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Dropbox’s Austin Office Serves as Gateway to Latin America

May 23, 2014 / LauraLorek@gmail.com / 0 Comments

When San Francisco-based Dropbox announced plans to open an office in Austin, the company had more volunteers than positions here.

“We still have interest,” said Ross Piper, vice president of enterprise strategy at Dropbox.

The startup kicked off its local office with a small founding team from San Francisco to maintain its corporate culture, Piper said. It now has 700 employees worldwide and it has doubled in size for the past couple of years, he said.

Dropbox opened its office at 501 Congress in February. It has 40 employees now with plans to expand to 200 employees by the end of next year, Piper said.

“This is going to be a very big part of our organization,” he said.

Piper gave the afternoon closing keynote talk at the Austin Technology Council’s fourth annual CEO Summit on Thursday at Brazos Hall in downtown Austin. More than 140 registered to attend the daylong event, which featured panel discussions and talks on variety of technology topics from transportation concerns to increasing Austin’s share of the nation’s venture capital.

The Austin office serves as Dropbox’s gateway to Latin America, said Piper. Seventy percent of its customers are outside the U.S., he said. The company also has an office in Dublin, Ireland.

Dropbox, founded in 2007, provides an online storage box that allows people and businesses to exchange files including documents, photos and videos from anywhere. More than one billion files are uploaded daily on its platform. The company has more than 275 million customers including 4 million businesses including National Geographic, Dell, Whole Foods. It’s also a partner with Dell and provides Dropbox for business using Dell’s cloud software and services.

“This is really changing the way people work,” Piper said.

Last February, the City of Austin approved an incentive package worth $244,500 for Dropbox and the company received a $1.5 million Texas Enterprise Fund grant.

Go Big Austin

May 23, 2014 / LauraLorek@gmail.com / 0 Comments

By LAURA LOREK
Founder of Silicon Hills News

In a panel titled “Austin’s Brand: Go Big or Go Home” at the Austin Technology Council’s CEO Summit three seasoned tech leaders gave their perspective on building a billion dollar company.

“Something that Austin is not known for is thinking big,” said Mark McClain, CEO and founder of SailPoint Technologies.

Austin companies often don’t go long and take their ventures to the “Thunder Lizard” stage, a term made famous by Mike Maples Jr. with Floodgate Ventures in Silicon Valley. Maples has challenged Austin entrepreneurs to come up with the next big thing and create a $100 billion tech company in the next 10 years, a venture he calls a Thunder Lizard.

RetailMeNot always had a bigger vision, said Cotter Cunningham, its CEO.

“For us, we felt like there was an opening and we could take advantage of it,” Cunningham said.

RetailMeNot is now the world’s largest online coupon and deals marketplace. Cunningham raised about $300 million from investors, including Austin Ventures, Google ventures and others. His intent was always to build the biggest company in the coupon market largely through acquisitions.

RetailMeNot went public last June. Its stock trades under the symbol “SALE” on the Nasdaq stock market and closed at $25 a share on Thursday. It has a market capitalization of $1.2 billion.

Rod Favaron, CEO of Spredfast, a developer of enterprise software for social media platforms previously ran a company called Lombardi Software, which he said was in a niche market. IBM acquired Lombardi Software in 2010. He then joined Spredfast.

At the time, Favaron had no idea that Spredfast was chasing a multi-billion market.

“In 2011 we started to sell to people for $100 a month,” he said. “It was completely unclear how big the market would be. It hit us last summer that this was a very big market. We went from very short term planning horizons to long term planning horizons.”

Spredfast raised $60 million and recently acquired another Austin startup in the social media market, Mass Relevance.

“It’s either going to be a giant fireball or really successful,” Favaron said. “We’re shooting the moon on this one.”

At SailPoint there may be a chance to go bigger and go longer, McClain said.

But it’s often difficult to see that massive potential at the startup stage, he said. Some people may think their market is small but it may develop in ways they didn’t think about, he said.

The key to building a massive company that can scale is product and market fit and market size, the panelists said. The market has to be really big and the startup has to be the leader.

Investors can also keep a company from going big if they don’t think big, Favaron said. It’s really important that investors be in synch with the long-term vision of the company, he said.

The founders also have to have the right mentality to go long and take risks. Some first time founders want to maintain control and that means they don’t raise a lot of money and take risks. For example, the founders of Spredfast were willing to sell the company for $6 million, Favaron said. But he saw a much bigger market and potential.

“Our biggest competitor has raised $70 million,” Favaron said. “I’m underfunded, which is weird. It’s a super big market. I think going big is something we don’t do enough in Austin.”

First time entrepreneurs are more risk averse and tend to sell their company so they can put some money in the bank, according to the panelists. Second time founders are more willing to raise more money and risk more.

“If you’re the founder you can do what you want unless you raise money,” Favaron said.

Austin needs to spin out more first time entrepreneurs quickly and cultivate a set of executives “ready to swing big for the next one,” according to the panel.

Austin has a strong brand as a technology center, which South by Southwest Interactive has helped to cultivate globally, said Favaron. He said he doesn’t have any trouble recruiting tech talent to Austin. In fact, Spredfast just recently hired a Chief Financial Officer and had plenty of qualified candidates, he said. Earlier in the day during a different panel discussion, Chuck Gordon, co-founder of SpareFoot, mentioned his company was having trouble recruiting a CFO to relocate to Austin.

How to Craft the Perfect Pitch

May 21, 2014 / LauraLorek@gmail.com / 0 Comments

By LAURA LOREK
Founder of Silicon Hills News

Crafting the pitch, photo licensed from Getty Image

A good pitch can determine whether a startup lands money from investors to expand.

But few entrepreneurs know how best to pitch.

Texas State University’s Small Business Development Center held a special training session Wednesday afternoon at its Round Rock campus to help entrepreneurs titled “Pitching to Anyone: How to Own the Room.” It’s part of its Spectrum Series of events tailored to assist entrepreneurs.

The session provided tips on everything from how to dress to crafting the right pitch and how to make a video pitch.

The three keys to giving a great presentation are confidence, credibility and passion, said Jim Comer, Comer Communications.

“Fear gets in the way of being unique,” Comer said.

But individuality leads to likeability, he said. So it’s essential to have some techniques to get through a presentation. He said entrepreneurs should smile, maintain eye contact, talk naturally, use natural body language and just use their hands organically.

First off, confidence comes from expertise, he said.

“You’ve got to be the expert,” Comer said. “And credibility comes from anything you can do to build up yourself and your team in front of the audience without bragging.”

Passion is key, Comer said.

“We’ve all got natural resources that make us unique,” Comer said. “The person that your friends like that is the one you want to share with the audience.”

And lastly, don’t forget to smile that starts a presentation off right, he said.

“This is not a torture test,” Comer said. “They want you to succeed. The investors are dying to hear a good idea. Smile, enjoy it. They are on your side.”

The pitch must also make a few points well. Comer suggested entrepreneurs state the problem, provide the solution and show how it works with brevity and clarity and to use an analogy if possible.

“You’ve got to use language the audience understands,” he said. “Don’t use acronyms or technological terms.”

It’s also important to talk about your team and how they have the talent and experience to make the startup succeed, Comer said. And an entrepreneur’s pitch deck must show financials that are easy to read and understand and not pie in the sky, he said.

Eliminate all jargon like paradigm shift, tipping point, and eliminate all technical terms from the presentation, Comer said.

“Think of how the Pentagon would say it and do the opposite,” he said.

He also said to remember “A.T.O – Acknowledge the Obvious.” If something goes wrong during a presentation like the projector catches on fire, acknowledge it and then move on, he said.

“The investors will be as impressed by “grace under pressure” as by your idea,” he said. “However you respond to the unexpected – they are judging you.”

Everyone can be a great presenter if they just fight their fear and focus on their individuality.
To pitch through video, make your point clear, believe in your product, speak passionately and genuinely and stick to the point, said Scott Edwards of Edwards Media.

A crowdfunding video generally costs from $1,500 to $3,000, Edwards said. A video for a company’s website costs from $2,500 to $3,000, he said.

Texas State Small Business Development Center has a studio with cameras and other equipment for entrepreneurs to use once they have gone through training said Dick Johnson, senior technology commercialization advisor. It’s a great way to record a pitch video to see how entrepreneurs appear to potential investors, he said.

Ninety-three percent of any first impression is a visual one, said Jean LeFebvre with Panache Image.
Clothes communicate an image to people, LeFebvre said. Less gimmicks equals better communication, she said.

“You need to put thought into an outfit. It’s not an afterthought,” LeFebvre said. “The most common mistake is not getting dressed for the role you play.”

She advised entrepreneurs to wear classic clothing and use accessories sparingly to be trendy.

“Don’t wear athletic gear when you’re not working out,” she said. “Gym shoes belong in the gym.”
LeFebvre advised people to dress properly even when they run errands.

“At any time be prepared to meet with your potential bosses, your potential investors,” she said. “You want them to see you as a successful person.”

Peg Richmond and Paul Wright, technology commercialization advisors with Texas State Small Business Development Center, gave the top ten investor pet peeves entrepreneurs make when pitching their ventures.
They are:

#10. It’s not fiction writing – tell your story – not a fairy tale
#9. Trying to be someone you’re not.
#8. Reading or talking to your slides
#7. Making the audience connect the dots
#6. Not knowing your ask
#5. Inconsistent messaging
#4. Building suspense and holding nuggets till Q&A
#3. Your business elements don’t match
#2. Burying the headline
#1. Transactional v. Relational

On June 24, the Spectrum Series continues at the Greater Austin Chamber of Commerce with “The Art of the Deal” information from experts on how to close a deal including what a term sheet looks like.

CodeHS Turns Kids Into Coders

May 21, 2014 / LauraLorek@gmail.com / 0 Comments

By LAURA LOREK
Founder of Silicon Hills News

Students who excelled at the inaugural CodeHS program at Highlands High School.

In the first CodeHS program at Highlands High School this year, Ernest Rodriguez learned to program a computer and to do animation.

“I saw the opportunity and I took advantage of it,” said Rodriguez, a freshman.

Now he wants to be a computer programmer and work at Rackspace Hosting some day, he said.

Rodriguez not only completed the program, but also excelled at it, said Chelsey Cook, CodeHS coordinator at Highlands. The students earn points for completing coursework. They expected students to earn about 100 points by the end of the year. Rodriguez earned more than 600 points.

On Tuesday, Rodriguez and 27 other students, the outstanding performers in the class from Highlands, took a field trip to Rackspace to tour the high tech campus in San Antonio. They also gave a brief presentation demonstrating some of the skills they learned in the program.

This past school year, the entire freshman class at Highlands High School, more than 450 students, in the San Antonio Independent School District, participated in CodeHS, a web-based platform to teach kids to code. Rackspace Hosting’s Chairman Graham Weston’s 80/20 Foundation provided a grant to fund the program.

The coursework teaches the students how to write their own code through interactive games, which then progress into more complex projects and lessons. The program includes dozens of tutorial videos and hands on training.

“I learned that even if there’s something wrong with your computer, you can fix it and understand it,” said Lucinda Angel, a freshman at Highlands. “I feel so connected to the computer.“

For many people, understanding computers is difficult, Angel said.

“But since we’ve been working on it all year, I understand its language now,” she said.

Angel wants to be a lawyer and she’s hoping she can get a job working for Rackspace.

“I’m not a geek or anything,” she said. “But geeks rule.”

CodeHS motivated the students and expanded their horizons, said Joan Jackson, CodeHS teacher.
“This exposed them to so much more,” Jackson said.

A lot of students’ talents came out during CodeHS, said Cook, the program’s coordinator. Some of the students who got average grades in other courses, excelled in CodeHS, she said. And the computer programming coursework helped complement what the students learned in other classes like math and science, she said.

The CodeHS program lets students work at their own pace, Cook said. It also prepares them for college and for the workforce for computer programming jobs that are in demand.

“If they don’t get exposure in high school, they are less likely to know about those opportunities when they get in college,” she said.

Next year, the students who have gone through the program will take advanced computer programming and will serve as mentors to the freshman taking the Code HS course, Cook said.

“We really strongly believe in the model that CodeHS has set up,” said Daniel Sherrill, spokesman with Rackspace.

“We’re looking for ways for our Rackers to further engage with the kids,” Sherrill said.
Rackspace is also interested in applying the CodeHS model to others schools in San Antonio, Sherrill said.

“Anything that is creating that future talent pipeline is something Rackspace is interested in,” he said.
In June, Rackspace will host a high school hackathon with more than 500 students. It’s inviting kids from CodeHS to participate in the hackathon, Sherrill said.

“It’s an opportunity for students to connect with other students from all over who are passionate about code,” Sherrill said.

“We are thrilled with our partnership with San Antonio ISD and Highlands High School,” said Scott Meltzer, deputy director with the 80/20 Foundation. The San Antonio CodeHS program is the second largest in the country, he said.

The CodeHS program will continue next year in a “targeted and focused manner” with about 150 freshman and sophomore students at Highlands High School, Meltzer said. The program focuses on preparing the students to enter a job-training program like Cloud Academy or CodeUp in San Antonio or to go on to pursue a college degree, he said.

The CodeHS program is directly connected to San Antonio’s workforce needs, Meltzer said.

“It’s the next step on their pathway to pursuing high tech jobs in San Antonio,” Meltzer said.

San Antonio Ranks Third on Forbes List of the Nation’s Tech Hot Spots

May 17, 2014 / LauraLorek@gmail.com / 0 Comments

Forbes names San Antonio-New Braunfels as one of America’s technology hot spots.

The greater San Antonio area earned the number three spot on the list behind number one, Washington, D.C. and number two, Riverside, Calif.

Forbes reported that San Antonio-New Braunfels gained 18.3 percent in Science, Technology, Engineering and Math jobs between 2011 and 2012. The growth during the last two years has been 4.5 percent.

Forbes hired Mark Schill of Praxis Strategy Group to examine the nation’s 51 largest metropolitan statistical areas.

“Notably absent from our list of the 10 metro areas that enjoyed the strongest growth over that period: the country’s largest cities,” according to Forbes. “Chicago, New York and Los Angeles all lost tech jobs over the past 11 years. Silicon Valley? For all the buzz over Facebook and other hot social media companies, the San Jose area has 12.6% fewer tech jobs today than in 2001.”

San Antonio has a large biomedical industry and cybersecurity industry. The city has also nurtured its technology startup community with the founding of Geekdom, nearly three years ago.

Rackspace Entertains Buyout Offers

May 17, 2014 / LauraLorek@gmail.com / 0 Comments

Rackspace Hosting may be sold.
The San Antonio-based company hired Morgan Stanley to evaluate potential partnerships and acquisitions.
“In recent months, Rackspace has been approached by multiple parties who have expressed interest in exploring a strategic relationship with Rackspace, ranging from partnership to acquisition,” according to a statement filed with the Securities and Exchange Commission last week.
“Our board decided to hire Morgan Stanley to evaluate the inbound strategic proposals and to explore other alternatives which could advance Rackspace’s long-term strategy,” Rackspace wrote. “No decision has been made and there can be no assurance that the Board’s review process will result in any partnership or transaction being entered into or consummated.”
Rackspace, which provides web hosting and open cloud services, reported it did not intend to comment on the situation until its board approves a specific partnership or transaction. The company has faced increasing competition from giants Google and Amazon, which provide cloud hosting services.
In February, Lanham Napier, 43, retired as Rackspace’s chief executive officer. He had led the company since 2000 from a small startup to a large publicly traded company with more than 5,000 employees worldwide and more than $1.5 billion in revenue.
A year earlier, Lew Moorman, Rackspace’s president, left the company because of health issues with a family member.
Since February, Graham Weston, Rackspace’s chairman and co-founder, has served as its CEO.
Rackspace, founded in 1998, is the largest technology company in San Antonio with more than 3,000 employees occupying the old Windsor Park Mall in Northeast San Antonio. It also has an office in Austin and has international offices in London and Hong Kong.
Rackspace’s stock, traded under the symbol RAX on the New York Stock Exchange, soared on the news of the possible sale last week. Rackspace’s stock closed at $36.12 on Friday, up nearly 18 percent. The company’s stock traded as low as $26 and as high as $54 in the last 52 weeks. The stock traded as high as $81 per share in January of 2013, according to Forbes.

Dell Selects ihiji and Open Labs of Austin for its Founders Club 50

May 17, 2014 / LauraLorek@gmail.com / 0 Comments

The Dell Center for Entrepreneurs last week announced its first Founders Club 50, an exclusive group of high growth tech startups, including two from Austin.
Dell selected ihiji, which makes remote diagnostic tools for computer networks and Open Labs, a stage lighting and technology company focused on the music industry.
Dell plans to announced its new Founders Club 50 class twice a year and it’s currently accepting application for its fall class.
“The Founders Club 50 is a great opportunity for these start-ups, all of whom are on the verge of reaching the next level of innovation,” Ingrid Vanderveldt, Dell Entrepreneur in Residence, said in a news release. “The program creates a win-win; by serving as a trusted advisor to these companies at this crucial early stage, we hope they will continue to grow with Dell in the future. Dell has always seen the value in fostering innovation and entrepreneurship, and the Founders Club 50 is the natural next step in continuing to help high-growth start-ups expand their networks, find valuable resources and use technology to transform their businesses.”
During the two-year term as Founders Club 50 companies, they receive help from Dell in the areas of sales, technology, access to capital, networking and marketing. When they complete the program, they become Club Alumni. Dell has more than 115 alumni companies including Skyera, CloudFlare, Everloop and Mass Relevance.
Members of Dell’s first class are from 17 states and various industries including analytics, healthcare, enterprise solutions, entertainment, IT and mobile computing.

YouEarnedIt Gets $1.5 Million in Seed Stage Funding

May 17, 2014 / LauraLorek@gmail.com / 0 Comments

YouEarnedIt, a startup focused on helping companies reward employees, has received $1.5 million in seed stage funding, according to the Wall Street Journal.
The company received the funding from Capital Factory, an Austin-based incubator and accelerator of tech companies led by Joshua Baer and advertising giant WPP PLC, according to the article.
The Greater Austin Chamber of Commerce also recently names YouEarnedIt as one of its A-List Austin startup to watch for 2014. The company’s customers include Gatti’s Pizza, Conde Nast, Y&R, RetailMeNot and Spredfast.
Kenny Tomlin founded the company in 2011. He was replaced as CEO last year by “Steve Semelsberger, a former senior vice president and general manager of California-based Demand Media Inc.’s (NYSE: DMD) social products group,” according to the Austin Business Journal. The Wall Street Journal story listed YouEarnedIt’s CEO as “Autumn Manning, who previously worked as a partner at training and coaching services firm SVI World.”

Compare Metrics Snags $3.8 Million in Follow-On Venture Capital

May 17, 2014 / LauraLorek@gmail.com / 1 Comment

Austin-based Compare Metrics, which makes analytics software aimed at retailers, announced that is has received $3.8 million in follow-on venture capital.
Austin Ventures led the investment with additional funding by existing investors Julie Allegro of Allegro Venture Partners, Bob Greene of Contour Ventures, Capital Factory, Mike Maples Jr. of Floodgate, Brett Hurt of Hurt Family Investments and independent investors Dean Drako, Ralph Mack and Adam Ross.
This brings the company’s total amount of funding to $8 million. Compare Metrics received $4.2 million in first-round financing in May of 2013.
Compare Metrics recently made the Greater Austin Chamber of Commerce’s A-List of Startups to watch in Austin in the emerging growth category.
The company plans to use the money to support its continued growth. It now has 32 employees and several customers including Fresh Pair, Lenovo, Rebecca Minkoff and The Wasserstrom Co.
Garrett Eastham, Mikael Solomon and Stephen Goodwin co-founded Compare Metrics in 2012 based on Eastham’s cognitive science research at Stanford University.
“It has been exciting to watch the journey of the Compare Metrics team from a three-person start-up to the high-growth and maturing company that it is today. This follow-on investment is indicative of the company’s progress in proving out their market value,” Chris Pacitti, general partner with Austin Ventures, said in a news release. “Retail client results have again validated our original confidence in the company’s potential, and I look forward to watching their continued success going forward.”

StepOne Closes on $ 4 Million in Venture Capital

May 17, 2014 / LauraLorek@gmail.com / 0 Comments

Alex Mitchell, President and co-founder of StepOne, photo courtesy of StepOne

StepOne, an Austin-based startup that makes customer support software, announced that it secured $4 million in venture capital.

LiveOak Venture Partners led the round with participation from Silverton Partners. The company plans to use the money to add employees and to expand sales and marketing efforts.

StepOne has already landed Telstra, Australia’s largest telecomm company, as a customers as well as a major U.S. cable company.

StepOne’s flagship product, Contextual Care, focuses on helping large companies with complex products deliver excellent customer support.

Although lots of products currently exist to help companies deliver self-service customer support, StepOne has a different approach. It “predicts a customer’s question by measuring hundreds of customer attributes like what services they’ve purchased, the state of their billing cycle and the technical performance of the product, and then matches the customer to the optimal content for their predicted question,” according to a news release. “The adaptive software continuously learns which specific pieces of support content best serve various customers, improving its accuracy over time.”

“From product onboarding to in-life support, self-service for customers is broken,” Alex Mitchell, CEO and co-founder of StepOne, said in a news release. “Even though most customers prefer to solve problems themselves, they give in and finally pick up the phone. There is too much content presented to solve the problem and too many irrelevant results in search queries. Our goal is to make self-service become a driver of customer loyalty and cost savings. When you can answer the customer’s question before they’ve even asked it, they’ll stick with you.”

Last year, LiveOak Ventures invested an undisclosed amount of seed stage funding into StepOne.

“Since our seed investment, the StepOne team has achieved significant customer traction, so we are delighted to continue to support the StepOne team as they scale their operations,” Krishna Srinivasan, co-founder and general partner at LiveOak Venture Partners, said in a news release.