the Sloan group were expecting a wary market for new jobs and internships, given tightening budgets and the prospect of layoffs seemingly around every corner. But the Seattle companies were very receptive, Hussain says. “They seemed surprisingly welcoming in talking to MBA students.” As for any wariness or uncertainty (about internships anyway), he says, “we didn’t see any of that.”

“A lot of people in business school are excited about coming out in this economy,” Hussain says. “For companies, it’s very pivotal for them. It’s such an important time to be working at these companies. That’s what makes it so exciting, and that’s what drives our visits.”

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On a grey winter day, it might not seem like Seattle has much to contribute to the solar power industry. But cleantech and IT are converging in the Northwest these days. And what we lack in sunshine we make up for in software developers, according to Jeff Ressler, head of the software division of Clean Power Research, a small renewable-energy company that expanded to Kirkland in September.

The company, which consults and writes software for solar power and other clean energy industries, is a small group of 15. Their Kirkland office has a whopping total of two people so far. But they clearly have staying power. Founded 11 years ago in Napa, CA, the self-funded company is profitable and growing, and all that growth will be happening here in the Northwest, said Ressler, who heads the Kirkland office.

Clean Power Research plans to hire six more employees in Kirkland by this spring. “We’re really excited to be in Washington, just in terms of the job candidates we’re seeing,” said Ressler, a former Microsoftie. “There’s a kind of built-in awareness in many people up in the Northwest of environmental issues, and a real passion for that. That’s what we really want to tap.”

The company has five products on the market right now, all Web-based software applications that calculate energy output or cost of solar panels. The applications range from Clean Power Estimator, a general tool to estimate solar energy available in your area for individuals considering installing solar panels on their roofs, to SolarAnywhere, a database developed in collaboration with researchers at the State University of New York that uses U.S. government satellite photos to calculate the precise amounts of solar radiation across the country at any given time. The database can tell you hourly amounts of solar rays for every 25 to 35 square miles in the United States.

“If you wanted to know how much solar radiation hit downtown L.A. yesterday afternoon, we could tell you what those numbers were,” Ressler said.

While it might sound cool to know the exact amount (or lack) of sunlight shining on your …Next Page »

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This morning, I had a good chat with Seattle entrepreneur and investor Martin Tobias, in advance of tomorrow’s holiday open house at his new startup, Kashless. Known to get around on his Segway, Tobias said he trudged down the hill on foot today to his new office, which is in Lower Queen Anne. All of his meetings were canceled because of the snowstorm, he says.

Tobias is the former CEO of Imperium Renewables, the troubled Seattle biodiesel refiner, and a venture capitalist with Bellevue, WA-based Ignition Partners. I wanted to hear more about Kashless, whose green-tech software has been in private alpha trials since Tobias raised $5 million from RRE Ventures in October. (Tobias is an investor in two RRE funds, so in part, he funded himself.) “Stuart Ellman [RRE's co-founder and managing partner] has taken a pretty thoughtful look at how a tech fund can play in the green space. He’s focused on doing software deals that relate to green,” Tobias says. He adds that other tech investors have tried to get into cleantech in areas that don’t relate to software—like solar and biofuels—and they got burned.

The concept of Kashless, as I understand it, is to provide an online service whereby people can efficiently acquire and give away stuff for free—equipment, furniture, whiteboards, and the like. It’s a combination of social network, community message board, and Web service, all with a green environmental theme. Kashless calls it “recommerce.”

Kashless currently has five employees and is looking to hire four more senior software engineers, Tobias says. They have moved into a 1,200-square-foot office, which will be on display tomorrow evening. (Tobias says he expects around 100 guests, so it might get crowded.) Not surprisingly, Tobias used Kashless to furnish the new office. “Every piece of furniture was free,” he says, from tables and chairs to whiteboards, and even some computer monitors. “Kashless could be an interesting tool for startups to reduce their expenses.”

Tobias says he even got some of the beer for the holiday party for free. He was looking for a beer fridge, and instead found several people trying to give away unopened cans and bottles. “We’ve been amazed what you can find for free in the community,” he says.

As for his product, Tobias says there are now 13,000 items in the Kashless system. The software searches community sites like Craigslist and Freecycle.org for all free stuff, and posts it. So far, Kashless users can’t post their own items yet, but that will come in January. Tobias says the service will move into beta trials in March or April—when the site will be “feature-complete but you’re working on scalability and usability” for a large number of users.

“Our idea here is to get more of this stuff actually moving around the community,” Tobias says. The longer you can use something, the better.” Recycling is great in principle, he says, but e-waste recyclers are not always reputable. “We prefer to extend the lifespan of an item as an alternative.”

So what will Kashless provide that isn’t already covered by community e-mail lists and websites? “We’re trying to hook into lots of different marketplaces and lots of different lists, to get the largest potential distribution for free stuff,” Tobias says. “You can see stuff from all over region. We certainly want to partner with STS [the Seattle Tech Startups list] and the whole startup community…We want to make it extremely valuable for people in Seattle first, before we pour gas on the fire.” But the eventual plan is to go national, and then global.

Tobias points to some expansion lessons from Craigslist, including the site’s ease of use, simplicity, and being lightweight. The key is to build a high-traffic website without a big staff, he says. “A lot of startups make the mistake of hiring a lot of people. I’ve done that myself…We’re focusing right now on building a valuable service. We’ll figure out how to make money later.”

In the meantime, he says, “We’re funded, we’re expanding, and we’re hiring.”

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“We’re not just a gaming company,” says Glenn Walcott. The chief financial officer of Seattle-based Big Fish Games is telling me about his company’s focus on new hires, and this comes as a bit of surprise. People tend to think of Big Fish as a game producer, but Walcott stresses that most of its engineers don’t work directly on games. They work on other aspects of the business, like e-commerce, distribution platforms, and real-time memory systems for personalized user experiences. “It’s a lot of fun for new guys,” he says.

But the main message is the company is hiring—period. It’s a welcome change from the doom and gloom we’ve been reporting lately. On a sunny Friday afternoon, I checked out the Big Fish offices on Elliott Avenue West, where the company moved last July. The open floorplan means most employees have a striking view of Elliott Bay. And the beautiful aquarium in the lobby is getting new fish this week (no word on their size, but I have a hunch).

There has been a lot of talk about whether the gaming industry—particularly “casual games,” which are relatively cheap and don’t require much time commitment—might be recession-proof. Walcott eschews the label, but he notes that Big Fish’s October sales were up 23 percent over September, and November sales were 10 percent above that. The company’s latest big release, Mystery Case Files: Return to Ravenhearst, has sold 100,000 in its first week, and Thanksgiving weekend was Big Fish’s biggest sales weekend ever, says Walcott.

It all adds up to unprecedented growth for the company, which landed an $83.3 million investment led by UK-based Balderton Capital in September. Walcott says Big Fish currently has 35 open positions—mostly for engineers, programmers, and software development testers, but also for a director of marketing. Native foreign-language skills are a plus, Walcott adds; the company does a lot of business in Europe.

A few more tidbits about the Big Fish workforce:

—Of its 320 workers in Seattle, 45 percent are engineers. Only about 15 percent of the staff work on game development (for the company’s studio). The rest work on things like building a software platform to handle two million game downloads a day.

—The company’s talent mostly comes from the Northwest. Walcott estimates 95 percent of the staff had a previous job in the Seattle area before joining Big Fish.

—The firm opened an office in Vancouver, BC, in August. It has five workers there, with the goal of building up to about 30 people, primarily for game development. Why Vancouver? A great talent pool, and it’s easier to get work visas there for employees from Europe, for instance.

Looking ahead to next year, Walcott predicts there will be a lot of talented workers available in the first quarter. Big Fish would love to snap them up, of course, but people might be hesitant to make any career moves because of the economy, he says. With those people in mind, I asked him what his company’s greatest selling point is.

Besides its “fun, family-friendly product,” Walcott says the Big Fish culture is open and very collaborative. “I think it’s the best company to work for in Seattle,” he says. OK, he’s a bit biased, but his message is clear. “We really try to take care of our employees…I’m proud to say people here have a very good work environment.”

Sounds like Big Fish is trying to reel in its new employees, hook, line, and sinker (sorry, couldn’t resist).

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On Friday, there was a really good talk by the noted tech entrepreneur and investor T.A. McCann at a Northwest Entrepreneur Network breakfast in Bellevue, WA. The topic was how to get a startup off the ground: he called it “0-25 mph.” What with the economy these days, advice from someone like McCann seems more valuable than ever. For those who may have missed the talk, here are a few highlights and a link to McCann’s slides.

McCann is a former Microsoftie who has experience at Polaris Venture Partners and Vulcan Capital. He has been involved with a number of tech startups, most recently Evri and Gist, the latter of which he currently leads as founder and CEO. I thought McCann’s comments in his blog about the talk were particularly telling about his approach to entrepreneurship. “I always learn something when I do these kinds of events, both about what I have done right/wrong in the past and how I can be better in the future,” he writes.

At the bottom of his talk slides—which covered everything from strategy and operations to fundraising and hiring—McCann listed “lessons learned.” A few points stood out to me:

—Know your own space, pick customers you want to embrace, and make sure they pay.

—Strategy should not be complicated.

—A team’s value is 5 parts passion, 2 parts brains, and 1 part experience.

—Outsource routine tasks, hire for thought leadership.

—Deliver status updates every two weeks to your investors/board/advisors.

McCann closed with the following five-point summary for entrepreneurs. Points #2 and #5 are really key, I think:

—If it were easy, everyone would do it.

—Love your customers more than your idea.

—Use the right tools, timing, and discipline.

—Know where to spend and save.

—If you were rich, would you still be doing it?

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Authoria, a Waltham, MA company that makes software used in employee recruiting and retention, said Monday that it will be bought by White Plains, NY-based private equity firm Bedford Funding for $63.1 million. Bedford has also agreed to put $8 million in working capital into the company.

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How do you run a national investment bank here in the Northwest, far away from the bustling financial centers of New York and San Francisco? I put the question to Michael Butler, chairman and CEO of Seattle-based Cascadia Capital, one of the area’s leaders in providing banking services in corporate finance and strategy. His answers provided insight into banking and local investments, as well as a broader snapshot of growth areas to watch in the region.

Butler is a Seattle native who spent 16 years working on Wall Street. Like almost everyone you meet from the Northwest, he eventually wanted to move back. In 2000, he co-founded Cascadia with an eye towards making deals across a broad geographical region centered on Seattle, but stretching north to Vancouver, BC, south to Portland, OR, and east to Denver, CO. “Out here you have to educate people about what an investment bank does. Back east, everyone knows,” says Butler. “We’re a facilitator of taking capital and getting it to companies.”

The main challenge out here, Butler says, is attracting experienced bankers to the Seattle area. He says his team tracks the top investment bankers in New York and San Francisco and actively recruits those who are from the Northwest (or whose spouses may be) to come back. It’s about “getting a few good bankers,” he says. “It’s all about the people.”

On the plus side, being away from the major financial centers means Cascadia can stay “out of the rigamarole,” Butler says. “We don’t get caught up in the group-think, and we make decisions less influenced by the day-to-day noise.”

Cascadia is small, with just under 30 bankers, and is looking to focus on three main areas of high-tech. “We see telecom and [traditional] tech as consolidating. We believe growth will be in new media, cleantech, and health care,” says Butler. “There are a lot of companies with big-time capital needs.”

—By new media, he means innovative Internet-based business models. As Butler sees it, 15 to 20 percent of the Seattle-area dot-coms from 2000-2001 survived, are raking in $20 to $30 million in annual revenue, and are “doing something to get to the next level,” he says. “There’s really some great talent out here.” Case in point: WidgetBucks, the online ad network that recently raised $10 million from Draper Fisher Jurvetson and Bellevue, WA-based Ignition Partners, with Cascadia involved in the deal.

—Cleantech and alternative energy is the “fastest growing area, with a lot of capital being raised,” says Butler. But these days most of it is in Portland, OR, Denver, Vancouver, BC, and Calgary, AB—which Butler calls “absolute hotbeds.” There has been a lull in Seattle proper since an early wave of companies getting funded, such as Imperium Renewables. “The west coast is still learning the sector,” says Butler. He’s looking at closing deals soon with Bend, OR-based PV Powered and Burnaby, BC-based NxtGen Emission Controls.

—Healthcare, especially where it converges with software, has great potential for growth. “We have pretty good expertise here in using software to discover drugs,” says Butler. Plus, he says, “the Gates Foundation will transform the city… The leading experts are all relocating out here, drug companies are locating offices here. There will be an influx of people, and some of them will migrate to the private sector.” Meantime, he says, there are three to five deals to be done in healthcare tech and services for assisted living.

Butler left me with a final thought, which echoes something Xconomist Eddie Pasatiempo of the Clarion Group told me a few weeks ago. Given that mergers and acquisitions are the “exit of necessity” these days, it has become more important to position a company so potential acquirers see how it fits their needs. And a lot of that positioning is determined by the quality of the company’s investment bank. “It’s critical,” Butler says, “absolutely critical.”

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Last week, the University of Washington’s Computer Science and Engineering department hosted a special workshop sponsored by Google and the National Science Foundation. The goal of the three-day program was to instruct professors on how to teach Google-style computing—which includes harnessing huge amounts of digital data and doing “cluster computing” over large-scale, networked servers. The weekend before that, Google also sponsored a workshop at UW to teach high-school math and science teachers about computer science—everything from programming and robotics to cryptography and security.

It’s an example of Google ramping up its local outreach as the search giant builds a larger presence in the area. Google Seattle, located in the Fremont neighborhood, has grown from 0 to 180 employees since opening last October, while on the east side of Lake Washington, Google Kirkland boasts some 400 workers. “Having Google in the Seattle area—and particularly having them in the city of Seattle—is huge,” says Ed Lazowska, chair of computer science and engineering at UW (and an Xconomist). He adds that he worked “very hard over several years” to encourage Google to open an office in Seattle proper.

Not that Google’s relationship with Seattle is anything new. Lazowska’s department has 150-plus alumni working for Google—many based at the company’s headquarters in Mountain View, CA, but an increasing number in Kirkland and Seattle. “We have dozens of undergraduate students doing summer internships at Google, many graduate students carrying out their research at Google, and two faculty members spending the year there on sabbatical [Gaetano Borriello and Steve Gribble],” says Lazowska. And Brian Bershad, director of Google’s Seattle site, is a UW computer science professor on leave.

Some would say Google’s main mission in Seattle is to compete for talent against a certain home-grown software giant that has done more than its share of outreach in computer-science education over the years. So while Google’s latest efforts are highly welcomed, it will probably take some time for the search company to become as deeply established in the community.

“Despite all this, Microsoft is [still] the University of Washington’s #1 corporate partner,” explains Lazowska. “Google is fantastic, but they have a lot of ground to cover to catch up.”

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Last night I took the bus down to South Seattle for nPost’s networking event at the Columbia City Theater (not to be confused with the Columbia City Cinema just up the street). It was hosted by nPost founder Nathan Kaiser, whose resource site for tech entrepreneurs is getting ready to launch a biotech job site and a green-tech job site, all in the next few weeks. Kaiser’s events have become a staple of the startup scene.

There was free beer, half a dozen startup demos, and lots of good conversation with entrepreneurs, developers, and a few investors. At one point the people giving demos were invited up on stage to give one-minute overviews of their companies. Several held beers while they spoke. I recognized Mikhail Seregine, the founder of ClayValet (a personal shopping service), from the two-minute pitch competition in West Seattle last month. Although there were more than a hundred people in attendance, it felt like a manageable crowd. The mood was casual, festive, and useful.

A quick sample of interesting people I met:

—Matt Cassarino is the founder of TourVista, which creates online virtual tours for real estate and other applications. Look for a revamped website in early August, he says. Matt also told me about the infamous “Seattle freeze,” whereby people you meet are friendly at first but never really become your friends. (Matt will probably never talk to me again.) I’m not convinced this is any different from other places, but I asked a few people whether it affects local business relationships, and they said not really.

—Ben Curtis is the founder of Catch the Best, which has built an online recruiting tool for companies to manage job applications and candidates. On the topic of working for big companies instead of startups, he said, “A few months of contract work for RealNetworks cured me of it… I want to build products and have people actually use them.”

—Rob Eickmann is the co-founder of Six Hour Startup, which is a bunch of developers who get together on weekends to start Web companies. (They begin with a six-hour sprint to get a site up and running.) One of their startups, Timelope, is led by local coding stars Anders Conbere and Aviel Ginzburg; they built a software plug-in that lets you and/or your social network track the sites you visit.

I asked Rob and Aviel about the impact of Microsoft, Amazon, and now Google on the Seattle developer community in general. There’s a good-sized subculture of developers here who’ve never worked for these companies, they said. And so far, the Google people “keep to themselves,” they said, unlike Microsoft and Amazon workers. Maybe it’s too early to say, but is there a wall forming between Google and the innovation community?

—Ian Mercer sold his company NextBase to Microsoft and “did his time” (10 years) there as a product manager in Redmond. Ian said he has probably the “most automated house in the world, other than maybe Bill Gates.” It’s on the Sammamish plateau, east of town, and it boasts all manner of statistical software and sensors—strain gauges, magnetic, you name it—to infer everything from what kind of music should be played in the home office to how many visitors are coming up the driveway and through the front door. No flashy buttons, controls, or displays—”it just knows.”

—Chris Howard is an associate at Ignition Partners who invests in software and services and wireless. Chris worked on the $16 million Xeround deal that we wrote about last week. He also pointed out another interesting company in his portfolio, Seattle- and New York-based Visible Technologies, which develops software to help companies track and analyze what’s being said about them in the media, and manage their reputations in search engines.

After the event, I tried La Medusa, a Sicilian/Mediterranean restaurant nearby (food rating of 25 in Zagat). I ordered an orecchiette pasta with beef ragu and English peas, and it was wayyy too salty. First major restaurant disappointment here. In any case, the wine and the service made up for it, so I will have to give it another try—maybe after the next nPost event.

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I had a good chat yesterday with Dave Schappell, the founder and CEO of Seattle-based TeachStreet. I’ve been hearing more and more about his website, which launched in April as an online community of teachers and students. The basic idea is if you want to learn any skill, from boxing to basket weaving, the site helps you hook up with a local expert—and conversely, if you’re looking to give lessons, it helps you find students. Funded by Madrona Venture Group and Bezos Expeditions, TeachStreet lists more than 25,000 classes in the Seattle area and is busy working on its expansion plans—more on that soon.

For now, what I found most interesting was Schappell’s take on the startup life versus working at a big company. From 1998 to 2004 he was a director of product development at Amazon, where he worked on the online marketplace that allows third parties to sell used and new products (which make up around a quarter of Amazon’s sales volume today). After that he moved on to Venica, CA-based JibJab and then the Seattle nonprofit Unitus.

By early 2007, Schappell says, “I wanted to try something startup-ish.” He got the idea for TeachStreet when he bought a scooter and needed to get certified, but didn’t want to go through the Washington Department of Motor Vehicles. Searching online for a motorcycle certification class was “awful,” he says, so he ended up finding one on a paper flyer. There has to be a better way to do it online, he thought.

An angel round and $2.25 million Series A financing later, Schappell is in charge of a TeachStreet team of 10 full-time employees in Seattle, plus a data-collection team in Asia. He has taught microfinance and poker himself. He also has a fresh perspective on the startup scene, and what it takes to get a company off the ground. “We’re not sending rockets to the moon,” he likes to say. “[TeachStreet] is as good an idea as any other.”

In other words, if you’re thinking of doing a startup, this is the time and the place—contrary to those who say the climate is risky. “If you’re competent and willing to work really, really hard, Seattle is unbelievable,” Schappell says. “There is no lack of funding, talent, energy, events, support systems. I don’t understand what the gripe sessions are about. People need to get off their ass.”

As for making the transition from a big company to a startup, he says, “Don’t work unless you’re passionate about it.” People who work at big companies for many years “get locked in,” he adds, and most don’t have the guts to try something new. But those who do, particularly the younger ones, have valuable skills to take to a startup—and they usually find working for a smaller team energizing. “Every day we control our own destiny,” he says.

Currently three of Schappell’s 10 employees are Amazon veterans, and he is about to add another one. “We think we need to hire more Amazon people,” he says. The ideal candidates are those with two to three years’ experience at Amazon who have “great attitudes and great training” and are ready to do something new.

About the other tech giant in town, Schappell had this to say: “Microsoft has a world of hurt coming. They’re bloated… I don’t use Microsoft stuff anymore. I run Google Apps, and the iPhone is incredible.” Which is not to say that there isn’t still great talent at Microsoft, but it seems to be a common sentiment that the company’s best days are behind it.

And the downside of controlling your own destiny? That would be the never-ending pressure, of course. “It’s been a wakeup call for me,” Schappell says. “I’ll be recruiting talent forever. And raising money forever.”

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Nathan Kaiser is connected. His office is wherever he feels like working. He walks into shared startup digs on Alaskan Way, and people flash him knowing hand signals. I probably shouldn’t even be talking to him, given my lack of an iPhone; my Nokia brick looks like it’s from 1998. (I’m 10 years behind when it comes to consumer tech—don’t ask.) We’re sitting in a Downtown Cups cafe in Seattle, across from the ferries, enjoying a nice latte (7.8 on the Huang scale) and iced chai, respectively (”I can’t drink coffee,” he says).

While I wolf down a sandwich, Kaiser tells me about his Seattle-based company, nPost, which runs a resource site for tech entrepreneurs. It is dedicated to promoting startups and matching up companies with talent via networking events, online interviews with entrepreneurs, and a job board that covers major tech centers from the Northwest to New York City.

Kaiser’s own entrepreneurial story is a good one. In the late 1990s, he studied microbiology at the University of Washington, then went into marketing at Medtronic. Around 2000, he began putting up online Q&As about the entrepreneurial experience, on the side—the genesis of nPost. “I started calling up CEOs, doing informational interviews. ‘How do you engage a sales team? How did you deal with restructuring the company as a leader?’” he says. “I found I had a passion for early-stage startups.”

Those networking chats with CEOs led directly to new jobs for him—first in Austin, TX, at United Devices. Then, in 2001, he went to New York City to join LinkShare. (He was a block away from the World Trade Center on the morning of September 11, 2001, attending what he calls a “Web 0.0″ conference, when he felt the impact of the first plane.)

In 2003, Kaiser moved back to Seattle, still running nPost on the side. Two summers ago he went full-time, bootstrapping the company and selling sponsorships. In February 2007, nPost started making money, thanks in large part to its job board. The company’s networking events have been getting “bigger and bigger,” says Kaiser, and now draw up to several hundred participants. The next big one is July 15 at the Columbia City Theater in Seattle.

So what are the tech trends Kaiser is looking at these days? A common lament among recruiters seems to be the local labor market. “Recently, recruiting has been really difficult,” he says. “It’s essentially a poaching market.” On the bright side, he’s seeing a lot of activity in two emerging areas: startups that use Web 2.0 tools to help large businesses connect with users and sell more products; and companies that filter online data, helping people and businesses manage their vast amounts of email, RSS feeds, and search information. What isn’t hot, at least for local Internet startups, is consumer retail and search sites. “It’s hard to make money until you get to scale. Advertising is really hard,” he says.

What Kaiser thinks the Seattle area needs most at this point is infrastructure to support risk-taking—lawyers with entrepreneurial expertise, and more depth in executive management talent, for starters. “It’ll take time, and we need to recruit people,” he says. It would also help, he adds, to build up collaborations in the Northwest, with places like Portland, Spokane, Boise, and Vancouver, BC—and to become more established as a tech innovation center for the region.

As we wind down, he leaves me with a page-long list of early-stage entrepreneurs and networking experts to tap into. “Just the tip of the iceberg,” he says.

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If you’re both profitable and growing at a rate of 400 percent for three years in a row, do you still need outside financing?

Yes, says Arthur Papas, CEO and co-founder of Bullhorn, a developer of software for the recruiting and staffing industry. The Boston-based company just raised $26 million in new financing, in a round led by local venture capital firms Highland Capital Partners and General Catalyst Partners.

Bullhorn was founded in 1999 and launched is first product two years later. Since then the privately owned company has grown rapidly and counts around 130 employees today. Until today the company had raised a total of $8.4 million, which means that its growth has been largely self-financed, Papas told Xconomy. “We are planning to do three things with the money, and the investment in these areas reflects a continuation of the strategy we’ve deployed since we went to market seven years ago,” he says.

“We invest in R&D, we follow up with an investment in sales and marketing to expand our reach, and then we follow up that with an investment in services,” Papas says. “It is really the strategy we’ve followed since we started, and each year when we looked back we said to ourselves that we should have invested even more. We’ve seen what we can do with our own capital and we’re excited to see what we can do with additional financing.”

Bullhorn’s business is based on a software-as-a-service model. As a customer you pay a monthly fee and get access to services like e-mail, calendars, sales support, and tools that find suitable job candidates by searching databases like Monster (NASDAQ: MNST) or Yahoo (NASDAQ: YHOO). All applications run on Bullhorn’s servers and are accessed via the web.

Finding the right person to do the job means big business. “Staffing and recruiting is a $300 billion plus global industry, ranging from innovative emerging firms to multi-billion dollar multinational enterprises,” Highland Capital Partners general partner Bob Davis said in a statement.

Today, more than 1,000 recruiting and staffing firms are using Bullhorn’s software, according to the company. Customers range from small to large firms, and from those concentrating on temporary staffing to those specialized in executive headhunting.

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When shareholder activists like Carl Icahn start banging on a company’s front door, threatening to rally investors to help them take over the company, it naturally gives management headaches. But what effect does it have on a company’s ability to innovate?

It’s a good question in general, and it’s moving front and center next week here in Boston as Icahn seeks to gain control of Biogen Idec, the Cambridge, MA-based global biotechnology company (NASDAQ: BIIB). The answer, according to an unscientific poll of a dozen leading business school professors of innovation, is that nobody really knows.

In Biogen’s case, the company believes, not surprisingly, that such activism hurts not just innovation, but morale and other aspects of the business. “It’s the uncertainty,” says Biogen spokeswoman Naomi Aoki. “Whenever you have uncertainty, it has an impact on whether people want to do deals with you and with your ability to recruit and retain employees.”

Although the firm won’t reveal too many fresh stats, it is forthcoming about a few problems that seem to support the company line. At least one key executive spot has been hard to fill during these recent uncertain times at Biogen. David Parkinson, who had been the company’s senior vice president for oncology research and development in San Diego, left to become CEO of Nodality, a San Francisco Bay Area diagnostics startup in September, a month after Icahn first began making noise at the company. The oncology research job remains unfilled nine months later, Aoki confirms. And, as of last weekend, the company counted 83 openings in research and preclinical development.

Biogen’s business development group also appears to have slowed a bit, as, perhaps, partners wait to see if Icahn can get his nominees elected to the board before they agree to a deal. Biogen did seven business development deals from September 2005 to July 2007—a rate of about one every three months. Since Icahn entered the picture, Biogen has completed two deals in 10 months, Aoki says.

To at least partially counter the presumed effects of Icahn’s presence on employee morale—including that of top scientists who lead its innovation efforts—Biogen launched a retention program in February that offers key employees bonuses of up to 150 percent of their annual salary if they remain continually employed at the company through March of 2009.

It seems like common sense that an ongoing proxy fight might unnerve employees, and that morale—and innovation with it—could suffer. In Biogen’s case, top executives, even if they keep their jobs, may also feel the pinch in their wallets, because their annual bonuses are partly based on their ability to keep turnover low and fill senior vacancies quickly, according to the company’s proxy statement with the Securities and Exchange Commission.

But some academic research suggests that corporate takeovers, despite their controversy, actually have a positive effect on innovation. Josh Lerner, a professor at Harvard Business School, looked at patenting trends before and after 495 buyout deals. “Patents granted to firms involved in private equity transactions are more cited (a proxy for economic importance), show no significant shifts in the fundamental nature of the research, and are more concentrated in the most important and
prominent areas of companies’ innovative portfolios,” Lerner and colleagues wrote in the April 2008 paper.

Of course, patenting data is public, so it’s easy to capture, but it isn’t the only measure of innovation. Business development, product approvals, publications, and advancements through phases of clinical trials are also signs of the potential for innovation at a biotech company like Biogen, just like recruiting and retaining innovative employees.

Lerner’s data doesn’t address any of those issues, and it also doesn’t tease out patterns like what happens to innovation if there’s a prolonged tug-of-war for control.

This is where Biogen’s case falls into completely uncharted territory. There really aren’t any …Next Page »

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Perhaps predictably, MIT students blew their Harvard counterparts out of the water at the Google Games, a day of engineering- and math-heavy challenges held Saturday at Google’s new offices in the heart of Kendall Square. Teams from MIT captured the top three slots in the competition, while the Harvard contingent had to console itself with the prize for the best display of team spirit.

But the day was more about having fun than it was about the old rivalry between the Crimson and the Engineers, or between the pilgrims and the beavers, or whatever the heck Harvard and MIT call themselves (I’m an alum of both schools and I still don’t really know what their official mascots are). Organized by the search giant’s university outreach and human resources offices, the event was designed to give local college students a taste of Google’s rambunctious atmosphere, as well as the opportunity to work on a few wicked-hard puzzles and engineering problems.

“Our goal is to do a ’soft recruiting’ event—a day of fun and competition to get students away from their labs and their homework and get a sense of the Google culture,” said Ronner Lee, a university programs specialist in Google’s Mountain View, CA, headquarters, and the chief Googler at the event. The company, which has run similar events pitting Stanford students against Berkeley students and arraying teams at the University of Illinois at Urbana-Champaign against each other, rounded up the 100-plus participants by sending invitations to the schools’ math and computer science departments.

I spent a few hours watching the teams work and cheering for both sides. During the initial, Jeopardy-style portion of the challenge, I felt quite proud of myself for knowing the answers to several geek-movie-trivia questions (or rather, the questions to the answers) that, surprisingly, stumped the callow Harvard and MIT youths. (Answer: Sting starred in this 1984 movie based on a Frank Herbert novel. Question: What is Dune? Answer: This 1985 movie was about two teenage nerds who build a perfect woman. Question: What is Weird Science?)

But as soon as the core of the competition got underway—an Amazing Race-style series of events, with the prizes going to the team that finished all the events in the shortest amounts of time, after all penalties and bonuses—I started to feel grateful that I’ll never have to take another calculus exam. The heart of the competition consisted of math-oriented puzzles devised by Google engineers. I vowed to Google’s PR people that I would not to reveal the puzzles’ details, since the company plans to use some of them again in future events. Suffice it to say that they required the ability to predict the output of computer programs written in three languages without actually running them, and to arrange the digits 1 through 7 in such a way that the answer was a multiple of 88—with the added complication that each number represented a room on a map and two numbers could be put together only if their rooms were adjacent.

Most of the MIT teams seemed to whiz through the first set of puzzles in a couple of hours. The Harvard teams were a bit slower.

“The puzzles are doable, but they take a while,” said Anna Hopper, a Harvard freshman. Hopper admitted that while she enjoyed puzzles, she was likely to major in government. She said she was at Google mainly to fill in for a sick friend. “We aren’t winning,” she said cheerfully.

The MIT teams had a slightly harder time with the “athletic” portion of the Google Games. I put “athletic” in quotes because this portion involved getting five strikes or spares in Wii bowling; walking around the room while balancing a plastic egg on a plastic spoon held in one’s mouth; bouncing a hacky sack five times without dropping it; skipping rope for 30 seconds; and doing 20 pushups and 50 crunches. While I was watching, one student actually had to ask what crunches were. (To be fair, I didn’t see whether he was from Harvard or MIT. But he had certainly spent too much time with his Xbox.)

For observers, the Lego portion of the competition was perhaps the most dramatic. Student teams were given identical bags full of Lego parts and told to build a gravity-powered trebuchet that would fling a toy rubber tire across an 8-foot gap into a dog-bowl-sized bucket. There’s nothing like seeing 23 groups of 18-to-22 year olds sitting on the carpet around big piles of colored blocks, arguing about velocity versus angle of release and how to brace the trebuchet arm so that it doesn’t fly off with the tire.

The rules allowed teams that missed the bucket after five tries to give up and take a 45-minute penalty. After watching some of the rickety contraptions fall apart after every shot, I felt certain that most teams would simply opt to take the penalty. And a few tried— but the Google staff encouraged the teams to persist, and before I had to leave I witnessed at least one successful shot.

The winning teams (who, I’m betting, all have Google interviews in their near futures) were as follows, according to Google:

1st Place: Statistical Zero Knowledge (MIT) – 2:07
2nd Place: Super Cow Power (MIT) – 2:15
3rd Place: Team Windsington (MIT) – 3:04
Team Spirit: Google Bomb (Harvard)

To my eyes, though, the real winner was Google, which got to impress more than a hundred potential future employees with its well-known commitment to fun and games (and lots of free food) as a stimulus to productive thinking.

I asked Aneesh Kulkarni, a Harvard junior whose team took home the award for the prettiest trebuchet, what he thought of Google after the day’s events. “It seems like an environment where they really care about making employees happy,” he said. Mission accomplished.

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If you were creating a satellite office for Google 3,100 miles away from the Googleplex in Mountain View, CA, yet you wanted to make it authentically Google, what would you do? The short, superficial answer would be to buy a few lava lamps, paint the walls in bright primary colors, build a great cafeteria with lots of free jelly beans and energy bars, and offer piles of options on Google’s $600-something-and-rising stock to your recruits.

Stephen Vinter, site manager at Google’s fast-growing Cambridge, MA, operation, has done all of those things. Oh, I forgot to mention the big rooms crowded with workstations, the giant posters of Google’s clever holiday logos, the Rubik’s Cubes, and the smiley-face mylar balloons flying over the desks of the new employees. Google’s offices on the 7th and 13th floors at One Broadway in Kendall Square, where Vinter showed me around on Tuesday, have those too.

But that’s just the Google that visitors, magazine photographers, and new job candidates perceive. The real essence of Google’s Cambridge operation is something you can’t see—or rather, something that you can only understand by listening to Vinter explain his personal strategy for replicating Google’s amazing global success on a local scale.

“Google has made a commitment to having distributed offices, meaning we have engineers across the globe,” says Vinter, whose official title is engineering director. “The key to making sure the satellite offices are as succesful as they can be is to figure out how you can get the best-motivated people in the local area.”

He’s found quite a few already. Google’s cramped Cambridge office has more than 100 employees, up from just a handful less than a year ago, and is still growing fast. It’s not clear exactly how fast—”We don’t talk about rates,” Vinter says. But the company’s real-estate deals may say something about its expansion plans. Google has hired a construction firm to renovate a reported 59,000 square feet on three floors at Five Cambridge Center, just down the street. That’s three times as much space as the company is currently leasing at One Broadway.

Google communications senior associate Erin Gleason confirms the renovation project, but says a move-in date hasn’t been announced. Google isn’t, of course, the only West Coast tech giant that’s in rapid-expansion mode in Kendall Square. Microsoft’s Reed Sturtevant, as Bob reported this morning, is preparing to staff up a special innovation group at One Memorial Drive, where Microsoft has taken a lease on about half of the 17-story tower, and networking leader Akamai just signed leases at Four and Eight Cambridge Center that will nearly double its Kendall Square footprint to 250,000 square feet.

For Google, filling up its new space will mean exploring every corner where talent is hiding. Vinter, true engineer that he is, goes to the whiteboard in the tiny conference room where we’re meeting and draws a box surrounded by bubbles and arrows. Boston is a fantastic setting for filling up the Google box, he explains, because there are so many bubbles around it: MIT, Harvard, BU, Brandeis, Northeastern, U Mass, and the other great schools churning out new graduates; a large ecosystem of high-tech firms employing ambitious programmers and scientists (and Vinter considers both information technology companies and biotechnology companies to be fair hunting grounds); graduates from other regions who want to move to the Northeast; and people already inside Google who want to do the same.

“There are not many places in the world with that collection of people, and with the attractiveness of Boston and its culture, and with great upward mobility for people in high-tech,” Vinter says.

But what do you put inside the Google box, to make sure people are happy and productive once they get there? You start with what Vinter calls “a complete compensation package,” including, of course, those coveted Google stock options. Then there’s the …Next Page »

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