In 2007, a startup called Click Forensics began operations in San Antonio.
The company, founded by Tom Cuthbert and Tom Charvet, tackled the problem of click fraud online. Austin Ventures provided its initial $500,000 seed stage funding.
Click Forensics ended up moving to Austin and pivoted to become a marketing analytics firm called Adometry.
On Tuesday, Google announced it bought Adometry for an undisclosed price. Since its inception, Adometry has raised $29.1 million in venture funding from Austin Ventures, Shasta Ventures and Sierra Ventures, according to the company.
Adometry and Google both announced the deal it in separate blog posts.
“Adometry is joining Google, where they will build on the momentum of our existing measurement and analytics offerings, which include Google Analytics Premium as well as other products,” according to a Google blog post.
“Attribution solutions, like Adometry’s, help businesses better understand the influence that different marketing tools — digital, offline, email, and more — have along their customers’ paths to purchase (http://goo.gl/tXTliw). This heightened understanding, in turn, enables businesses to measure marketing impact, allocate their resources more wisely, and provide people with ads and messages that they’re likely to care about.”
Adometry moved into new headquarters last year at the Lakewood Center Building II on Capital of Texas Highway and has about 135 employees, according to this profile Silicon Hills News did of the company in March.
“We couldn’t be more excited to join Google — a company that shares our core values. Not only do they focus on innovation and solving big problems, but also like Adometry, they seek to provide brands and their agency partners with the analytics and insights to improve the performance of their marketing campaigns,” Paul Pellman, Adometry’s CEO, wrote in a blog post on its site.
Category: Austin (Page 198 of 310)
By LAURA LOREK
Founder of Silicon Hills News
Joshua Baer, co-founder of Capital Factory, the latest Google Tech Hub
Mayor Lee Leffingwell, donning a pair of Google glasses, made the announcement Tuesday at Capital Factory to more than 150 people from the startup community. He welcomed Google for Entrepreneurs and its partnership with Capital Factory, which is a technology incubator, accelerator and coworking space with more than 600 members and 200 companies.
“The impact goes way beyond Capital Factory,”‘ said Leffingwell.
Capital Factory joins seven other Google Tech Hubs in the U.S. and Canada, which Google announced late last year. The others are in Minneapolis, Chicago, Waterloo, Ontario, Nashville, Durham, Denver and Detroit.
Mayor Lee Leffingwell, donning a pair of Google glasses, announced Capital Factory as a Google Tech Hub
The Google Tech Hub members can also work out of any of the eight locations in the network and sites in London and Tel Aviv.
Daniel Navarro with Google for Entrepreneurs showed a video members of the other Google Tech Hubs created to welcome Capital Factory to the network.
The Google Tech Hub partners also work closely with Google’s developer and business groups, said Gerardo A. Interiano, spokesman for Google in Austin. It has about 300 employees at its Austin offices.
Daniel Navarro with Google for Entrepreneurs
Capital Factory has had such a strong partnership with Google for such a long time, said Josh Baer, co-founder and director of Capital Factory.
Capital Factory is also one of 100 sites the City of Austin selected to receive its 1-Gigabit Google Fiber high speed Internet service through its community partnership program. Google announced plans for its high-speed fiber network last year and is the process of installing it and expects to turn the service on in Austin later this year.
Josh Baer, co-founder and director of Capital Factory.
Pristin.io is a Capital Factory company working specifically to create Google glass applications for physicians to use Google Glass in surgery. But all of the startups use Google applications to run their businesses, Baer said.
“The way Google makes a big difference here is it covers a lot of the basics that all startups need,” said Tuscan Knox with Weeva, a story telling startup recently admitted into the Capital Factory incubator program. “There are a lot of services they provide that almost every startup needs.”
Another benefit is having access to Google’s people and expertise, Knox said.
“They have people who are incredibly smart,” he said. “Every startup here is super excited to have Google involved with Capital Factory.”
Gerardo A. Interiano, spokesman for Google in Austin.
By LESLIE ANNE JONES
Reporter with Silicon Hills News
Emmanuel Abiodun, founder of Austin-based Cloudhashing
Before CloudHashing, Abiodun worked at HSBC building risk-management and trading systems, so he had a good mix of finance and tech background. Around the time he began mining, he had friends who were also interested, but lacked the necessary tech savvy.
“So that’s where the business idea came from,” he said.
Abiodun decided to sell pre-order mining contracts to raise capital to invest in the hardware to build a major mining pool. He launched CloudHashing.com in April 2013. Abiodun’s initial investment was $15,000. Now he has mining hardware worth $15 million kept in guarded facilities with strict security procedures that include biometric scanning.
A bit of background on cryptocurrency mining: The mysterious/anonymous person (or maybe group of people) Satoshi Nakamoto introduced the Bitcoin program in 2009. Today, it is the frontrunner among dozens of digital currencies. Bitcoin uses a cryptographic algorithm to release coins. Only 21 million bitcoins will ever exist, and presently there’s around 12.6 million in circulation. About every 10 minutes, more bitcoins are released and the program is written so that the last coins will enter the market in 2140. By having computers “hash” the algorithm (i.e. solve really difficult math), miners compete to earn bitcoins as they’re released. In 2009, it was possible to do this with a desktop computer, but as more computers work on solving the algorithm its difficulty increases. Today, people buy multi-thousand dollar chips specifically manufactured to mine bitcoin.
The hardware involved sucks up a lot of electricity, generates heat, can be noisy and smells like ozone. CloudHashing offers a solution to people who want to mine bitcoins without the hassle of purchasing and maintaining their own equipment. For as little as $299, people can buy a one-year contract that is essentially a lease on CloudHashing’s mining power.
Shortly after the CloudHashing website debuted, Abiodun was contacted by Benny Gorlick, a small businessman from Anchorage, Alaska whose company sold heavy equipment to gold mining and oil companies. Like Abiodun, Gorlick was in his early thirties, had only recently started bitcoin mining, and he too had a wife who was befuddled by all the loud, hot computer equipment he was installing in their home. After a long Skype call, the two decided to work together. Gorlick’s experience negotiating with real-life mining equipment manufacturers helped them in the process of buying bitcoin mining equipment.
Their introductory conversation took place around May last year, Gorlick and Abiodun wouldn’t meet in person until October. In the intervening months, both kept their day jobs and ran the company together over Skype and email, but their customer base quickly mushroomed beyond what just the two could manage.
Today, the company has a small sales and customer service office in north Austin. The Iceland mining facility began operating at full capacity in October, and the one here in Texas at the end of January. Gorlick moved from Alaska and now oversees the U.S. side of operations, while Abiodun continues to live in the U.K., but travels to the States frequently to meet with customers. CloudHashing chose Texas partly for its low energy costs (which Iceland also offered) and proximity to manufacturers. CloudHashing’s office is across the hall from one of its hardware suppliers, Cointerra, which is also only about a year old and has already seen sales of $35 million.
Both companies received some criticism from consumers unhappy with order delays (Cointerra’s mining rigs shipped late, and CloudHashing initially had delays delivering capacity). As Gorlick put it when reflecting on his experience in the oil and gold mining equipment industry, “You’re always in line behind the guy who’s ahead of you.” Right now, it’s a scramble for manufacturers to develop faster hardware and for miners to snap it up. Meanwhile, the Bitcoin algorithm’s difficulty increases and returns diminish. Abiodun said his goal is to have CloudHashing doing 15 percent of total Bitcoin mining activity, but presently the company is at about 7.5 percent, as stiff competition slows growth across the board.
Presently, Abiodun says his typical customer is between 30 and 50 years old and has a salary of $115,000-200,000 a year. Many have invested hundreds of thousands in the company and the biggest contract to date was for $1 million.
Glenn Chaffin, a financial controller for a California marketing company, invested about $20,000 with CloudHashing in December. “I kind of wanted something with contractual obligation, to where I didn’t have to do any setup or support of software,” he said. Chaffin estimates he’ll break even in nine months, but it depends on the price of bitcoin, which has dropped over the last three months.
Abiodun said he doesn’t worry about the short-term fluctuations in bitcoin price, and that his stresses have more to do with the day-to-day operations of the business and keeping the hardware mining optimally. It’s been a whirlwind thus far, and as for the next six months? The plan is to increase CloudHashing’s mining capacity exponentially.
By LAURA LOREK
Founder of Silicon Hills News
Watson display at the Computer History Museum, photo by Laura Lorek
To do that, IBM issued a challenge back in February to app developers worldwide encouraging them to submit apps for its IBM Watson Mobile Developer Challenge. The apps needed to use “Watson’s cognitive computing capabilities to analyze, discover insights and learn from Big Data.” IBM developed Watson as a cognitive technology that processes information more like a human and understands natural language.
Some might consider IBM’s mobile Watson, the sage grandfather of Siri, Apple’s personal assistant available on its iPhones.
Last week, the IBM Watson team announced it has picked 25 finalists in its competition including San Antonio-based Biovideo and Austin-based 9WSearch.
Several hundred companies submitted apps in the IBM Watson Mobile Developer Challenge. The apps that made the cut span several categories including finance, healthcare services, news, business, fashion, education, cities and nutrition.
In the finance category, 9W Search, founded by Susan Strausberg, one of the founders of Edgar Online, submitted its app, which mines financial information online combined with Watson’s cognitive capabilities to answer complex financial questions. Its first application is in the energy industry.
“The ability to incorporate vast amounts of structured and unstructured primary source materials into the 9W/Watson cloud lets users ask and answer billions of complex questions through a simple, familiar interface,” according to 9W Search’s submission.
Biovideo, founded by Carlos Villasenor, made the finalists in the Health Services category. The company submitted an app that provides “the best help for new and expectant mothers at their fingertips.”
Biovideo, which operates out of San Antonio’s Geekdom, works with hospitals in Texas and Mexico to create a movie capturing the birth of a child for free for parents.
“The Biovideo App incorporates the Baby 101 searchable database for the first time and becomes the ultimate parenting tool,” according to the company. “It also eliminates geographic limitation, as the app and the Baby 101 program are available to anyone, anywhere. Providing the power of Watson to the Baby 101 program provides unlimited information, insight and reach to new parents.”
The finalists must submit prototypes to IBM, which will select five teams to present their proposals. And then IBM will choose three winners. “The three winners are awarded 90 days of access to the Watson APIs and consulting from IBM Interactive design services.”
By LESLIE ANNE JONES
Reporter with Silicon Hills News
Melissa Pickering, founder of iCreatetoEducate.com
Back in 2005, Disney hired Pickering into its show-ride design department right after she graduated with a mechanical engineering degree from Tufts University. While working there was “an amazing experience,” Pickering noted few other women worked in the department and most were serving in administrative positions. Back at Tufts, she’d participated in a work-study program in Boston public schools helping kids build LEGO robots. That experience gave her an enduring interest in education initiatives that could lead more students, especially female ones, into STEM fields.
After two years in Los Angeles, Pickering returned to her alma mater. She relinquished her coveted “Imagineer” title to work at the Tufts Center for Engineering Education and Outreach, an institute dedicated to bettering engineering education for students in kindergarten through high school.
Leaving Disney was difficult, but the move wasn’t unprecedented. Pickering saw other engineers leave the Magic Kingdom, one to go to law school, another to become a teacher.
“There’s a feeling in our generation where if we’re not challenged we’re going to jump and do something else,” the 30-year-old Pickering said.
At the Tufts Center, Pickering saw a lot of grant-funded work on educational software development, but the grants would end and the graduate students would graduate, and so many good ideas were left unimplemented. After two and a half years at the Center, Pickering left in 2010 and founded iCreate to Educate to bring one of the Center’s projects, the SAM Animation software, to market.
SAM Animation is a simple stop-motion animation program that allows students to make videos with a webcam. Its features are limited to image capturing and basic editing. It is easy for both teachers and students as young as 5 to use, and students can concentrate on the content of their videos, instead of learning the bells and whistles of a complicated program.
“It’s not just popping bubbles or playing Angry Birds, they’re using technology but it also takes creative thought,” Pickering said.
The software is supported by constructivist education theory. The idea is that students learn by doing: they’re better able to learn concepts when education incorporates interaction with the world around them. Creating something related to a topic helps cement knowledge. For example, the software is popular among science teachers who have students create videos that illustrate photosynthesis and the water cycle.
High School science teacher Kevin Murray of Fort Collins, Colorado uses SAM Animation with his ninth-grade biology students to explore botany topics. He observed that not only did making videos help students learn the subject, it also imbued them with a sense of pride about the cool videos they were making. “They want their work to be seen, which isn’t always true,” he said. “They wouldn’t want me to put their papers under a document camera.”
Deb Ramm, who teaches fourth grade in Johnston, Rhode Island, uses it for science and math lessons. “It’s really engaged the kids. They’re taking some of the things we do every day in the classroom and having more fun with them,” she said.
In 2011, Pickering was selected for the Kauffman Foundation incubator program, which helps education-minded entrepreneurs. iCreate also benefited from its association with Tufts, teachers in the northeast were familiar with the Center and its research-backed educational mandate.
In 2012, iCreate released the iPhone and iPad version of the software. Last year, Pickering moved to Austin and received an investment from education company Kaplan. Hue started distributing iCreate’s product in the UK back in 2011 and just recently bought out Kaplan. Pickering is pleased with the acquisition because Hue has a small product line that fits with her product. Also, she’s fielded a lot of interest from teachers and parents in Europe and the UK, so it’s good to have a partner based there.
Even today, Pickering says word of mouth among teachers is her best source of advertising. Some 60 percent of new users hear about the product from another teacher, she said. A school-wide software license runs $500-1,000 depending on the size of the school, a single computer license is $30 and the iPad/iPhone app is $4.99. About 100,000 users have downloaded the free (abbreviated) version, and 300 school licenses and 20,000 individual licenses have been issued.
Before acquisition, iCreate only ever had four team members. Presently, Pickering and an assistant are based out of the Center61 coworking space, but will likely move into a more permanent shared office sometime this summer. “It’s a huge relief,” Pickering said, “And it’s exciting that another entity sees enough value in what I’ve built in the last four years.”
By LAURA LOREK
Founder of Silicon Hills News
IAG Cargo’s team: (LtoR) Camilo Garcia, head of Global Key Accounts, David Shepherd, president of commercial business and Joseph LeBeau, vice president of commercial, the Americas.
And it might be flying in salmon, automotive and other parts into Austin Bergstrom International Airport from its hub at the Heathrow Airport.
“A market like this is great because it’s so diversified,” said David Shepherd, head of commercial business for IAG Cargo.
IAG Cargo wants to make sure Austin companies can deliver products worldwide as fast as possible, Shepherd said. They are particularly targeting the growing high-tech industry in the region.
Shepherd spoke at a press conference Friday morning at the Austin Chamber of Commerce offices in downtown Austin. Four British journalists flew to Austin to learn more about the company’s operations here. They were going to go on a tour of the city and visit Freescale Semiconductor and then have a special dinner at Salt Lick.
IAG Cargo formed in 2011, after the merger of British Airways with Iberia. The company has $1.5 billion in revenue annually and is the seventh largest cargo company in the world. It has more than 2,700 employees worldwide.
“We’re not the biggest but we believe we’re the best,” Shepherd said.
In March, IAG Cargo began offering services out of Austin when British Airlines launched its direct flights between Austin and London. The company has 380 aircraft and connects to 350 destinations worldwide through its hubs at Heathrow and Madrid.
It’s not just geeks flying from Tech City London to Austin’s bustling startup scene. It’s a lot of cargo too.
IAG Cargo transports general cargo, live animals; secure products, gold, airmail, dangerous goods, human remains and courier services.
IAG Cargo has 20 gateways in the U.S. and operates more than 45 flights per day. It already operates out of Dallas and Houston and Austin was the next logical expansion, said Joseph LeBeau, IAG Cargo’s vice president of commercial, the Americas.
“It’s been in the works for about two years,” he said.
“Texas has been very kind to IAG Cargo,” he said. “Between Dallas and Houston, for as long as I can remember, we have been 100 percent full every day.’’
The cargo flights on the Austin to London route were 88 percent full after just three weeks and now operate at 90 percent to 95 percent capacity, LeBeau said.
“It’s not all Austin. It’s being fed into by San Antonio and Laredo,” he said. “This route eases the capacity crunch at Houston and Dallas.’’
Austin is shipping high tech products from the “Silicon Hills” as well as aviation and oilfield spare parts and equipment and pharmaceuticals.
IAG Cargo has a fully functional warehouse at the Austin airport and is expected to get its constant climate accreditation shortly for its refrigerated cargo. Its transatlantic service began daily service as of May 1st and is serviced by a Boeing 787 Dreamliner that can transport up to 44,000 pounds of cargo per night.
Joseph LeBeau providing an overview of IAG Cargo’s Austin and North American operations.
Photo licensed from iStock Photos.
The life sciences sector has 206 companies, 6,052 employees and generates more than $1 billion in economic activity to the region.
The five sectors that make up the industry include pharmaceutical manufacturing, research and development in physical, engineering and life sciences, research and development in biotechnology, surgical appliance and supplies manufacturing and biological product manufacturing.
The industry also pays high wages with the average salary in the life sciences sector of $75,209, compared to $49,557 for the regional economy as a whole.
The sector did suffer a job loss following the dot com bust and during the financial meltdown in mid-2000. But it’s been on the mend and with the groundbreaking of the Dell Medical School at the University of Texas at Austin, the industry is expected to expand even more.
Austin’s life sciences industry is still much smaller than San Antonio’s bioscience and healthcare industry. BioMedSA reported that more than one in every six jobs in San Antonio are in that industry which had an overall economic impact of more than $29 billion in 2011.
Research organizations, private sector companies and the U.S. military drive the bioscience industry growth, according to BioMedSA. The University of Texas Health Science Center at San Antonio is one of the main contributors to the industry along with the University of Texas at San Antonio, the Texas Biomedical Research Institute, Southwest Research Institute, South texas Accelerated Research Therapeutics and the National Trauma Institute.
Are you a SAS startup or company? Then there’s a conference coming to Austin you may be interested in. And last night at Startup Grind San Antonio I announced that you can get a free ticket – but only for a handful of people so act quick. (Full disclosure the conference is an advertiser on Silicon Hills News)
Softletter’s SaaS and Cloud Applications University Returns to Austin, TX, May 13-15
As a special promo, we have provided San Antonio Startup community 10 comp tickets to attend SaaS University. These tickets are available on first come, first served basis. They allow you to enable SaaS and Cloud Apps University as full attendees and receive all conference takeaways.
To attend on a complimentary basis, please register here.
And use this coupon: STARTUPGRINDGUESTS
Missed your chance to attend for free? If you’re under $1 million in revenue, you can attend as a SaaS University and Cloud Apps scholar for $299 as a full attendee and receive all takeaways and attend all sessions with this coupon: SILICONHILLSSCHOLAR.
Questions? Please contact Rick Chapman at rickchapman@softletter.com or call directly at 860.388.7549.
By LAURA LOREK
Founder of Silicon Hills News
Immigration laws haven’t kept pace with the digital economy, said Burnie Burns, founder of Austin-based Rooster Teeth.
Burns spoke on a panel of entrepreneurs promoting immigration reform Tuesday night at Techstars’ offices in downtown Austin. Erika Sumner, co-founder of Social Good TV, moderated the event.
The other panelists included Anurag Kumar, CEO of iTexico, a web and mobile app development company and Kristel Viidek and Marko Kruustuk, co-founders of Testlio, a mobile app testing service.
FWD.us and Partnership for a New American Economy are hosting events in nine cities in two weeks with the goal of accelerating immigration reform.
The Austin event attracted more than 50 people for a two-hour discussion featuring two panels.
The entrepreneurs took to the stage first. In 2004, Burns founded Rooster Teeth, which has the fourth most watched YouTube channel in the world with 5 billion views. He discussed his problems getting visas for immigrants to work for his company.
Burns ran into a lot of trouble when he tried to bring, Gavin Free, 18, from the United Kingdom to work for him.
Free is an expert on slow motion video and he’s a viral Internet hit, Burns said. Free created a video of him jumping on a six-foot water balloon in his backyard in slow motion, which has more than 50 million views on YouTube.
But the U.S. government issues only 85,000 H-1B high-skilled worker visas each year. And the annual quota is met every year within the first week of April; five business days after the filing period opens.
“We had to go through all these processes to get him to qualify for a visa,” Burns said. Free’s age and educational level proved to be big barriers to overcome to qualify for a visa for workers of extraordinary ability, Burns said. He also had to have several letters written to immigration officials on his behalf.
In 2010, Rooster Teeth had to educate the U.S. Department of Labor about what YouTube was and why it was an important platform, Burns said. And then they had to prove why Free was an important extraordinary talent in this new industry. Rooster Teeth can employ contractors overseas in the U.K. and pay them to upload videos to from there, Burns said. But the U.S. doesn’t benefit from Rooster Teeth sending money to them aboard.
“My channel can be global but my company really can’t,” Burns said.
Immigration reform needs to address emerging technologies and ways to get talent to the U.S. to fuel those industries, Burns said.
In the Austin-Round Rock-San Marcos metro area, companies filed requests for 3,087 H-1B visas in 2010-2011, according to FWD.us. They paid a minimum of $1,575 for each H-1B application.
The founders of Testlio, Viidik and Kruustuk from Estonia might have to leave the country to grow their startup. The two launched their company in London and moved to Austin to participate in the Techstars program. They would like to stay here but they are having trouble getting visas. They may have to move their company back to London.
Another panelist, Kumar, founder of iTexico, immigrated to the United States at the age of 21 with no money, no family and no friends. Thanks to the immigration policy of the 1980s, he was able to get his green card and stay and start his first company when he was 25.
“I wonder what if the green card processing took six years, seven years or ten years like it does now where would I be right now? I probably would have had to do something else,” Kumar said.
Last week, the government of Mexico honored his company, iTexico, an Austin-based mobile and Web development company, with the 2014 National Entrepreneurship Award in the small business category.
“Talent is everything,” Kumar said.
And U.S. companies are in a global competition to attract the best talent to fuel growth in their businesses and the economy.
Yet a mismatch between job openings in the Science, Technology, Engineering and Math fields and the current workforce in Austin exists, said Michelle Skelding, vice president of technology for the Austin Chamber of Commerce.
Skelding spoke on a second panel of experts which included John Holmes, vice president of legal at Freescale Semiconductor, Peter French, president of Café Commerce in San Antonio and Ramey Ko, attorney with Jung Ko PLLC.
Currently Austin has 8,000 job openings, as of March 2014, for computer science and math jobs, Skelding said. And there are 29,000 net job openings beyond that, she said. Austin has an unemployment rate of 4.5 percent right now. So there’s a gap in available talent and jobs.
Austin universities graduate 3,000 people in the STEM fields every year, so there’s a huge need and gap in the talent pool, Skelding said.
“We need to look internationally to fill those jobs and we’re not going to displace anyone in the process,” Skelding said.
For every H1-B visa filled there’s a positive correlation with job creation with 7.5 jobs created, Skelding said.
Freescale Semiconductor has 4,500 employees in Austin and hired 115 people in Austin last year.
“Eighty percent of the folks we are hiring require immigration assistance,” Holmes said.
Freescale currently has 250 employees on H1-B visas, he said.
“The wait for those folks, I think for us is four to eight years,” Holmes said.
The worst day for the UPS man in Austin isn’t Christmas but the H1-B visa deadline day, Holmes said. In the “bizarre lottery system” for H1-B Visas this year, Freescale got 60 H1-B Visas out of the 120 applications, he said.
“Freescale would like to see the H1-B visa cap raised dramatically or eliminated,” Holmes said.
Freescale also supports the right to work initiative which allows a graduate of an accredited U.S. university with a master’s degree or higher in a STEM field to automatically get a visa.
Small businesses and startups aren’t participating in the H1-B Visa process, said Peter French, president of Café Commerce in San Antonio. The process needs to be fixed, he said.
Some of the programs to obtain visas for immigrants are underutilized, French said. To find a solution, businesses need to think more creatively about how to keep immigrants in the U.S. working, French said. Research universities have an exemption, under the American Competitiveness Act for the 21st Century, for the H1-B cap, he said.
“We can do it with some of the tools we already have,” French said.
“We’re going to find a way,” he said. “The entrepreneurs are going to figure it out.”
Immigration reform legislation has been stalled in Congress, but the issue should be addressed again this fall, said Ko. The tech community from July to November should send letters, make calls and email Congress members in favor of immigration reform, he said.
The Partnership for a New American Economy is asking people to visit pnae.us/eletter to pledge support.
BY LAURA LOREK
Founder of Silicon Hills News
Greg Fenves, Provost of UT, Bob Metcalfe, professor of Innovation at UT, Joshua Baer, founder of Capital Factory and Longhorn Startup Labs instructor, Bobby Epstein, founder of COTA and Ben Dyer, EIR at UT and instructor at Longhorn Startup Lab.
“You might pivot a couple of times,” he said.
Epstein gave that advice at Longhorn Startup Lab’s Demo Day Thursday night to hundreds of people at the Lady Bird Johnson Auditorium. Bob Metcalfe, professor of innovation at UT, interviewed Epstein, who runs COTA, a Formula One racetrack and one of the largest startups in the Austin area. He quizzed Epstein about his entrepreneurial background and asked him what advice he would give to aspiring student entrepreneurs.
“The best advice you can give anyone as an entrepreneur is to be prepared to work 70 hours to 80 hours a week,” Epstein said.
It’s ok to risk everything, Epstein said. “But don’t risk more than that.”
Too many people start undercapitalized businesses.
“It’s great to be ambitious and start a business but don’t risk everything you have to start something that’s undercapitalized because that’s potentially a formula for failure,” Epstein said. “Don’t think that when you get to that next point the next dollar is going to be there. I think that’s really important before you spend it all.”
Epstein, a UT graduate, was born in New Jersey, but grew up in Dallas and spent time in Indianapolis. His father was an engineer, inventor, and entrepreneur and worked at Bell Labs.
He didn’t have a lemonade stand but he did host a carnival in his backyard. And he ran a DJ business in high school.
Epstein attended UT in 1983 and graduated with a degree in Liberal Arts. When Metcalfe asked him if he knew Michael Dell, who founded his company at UT in 1984, Epstein said no.
“He was a year ahead of you,” Metcalfe said.
“In many ways,” Epstein said.
Epstein didn’t start a company in college. But he did drop out of medical school. He ended up working on Wall Street on a bond-trading floor doing research. He created predictive and regression models on trading patterns.
“It was supposed to be a summer job,” Epstein said. He liked the job and he worked a lot of hours. He decided not to go to medical school and he continued working in the bond trading industry. He ended up working on mortgage derivatives and in 1992 he founded a broker dealer. He sold that business with 100 employees in 1995. He founded a new business, Prophet Capital Asset Management, and moved it to Austin in 1997 and has had 19 years of steady growth. His hedge funds manage more than $2 billion, according to a Forbes article.
“So this business was so successful that you were able to consider founding and financing COTA,” Metcalfe asked.
“Yes,” Epstein said.
“Can you tell us how that happened?” Metcalfe asked.
He met a guy who wanted to bring Formula One to Austin and Epstein thought that was a terrible idea. But he had a piece of property he bought in 2005 in Southeast Travis County that Epstein planned for houses. Instead, he pivoted. He turned what would have been a residential development into a racetrack. Today, that piece of property is about 20 percent of the land that COTA sits on. The 3.4 mile racetrack is on a 350 acre development. It also includes an amphitheater, which can accommodate up to 14,000 people.
The Circuit of the Americas got its primary funding from San Antonio Billionaire Billy Joe “Red” McCombs along with Epstein’s contributions. The state of Texas, through its Major Events Trust Fund, also pledged millions to the project.
Since COTA has been in business for a year and a half, it has had an economic impact of $1 billion, Epstein said. It has also raised the global profile of Austin, he said. And it has created lots of jobs, he said. COTA has 100 year-round employees and thousands that come in to work for events. The project costs $400 million in construction, the two Formula 1 races have generated $250 million to $300 million each in economic impact and the track has hosted more than 1.4 million people, Epstein said. And 250,000 have come in from outside Texas.
“A billion dollars in revenue in a year and half. Doesn’t that make you the biggest startup in Austin?” Metcalfe asked.
“It’s not all our revenue,” Epstein said. “That’s the only thing. We have two revenue streams. One revenue stream that goes to everyone else and one revenue stream that goes to COTA.”
“Let’s call it gross revenue,” Metcalfe said.
COTA does encourage people to come in from out of state and spend money, Epstein said.
“We get the people with the biggest pockets and have them come here and empty them out…if they have a great time they’ll come back,” Epstein said.
COTA isn’t yet profitable but it has helped the local economy tremendously, he said.
The racetrack is betting on other events such as the X-Games and concerts at its amphitheater, which will host a Jimmy Buffet concert next month, to push it into profitability.
Metcalfe also asked Epstein about all the technology used in the cars and said that’s one more reason COTA is a high tech startup. The criteria for a fast car, according to a Ferrari car designer, are a fast engine, aerodynamic design and high-tech wheels, Metcalfe said. He didn’t mention the driver, he said. He asked if there would a driverless robotic car race or an electric car race.
Epstein said he didn’t think the drivers were expendable. They have tested driverless cars on the track though, he said. And they have raced electric and solar vehicles there also.
