Category: Austin (Page 107 of 317)

By LAURA LOREK
Publisher and Reporter with Silicon Hills News
Host of the Ideas to Invoices Podcast

Internet Pioneer Bob Metcalfe is celebrating his 71st birthday today.

Metcalfe is best known worldwide as the inventor of Ethernet.

“A lot of people think an idea comes all of a sudden, a Eureka moment,” Metcalfe said. “But in my experience, that’s very rare.”

In this Ideas to Invoices podcast, Metcalfe recounts how difficult it is to take a disruptive idea and launch it into the marketplace.

Metcalfe started his work on the Internet at MIT in January of 1970. And then he went to Xerox Palo Alto Research Park in 1972. He invented Ethernet on May 22, 1973.

Metcalfe also formulated Metcalfe’s Law, “which states that the value of a telecommunications network is proportional to the square of the number of connected users of the system.”

By his own count, Metcalfe has had five substantial careers. He founded 3Com, a manufacturer of computer networking equipment, in 1979 and served as an executive there. (3Com stands for Computers, Communications and Compatibility) Then, he worked as a journalist serving as pundit and publisher for InfoWorld. He left that career to become a venture capitalist and served as a venture capital partner with Polaris Partners in Boston. He is now professor of Innovation at the Cockrell School of Engineering at the University of Texas at Austin.

He’s also a graduate of MIT with two B.S. degrees in Electrical Engineering and Industrial Management. He has a Masters in Applied Mathematics and a PhD in Computer Science from Harvard.

Metcalfe went to school for 23 years and the last few years, he worked on the early version of the Internet, called the ARPAnet with the goal of connecting minicomputers across the country.

That problem evolved rapidly at Xerox PARC where Metcalfe went in 1972, the goal was to connect a computer on every desk. He was the networking guy and he had to get the Internet to extend into the building and connect to every desk, Metcalfe said. He was given the opportunity to invent something to connect those PCs together, he said.

To create Ethernet, Metcalfe took ideas from ARPAnet, primarily packet switching, the underlying technology of the Internet and an idea from the University of Hawaii: Aloha Network, a method for sharing: a communication channel, Metcalfe said.

“It was designed to extend the Internet into the building. It was designed to connect a PC to a printer,” Metcalfe said.

One day, Metcalfe had the world’s highest speed terminal in his office: a Texas Instruments Silent 700 and it ran at 300 bits per second. The next day, he had Ethernet running at 2.94 megabits per second, 10,000 times faster.

“And that’s when we started this cycle of build it and they will come,” Metcalfe said. “Because no one needed 2.94 megabits per second. But we made it available and look what happened: the Internet blossomed at much higher bandwidth than previously existed.”

Their main motive was to build their own tools, Metcalfe said. They didn’t want to carry diskettes from their computer to the printer. They wanted to hit command P on the computer and pick up the document at the printer, he said.

“That was one of the earliest uses of Ethernet: printing,” Metcalfe said.

Metcalfe left Xerox and founded 3Com on June 4th of 1979. He raised venture capital in February of 1981. 3Com shipped its first big product, Ethernet for the IBM personal computer, in September of 1982. The company went public on March 4,1984.

In 1999, 3Com had $5.7 billion in revenue and was sold after 30 years of independent operation to HP in 2010 for $2.7 billion.

DEC, Intel and Xerox agreed to cooperate to make Ethernet a standard Local Area Network, known a LAN. Two others, General Motors and IBM came to the IEEE with contending standards, Metcalfe said. The Institute of Electrical and Electronics Engineers, the organization known as IEEE, made all three standards: Ethernet was 802.3, General Motors’ Token Bus was 802.4 and 802.5 was IBM Token Ring, he said.

“And then we went to war in the marketplace,” Metcalfe said. “And by the way, there were a bunch of other nonstandard LANs like Arcnet and Wangnet. There were lots of local area networks then.”

In San Antonio, Datapoint Corp. had an early personal computer and a local area network, called Arcnet. Metcalfe traveled to San Antonio to meet with Victor Poor, vice president of engineering at Datapoint to invite the company to submit Arcnet as standard to IEEE. A few weeks later, Poor contacted Metcalfe and declined to submit Arcnet as an industry standard and instead keep it as proprietary.

“And that was the end of the Arcnet,” he said.

Datapoint ended in bankruptcy in 2000.

As for LAN standards, Ethernet eventually won, Metcalfe said. After 20 years, Ethernet finally killed the IBM Token Ring and all the contending standards, Metcalfe said.

Ethernet’s strategy was to be an open standard, Metcalfe said.

In the podcast, Metcalfe also reveals the secret to selling – an essential skill for every entrepreneur. The key is to shut up and listen, he said.

Metcalfe, an engineer by training, took 3Com Corp. from zero sales a month to $1 million a month. The company then hired a series of sales executives to take the company to the next levels.

“Sales is something you do every day and the better you are at it, the happier you are going to be,” Metcalfe said.

In Silicon Valley, there’s a term called Adult Supervision, in which a seasoned executive comes into a company to help the entrepreneur, Metcalfe said. Bill Krause was the adult supervision at 3Com. When he joined 3Com, Metcalfe went to Krause’s first meeting. He saw him writing furiously on a notepad during the weekly operations meeting. Metcalfe looked at the paper over Krause’s shoulder and saw that he had written “DNT” repeatedly. Afterward, Metcalfe asked Krause what that meant.
Krause explained it meant “Do Not Talk” and that he needed to remind himself not to interrupt and to listen. The key to running a successful meeting meant that people needed to talk and he needed to listen, Krause told Metcalfe.

Sales is a key skill in life, Metcalfe said. Among his first jobs, Metcalfe worked as a Cabana boy and earned more by catering to his customers. He also turned his package pickup job at Sears into a tips job and made more in tips than his hourly wage.

Most successful entrepreneurs should put 10,000 hours into something before founding a company, Metcalfe said. He references Author Malcolm Galdwell’s 10,000-hour rule explained in his book Outliers, in which a person who does 10,000 hours of something can become a leader in that field.

Metcalfe is also known to change careers every ten years. He moved to Austin in 2011 to work as professor of innovation at the University of Texas at Austin. His wife, Robyn Metcalfe, is a triathlete and long distance runner. She got tired of training in the snow during the Boston winters and they picked Austin for their new home. Robyn Metcalfe also runs Food+City at UT, which publishes a magazine, hosts events and holds an annual food supply chain contest. They have two grown children, Max and Julia.

Metcalfe jokes his next career will be as a stand-up comedian. In this podcast, he tells a USB funeral joke. Tune in to hear him tell it and for more tips on how to become a successful entrepreneur.

Editor’s note: Metcalfe was the third person interviewed for Silicon Hills News’ Ideas to Invoices podcast. The first few minutes of the interview are rough, because it was recorded at Galvanize, which was under construction. For more interviews with local entrepreneurs, please subscribe to the Ideas to Invoices podcast on iTunes.

By LAURA LOREK
Publisher and Reporter with Silicon Hills News
Host of the Ideas to Invoices Podcast

Next Coast Ventures might be able to afford to lose $1 million on an investment, but can an entrepreneur afford to lose five to ten years of their life working on a startup that doesn’t hit it big?

That’s the kind of deep thinking unearthed in the latest Ideas to Invoices podcast featuring Mike Smerklo and Tom Ball, co-founders of Next Coast Ventures, an Austin-based Venture Capital Firm that invests in early stage companies. It just closed on a $85 million fund last month.

In the podcast, Ball and Smerklo discuss how difficult it is to build a company.

One of the things that sets them apart from other VC firms is that both Smerklo and Ball are experienced entrepreneurs who have taken a startup from idea stage to exit.

Before launching Next Coast, Smerklo ran ServiceSource and took it from a small startup to a public company with more than 3,000 employees. Ball was a general partner with Austin Ventures for a decade. But he also founded Tahoe Domains and Co-founded Openfield and Razorgator Interactive and founded eCoupons.

Next Coast Ventures looks at a lot of attributes when evaluating a business plan including team, the founder, market fit and if the founders match up to the opportunity, Ball said. They also look at the domain the business is operating in and what theme it approaches, he said.

“We look at is it a good use of our time and can we add value to the investment,” Ball said.

Entrepreneur to market fit is a key metric, Smerklo said.

“There’s great ideas and sometimes the entrepreneur isn’t well qualified to run that business,” Smerklo said. “So we spend a lot of time thinking about can he or she take this business from this concept and really drive it to the next level. Is their passion, their energy and their domain experience a good fit for the idea they are trying to bring forward.”

They also look at the risk and reward balance in the business plan, Ball said. Next Coast Ventures wants to get a ten times return on its investment, Ball said. So it looks for ideas that can provide that kind of return, he said.

The best way to pitch Next Coast Ventures is through a qualified introduction from someone they respect, Ball said. They get a lot of cold email pitches to info@NextCoastVentures.com and they try to respond to most of them, but the best way to pitch them is through someone in their network.

“There’s a vast number of ideas and opportunities we can spend our time with and unfortunately or fortunately, our job is to say no 99 percent of the time,” Smerklo said.

To make it easier to find the deals Next Coast is interested in, the firm looks at certain themes. It plans to invest in business models designed for digital natives as well as innovative companies in the education, retail, business to business and business to consumer sectors.

Next Coast Ventures has already invested in four Austin-based startups: Umuse, Dropoff, OnRamp and Phlur and one San Francisco-based startup Cloverpop and one New York-based startup Clarity Money. It has also invested in two more local startups, which it has not yet publicly announced.

Next Coast Ventures had conversations with more than 600 entrepreneurs last year. Ultimately, the firm plans to invest in 20 to 25 companies during a three to four year period, Ball said.

The number of investments any firm makes is really small compared to the number of deals it looks at, Smerklo said. That’s why entrepreneurs should cast a wide net when looking for funding, he said.

There’s a lot of variables that come into play when a VC firm says no other than the idea, Ball said. It might be the stage the fund is in or whether they have made an investment in a competitor, he said.

Next Coast Ventures doesn’t use a “Moneyball for analytics” system to evaluate entrepreneurs.

“Ninety percent of the decision is the entrepreneur,” Smerklo said.

Both Smerklo and Ball have extensive networks in Silicon Valley from time spent working there. They take entrepreneurs they invest in to Silicon Valley early on to meet with syndication venture capital partners there, Smerklo said.

“You can never start that process early enough,” he said.

The Next Coast Ventures market it invests in isn’t geographically defined, it’s “spiritually defined” Smerklo said. They look for deals in Austin, which has great ideas but not as much institutional capital that is available on the coasts, he said. They will also invest in the Midwest, Boulder, Salt Lake City and other markets that are similar in size and mentality to Austin, he said.

Both Smerklo and Ball have raised money as entrepreneurs. It’s never easy, Smerklo said. They spent a year raising $85 million from private and institutional investors for the Next Coast Ventures fund. In the end, the fund was oversubscribed. They initially planned to raise a $55 million fund. They also put their own money into the fund.

“It’s planes, trains and automobiles,” Smerklo said. “It’s being passionate about what you are doing and reaching out to every opportunity.”

The funding situation in Austin is better than it’s ever been from a competitive dynamic among the investors, Ball said. It’s very healthy versus having one big investor, he said.

“Having multiple options in a bonus,” he said.

In Austin, seed financing is better than it’s ever been ever, Ball said. There are a lot of people here who are accustomed and attuned to investing in early stage companies. And Capital Factory, Techstars, Galvanize, WeWork and others have helped to build the local technology ecosystem, he said.

Entrepreneurs who know how to sell are at a key advantage in the marketplace, Ball said.

“You have to know how to sell and get the word out about your product,” Ball said.

Next Coast Ventures also recently added Zeynep Young, founder of Double Line Partners, as a partner. She brings tremendous entrepreneurial experience as well as diversity of thought, Ball said.

For more tips on how to get VCs to back your startup, tune in to the podcast, available for download on iTunes.

By LAURA LOREK
Publisher and Reporter with Silicon Hills News
Host of the Ideas to Invoices Podcast

Most people in Austin’s technology community know Joseph Kopser.

He is one of those people who seems to be everywhere and involved in everything from Austin’s smart city efforts and transportation issues to promoting veteran entrepreneurs and higher education for a more skilled Texas workforce.

And Kopser also recently announced he is considering challenging Rep. Lamar Smith in Texas’ 21st Congressional District. Buzzfeed broke the news on March 14th (after this interview for the Ideas to Invoices podcast was done.) Kopser also sent out an email to family and friends outlining his plans and requesting support. So far, he has raised more than $70,000.

Kopser is a successful entrepreneur and co-founder of RideScout, a startup smartphone app created to increase transportation efficiency by getting people out of their cars and into other public, commercial and private options.

Previously, he served in the U.S. Army for 20 years earning the Combat Action Badge, Army Ranger Tab and Bronze Star. He graduated from West Point with a BS in Aerospace Engineering and a Master’s Degree from the Harvard Kennedy School. Kopser retired from the Army in 2013 as a Lt. Colonel.

Initially, Kopser created RideScout to optimize his commuting options in the Washington, D.C. area so he could spend more time with his wife, Amy, and their three daughters.

Craig Cummings, co-founder of RideScout, helped Kopser raise the initial capital and hire staff to launch the startup. The provisional patent was filed in May of 2011. In the beginning, Kopser didn’t quit his day job as a military science professor teaching at the University of Texas at Austin.

“I tell all entrepreneurs who ask, especially in the early stages, don’t quit your day job,” Kopser said.

Don’t quit your job until you can maintain two of the three Cs: cash, customers and commitment, Kopser said.

In March of 2013 is when RideScout did a soft launch at South by Southwest. It formally launched in November of 2013. RideScout got to know the team at Mercedes through its relationship with Car2Go. Mercedes owned moovel, a competing product to RideScout.

In September of 2014, Daimler AG, parent company of Mercedes and moovel, announced its acquisition of RideScout. Kopser became global president of moovel and served with them until last November when moovel announced plans to close its Austin office and move all of its operations to Portland, Oregon.

Kopser chose not to move. Instead, he formed a new venture, Grayline, a corporate consulting firm, with Bret Boyd.

He is also still involved in Bunker Labs Austin, an effort to help veterans become entrepreneurs. And he is also promoting the 60 by 30 high education plan which focuses on the goal of having 60 percent of the 25 to 34-year-old Texas population to hold a certificate or degree by 2030.

In this Ideas to Invoices podcast interview, Kopser shares tips for other entrepreneurs to build their companies and his motivation. He also recommends everyone read Dale Carnegie’s book: How to Win Friends and Influence People every few years.

Entrepreneurship is “really, really hard,” Kopser said.

“Not everyone is going to love your ideas as much as you do. Much of your time is going to be spent being told no,” he said. “It takes someone with a strong constitution.”

Editor’s note: Joseph Kopser was the second entrepreneur interviewed to kick off Silicon Hills News’ Ideas to Invoices Podcast. He provides a lot more insights into how he built RideScout in the podcast. Please listen to the interview or go to iTunes to subscribe to our weekly podcast. Please also rate and review the podcast on iTunes. We will soon be launching on Soundcloud, Stitcher and other podcasting platforms.