BY L.A. LOREK
Founder of Silicon Hills News
The buzz surrounding the Initial Public Offering of Facebook and the billions Mark Zuckerberg will receive might make people think that running a startup leads to fame, fortune and fun.
But several entrepreneurs offered up a different view at the Texas Venture Labs “Been There, Done That” panel last week at the University of Texas’ McCombs School of Business. The panel was made up of alumni of the Texas Venture Labs Investment Competition. They also served as judges for the finals competition.
“Expect extreme highs and extreme lows,” said Robert Reeves, director of the IT and Wireless Portfolio at the Austin Technology Incubator. He cofounded Phurnace Software with Daniel Nelson. They won the Texas Venture Labs Competition in 2006. They went on to raise $5 million in venture capital from S3 Ventures and in 2010 sold Phurnace Software to BMC Software.
“You have got to have a certain intestinal fortitude that you don’t have yet, but you’ll get there,” Reeves told the audience of about 100.
Jay Manickam, UT class of 2004, started UShip with two other UT graduate students: Matt Chasen and Shawn Bose. They entered the TVL Competition during its second year and they finished in last place.
Since graduating from UT, Manickam and his cofounders have raised a little more than $7.5 million in two rounds of funding and now have 100 employees at UShip. The company also recently launched a reality TV show on A&E called “Shipping Wars.”
“It’s not where you finish in this competition, it’s the fact that you’ve done it,” said Rob Adams, director of the TVL Investment Competition. “I was an investor at the time and I turned the deal down.”
“In the first stages, things are very, very emotional,” said Hassan Johnson, who created ThaTrunk while at UT as a platform for hip-hop artists. “It’s a rollercoaster, just enjoy.”
ThaTrunk has since evolved into a mobile proximity sharing app for creative content. It was one of TVL’s first portfolio companies. Last summer, Hassan participated in DreamIt Ventures accelerator in Philadelphia and has raised six figures in angel investments.
“Now we’re back on the fundraising trail,” Johnson said.
Angel networks, in general, play a vital role in any entrepreneurial venture, said Jeff Harbach, he serves as executive director of the Central Texas Angel Network. He also owns several small businesses including two 7-Eleven convenience stores. He received his MBA from UT where he co-founded Texas Venture Labs.
He advised entrepreneurs to start off going to the local angel network, accelerators and incubators.
“Start getting feedback as soon as you can,” Harbach said. “Be active in your ecosystem.”
A big mistake entrepreneurs make when talking to potential funders is saying they need money right off the bat, Harbach said.
“That’s the wrong way to go about it,” Harbach said. “If you’re looking for money, ask for advice. If you’re looking for advice, ask for money.”
Texas Venture Labs works closely with the Central Texas Angel Network, Adams said.
“If you look at how deals get funded in today’s environment it’s usually an angel type investment,” he said.
One of the biggest highs as a new entrepreneur comes from getting a customer’s first payment, said Sangram Kadam, who received his UT MBA in 2010 and co-founded Ordoro, inventory management software for online retailers.
But for every customer that says yes, 100 will say no, he said.
Ordoro received a $600,000 angel investment late last year.
“Since then we’ve been growing fast and furious,” Kadam said.
But as a startup founder, he’s gone without a salary and he has eaten many meals consisting of raman noodles.
Aaron Lyons, who finished his MBA in 2011, has launched a restaurant concept called Urban Dish. He’s raised $600,000 toward a $700,000 goal to fund his company.
To launch his venture, Lyons sold his car.
“I got real familiar with the bus schedule,” he said.
He also maxed out a lot of credit cards.
“Just in a day, you hit huge highs and huge lows,” Lyons said. “I’ve gotten used to something bad happening tomorrow, “ if he gets a huge check from a funder or some other good news.
When asked when is the right time to start a company, Johnson said “right after school.” That’s when you’re used to being poor. If you go work for a big company, you might get used to the perks and nice environment, he said.
Reeves said “another good time to start it is after you get fired.” He referred to unemployment checks as startup capital.
Reeves and Manickam also said it really helps to have a technical founder.
“We didn’t have one,” Manickam said. “Nowadays it’s almost a prerequisite.”
“You’ve got to have a geek on staff,” Reeves said. “No one is gong to fund anything with just a Powerpoint presentation.”
Make sure to get family support on your venture, Lyons said.
“If you do have someone else in your life, it’s not just you making the decisions,” he said. “It can add additional strain and pressure. When you have a family to support, you just have that much more on your shoulders.”
But families can also support your venture.
Reeves said his wife “called me on my bullshit.” She supported him, but she also kept him grounded.
“It’s important not to have just a good coach but an ass kicker,” Reeves said.
When seeking investment capital, always check out the profile of the investor to find out what they back, Reeves said.
“Meet the investors on a regular basis,” Kadam said.
Also, share your idea with people who will listen, Harbach said. “Get their feedback.”
The idea is all about the execution, he said. And feedback is essential, he said. The Central Texas Angel Network has office hours on Wednesday from 9 to 11 a.m. at Mozart’s coffeehouse.
Also, things take longer than you expect, Reeves said.
“Much, much longer,” he said.
Never come back from having coffee with a potential investor and tell your significant other you’re getting funding, he said. He made the mistake of doing that.
“Keep your perspective. This is one of many meetings. Tell everyone about your venture,” Manickham said. “Live it. Be proud of what you’re doing. You never know who will be able to help you.”
Category: Austin (Page 305 of 318)
The startup eyeQ won the 2012 Texas Venture Labs Investment Competition Finals last night at the University of Texas’s McCombs School of Business.
The founders, Michael Garel, CEO, and Harish Jayakumar, CTO, beat 15 other teams during the semifinals held earlier in February and three teams in the finals. The students will receive their MBAs this year. As winner of the competition, eyeQ receives a one-year membership and an office in the Austin Technology Incubator. eyeQ will also go on to compete in the 2012 Global Venture Labs Investment Competition that will be held in Austin in early May.
eyeQ's founders Michael Garel and Harish Jayakumar pitch their company
eyeQ has a system to monitor consumer purchasing behavior which includes in-store cameras, analytical software and a smart screen. The system is designed to encourage consumers to buy products in the store instead of going online to make a purchase.
Every month, people use Amazon’s smart phone price scanning app to do about 20 million product searches, Garel said. That means the consumers go to the store to evaluate the product they want to buy and then they scan it with their phones and buy it online.
“Something needs to be done to prevent these online retailers from hijacking sales from brick and mortar stores,” Garel said.
A $17 billion market exists for analyzing and influencing consumer behavior, he said.
“Retail stores have a compelling need to understand and influence consumer purchasing behavior and provide an “online” experience in store,” Garel said.
That’s where eyeQ comes in. It monitors consumer purchase behavior at the shelf level with eyeQ’s dedicated camera, software and server. The system can then offer the consumer product information on a smart screen at the shelf and display a special price if the consumer buys in the next 60 minutes.
eyeQ has entered into a beta test at Golfsmith’s stores. It then plans to approach Home Depot, Costco Wholesale and other retailers like Target, Lowe’s and Best Buy
eyeQ is seeking to raise $450,000 to finish development and do the initial deployment of its system this year. Next year, eyeQ plans to raise another $850,000 to expand to 30 stores. Its goal is to be in 220 stores by 2014. The founders have already invested $44,000 in the project.
eyeQ competed against Embarkly, Athena Laboratories and Simple Invest.
Rob Adams, director of the Venture Labs Investment Competition, announcing eyeQ as the winner
“The rest of the competitors were too evenly matched,” he said.
One of the competitors was Embarkly, a pet boarding service, seeking to become the “Expedia” of the $2 billion industry.The service helps pet owners make reservations at pet boarding facilities, said Travis Skelly, one of its founders. Nicole Dimetman is the cofounder and CEO.
“The problem is that finding a place to board my pet sucks,” Skelly said. “It’s time consuming, inconvenient and just dropping a dog off at some random location is not ideal.”
The Embarkly online marketplace allows users to log on and make a reservation at a boarding facility with little hassle, Skelly said.
Skelly estimates the company could achieve potential annual revenue of $72.5 million with a 10 percent market stake. It faces competition from Findpetcare.com, Petbookings.com, Dogboarding.com and others. The company makes money by generating leads for pet boarding facilities.
Embarkly is seeking $400,000 financing.
Simple Invest showed off its cloud-based automated platform that enables investors to diversify and rebalance their portfolio and improve their long-term investment results.
Texas Longhorn Network interviews Rohit Sharma, CEO of Simple Invest
His product is aimed at the 96 million people in the U.S. with portfolios of $100,000 to $1 million.
Those investors have to chose among 7581 mutual funds and more than 4,500 broker dealers.
“The market is large,” Sharma said. “There is a genuine pain point.”
Next year, Simple Invest launches with five beta users. It plans to expand to 187,500 users by 2021 and revenue of $34 million.
Its competitors include spreadsheets, financial advisors, product providers and financial software.
Sharma is seeking $550,000 preferred equity for 17 percent stake in Simple Invest.
Athena Laboratories pitched its patented laser treatment for cellulite called FemtoSmooth.
FemtoSmooth is a pain-free, effective, cellulite removal involving a cool laser technology, which is high intensity laser treatment for a very short duration. It effectively treats the cause of cellulite and it’s minimally invasive. It only requires one treatment, which takes 20 to 30 minutes.
Athena Laboratories had the largest management team of all the competitors. The team is comprised of Albert Alvarez, Alex Garcia, Dr. Wendell Craig Johnson, Wayne P. Whitmore, Ravine Woods and Yewen (Wendy) Wu.
The cellulite treatment industry is a $6 billion market in the U.S. with 85 percent of women and 25 percent of men affected by cellulite, said Woods.
“There’s a market demand for an effective treatment for cellulite,” Woods said. “Over the last 10 years – cosmetic minimally invasive procedures are up 110 percent and cellulite treatments are up 30 percent.’’
So far, FemtoSmooth’s inventors have invested $1.4 million and they have 14 patents on the technology. The team is seeking another $7.5 million to take the product to market.
The company projects $45 million in revenue by 2017.
Last month, Austin-based Famigo conducted a study and analyzed information from 1000 random usage samples from Famigo Sandbox (its free Android app) and uncovered some surprising insights into how families are using mobile media, according to Sarah Combs, spokeswoman with Famigo.
Famigo compiled the infographic below from the findings of its study.
“A few of the key takeaways are that: 88% of the apps that families download and use are free, revealing a reluctance to pay for content. Casual and puzzle games are the most played in terms of app category, followed closely by education apps. Angry Birds, the most well known free casual game, remains the most popular among families,” according to Combs.
By all accounts, Rackspace Hosting is a fun place to work.
It ends up on lots of lists for best places to work including this one. It’s San Antonio’s largest high-tech employer and has an office in Austin and San Francisco.
But who loves their job enough to want to get married there? A couple of “Rackers” – the company name for its employees. Last week, Nathan and Meghan Spells tied the knot at Rackspace’s headquarters, which is dubbed “The Castle.”
On that same day, Friday, Feb. 10, Racker David Sims took his camera around the company and produced this video, which gives a good insight into what it’s like to work at Rackspace.
Disclosure: Rackspace is a sponsor of Silicon Hills News
By Luke Carrière
Special contributor to Silicon Hills News
Ever wanted to start a company but didn’t know the exact market or have the exact expertise? 3 Day Startup is teaming up with HomeAway, a recently IPO-ed Austin startup, to challenge, inspire, and help students and recent graduates to create companies in the travel space. The goal is to meet co-founders, work with great mentors, and build momentum for your new tech startup. We would like to invite you to apply to this exciting new event, which will be held the weekend of April 13th to April 15th. Please apply as soon as possible as we have rolling admissions.
We’ll combine the regular 3DS format – sixty hours of little sleep, high intensity doing, including market validation, prototyping, business model generation, etc – with HomeAway’s unique insights in the travel industry to help you create new companies. HomeAway has generously agreed to donate access to their API, their top executives, and has agreed to host free boot camps on the travel space in general and specifically, the $85 billion vacation rental market. The experiment here is simple: what happens when you combine 40 brilliant participants, 3DS’ proven methods for company creation, and the insights and expertise of a $2 billion company? As always, you, the participants will own the company. (That’s right, HomeAway isn’t taking any equity in companies that come out of the weekend, although they have acquired a lot of companies (16) in the past few years.)
Accepted participants will be mentored by some of HomeAway’s finest employees, including Chief Technology Officer Ross Buhrdorf. Over a dozen rockstars from HomeAway’s engineering, marketing, and sales departments will also be on hand at the event to help you build your companies. If you’re interested in participating in this unique new event, please click here to apply.
This is a sponsored post.
Photo: PRWeb / Copyright: Stadler Studio Do not reproduce without permission.
In the 2012 World Tech M&A Report, Carter noted that “SaaS continues to be the hottest segment of the application software sector. Growth rates of SaaS are over twice that of on-premise solutions.”
SaaS University provides the hard data and practical execution strategies SaaS and cloud applications companies need in order to take advantage of this growth. The event includes 28 separate sessions, including SaaS sales and marketing, finances and transition to SaaS. Attendees also receive a complimentary subscription to the monthly Softletter publication, which provides valuable benchmarks and proprietary industry data.
Ward Carter is Chairman of the Corum Group, the leading seller of privately held software and related technology companies. Corum has done landmark SaaS merger and other transactions with many of the leaders in the SaaS field including Salesforce.com and Concur. Ward has personally been at the vanguard of the SaaS revolution, running many of the leading valuation and negotiation forums. He was also a contributor for nearly five years with Softletter and other leading software industry pubications as an expert on topics related to software and technology M&A.
The half-day “Selling Up, Selling Out” workshop helps software entrepreneurs to prepare, position, research, value, negotiate and execute due diligence for maximum price and structure. It is the most attended technology M&A event ever, with participants having achieved over $1 trillion in transaction value.
To register for this event, please visit the SaaS University website.
About Ward Carter:
Mr. Carter’s technology background includes field and management positions with Burroughs Corporation (later Unisys). Later, as vice president of a Wall Street investment firm and as a principal in a regional venture capital firm, Mr. Carter raised funds for ventures in computer hardware, software, and biotech. As an executive for a Seattle-based archival storage software company he attracted venture capital and assisted in the eventual acquisition of the company. As the president of InfoMatrix, and later of Discovery Sales + Marketing, Mr. Carter provided strategic consulting support to emerging software companies.
In 1997 Mr. Carter joined Corum Group where he has successfully managed numerous software mergers & acquisitions worldwide, and was appointed president in 2006 and Chairman in 2010. He graduated with Honors from Seattle University with a BA in Business.
About Corum Group:
The global leader in software M&A, Corum Group has specialized in serving software and technology companies for over 25 years from its network of offices throughout North America and Europe. The company has created more than 6 billion in wealth for its clients while completing over 220 software M&A transactions. With an experienced team of senior M&A advisors backed by top industry valuation and research analysts and the industry’s most comprehensive database of potential buyers and investors, Corum offers unparalleled support in achieving its clients’ M&A objectives.
About SaaS University
For four years Softletter’s SaaS University has provided actionable SaaS benchmarks, metrics, and hard data not available from any other source. The 2012 event showcases SaaS Communities for Growth and Profitability as well as Private Meetings with VC and M&A Experts.
The company that placed this press release with PRWeb is responsible for its content. It is not edited by SiliconHillsNews.com
If you would like to attend this conference for free, Silicon Hills News has one ticket to giveaway, please contact Silicon Hills News to put your name in the hat. We’ll draw one winner at the end of the week.
By SUSAN LAHEY
Special contributor to Silicon Hills News
WP Engine co-founder Jason Cohen knew there was a market for what he wanted to build. Because it was exactly what he needed.
The founder of four companies and a dedicated blogger, Cohen often made the front page of Hacker News. And every time he did, his site went down. Having a sudden surge of popularity and traffic, he realized, doesn’t do you a lot of good if it causes your site to crash until the traffic goes away.
It was easy to assume that, with 15 percent of all websites and 22 percent of new websites in WordPress according to WP statistics, others were having the same issues. WordPress is a free and open source blogging tool and one of the web’s most popular content management systems.
“I needed to know what are the root pain points?” Cohen said. “Volume is one. Speed is another. It can often take three or four seconds for a page to come up. What about security? What about support? What about testing? Everything is live right now. Testing is where I can work it out and see it.”
Cohen talked to 50 people before starting the business, asking them: “Would you pay for this? What would you pay for this?” Once 30 people committed to spending $50 a month, he started to build his hosting company for the middle market, people with a lot of traffic “who aren’t CNN.” WP Engine launched in July of 2010. Cohen founded the company with Aaron Brazell, who stepped down last October to do consulting work.
When Matt Halfhill heard about Cohen’s infant company that hosted high volume WordPress sites, he said what so many of WPEngine’s customers say: “That’s exactly what I need!”
“That was my biggest problem ever in business,” Halfhill said. “So few hosts understand the nuts and bolts of how WordPress works. (WPEngine) breaks it down to the point where there are next to no inefficiencies.”
At the time he joined WP Engine, in 2010, Halfhill’s company NiceKicks had more than a million visitors per month. The site, which previews and reviews sneakers, was paying Rackspace $6,000 to $7,000 a month for the bandwidth to handle all its traffic. With WPEngine, it pays closer to $1,000. And its monthly traffic has more than doubled.
Rackspace spokesman Rob La Gesse said “While many providers choose to compete on price, Rackspace differentiates itself on service, which we call Fanatical Support®. With that being said, WPEngine and Rackspace have significantly different business models, products and pricing structures.”
Cohen has always been something of a prodigy. He was fresh out of college with his computer science degree when he was discovered by Jim Woodhill, a famous psychologist and venture capitalist who was on an email list of “random smart people” with Cohen’s dad.
“He is the kind of guy who doesn’t care as much about the idea as the team. He decides ‘I just need to collect certain kinds of people and I want you,’” Cohen said. The company Cohen started, however, didn’t create products but performed services. And though he was bringing in $1 million a year, the venture capital firm lost interest. Soon afterward, he connected with Gerry Cullen, a serial entrepreneur.
“He was young,” Cullen says of Cohen. “You want to know how young he was? He was so young I had to rent cars for him.”
The two created Sheer Genius Software.
“He was the genius software guy and I was the CEO lead developer,” Cullen said. “I was the leg guy and he was the brains….Jason was very fast on his feet. People asked him questions he just answered them, kaboom. I’d lift the flagstone up and all the little snakes would run and we’d get them. It was great happy times.”
For one order, the $750,000 big order, Cullen said, they were brought to London to develop a program for a government office. Cohen wound up having to jerry-rig a modem using ‘doorbell’ wire running from the building’s bathroom. And, because the monitors were so small and the offices so bright it was difficult to see the screens, Cullen created a little hut of foam board to make it dark enough.
“It was like we were showing weird porn in the government offices and we didn’t want anybody to see.”
They got the order.
After Sheer Genius, they started IT WatchDogs, which manufactured climate monitoring devices for server facilities. During that time, Cohen said, Cullen taught him all about the business end of startups. He taught him, for example, about the Stanford Test, a test he made up.
The Stanford Test is this: If you make something, can you give it away for free? Will people want it? Because if they won’t, there’s not much point in charging for it.”
IT WatchDogs demonstrated the Stanford principal. The first climate control monitor plugged directly into the servers. Server companies were horrified.
“They’re like ‘You’re not sticking that thing in my server!’” Cohen recalls. It failed the Stanford Test. Then they created a model that only plugs into the wall outlet and never touches the server. That model people wanted. They’d even pay for it.
Cohen and Cullen wound up selling IT WatchDogs. But about the same time they had started it, Cohen had, almost inadvertently, started Smart Bear Inc. He created a site online whereby programmers could submit code they were working on for peer review. It was an idea he was tinkering with that took off. He ran it until 2009 when he got an offer to buy the company that would give him enough money he never had to work again. After checking with some of his advisors—17 to be exact—he took it.
He took a sabbatical to stay home with his new baby. He began blogging almost obsessively. And then the idea for WPEngine arose.
He and Josh Baer, founder of Capital Factory and a serial entrepreneur in Austin who runs Other Inbox, put in a little bit of seed money and within seven months, the company was profitable. They hired two people and six months later it was profitable again. But all these baby steps were time consuming. So Cohen sought funding and wound up with $1.2 million last November. Silverton Partners from Austin led the round, which included prominent angels investors like Eric Ries, author of the Lean Startup, Loic Le Meur, Dharmesh Shah, Jeremy Benken, Bill Boebel, Rob Walling and others. Automattic, the company behind WordPress.com, also participated with a strategic investment.
WP Engine now has an install base of more than 30,000 personal and professional WordPress blogs. It recently dropped its base hosting price from $50 a month to $29. And it has plenty of room to grow. More than 71 million WordPress sites exist worldwide and WordPress.com hosts about half of them.
WP Engine is always tweaking.
Halfhill said the company is super proactive. They’ll call him to say “You’re definitely sucking up a lot of resources, we might want to reconfigure. There are no charges for that. It just feels like they’re taking care of me as a customer. It’s just like breathing.”
Cohen, though, is a startup guy. He’s constantly percolating with other ideas. Lately he’s been really focused on the idea of honesty, how honesty should be the bedrock of businesses. He might do something with that at some point.
“People asked me, ‘When you had enough money to live off forever, why do a startup?’” Cohen said. “It’s just in you…some people have to do companies.”
Disclosure: Rackspace is a sponsor of Silicon Hills News
By Luke Carrière
Special contributor to Silicon Hills News
The Austin Forum on Science, Technology and Society hosted a free event Tuesday evening to help nonprofit organizations get the most out of South by Southwest Interactive 2012.
The event attracted non-profit professionals, start-up founders, and University of Texas students. Several people tweeted throughout the evening using the hashtag #austinforum.
To kick things off, Hugh Forrest, director of the SXSW Interactive Festival showed a video by SXSWi, which is an example of how nonprofits can use technology to engage their followers. He advised nonprofits to create dynamic videos, rather than videos featuring their executive director speaking into the camera for 12 minutes, which would not communicate their mission as well. He also invited the audience to attend a free event on March 11: The 2012 Dewey Winburne Community Service Award Ceremony, which honors one of the co-founders of SXSWi, who “believed that the new media revolution could help level the playing field between the haves and the have-nots in our society.”
Next, Heidi Schultz Adams, senior director of engagement at LIVESTRONG, pointed to the power of social media in managing communications with seven time Tour de France Champion and Philanthropist Lance Armstrong’s 3 million followers. Lynn Freehill tweeted Adam’s advice on how to handle the debates that surface on social platforms, “Leave in negative comments, leave in positive comments–let the conversation unfold.” The bottom line about using social media was summarized by Ronald McDonald House Charities Austin, “Social media costs you, but it can also save money for a nonprofit. Be smart about it.” Yes, you will need to dedicate time and resources to ensure you do it right. Giving the task to an unpaid intern is not the way to manage and cultivate constituent relationships effectively.
David J. Neff, founder of Lights. Camera. Help said his nonprofit, like many in Austin, is constantly exploring ways to generate revenue. He said it can often be difficult for a nonprofit to reach the point where they can afford to hire their first full time employee. In contrast, startups have it easier than nonprofits because of the huge upside of potential profit they offer investors and employees. SXSWi can be a resource for nonprofits to stay on top of emerging technology and tools, he said. He recalled SXSW 2005, when he learned about the growing field of online video. That is now central to his nonprofit, which connects nonprofits with videographers to help them convey their mission in a video form. “SXSW Interactive is where I go to find out what’s going to be hot in two years,” Neff said.
Overall, the take-away from the event was that nonprofit leaders should stay aware of the powerful social media tools being developed every year. If SXSW Interactive is not within your budget, there are many free events to attend and affordable options like SXSWedu and SXSWeco.
Sara Peralta, a student at Texas State University, covering all things SXSW at SXSTXSTATE. Filed this Storify post on the event.
By L.A. LOREK
Founder of SiliconHillsNews.com
GameSalad Founders Dan Treiman (seated), Tan Tran (center) and Michael Agustin
Fashioned after Angry Birds, the game features a slingshot to fling caricatures of protestor Anna Hazare and others at Indian politicians. The game took just three days to make using the GameSalad creation platform.
“Angry Anna speaks to games as communications tools,” said Michael Agustin, co-founder of Austin-based GameSalad.
In its first week, people played the game more than 250,000 times. The viral game, created on HTML5, the web’s publishing language, allowed it to reach an audience quickly. Players could log on to the game using their computers without downloading additional software or plug-ins. They could also easily share the game by embedding it on websites or posting it to Twitter or Facebook. It’s just like a YouTube video and that’s what the GameSalad founders set out to do when they created the company. They wanted to develop the “Youtube” of game creation platforms online.
“We wanted to democratize the creation of video games,” Agustin said, during a recent interview at the company’s new headquarters at 9600 Great Hills Trail.
Michael Agustin, co-founder of GameSalad
So far, people have built and published 30,000 games with the GameSalad Creator. That includes more than 40 top 100 games in Apple’s App Store.
“We see 1,000 new games a month,” Agustin said.
The GameSalad Creator tools are easy to use and that appeals to everyone from professional game developers to kids.
Abdulrahman Al Zanki, a 15-year-old in Afghanistan, created Doodle Destroy in three days using the GameSalad tools. It has been downloaded nearly 1 million times. He’s since built eight other games for the iPhone and iPad.
Conner Haines, an 11-year-old CEO of FlipFlopGames, builds games for kids with cancer using the GameSalad platform. He creates the games for free and any proceeds from the sale of a game goes to the Make A Wish Foundation.
“I really like to think of game or app ideas and just bring them to life and let the whole world play or use them,” Haines wrote on his website.
Agustin formed GameSalad, formerly known as Gendai Games, with Tan Tran, and Dan Treiman in 2007.
“We wanted to enable people to create content easily online,” Agustin said.
It’s working. GameSalad is the number one platform for iOS development and boasts 300,000 developers, Agustin said. The company has 42 employees in Austin, San Francisco and Los Angeles and 20 contractors and it is hiring.
“We are always looking out for top folks,” Agustin said. “We’re one of the largest game companies in the world.”
Initially, Agustin and the other founders bootstrapped the company for three years. That is they put their own money into it and ran it off the revenues generated from the business. They joined the Austin Technology Incubator in July of 2009 and worked out of its offices until recently. GameSalad graduated last month from ATI.
ATI’s former IT and Wireless Director Bart Bohn met the GameSalad founders at a 2008 Texas Funding Symposium. He then invited them to the 2008 Wireless Seed Stage Forum and the 2009 Entrepreneur’s Lounge at SXSW.
Michael Agustin, co-founder of GameSalad at ATI graduation
The founders got a product up early, sold games and funded their company with the proceeds, Bohn said.
“It let them progress farther in the maturation process,” Bohn said. “It gave them a better vision of their company and they could move faster when they raised money.” They could also hold on to a larger ownership stake, he said.
The GameSalad founders also saw the potential early on in the mobile space, Bohn said.
Venture Capitalist Aziz Gilani with DFJ Mercury in Houston first met Agustin at SXSW in 2009.
“I knew he was going to do something great, but was unconvinced about the market he was going after (desktop casual games.) We still kept in touch, and spent some time together at SXSW 2010,” Gilani said. “He had shifted his focus to iOS which was an area that I was much more excited about. After SXSW I went back to Houston and bought a Mac so that I could install and play with the tool. I was floored by how easy it was to create games and knew we had a hit on our hands.”
Houston-based DFJ Mercury led a $1.1 million seed investment in GameSalad in July 2010. Then in March of 2011, the firm participated in the $6.1M Series A financing led by Steamboat Ventures, Disney’s venture capital firm.
With the venture investment, Disney Executive Steve Felter, who previously worked as chief operating officer of DigiSynd, a social media marketing company Disney acquired, became the chief executive officer. He works out of San Francisco along with Agustin, who became the chief products officer.
Frank Coppersmith, GameSalad COO
The competitive advantage GameSalad has is its intense focus on making game design accessible, Gilani said.
“GameSalad was designed from the ground up to be a code-free, yet insanely powerful game design tool that anyone can use,” Gilani said. “That is an extremely hard feat to accomplish, and is only possible because of Michael’s heritage from Carnegie Mellon’s Entertainment Technology Center.”
At Carnegie Mellon University, Agustin studied with Randy Pausch, professor and founder of the Entertainment Technology Center. Pausch died in 2008 from pancreatic cancer. He wrote The Last Lecture, which became a New York Times bestseller.
Pausch pioneered the non-profit Alice project, an innovative 3-D environment that teaches programming to young people via storytelling and interactive game playing.
Pausch made quite an impression on Agustin and his quest to democratize the game development and distribution industry. Agustin received his master’s degree from Carnegie Mellon and his undergraduate degree from the University of Texas in computer programming.
“GameSalad was also blessed by making several smart strategic decisions early on,” said Galini with DFJ Mercury. “They were building games with HTML5 before it was trendy. They also decided very early on to deeply engage with their community of developers, enlisting their biggest contributors as “Sous Chefs” and having an extremely open dialogue with them about the company’s direction. GameSalad understands that it can’t be successful unless its game creators are successful, so their opinions have a huge impact on the direction of the company.”
In 2012, GameSalad is focused on its game developers and looking for more ways to generate profit for them, Agustin said. It is also going to expand the feature set of its existing tools and focus on distributing games internationally. Europe is the second largest market behind the United States for GameSalad and it’s looking to expand into Asia.
On Austin’s North side on technology row, the GameSalad offices, outfitted with IKEA furniture, are filled with game developers. Posters of its games developed by its own programming team, hang on the walls.“They are very focused and very dedicated,” Bohn said. “They went out and learned a bunch from a lot of people in the industry. Their passion and their ability to listen and evolve and take feedback and incorporate that into what they are doing has helped lead to their success. I’m so excited for what they are doing. I end up being a huge cheerleader for them.”