It can be pretty dizzying to tally up the scope of Amazon Web Services, a potentially $1 billion business that serves up critical cloud computing infrastructure for a big slice of the digital economy. Even keeping up with the number of individual services the company offers can be a challenge—and Amazon CTO Werner Vogels wants you to know that he’s sorry about that part.

“That might make it seem somewhat chaotic at times, and I apologize for that,” Vogels said last night, prompting chuckles from the crowd at an open house in Seattle. “But as an advantage, you get stuff really fast.”

That rapid-fire release of services is one of the three key elements that, in Vogels’ view, makes Amazon Web Services so successful.

Amazon is not known for releasing meaningful statistics, but you can get a sense of AWS’ reach from the huge reaction to last year’s multi-day crash of some AWS offerings. And, of course, the number of tech companies big and small in the market continues to grow.

Werner Vogels

In that crowded and competitive environment, Vogels said, Amazon hopes to stand apart with a “relentless focus on very fast, iterative innovation.”

“We will not build a thing with the whole kitchen sink, with all features in it,” Vogels said. “We will put something in your hands really quickly with a new feature set, and work very closely with customers to actually iterate really fast in a direction where the customers want the product to go.”

“That’s why you don’t see massive marketing events from us where, in one big thing, we will just announce everything that’s going to happen,” he said. “As soon as we have features ready, teams have the mandate to get it into the hands of their customers as quickly as possible.”

Vogels also said he thinks AWS has found success by being flexible: “You could be on any operating system, any programming language, any interface—whatever you want. We do not lock anybody in,” he said.

And sharing the price-conscious DNA of a retail company doesn’t hurt either. Vogels said a recently announced price cut for Amazon’s Simple Storage Service was the 18th price reduction for AWS offerings, with more to come. “Some of our customers are getting 12 to 13 percent lower bills in February and we’ll continue to focus on that,” he said.

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The explosion in incubators for early stage tech companies has spawned a familiar startup storyline: A team of bright founders hits on a promising idea, builds a prototype, and applies to one of the big-name programs. After they get accepted (or sometimes even if they don’t), it’s off to the races for a few intense months of coding, meetings, demos, late nights, long weekends, and camaraderie.

And when it’s over, a big demo day where everyone shows off their hard work—and hopefully lands some investment to really get things going. Not as much ink is spilled about that day-after reality, when the wunderkind founders get to work actually building a business.

That brings us to Seattle-based FutureAdvisor, a startup that graduated from the summer 2010 batch of Y Combinator—biggest of the big-name startup incubator programs. Among the other companies produced in that group are Hipmunk, the travel-booking site, and Contagion Health, which has since merged with another company to form Habit Labs, also based in Seattle.

FutureAdvisor is a Web-based software service for individual investors who want help maximizing their retirement savings, but don’t have enough money to get the attention of a traditional financial advisor who typically focuses on bigger fish—all the better to earn fees.

FutureAdvisor focuses on index investing, a growing trend that eschews professional mutual fund managers in favor of pegging investments to stock market indexes compiled by financial firms, like the S&P 500 or the Russell 1000. FutureAdvisor is still in a beta phase, but says it’s now able to offer services to employees at the 15 biggest companies in the greater Seattle area, with many more in the pipeline.

The company was founded by Bo Lu, 28, and Jon Xu, 32, who met while working at Microsoft on a “skunkworks” project called Catalyst, which eventually became part of the new Windows Phone system—Lu worked on the technology that would become the all-in-one social networking feature on Windows Phone 7, and Xu helped build the system that tied together instant messaging and text messaging.

Once they knew they worked well together, and felt they’d been bitten by the entrepreneurial bug after working on a 40-person team inside the behemoth of Microsoft, Xu and Lu ran through some side projects until hitting upon the idea that would become FutureAdvisor. It’s actually based on a problem that Lu, an active investor since the age of 16, had seen with friends: People wanted his advice on how to allocate their money, but didn’t have the time, patience, or acumen to keep up with the homemade spreadsheet he’d been using since he was a teen.

“Immediately, Jon and I were like, ‘That looks like a software problem,’” Lu says. “So we made something, and we applied to Y Combinator with a super-ghetto prototype that, at the time, had my Fidelity credentials in the code base.”

“But at least it was fast,” Xu says with a smile.

That was the spring of 2010, and the idea that would become FutureAdvisor was just taking off on its wild ride. Fast forward to today, with a team of eight people pretty evenly split between financial and technical expertise, working out of a historic building in Seattle’s Pioneer Square.

They’ve landed financial backing from Silicon Valley venture capitalists, although the amount and investors haven’t been publicly announced yet, and are advertising on social and professional networking sites to recruit more customers.

And they’re still working to add more companies to their database—a painstaking task that requires importing all of the retirement account options available to any given company’s employees, so that when new customers log in, their options show up automatically. (As they note below, FutureAdvisor recently added a big fish to the collection in their old employer, Microsoft.)

Here are Xu and Lu’s lessons from the first few months of living out in the wild.

BUILDING A BUSINESS
BO LU: ”You spend a lot of time in the incubator building a product … once you’re out of the incubator, you spend a lot of time on scalable economics. Which is not something that we as hackers ever did. So rather than staring at code all day, we felt like we stared a lot more at spreadsheets. How much it costs to acquire a customer, how would this channel do, and all of those things.”

HELP WANTED
JON XU: “Shortly after Y Combinator … we were faced with, ‘Well, do we come back here? What do we do? And I think we’d always thought that this was a good area to start a company, but also, more importantly, we knew our technical networks were pretty deep up here, having been from Microsoft.”

BO LU: “This is a unique vein of talent. And we found … after comparing notes with our batch-mates who stayed in the Bay, that it was easier for us to recruit here. We had a much higher accept rate of offers, and it just wasn’t as nuts. So over PG’s [Y Combinator founder Paul Graham] strident objections, we moved.”

JON XU: “Really, you’ve got to get down to actually building a team. Building a machine that generates the actual products.”

BO LU: “No one learns how to hire during the incubator. They all learn how to hire afterward. And they all learn it on their own. … And when you compare notes, some teams do really well and some teams do really, really poorly.”

HAND-TO-HAND COMBAT
JON XU: “A lot of times to get your business started, you need to do some hand-cranking. It’s not going to be a skyrocket all the way, but there’s definitely this grind of hand-cranking the engine to get it started.”

“Because we deal with retirement products, quite often it’s knowing what investment options are in people’s 401(k) plans. … So we’re hand-cranking, essentially company by company in the Seattle area, and we actually launched Microsoft—that was a big milestone for us.”

BO LU: “Every day’s just like every other day. You make your own progress, and you make your own headway. So there are great days, like when you launch to a new company, and there are not-so-great days, like when you launch to a new company and a bunch of bugs are discovered. So that’s where we are.”

STAYING CONNECTED
JON XU: “The way I’ve heard it put, from one of our friends who founded Posterous, was that quite often after the Y Combinator experience where you have such a deep network of like-minded entrepreneurs that you’re dealing with, you kind of go your separate ways to build your own teams, and you kind of have to establish a culture for your own team. So very much by design, you have to spend a lot of time building that up rather than being interconnected with various other companies.”

COMPETITION (OR NOT)
BO LU: “People are always like, ‘Oh, what’s it like competing against financial advisors?’ And the answer is, we don’t compete with financial advisors—financial advisors love us. Which I never thought—that was super-surprising.”

“We meet with a financial advisor, and they’re like ‘Oh my God, I wish that I could give some service to the people who come to me who don’t have enough money for decades. But I can’t do it, my friends won’t do it, no one will help these people, and so I end up doing pro bono work just to be nice and be part of the community.’ But he’s like, ‘Man, if somebody could help these guys cost-effectively, that would be awesome, because I don’t have a business model to do that with.’”

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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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—San Diego’s Active Network (NYSE ACTV), which provides online event registration and related services, acquired Philadelphia-based StarCite for about $51 million in stock and cash. StarCite, which provides Web-based event management services for companies around the world, has about 300 employees. The Active Network said StarCite will become part of its newly launched “Business Solutions” division, which will serve the events industry.

—San Diego-based Accelrys (NASDAQ: ACCL), which provides scientific enterprise research and development software and services, said it’s paying $35 million to acquire VelQuest, a Boston-area developer of systems that support good manufacturing practices for FDA-regulated industries. Accelrys said the VelQuest acquisition would expand its product line to include software used in pharmaceutical quality assurance and quality control.

—San Diego’s Entropic Communications (NASDAQ: ENTR), which specializes in Multimedia over Coax (MoCA) technology used in home entertainment systems, said it wants to purchase certain assets of Trident Microsystems’ set-top box and system-on-a-chip business. Entropic submitted its $55 million offer as part of a Chapter 11 bankruptcy reorganization that Sunnyvale, CA-based Trident filed last Wednesday. The bankruptcy court in Delaware must approve the Entropic offer, which could happen by the end of March if no other bidders step forward.

—Qualcomm Chairman and CEO Paul Jacobs is set to deliver the opening keynote address tomorrow morning at the annual Consumer Electronics Show in Las Vegas. Jacobs is expected to talk about Qualcomm’s vision for mobile computing as smart phones and tablets increasingly become a mainstay tool for consumer media and entertainment. The three-day show also will serve as a global stage for Sony Electronics, the San Diego-based arm of Sony’s U.S. business. San Diego’s Razer, Entropic Communications, Leap Wireless, Independa, Skin-It, and Marchon 3D, also are displaying products at the show.

—I profiled San Diego-based Verimatrix, a venture-backed company that develops encryption software and related security technologies for pay-TV networks. Verimatrix CEO Tom Munro told me the company has been successful in creating piracy protection software for Internet-Protocol Television (IPTV), and today more than half of the company’s business is in so-called unmanaged networks, such as Netflix, which provides streaming video “Over the Top” (OTT) of a cable- or satellite-based broadband Internet platform.

—The 2011 executive compensation survey showed a 3.7 percent increase nationwide in tech sector CEO pay over 2010. The annual CompStudy survey produced by executive search firm J. Robert Scott and law firm WilmerHale in collaboration with Noam Wasserman, associate professor of business administration at Harvard Business School. The study found that non-founder technology CEOs brought in average base salaries of $242,000 in 2011, up from $233,000 in 2010.

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[Updated 1/5/12 8:05 am. See below.] San Diego’s Active Network (NYSE: ACTV) made roughly 50 acquisitions since it was founded (in 1998), but the company has become more deliberate about its deals since it paused in 2010 to overhaul its Software as a Service technology and prepare for last year’s IPO.

The Active Network provides Web-based event registration and related services, and most of its acquisitions have helped the company expand its business beyond online registration for recreational sporting events to include outdoor activities, online communities, and corporate business events. As CEO Dave Alberga told me in August, the company is now targeting a $10 billion market that wasn’t really apparent before the rise of Software as a Service.

Today the company is announcing its latest deal—the acquisition of StarCite, a Philadelphia, PA-based provider of Web-based meetings management, meetings procurement, and online event registration management. It reflects a more concerted focus by the Active Network on the multi-billion dollar business conference and events industry.

[Updates financial terms] In a regulatory filing this morning, the Active Network values the deal at $57.7 million in cash and stock, including $6.6 million in outstanding debt. StarCite has 300 employees and maintains offices in San Jose, CA, London, Dusseldorf, Shanghai, and Hong Kong to serve its target market of global 2,000-size companies. The privately held company was founded in 1999, and has received at least $15 million in venture funding from the ICG Group (NASDAQ: ICGE), TPG Ventures, and Norwest Venture Partners (NVP).

One intriguing aspect about the deal is that it follows a strategic partnership with the Professional Convention Management Association (PCMA) that the Active Network disclosed a few days before Christmas. As part of this new alliance, the Active Network says it’s providing its … Next Page »

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If you’re a technology company, it’s painful to bury an obsolete product before it’s well and truly dead. Most established companies can’t bring themselves to do it, choosing instead to keep limping down the comfortable old path—which is why they so often lose out to newcomers (can anyone say Nokia or Siebel?).

By 2008, the writing was on the wall at Mindflash. The Santa Barbara, CA-based company had been around since 1999, selling learning management systems to big, Fortune-1000 companies, who used it to train new employees. Mindflash made a lot of money on each sale—the software cost about $50,000 to install—and it had a growing, cash-flow-positive business.

But there were some problems. Companies had to buy their own servers to run Mindflash. The software wasn’t just expensive to purchase up front—it was also costly to customize and maintain. Companies without full-time engineering and IT support couldn’t even think about using it. And it was so difficult to create new training material for the system that only two or three people inside each organization would ever bother to learn how to do it.

Contrast that to the emerging pattern in the Software-as-a-Service (SaaS) world, where software is usually available for a modest monthly subscription price, lives on remote servers accessed via the Web, and is far easier to use, meaning almost anyone inside an organization can master it. Mindflash’s investors and founding engineers looked at fast-growing SaaS businesses like Salesforce.com and figured it was only a matter of time before someone came along with a Web-based corporate training software package that would steal away the company’s livelihood.

That’s when Mindflash made the fateful decision to disrupt itself, rather than wait to be disrupted.

Mindflash CEO Donna Wells

“They did something a lot of companies talk about and almost none do,” says the company’s current leader, Donna Wells. “They looked at the successful product they had and the niche market they were serving and said, given the direction technology was going, it was highly likely that two guys in a garage were going to reinvent their existing product and cannibalize their business.”

It was in order to cannibalize itself, rather than be cannibalized, that Mindflash hired Wells, a veteran of big consumer-facing businesses like American Express, Charles Schwab, Expedia, and Mint.com, as its new CEO in early 2010. Wells immediately brought in outside design and engineering consultants like Adaptive Path and Universal Minds to jump-start product development on a new Web-based training software system. She also moved the company from Santa Barbara to Palo Alto, where there would be easier access to software talent, and hit the fundraising trail, eventually collecting $4 million in new financing from the company’s original 1999 investor, the Investment Group of Santa Barbara (IGSB).

When the new Mindflash system was finally released to the public in September 2010, it contained not a single line of legacy code. “Almost every company has the intelligence to recognize when they are coming up to an inflection point in technology and that they might be on the losing side of that,” Wells says. “Very few have the gravitas to say, ‘Let’s become that company rather than watching as we’re put out of business.’”

Mindflash didn’t completely abandon its old users—there’s still an on-premise version of the training software for customers who can’t stand to part with their enterprise systems. And it didn’t break free of all competition: Louisville, KY-based eLeap offers similar Web-based business training software. But Mindflash has made an irreversible commitment to the cloud, even going so far as to … Next Page »

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Get Satisfaction, the San Francisco-based builder of freemium online customer support communities, has one of those longest-overnight-success-ever stories. Founded in 2007 by Thor Muller, Amy Muller, and Lane Becker, the company has had at least a couple of brushes with death on its way to finding thousands of customers and $21 million in venture capital. The way it escaped from the first one says a lot about how the company works today.

Josh Felser, the co-founder of Freestyle Capital and an investor in the company, relates the story: “They were out of money. They didn’t have any clear path to raising capital. They were nervous about having to shutter the company. So I was talking to Thor and said, ‘What if you just did a salon at your home, invited friends who had capital to invest, made dinner for everyone, and casually gave them the pitch? If you are nervous, no one is going to invest in you. If you are comfortable and casual and you feed people, that seems to work.’ They did, and they raised their capital.”

Not only that, but they also managed to get one of the angel investors at the dinner—former Siebel executive Wendy Lea—so interested in the company that she would eventually join as CEO. Becker, who’s now an advisor to Freestyle, writes that Felser’s dinner idea was “the best piece of advice we ever got” and that it “pretty much saved the company.”

Today, Felser’s bit of coaching advice about being comfortable, casual, and intimate pervades Get Satisfaction’s customer support technology, which is used by companies as small as Eventbrite and as large as Coca-Cola. More than just an online support forum, a Get Satisfaction site is like a company’s front porch. Customers who gather there are as likely to share praise and ideas as they are to complain. Get Satisfaction encourages its clients’ employees—not just their customer-support reps, but their line-of-business people—to mix with visitors, answer their questions, and listen to their suggestions.

Transparency is the rule, and the goal is to resolve most customer problems in public, so that other customers can see the solutions. In fact, Get Satisfaction has drawn up a customer-company pact that calls on customer-facing enterprises to “be human,” “be personal,” “be accountable,” and “be earnest,” among other goals.

Get Satisfaction CEO Wendy Lea

Lea herself embodies the company’s human approach. With roots in the South, and an accent to prove it, she’s as unpretentious a technology executive as you’re likely to find in the Bay Area. By way of background, she refers to herself as a “Siebel girl” and a “sales and marketing chick;” she has a deep interest in comparative religion and Feng Shui, and she spent a couple of years after leaving Siebel as one of the founding mentors at the TechStars startup accelerator in Boulder, CO. The day I met her, she was about to jet off to Aspen to lead a self-development seminar.

Lea says she “fell in love with Lane and Thor” after that first dinner—and especially with the new socially engaged approach to customer support that the Get Satisfaction platform exemplifies. “I come from the CRM [customer relationship management] world, which is inside-out—a company taking products out to customers and the automated software you buy to communicate about that,” Lea explains. “So it wasn’t the technology itself that caught my attention, it was the philosophy about open, transparent relationships and communication. This is right up my alley. I would never be able to be a good leader for a software or service asset that didn’t have a strong philosophical underpinning.”

Back in September 2010, just after Get Satisfaction had collected $6 million in Series A financing from Azure Capital Partners, O’Reilly AlphaTech Ventures, and First Round Capital, I wrote about the startup’s founding, its concept for helping customers help each other, and its unusual formula of giving users a single online identity that they carry with them to every Get Satisfaction support site. All those ingredients make a Get Satisfaction site feel less like a complaint department and more like a shared, neutral space for conversations about a company and its products—Muller has called it a “a Switzerland for customer service.”

Since then, I’ve had the opportunity to dig further into the world of Web-based customer communities, profiling companies like Assistly, Lithium Technologies, PowerReviews, and Zendesk and getting to know their founders. My sense is that the old ways companies related to customers—faceless online FAQs, impenetrable phone trees, long waits to speak with a human representative—are coming to be seen as an embarrassing relic. There’s been a slow-motion shift over the past few years in the … Next Page »

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Contrary to what you might expect, the pace of tech news out of San Diego didn’t slow down much before the Thanksgiving Holiday. We still managed to round it all up, though, and our briefing begins here.

—As director of the UC system’s California Institute for Telecommunications and Information Technology (CalIT2), Larry Smarr is an Internet pioneer who frequently offers his perspective on the future of IT technologies. Lately, however, Smarr has been providing a glimpse at the future of “quantified health” and digitally enabled genomic medicine. In a Q&A with Smarr, he told me he found he had one chemical marker (out of 60 that he regularly tracks) that was five times higher than the recommended upper limit—triggering a kind of detective story that illustrates the potential revolution in health IT and wireless health.

—In the U.S. Navy’s largest demonstration of alternative fuels, a decommissioned Navy destroyer refitted as a kind of ocean-going test facility completed a 17-hour transit from San Diego to Port Hueneme. The Spruance-class destroyer used a 50-50 mixture of standard Navy diesel fuel and algae-based diesel produced by San Francisco-based Solazyme.

—Mellmo, the four-year-old startup based in Solana Beach, CA, has been moving into overseas markets in Europe and Asia with Roambi, its Web-based business intelligence graphics service. Mellmo co-founder Quinton Alsbury also talked with me about Roambi Flow, a new service that enables corporate customers to wrap text around their Roambi graphics to produce magazine-quality reports for the iPad.

—The case of the 2010 murder of San Diego angel investor and retired life sciences executive John G. Watson came to a close when a San Diego jury convicted Kent Thomas Keigwin of first-degree murder, attempted grand theft of personal property, burglary, and forgery. The prosecutor argued that Keigwin, who was working as a financial advisor, used Watson’s personal information to transfer some $8.9 million from Watson’s accounts.

—San Diego-based Next Autoworks, which was once known as V Vehicle, withdrew its … Next Page »

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In a remarkable test of will, I’m going to avoid any Thanksgiving-related puns and just dive straight into this wrapup of the past week in Xconomy Seattle’s tech headlines, covering everything from Black Friday shopping apps to the latest rumblings of possible doom from a local wireless company.

—The crew at Seattle startup Decide made the obvious leap into a full mobile app, released just as bargain-hunters were warming up for the holiday shopping frenzy. Decide is among several sites that help consumers decide whether to buy electronics, or wait for a better price. But the company, co-founded by University of Washington search expert Oren Etzioni, takes things a significant step further by employing a sophisticated price-prediction technology.

—I profiled Avalara, a Bainbridge Island-based company that sells web-based software to help merchants calculate and pay sales taxes. That’s a complicated task, with some 11,000 taxing districts of all shapes and sizes littered around the country. Avalara’s been posting impressive growth numbers, and the trend could continue as Congress, Amazon, and traditional retailers try to hash out a deal over charging sales tax on more online purchases.

—Xconomy’s Greg Huang brought us the scoop on a speech by all-star investor Brad Feld, who told entrepreneurs and angel investors at Microsoft‘s NERD Center in Cambridge, MA, that product and people should be their main focus. Feld is the co-founder of TechStars, a startup bootcamp program with a branch in Seattle. He’s also a board member and investor, through the Foundry Group, in Seattle startups BigDoor Media and Cheezburger Network.

—I looked at a recent tactical shift made by MiNeeds, a Seattle-based site that pairs users up with local service providers who bid for their business. It’s a relatively active area for Web companies to target, but MiNeeds thinks it found a significant edge in the wedding market when it decided to break those services out from the plumbers and carpenters and house painters on the main site. That was something the co-founders resisted—but, as good data geeks, they changed their minds after testing showed it was the right move.

—PaperShare opened up its doors to the public—or at least the cloud computing and virtualization slice of the public. The startup, headed by longtime server computing consultant Doug Brown and former Microsoft virtualization director David Greschler, is a new twist on the sometimes ancient websites that many professionals still use to spread technical info and industry insights.

—And finally, we had some contrasting bits of news: Clearwire, which is trying to simultaneously slow its losses and raise money for a network overhaul, publicly said it would consider delaying a big debt payment. Shares, of course, took a beating. On the other hand, Ignition’s Frank Artale led a $15 million investment in ServiceMesh, a cloud platform company in Santa Monica, CA.

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Mellmo began life on the move. Now the Solana Beach, CA-based startup is going global.

Mellmo, as we’ve explained before, provides business intelligence for mobile users. Its flagship product, Roambi Analytics, is a Web-based service that converts mind-numbing business data from spreadsheets and databases into simple-but-compelling graphic displays—pie charts, bar charts, list views, card index views—for iPhone and iPad users.

Since mid-September, when Mellmo secured $30 million in its first round of institutional funding, the four-year-old startup has announced the opening of a new London headquarters to oversee business in Europe, the Middle East, and Africa, as well as new offices in France, Spain, and Italy. The company also established a beachhead in Shanghai, and formed strategic partnerships with Hitachi Consulting, and Deloitte China Consulting—businesses that provide IT services to big companies in Asia.

“Before we even opened our office in London, we had five or six customers in Europe who had purchased our product through the [Apple] app store,” says Mellmo co-founder Quinton Alsbury. “The realization we came to was that the opportunity was much larger than we had anticipated ourselves.”

Mobile business intelligence is an idea that suddenly took off, Alsbury says, especially among the businesses listed in the Fortune Global 500 annual ranking of biggest companies in the world. “The concept of mobile BI in general just exploded after the iPad came out,” he says, adding that tablets are expected to surpass PCs as access points to business intelligence data by 2013. Instead of making business decisions from a desk, executives can access data on the factory floor, warehouse, or while traveling.

Mellmo enables customers to upload data from their corporate database (the company supports SAP, IBM, Microsoft, Oracle, and others) to the Roambi website. Customers can select the graphic views they want to use, add customizations, and make the information available internally to their workforce. Under Mellmo’s freemium business model, a basic personal account is free, and the service can be upgraded to Pro or Enterprise subscriptions, depending on customer needs.

I met with Alsbury last month, during the CTIA’s annual Enterprise & Applications conference at the San Diego Convention Center. As Mellmo’s president of product innovation, Alsbury leads the interactive design, user experience, functionality, and art design of Roambi. He was at the CTIA to demonstrate Roambi Flow, a wholly new software as a service that enables corporate customers to wrap text around their Roambi graphics to produce print-like reports. With Roambi Flow, users can embed their graphic displays in documents to create a platform that publishes much more comprehensive reports for the iPad.

“Imagine what The Wall Street Journal would be if it showed up on your doorstep with just the charts and graphics,” Alsbury says. “Roambi Flow enables customers to add editorial copy with their graphics to create an iPad-style magazine.”

“It’s the first thing I’ve seen in which the output is optimized for the iPad instead of a pdf,” Asbury says. Mellmo has some customers, such as the financial services giant Primerica, that are looking at Roambi Flow as a platform for their external communications.

Aside from Primerica, Alsbury says Mellmo now has about 160 enterprise customers, including San Diego’s Life Technologies, Novartis, and Dow Corning.

Mellmo also has expanded its workforce to roughly 100 full-time employees, and moved its corporate headquarters from Del Mar, CA, into a distinctive building in Solana Beach that was previously occupied by ServiceNow—which is now an established Web-based services provider on a fast-growth track. Alsbury says that’s good karma for Mellmo, and a sign of things to come.

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After a year of epic battles with politicians and brick-and-mortar competitors, Amazon.com has made sales-tax policy a relatively sexy topic in the business world. But another Seattle-area technology company has been working for years to navigate complex sales tax systems—and it’s growing like a weed.

That company is Avalara. Started by an accountant/developer and based on Bainbridge Island, WA, the company provides web-based software that helps businesses automatically calculate and pay sales taxes with precision, no matter where the sale takes place.

How big a problem is that? There are about 11,000 different taxing districts in the U.S. alone, with overlapping boundaries, shifting rates, and long lists of exemptions. Selling the same item to two homes in the same neighborhood could actually mean charging two different amounts for sales tax, if they’re on opposite sides of a tax boundary. And retailers are deputized as the tax collectors, taking in all the revenue up front and sending the government its cut.

It’s the kind of complex, constantly shifting set of data that has been practically begging for a software solution for years. But even businesses that were already using accounting software to keep their books traditionally had to punch in the nitty-gritty details of sales tax data manually.

Avalara makes it automatic by tracking the sales tax zones nationwide, tying them to a sale’s location, and plugging in the information exactly where it’s needed in accounting or e-commerce software. And since the Internet has expanded the sales footprint of virtually any business, making it possible for even a small retailer to find customers nationwide, making those calculations has become increasingly necessary.

It’s also downright fun, if you ask the Avalara guys. Even though their particular island is of the more frigid San Juan variety, the company embraces a pretty lighthearted culture that counters the potentially dry subject of sales tax policy. The executive team donned tropical shirts for their official headshots, and when we met recently at the company’s Seattle office, CEO Scott McFarlane’s shirt stripes, watch face, and laptop skin were all being employed to display Avalara’s signature bright-orange color scheme.

“Some people want to put a computer on everybody’s desktop. I just want to calculate everybody’s transactions,” McFarlane says with a powerful laugh.

Avalara got its start in 2004, and now has about 250 employees worldwide. The company, which has raised $21 million in financing this year, is led by three co-founders: CEO McFarlane, technical chief and board chairman Jared Vogt, and tax chief Rory Rawlings, the accountant-developer who has also been instrumental in helping to develop national sales tax policy through the Streamlined Sales Tax initiative.

Avalara’s rise has been quick enough to land it on the Inc. 500 list of fast-growing companies in 2010. It made the larger Inc. 5,000 list this year (No. 682), with last year’s revenues pegged at $16.7 million. This year, the business will grow again by 50 to 75 percent, McFarlane says, putting Avalara’s sales in the neighborhood of $25-$30 million. … Next Page »

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In financial results for the quarter ending Sept. 30, San Diego’s Active Network (NYSE: ACTV) said it paid $21.5 million in cash to acquire RTP, an Avon, CO-based IT company that provides online registration services for Vail and other ski resorts.

While the deal is consistent with the Active Network’s basic strategy, it is the first acquisition the company has made in winter sports as well as the destination resorts market, according to Alan Cole, a senior general manager at the Active Network. The San Diego company provides online registration services for a variety of sports leagues, marathons, and other recreational sports, as well as reservation services for campsites, community activities, business conferences, and other events.

The Active Network has more than 2,600 employees, and processed more than 70 million online transactions last year for 47,000 customers around the world, including Ironman, Cisco, Hewlett-Packard, and the US Tennis Association.

RTP began in 1998 as part of Vail Resorts, providing IT services as well as a point-of-sale commerce engine for Vail and several other Rocky Mountain ski areas. The business was later spun out of Vail Resorts, and now provides software as a service that enables skiers to book resort accommodations, buy lift tickets, ski school classes, and register for other activities. RTP says it also has integrated a host of other services for its customers, including back-office administration and reporting; customer relationship management; RFID access control; interactive marketing; website development; mobile apps and promotions; and augmented reality mobile application development. The integrated set of technologies captures customer transactional data for analysis and marketing.

RTP currently serves 20 of the top 30 ski resorts in North America, including the Aspen Skiing Company, Intrawest, and Powdr Corp., as well as Europe’s SkiStar, and VERBIER-St-Bernard.

Cole says RTP also has begun to develop other interesting opportunities in unrelated markets, including online registration services for Colonial Williamsburg, the destination resort in Williamsburg, VA, and for several water-parks, which he did not identify.

It was the Active Network’s second quarter as a public company. The company narrowed its third-quarter loss to $1.4 million (from a loss of $10.9 million during the same quarter last year) loss on total revenue of $89.6 million, (a 23 percent increase over the $73.1 million generated during the same quarter last year.

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It’s a big month for Collabor, a Maynard, MA-based maker of software that powers online communities—for banks, nonprofits, manufacturers and a slew of industries in between. The company is working on closing its first ever outside funding round and has just cross the 1-million-user mark across the sites its technology powers.

The five-year-old startup is working on collaboration software—a space that’s occupied by players large (Microsoft) and small (startups like Wiggio). Its big target, unlike many others, says CEO and founder Sandeep Kaujalgi, is organizations that are looking to collaborate with players beyond the company walls, rather than internal organizational collaboration.

“Our focus is almost solely on a business reaching out to other businesses, customers, stakeholders, membership organizations,” Kaujalgi says.

Collabor’s software, called Work 2.0, plugs into an organization’s existing databases. But Collabor prides itself in creating completely customized designs and interfaces for each client, depending on their business needs and audience. Within an organization, different types of users will have completely different functions available to them, based on the user profiles set up in the system.

“All collaboration is built on who the user is,” Kaujalgi says. “Our product looks completely different from company to company.” Work 2.0 offers functions such as sharing reports, polls and quizzes, photos, calendars, and user forums, and automatically translates content written in one language into the language of the user who will be reading it.

One of Collabor’s clients is Connected Living, a provider of online sites for helping seniors in residential communities keep in touch with their families from afar. The Work 2.0 software powers an interface for seniors that involves large buttons and colorful graphics, for an audience not used to Web browsing.

Another customer of Collabor’s is … Next Page »

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Perminova, a San Diego startup developing Web-based software for use in cardiology centers, says today it has raised $7 million in a combination of equity and credit financing. The company says it is pioneering healthcare’s move from outdated client-server technology to secure cloud-based computing.

The company was founded several years ago by Gregory Feld, a professor of medicine at the University of California, San Diego, and director of UCSD’s cardiac electrophysiology program. What began as a database for tracking electrophysiology procedures and patient care, though, has evolved into a more comprehensive workflow system provided as software-as-a-service for everything from patient scheduling to post-procedural documentation and billing.

The company’s first product, Perminova EP, is being used by the UC San Diego Health System and at New York’s Mount Sinai Hospital.

In a statement this morning, the company says its financing includes $3 million in Series A equity funding and a $4 million credit facility that can be accessed by the company as needed. Perminova CEO Craig Collins declined to identify the company’s investor, saying, “We have a large institutional investor and they don’t want to have their name out there.” He characterized the investor, though, as a super angel.

Collins says the funding will be used to expand product development, and for working capital, product development, sales, and marketing. “This round of funding provides us with an ample runway to gain market traction and market acceptance while creating a clear path to sustainable growth,” Collins says in the statement from the company.

“We now have the resources to expand our product offering, which will ultimately establish Perminova as the market standard in web-based software and cloud computing in healthcare,” added Collins. “This round of funding provides us with an ample runway to gain market traction and market acceptance while creating a clear path to sustainable growth.”

Perminova has been based at EvoNexus, the free startup incubator operated by CommNexus, the San Diego nonprofit technology industry group, since mid-2010. Securing financing, however, usually signifies that a fledgling EvoNexus company is ready to move out on its own. Collins indicated the company would likely move into its own commercial office space sometime in January.

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It was 1993 when the San Diego chapter of the American Electronics Association organized its first high tech industry awards to recognize local companies for their business excellence, technology innovation, community involvement, and sometimes simply for persevering in the face of adversity.

Since then, the nationwide organization that HP founder David Packard helped form in 1943 as the West Coast Electronics Manufacturers Association has morphed into the AeA, (in 2001) and TechAmerica (2009). Recently Tech America San Diego named the winners of its Eighteenth Annual High Tech Awards. The industry group handed out 10 awards in nine distinct categories:

—Software: Oceanhouse Media

—Internet/Web Commerce: Sorenson Media

—Computers and Related Products (two awards): AgigA Tech and One Stop Systems

—Communications Products and Services: MicroPower Technologies

—Software as a Service/Cloud-based Computing: ServiceNow

—Semiconductors, Industrial & Analytical Instrumentation: Creative Electron

—Cleantech: EcoATM

—Outstanding Emerging Growth: FieldLogix

—IT Service/Contract Services: Outsource Manufacturing-Made in San Diego

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New Boston-area startup Bozuko is working at the intersection of a lot of big trends. Mobile. Gaming. Location-awareness. Software-as-a-service. Marketing promotions. Sound crowded? Company co-founder Jake Epstein says that people would rather play for a smaller chance to win something big than a guaranteed slim discount, and that’s what makes his business different from what’s out there.

Medford, MA-based Bozuko offers a software platform enabling businesses to create mobile game promotions. Customers can play virtual scratch ticket or slot machine games on their smartphones to win prizes like free dinners, $25 gas cards, and baseball tickets from businesses offering those promotions.

And no, this isn’t a gambling startup. The only currency for playing the Bozuko games is some type of engagement with a particular business on Facebook. So, something like a “like” of a business’s Facebook fan page or mobile check-in to their location gives players entry into the games. Bozuko’s mobile app interface displays all the games going on near a consumer’s given location.

The aim is to tackle an area dominated by group buying and traditional paper coupons, says Epstein.

“This is a market that’s dominated by really boring coupons that no one cares about and really steep discounts that are very expensive to businesses and potentially damaging to their product or services,” he says.

Damaging? Epstein explains that businesses offering the massive discounts that come with group buying deals are basically reducing the value of their product and causing consumers to be less willing to ever pay full price for that product. “Bozuko has the opposite effect. It raises their own product as a prize you can win,” he says. Players also have the chance to win each time they walk into a business and play, so Bozuko has a better shot at driving customer loyalty for these businesses, says Epstein.

Bozuko will operate on a software-as-a-service model, requiring businesses to pay a monthly fee to use the platform. It will offer free access to the platform to smaller pools of consumers, but plans to charge a flat monthly rate once the volume of consumer players at a given business hits a certain level. Monthly rates will also increase for Bozuko to customize games and additional features in the games.

Businesses determine the win probability they want their Bozuko games to have. That way, handing out prizes is a “controlled cost for businesses,” says Epstein, unlike group buying promotions which are criticized for sometimes costing businesses dearly when one-time customers pour unexpectedly through their doors chasing a steep discount.

In August Bozuko kicked off a free pilot involving eight area businesses across 10 Boston-area locations. Among them, a car wash, a minor league sports team, a few bars and restaurants, and a parking garage. So far the app has seen 2,000 downloads and 60,000 unique plays, and has helped award about $5,000 in prize money. Bozuko announced last week that it had opened its platform to all interested businesses. The three-person company raised $346,000 in angel funding in the spring.

Bozuko obviously isn’t the first startup to offer discounts through mobile gaming or location tech. (Hello Foursquare, SCVNGR.) Epstein says what sets it apart is the fact that its games are “addictively simple” (even more so than Angry Birds, he claims), and that offering a chance to win bigger, more tangible prizes is more enticing than the small percentage discounts often offered through things like check-ins. We’ll have to see if he’s right.

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[Corrected 10/3/11, 10:25 am. See below.] ServiceNow CEO Frank Slootman said in August that he was accelerating hiring as the Web-based provider of IT services makes its transition from a fast-growth startup to an established leader in the Software as a Service industry.

[Updated to correct and clarify Luddy's role] Today the San Diego company is announcing the appointment of former Microsoft Internet executive Arne Josefsberg as its chief technology officer, a new position created to lead the company’s operations and to advance development of its data centers. Founder Fred Luddy, who was ServiceNow’s CEO until Slootman arrived in April, officially became the company’s chief product officer, a role he has retained. “As the chief product officer (CPO), Fred remains in charge of the product strategy and future direction,” says Michael Zeglin, a new spokesman for the company.

As CTO, Arne has joined ServiceNow to lead operations and the further development of our datacenters. As chief product officer (CPO), Fred remains in charge of the product strategy and future direction.

As the general manager of Windows Azure infrastructure, Josefsberg was previously overseeing Microsoft’s cloud computing service. With more than 25 years at Microsoft, Josefsberg has the kind of experience that ServiceNow needs in developing a resilient, flexible, and scalable IT platform as the company manages a period of explosive growth.

In a statement from the company, Slootman says, “Arne’s experience in building platforms to support services with millions of users will be of great benefit as we extend our offering to help companies better manage their IT services in the cloud.”

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SweetLabs scored what could be construed as a Google seal of approval in April 2010 when the San Diego startup, then known as OpenCandy, landed $5 million in a Series B round of venture funding led by Google Ventures.

Today, the four-year-old startup says it has scored a similar coup—raising $13 million in a Series C round of venture funding led by Intel Capital, the Santa Clara, CA-based chipmaker’s global investment arm. Google Ventures and another existing investor, Bessemer Venture Partners, also participated in the round. With this latest cash infusion, SweetLabs has now raised a total of $21.5 million in venture capital.

“What’s interesting is that we weren’t officially raising capital,” says SweetLabs CEO Darrius Thompson, who co-founded the Web 2.0 startup in 2007 with Chester Ng and other expatriates of San Diego-based DivX. Thompson says Intel was among several groups that came to SweetLabs with an offer to provide additional, unsolicited venture funding. Thompson says the deal also served as a kind of pre-emptive strike by Intel to keep other potential SweetLabs investors at bay.

Investors’ keen interest was triggered by the beta launch of Pokki, a new platform the company developed to provide an “always on” app-like experience for desktop PC users. As I reported at the time, SweetLabs used the occasion to also change its name from OpenCandy—the company’s original product category—and which SweetLabs continues to operate as a Web-based advertising network and online marketplace for downloading open source software.

SweetLabs San Diego Office

Ng, who is SweetLabs director of business development and sales, might have gotten Intel’s attention when he described today’s desktop PC experience as almost “prehistoric.” He explained that SweetLabs had developed the Pokki platform as a way to bring the simplicity and ease of the mobile app experience to the desktop.

While the Pokki platform is a cloud-based system, Thompson says Pokki apps are a kind of hybrid that reside partly on the computer and partly in the Web. Some online games, for example, simply run more efficiently when part of the program is installed in the computer.

In any case, the Pokki concept resonated within Intel, according to Thompson. He says the Santa Clara chipmaker is “completely aligned” with SweetLabs’ idea of re-inventing and revitalizing the PC, which remains one of the largest ecosystems for software development.

“It was definitely really exciting for us,” Thompson says. Among other things, Intel’s willingness to invest in SweetLabs represented a … Next Page »

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San Diego life sciences research and development, the engine that drives innovation, got some new digs at Isis Pharmaceuticals, and J. Craig Venter started the digging for the construction of a new genomics research headquarters. But we didn’t have to go digging for news; our roundup begins now.

—After meeting with federal regulators, San Diego’s Orexigen Therapeutics (NASDAQ: OREX) said it is restarting work on its experimental diet pill, a combination of naltrexone and bupriopion (Contrave), after declaring in June that it was suspending development of the drug. Orexigen shelved the program after the FDA said the company still needed to conduct a costly, long-term clinical study of more than 60,000 patients to demonstrate that the proposed diet pill wouldn’t increase the risk of heart attack or stroke. Orexigen found a way to move forward, however, by proposing a two-year cardiovascular study that would enroll 10,000 patients. Orexigen said the FDA’s feedback was “reasonable and feasible.”

—San Diego-based Independa, a wireless health startup developing technology to help seniors live independently, raised $1.6 million in an early stage financing round involving Miramar Venture Partners and City Hill Ventures, with an additional $200,000 loan from Silicon Valley Bank. Independa plans to spend the money on development of its Software-as-a-Service (SaaS) technology and to expand its marketing and distribution.

—NuVasive (NUVA: NUVA), the San Diego medical device company developing new surgical products and techniques for repairing the spine, said it gave more than it got in a continuing patent dispute with Medtronic. While a formal judgment has not yet been entered, a jury reviewing four of the nine contested patents determined that Medtronic should pay NuVasive $660,000 plus interest for infringing on a NuVasive patent. The jury also found that NuVasive should pay Medtronic $101 million plus interest for infringing three Medtronic patents.

—San Diego scientist J. Craig Venter and local dignitaries attended a ceremony Tuesday as construction began on a new $35 million building to house the West Coast headquarters for the J. Craig Venter Institute (JCVI). It’s going in near the Salk Institute and the new Sanford Consortium for Regenerative Medicine. A JCVI spokeswoman said the 45,000-square-foot building will be support 125 scientists and staff in a state-of-the-art, carbon-neutral building on the UC San Diego campus. The work will be focused on genomic research, including human genomic sequencing and analysis, synthetic genomics, and environmental genomics.

—Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS) has completed the consolidation of three R&D facilities into a single corporate and research facility. An Isis spokeswoman said the company’s 320 employees continue to be focused on research and drug development, with technology that enables the company to move three to five new drugs into its pipeline every year. The cholesterol-reducing drug mipomersen is the company’s most advanced drug.

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[Corrected 9/21/11, 1:05 pm. See below.] Independa, the San Diego startup developing Web-based services for the elderly, says it has closed on $1.6 million in early stage financing, and investor interest has been strong enough to extend the round to $2.2 million.

[Corrected to show $200,000 loan is in addition to $1.6M investment] Independa CEO Kian Saneii tells me the 2-year-old startup raised the capital from Miramar Venture Partners, based in Orange County’s Corona del Mar, and City Hill Ventures, a new healthcare-focused VC firm founded in San Diego last year by former Halozyme Therapeutics CEO Jonathan Lim. The company also secured an additional $200,000 loan from Silicon Valley Bank.

The company is raising the capital to expand its product development, add to its market-distribution arm, and to introduce new features of its Software-as-a-Service (SaaS) technology through pilot programs, Saneii says.

Independa’s Web-based software is intended to help the elderly maintain their independence by providing regular reminders for medication, appointments, and other needs while also providing friends and relatives a way to check on their loved ones. As we reported previously, the company released its advanced online program in June for beta testing. The system enables Independa’s elderly customers to use Facebook, Skype, calendars, e-mail, and other online social services, with no computer skills required.

The company plans to operate as an integrated software developer providing a suite of related Web-based services, Saneii says. The idea is to provide elderly customers access to social networking tools as well as health and safety services.

For example, Independa does not make sensors itself, but the company has been working with various hardware manufacturers to integrate wireless pill dispensers and wireless sensors for measuring weight, blood sugar, and blood oxygen, Saneii says. With the additional capital, the company plans to expand the capabilities of its system by integrating with more types of wireless health devices, such as a personal emergency response alarm, and blood pressure cuff.

Independa’s CEO says the goal is to integrate its technology in a comprehensive way, so that Independa can provide the broadest offering of wireless health services.

Independa’s system already is being used under several pilot programs, Saneii says. The company plans to sell its Web-based program to retail consumers as well as companies that manage enterprise software services for the elderly, such as assisted living operators and hospice caregivers. Caregivers share access to the system, Saneii says. “Sometimes a family member is the caregiver and sometimes it’s a professional caregiver.”

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