A pretty busy week in Seattle business means this weekly wrap of Seattle tech headlines is a little longer than normal:

—EquaShip, the upstart shipping competitor hoping to outfox UPS and FedEx by consolidating parcels from small and medium-sized businesses, finally took the covers off its service last week. The company is led by CEO Ron Wiener, previously of Earth Class Mail, and includes some notable board members with deep experience in shipping and e-commerce. From what we hear, the big guys may be watching this one pretty closely.

—Isilon, now a unit of big-data giant EMC, brought CEO Joe Tucci to talk about the company’s plans to add 200 jobs in Seattle. Tucci and Isilon head Sujal Patel were joined by Mayor Mike McGinn, who said the EMC additions at a spacious—but soon to be crowded—new office shows off the city’s efforts to remake the old Pioneer Square neighborhood.

—We added another big name to our Mobile Madness Northwest event on Dec. 6: Cameron Myhrvold, a founding partner at Ignition Partners. Myhrvold is a Microsoft vet, an active investor in software and infrastructure, and also a board member at Wild Tangent—which should make him an interesting fit to moderate our panel on how mobile is transforming gaming. Get your tickets now before the best prices expire.

—I checked in with Martin Tobias, CEO of Tippr, to see how the much-maligned daily deals sector is doing these days. Tobias’ answer? His piece of the action (white-label supplier) is looking good, while Groupon‘s well-publicized IPO problems are pointing to the enormous task of building a standalone consumer brand from scratch. Connecting the dots, I deduced that Tippr may be pulling in $44 million-$88 million in revenue, at least according to Tobias’ own stats about his market share.

—Speaking of deals, peer-to-peer e-commerce startup Zaarly announced a $14.1 million venture round and added HP CEO Meg Whitman to its board. The startup, while technically based in San Francisco, has major operations in Seattle, D.C., and Kansas City, MO.

—Facebook, which already is barreling toward an Internet standard in identity, began making bigger moves in the virtual currency world with the first steps of extending Facebook Credits outside its walled garden. The first public test partner is the GameHouse division of RealNetworks, which is going all-in to remake itself as a social games player.

—The third-quarter recaps of venture financing kept on coming, with the MoneyTree Report from the NVCA and PreiceWaterhouseCoopers showing some slowdown in U.S. venture activity. Here in the Seattle area, Inrix and Zulily were neck-and-neck for the quarter’s top fundraising haul.

—We got a look at what MacArthur genius, former Google innovation lead and University of Washington professor Yoky Matsuoka is doing on her leave in the Bay Area: Working at Nest, a smart-thermostat startup co-founded by a couple of guys who worked on those iPods and iPhones at Apple.

—Seattle startup Playmark announced a deal to be the online broker for merchandising rights for a big name in sports: the NFL Players Association. Playmark’s technology matches up the likenesses, signatures, and other assets associated with famous athletes to entrepreneurs and merchandisers who want to make branded or endorsed products. Early customers include ESPN.

—Clearwire stock took another ride—upward, this time—on reports of comments from Sprint‘s Dan Hesse about a tentative deal that could pave the way for Sprint to use Clearwire spectrum in the future. Clearwire still has to build the fourth-generation network in question, mind you—and Sprint still doesn’t sound like it’s interested in ponying up the cash.

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In her work at the University of Washington, Yoky Matsuoka spends time figuring out how to make the brain work directly with machines. In her startup work, she’s targeting something a lot less fancy-sounding: the home thermostat.

Matsuoka is vice president of technology at Nest, a Palo Alto, CA-based startup aiming to tackle energy efficiency by giving the ubiquitous wall-mounted thermostat a major overhaul. Nest’s device, detailed in these stories from The New York Times, Wired, and Forbes, adapts to its owners’ habits by tracking how they adjust their heat. It also uses motion sensors to detect whether anyone’s home, and gives owners data to track their energy use over time.

One passage from the Wired piece sheds some light on interesting adjustments that Matsuoka had to make to the device’s algorithms after testing with users.

It turned out that the Nest thermostat was actually being too aggressive in controlling the temperature for energy efficiency when nobody was home, making people feel like they were being forced into greener behavior rather than nudged.

“We’re actually trying to change the culture,” Matsuoka says. “If we just put a machine-learning device in people’s homes that changes the temperature without people understanding how it works, it’s never going to take off. We really had to understand how humans learn to live with a brand-new system.”

Nest’s co-founders led crucial work on the iPod and iPhone before starting Nest. Matsuoka, who was a 2007 MacArthur genius grant winner, also is a former head of innovation at Google. She’s on leave from the UW while working at Nest.

The startup is backed by top venture firms, including Kleiner Perkins Caufield & Byers, Google Ventures, and Lightspeed Ventures. Today’s reports say the company has raised in the neighborhood of $50 million.

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The University of Washington’s Center for Commercialization (C4C) said today it has named five new business leaders as entrepreneurs-in-residence. The group includes: Lars Johansson, Ron Berenson, Terri Butler, Henry Berg, and Stephanie Amoss. You can see their bios here. Separately, the UW announced a new program in which entrepreneurial faculty will mentor colleagues, advise C4C on programs, and provide input on UW commercialization policies. The entrepreneurial faculty fellows are: Daniel Chiu, Oren Etzioni, Yoky Matsuoka, Buddy Ratner, Rodney Ho, Carla Grandori, Vikram Jandhyala, and Joel Durand.

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Four professors from the University of Washington’s department of computer science and engineering recently presented their cutting-edge research to a private audience of tech executives and investors active in the game industry in downtown Seattle. The Interactive Media Technology Showcase was hosted on Wednesday by UW TechTransfer and enterpriseSeattle, and coincided with the Casual Connect gaming conference nearby. The moderator was gaming veteran Alex St. John, the founder of WildTangent and now entrepreneur-in-residence at UW TechTransfer.

As I understand it, the goal was to forge deeper ties between researchers and the gaming industry—presumably to explore the commercial applications of the professors’ work in areas like 3-D graphics, video processing, scene and motion generation, and human-computer interfaces. According to UW TechTransfer, the discussions led to at least one take-home message: that “control, simulation, and image manipulation technologies are at the point of radically changing the game development model.” Specifically, computers can now generate realistic-looking scenes, characters, and movements—potentially making it cheaper, faster, and easier to produce game-quality action and visuals, and “creating new possibilities for human control of game play.”

Just a brief recap of the talks here (you can also see videos here):

—Yoky Matsuoka, a neuro-robotics expert, gave an overview of her work on robotic hands and limbs, and control of virtual environments. She talked about how “neurobotic input devices” could let you grasp and manipulate virtual 3-D objects. Matsuoka’s work on measuring how challenging or stimulating it is to learn a repetitive action (like a hand motion) could potentially have impact on game design, in terms of being able to measure people’s enjoyment of a particular game or their ability to adopt new devices like the Nintendo Wii.

—Zoran Popovic, a specialist in computer simulations and animation, talked about artificial intelligence techniques for making next-gen Massively Multiplayer Online … Next Page »

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The minute I walked into an auditorium at Microsoft Research in Redmond last night, I knew this was going to be a fun event. In foot-high letters, someone wrote on a white board, “FOOD BEHIND THIS WALL. EAT.”

It turns out that that someone, who clearly had an innate sense for how to get people to mingle, was the University of Washington’s Yoky Matsuoka, the MacArthur “genius” grant winner, and Xconomist. She was trying to light a spark for the opening session of a three-day summit she organized with Rajesh Rao of the UW, and Desney Tan of Microsoft Research. The National Science Foundation is also helping sponsor the convention.

The goals of this effort, called the Pacific Northwest Center for Neural Engineering, are to foster more collaboration among the region’s engineers, physicists, biologists, computer scientists, and neuroscientists. About 145 people signed up for the conference, including Microsoft co-founder Paul Allen, although I didn’t see him last night. Too bad—he missed out on a fascinating talk about neuroscience of insects, specifically moths, by UW researcher Tom Daniel. He noted that insects like moths acquire, process, analyze, store, and retrieve vast amounts of information through their neurons to control actions like flying. “Tiny brains do amazing things,” he said.

This clearly got people at Microsoft thinking and talking, exactly what the organizers had in mind. “People need to talk. If we can get people together to talk, we’re achieving something here,” Matsuoka says.

There were lots of lively conversations early on—conducted over mini-hamburgers—that could lead to new experiments, industry partnerships, or grants, Matsuoka says. She and the other organizers also note that many companies are forming research teams, and partnerships with academic labs, to develop neural engineering products like implantable chips and human-device interfaces for personal assistance and rehab. “The time is right for uniting the neural engineering efforts of academia and industry in the Pacific Northwest region,” the organizers said in a letter to attendees. “Our vision is to build a center that will be the No. 1 destination for students, researchers, and companies that want to be at the forefront of human and assistive device integration and the neural engineering field.”

Daniel, who resembles Apple CEO Steve Jobs with the wire-rim glasses and black turtleneck, truly gave a riveting (and often humorous) talk about monitoring neural activity in moths during flight—work that has been funded by various military agencies and published in Science. He even passed a live moth around the audience, which seemed to give people the willies. “Isn’t it beautiful?” he said.

Then people in the audience threw some terrific questions at Daniel after his talk—always a hallmark of a lively event—including a couple that stumped him. (This was over my head, but it had something to do with the efficiency of electrical stimulation of neurons compared with chemical stimulation.)

It seemed like Daniel knew he was going to face some really keen questioning from this audience, since he started out saying, “I feel like Daniel in the neuroengineer’s den.” It looks to me like the neuroengineering den is getting livelier around here.

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One of the scenes from The Empire Strikes Back gives you an idea of what Yoky Matsuoka is pursuing. It’s the part where Luke Skywalker tests out a prosthetic hand that he can control with all the dexterity of a natural one, well enough to wield one mean light saber.

Matsuoka, a MacArthur “genius” award winner (and an Xconomist), and one of the up-and-comers on the faculty at the University of Washington, described her work in what she calls “neurobotics” this morning at the Technology Alliance’s Science & Technology Discovery Series in Seattle.

The research is a fusion of computer science that develops models of brain signals that control fine movements with mechanical engineering that makes more life-like bones and tendons in the hand. Current incarnations of prosthetic hands are heavy, costly, force patients to struggle through hours of work to perform coordinated movements, and don’t do much more than grasp objects, she says. She’s shooting for the kind of dexterity that could help a patient peel a banana with a prosthetic hand.

“I want to understand the brain signals that allow this, and the mechanical systems that allow you to simulate it,” Matsuoka said in her talk, after showing a clip from Star Wars as one of her slides.

Matsuoka, 37, came to the UW two years ago from a faculty position at Carnegie Mellon University because she wanted to be closer to her family in the San Francisco Bay Area. She was close to home as an undergrad at the University of California, Berkeley, before she went to graduate school at MIT in the artificial intelligence lab of Rodney Brooks and Emilio Bizzi. She went on to do a postdoctoral fellowship in mechanical engineering at Harvard University.

The UW “lucked out” in recruiting her, says Ed Lazowska, the Bill & Melinda Gates Chair of Computer Science at UW, who’s also an Xconomist. Not only did Seattle offer closer proximity to her family, it also happens to be home to Microsoft Research, a place where her husband, a Carnegie Mellon computer scientist, could also find satisfying work, Lazowska says. There’s also the advantage of having computer science labs just a few minutes’ walk from world-class medical researchers. “Seattle is getting to that point, like the Bay Area, where there are enough opportunities out there to satisfy the two-body problem, of placing two scientists,” Lazowska says.

What’s special about Matsuoka’s work is that “she’s made herself multi-disciplinary,” Lazowska says. “She’s fluent in computer science, she’s fluent in mechanical engineering, she’s fluent in bioengineering. She’s learning neuroscience. If she was just a computer scientist, she’d just do simulations of this. If she was just a mechanical engineer, she’d just build hands. It’s her ability to tie it together.”

Nothing from Matsuoka’s lab has been turned into a product, and it’s the sort of work that’s five to 10 years away from being widely applied, she says. The U.S. military has shown some renewed interest, through DARPA funding, for prosthetics research since so many war veterans are coming home with missing limbs. Companies like Intel and Microsoft are becoming increasingly interested in brain research, and she says she’s eager to form industry partnerships to further develop the work. So if Matsuoka gets her way, she’ll help realize the vision George Lucas helped put into the public imagination back in 1980.

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