BY L.A. LOREK
Founder Silicon Hills News
At Startup Grind, Clay Christensen decked out in a business suit with tie, looked like he was about to address his Harvard Business School class.
Instead, Christensen, perched on the arm of a leather chair, spoke plainly and authoritatively, to an attentive audience of technology entrepreneurs, angel investors and VCs at Startup Grind, a two-day technology conference focused on startups held on Tuesday and Wednesday at the Computer History Museum in Mountain View, Calif.
Christensen covered a lot of topics including how entrepreneurship is becoming a more predictable path to success through pattern recognition and that it’s no longer a trial and error process.
He also predicted major disruptions in education, smartphones and the venture capital industries.
“Just as I pray for Harvard Business School, I pray for Apple,” Christensen said.
And in the wake of recent suicides in Silicon Valley and the technology industry, Christensen also discussed his latest book How Will You Measure Your Life? The book focuses on integrity, happiness and living a balanced life.
For the first half of his talk, Christensen spoke directly to the audience. During the second half, Mark Suster, venture capitalist, quizzed him on a variety of topics.
Christensen, best known for his 1997 bestselling book The Innovator’s Dilemma about disruption in traditional industries, spent a great deal of time talking about how disruption breaks traditional businesses and spawns new ones. Disruption occurs when companies spend too much time focused on their existing business and fail to adopt new technology to meet future needs.
Christensen’s theory of disruption allows companies to predict “whether you will kill the incumbents or whether the incumbents will kill you.”
In one example of disruption, Christensen recounted his youth and his love of transistor radios because they were portable and allowed kids to listen to rock and roll music outside of the earshot of their parents. His parents had a large RCA radio equipped with vacuum tubes.
Transistors eventually replaced vacuum tubes in electronics because transistors were the superior technology. But they were also disruptive because they created a new marketplace.
Christensen explained that disruption occurs when incumbent industries respond to new competitors. He advised entrepreneurs to go after the bottom of a market and to work their way up. He also advised them to go after markets that have no customers. He used the example of a vendor selling solar TVs to the two billion people in Asia and Africa who don’t have electricity. They are thrilled with the devices. But people accustomed to high-quality TV in a market like the U.S. would not be as thrilled.
The path for entrepreneurs has also evolved from one of trial and error to an industry focused on pattern recognition.
“Most VCs still live in a world where they think it’s unpredictable to pick winning companies and entrepreneurs,” Christensen said. They still trust their gut instinct instead, he said.
That’s one reason why the venture capital industry is ripe for disruption, Christensen said.
“As a group, there are fewer venture capitalists that have read my research than any other group,” Christensen said. “They still think entrepreneurship is in the realm of intuition.”
“The Theory of Disruption” is what Christensen is best known for, he said.
Intel’s Co-founder Andy Grove, a fan of the Innovator’s Dilemma and author of Only the Paranoid Survive, told Christensen he should call the theory the “Christensen effect” because people would not understand what he meant by disruption.
“Everyone uses the word disruption but very few of them really understand what it means,” he said. “Disruption is what the competition will do in response to what you do.”
That’s why entrepreneurs should always move up from the bottom of the market in pursuit of profit, Christensen said. The existing market will flee up market.
“That’s actually quite important if you want to succeed,” he said.
He also advised startups to compete against non-consumption markets.
“When you have a new product it’s important to target people whose options are none,” Christensen said.
Tesla Motors makes $100,000 electric cars but that doesn’t fill a very big market niche. Instead, an electric carmaker should market a car that doesn’t go very far or very fast and sell them to the parent’s of teenagers, Christensen said.
Apple makes its iPhone and other products with proprietary technology, whereas the Android Operating System is built on open architecture. That makes the smart phone industry ripe for disruption, Christensen said. The marketplace will go to the cheaper Android-based smart phones.
Online education is leading to a massive disruption in the higher education industry. Christensen predicted 15 years from now half of all universities will go bankrupt including state institutions.
Lastly, Christensen explained how the venture capital industry will be disrupted, but not through crowdfunding. The VCs focus too much on large investments and they should be looking at the smaller deals too, he said.
He said that royalty-based financing, popular in Austin, has become a viable alternative to venture capital. Royalty-based financing gives an entrepreneur money in exchange for future repayment but doesn’t require any fixed payment schedules or amounts.
Christensen also talked about how an entrepreneur can find out if a customer is going to buy their product or not.
“What causes us to buy a product or service is stuff happens to us everyday,” Christensen said.
Understanding the cause and what motivates people to buy improves the probability of success to a much higher level, he said.
But the customer is the wrong unit of measurement, he said. Instead, an entrepreneur must understand the job the customer is trying to do.
Christensen recounted a story about a fast food restaurant that studied why customers bought milkshakes in the morning. They discovered that people who “hire” or buy milkshakes in the morning do so to keep themselves occupied on their drive to work because it lasted 25 minutes and satisfied their hunger. They occasionally “hire” bananas, donuts, bagels and coffee, but the milkshake did the job better than the others.
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BY ANDREW MOORE
Reporter with Silicon Hills News
This month on SA New Tech: Want to find the most authentic places to visit in downtown San Antonio? Now there’s a map for that. Plus, SPoTS can help you motivate your sales reps and SportyBird.io helps small soccer teams use big statistical tools.
The Loc@List Map
Christopher Perez and Eddie Romero of the Loc@List Photo by Andrew Moore
“We all wanted to do something in San Antonio to highlight great places and kind of get past this ‘San Antonio is lame’ kind of stigma that everyone has,” says Romero.
Romero and Perez pick the locations themselves – drawing from their own experience and keeping an eye on local blogs like Puropinche and sites like Yelp. The product will generate revenue by selling add space on the back of the printed map.
The maps will be available downtown at B-cycle locations, hotels, and various places along E. Houston Street.
The Loc@List is currently in the process of establishing an online presence and plans to produce a series of YouTube videos highlighting San Antonio’s downtown area.
The Loc@List is currently looking to hire people to help market their product.
SportyBird.io
SportyBird.io is a mobile app designed to keep track of soccer statistics in a user friendly way. The app was invented by co-founders Joshua Swank and John Trenholm. Swank has been involved with soccer for most of his life and had the idea for the app while coaching youth soccer.
“After college I started coaching youth soccer and realized a lot of teams don’t have a resource [for statistics],” said Swank. “Over 70 percent of coaches between youth soccer, college, and professional teams use statistics in some form or fashion – a lot of them still hand-write them on paper.”
SportyBird is designed to make recording these statistics much easier. The app can not only gather simple numerical data such as the number of saves, corner kicks, and shots on goal for a team, but it can be used to record the location of those shots and saves on the field. The mobile app links to a web interface where a coach can login to their SportyBird account and see graphs and detailed information about his team’s performance – both per game and over the length of a season. The app can also be used to record statistics outside of games such as how many practices a player has missed. Swank envisions the app one day being scaled up to a point where entire soccer organizations, such as division one clubs, can use it.
The SportyBird.io Team app is scheduled to come out in about a month. Swank hopes to market the product to youth clubs and lower-level professional teams. Their pay structure will work by charging a monthly or yearly rate for the product.
SPoTS
SPoTS is a web based application that is designed to help structure compensation for sales teams – essentially helping users identify and reward their sales superstars while not overpaying those employees that are not generating adequate revenue. Founder Dan Sevigny created the product to correct a problem he dealt with in his own sales experience while working for State Farm Insurance.
“The way I got compensated never lined up with the way the agency made money,” said Sevigny. “So I wanted to develop a tool, and we’ve come up with the solution of SPoTS.”
SPoTS stands for “scorecard production tracking system”. It started back in 2008 as an excel spreadsheet with some nice graphics. The system allows employers to identify and easily communicate to sales reps what products are most profitable to sell at any given time. The sales reps then can focus on selling those products and can receive better compensation by focusing on what makes their company the most money. The employees will also be able to see how their pay will increase if they make certain sales benchmarks.
SPoTS has improved their product each year, making the spreadsheet look progressively more appealing and adding better compensation system to let employees know what the best products for them to sell in the future would be. In 2012, SPoTS made $600,000 between their spreadsheet system and their consulting services.
Now in 2013, CTO Seth Watson has put the system online – making the system accessible from any computer or iPad. Every day, team members can see an online paycheck letting them know how much they’ve made. More importantly, they can see a “scorecard bonus scale” that shows how their paycheck will increase as they sell more. The scale is generated based on point values and indicates how profitable each product is for the employee to sell at any given time. It also shows how the employees commission will compound as they achieve certain benchmarks.
“They can see exactly what they need to sell, when they need to sell it,” says Sevigny. “All of the real time analytics are there.”
SPoTS also consults agency owners on how to manage their team and create the compensation system that is best suited for their production needs. To even better inform agency owners, the SPoTS product comes with analytics that show owners how and where their sales people are making the agency money.
The company currently has around 400 users – most of whom are State Farm Insurance agents. Right now, 2.2 percent of all State Farm Insurance agents use the system.
The company is currently looking for people to help them market their product.
Wimbo Music Inc.
Wimbo Music Mixer
“Wimbo music was born so that we could make playing music, practicing, and rehearsing much more fun,” says founder and CEO Denis Ouellette. “Music is the ultimate social media, and playing alone sucks.”
By using Wimbo, musicians can now play along with their favorite bands without having to play over them. A guitarist could mute the lead guitar in Sweet Home Alabama, for example, and play those notes himself instead. A drummer could mute the drums in his favorite song and experiment with different rhythms to fill in that space. Ouellette envisions musicians using Wimbo to practice, teach, analyze, and experiment with their favorite songs. They could even use the product as a portable Karaoke machine.
The trick to making Wimbo work, however, is obtaining a user’s favorite songs in a large, multi-track format where the instruments are not pre-mixed. Most bands, both past and present, do not keep their multi-track mixes. And if they do, the master recordings of the songs normally belong to an artist’s label and are very expensive to acquire. Wimbo Music resolves this problem by obtaining the right to reproduce popular music from the relent publishers, which is cheaper, and then re-creating popular songs by partnering with special studios, musicians, and sound engineers across the county. These studios have the resources and the talent to re-create popular music, including older music from artists like The Beatles, with an almost indistinguishable difference in quality from the original song. They can even replicate the voice of a popular singer like Christina Aguilera with around 90% accuracy.
Currently, Wimbo Music plans to have 50 to 100 songs available by their products release in mid-April – focusing on classic rock and country at the time of launch. They are also planning to work with upcoming musicians and indie bands to grow their library. At launch, Wimbo will charge $4.99 per song.
Ouellette sees Wimbo as a huge opportunity for artists to make more revenue and increase their interaction with fans.
“Artists are doing everything they can to engage their fans and there is no more intimate way than to actually let them play and mix their songs,” says Ouellette.
Wimbo is currently looking to hire developers with music backgrounds to grow their company.
BY ANDREW MOORE
Reporter with Silicon Hills News
From Left: Cory Shaw, Denis Ouellette, and Greg Cerveny of Wimbo Music Inc. Photo by Andrew Moore
Well, now you can.
Wimbo Music Inc., founded by CEO Denis Ouellette, wants to change the way that musicians learn and interact with their favorite music. The Wimbo product is an iPhone app that allows users to manipulate the individual instrument tracks of their favorite songs. Individual instruments in a song are controlled by a virtual mixer. Users can change instrument levels with a slider, or simply turn them off.
“We wanted to give people a tool — a simple tool — to be able to play over, or to play with, their favorite songs — or customize their songs,” says Ouellette. “We wanted to give people the opportunity to be able to customize a song for whatever their intended use would be… … and the only way to do that was to be able to have songs broken down by the instruments and vocals that make up their favorite songs.”Ouellette sees countless uses for the product. It can help musicians learn their favorite songs, teach music to others, jam out with friends, and even play karaoke off their smart phone. Furthermore, Karaoke users are not limited to just singing – any instrument, or combination of instruments, can be muted so that a musician or two could “fill in” for their favorite band on a karaoke stage.
“You can play with, truly, a band backup of professional musicians,” says Ouellette.
The product is not without limitations, however. To be utilized by Wimbo, songs must be available in a multi-track format many times larger than an MP3. Most bands, both past and present, do not keep their multi-track mixes. And if they do, the master recordings of the songs are very expensive to acquire from an artist’s label. While Wimbo Music can obtain some songs directly from artists in original multi-track format, most popular music must be re-created in that format.
To do this, Wimbo must first buy the rights to popular songs from the relevant publishers. The company then partners with studios, musicians, and sound engineers across the county to re-create popular songs for Wimbo’s product in the correct format. These studios have the resources to re-create popular music, including older music from artists like The Beatles, with an almost indistinguishable difference in quality from the original song. They can even replicate the voice of a popular singer like Christina Aguilera with around 90% accuracy.
Replicating music is not cheap, but right now Wimbo Music plans to have 50 to 100 songs available by their products release in mid-April. They plan to focus on classic rock and country at the time of launch, but are also looking for indie artists and local bands to partner with and increase their music library. Songs for the product will cost $4.99.
Wimbo Music Inc. is currently a three man team composed of founder and CEO Denis Ouellette, Chief Technical Officer Greg Cerveny, and Director of Design Cory Shaw. They have been working on their product for three years and are currently in the beta stage of development.
All three partners play an instrument and sometimes jam out together at Geekdom of San Antonio. They are currently looking to hire developers with music backgrounds to grow their company. They also need a drummer to jam with.
BY L.A. LOREK
Founder of Silicon Hills News
Photo by Kai Diekmann
They don’t sugar coat their messages.
And that’s refreshing in a startup environment where everyone seems to have something to pitch and everything is going to disrupt and revolutionize an industry.
Derek Anderson, the founder of Startup Grind, kicked off the first full day by laying down the rules. The two-day conference taking place at the Computer History Museum in Mountain View, Calif. is about making relationships, making friends and not just contacts, Anderson said. It’s not about pitching and collecting as many business cards as possible, he said. The key is to give and don’t take and then reap the rewards of helping others, he said.
A year ago, StartupGrind had only two other cities participating in its network of startup talks. Today, StartupGrind has 35 sites including 15 countries. Austin has a StartupGrind chapter led by Andi Gillentine, co-founder of Whit.li. She was at the event helping coordinate the volunteers.
Here’s some of the highlights from the speakers in the morning sessions at Startup Grind 2013:
Jared Allgood, CEO of Juxta Labs, gave an insightful talk on “Wait. Don’t take the money.”
Before taking any money, a startup needs to nail its product market fit, Allgood said.
Raising money does not make you a rock star, he said.
“You don’t know if anyone is going to buy anything you’ve got,” he said. “If you take the money, it starts a clock ticking down. That clock is just ticking down until the time you run out of money.”
Allgood recounted how he founded ClassTop in response to teacher’s pain with using Blackboard’s technology platforms in schools. He sent out cold e-mails to several school IT directors and 56 percent of them responded. So they created a product to solve their problems.
But first they got feedback from all the decision makers and users. They also figured out how much money they were willing to pay for it. And they scaled back the product to give fewer features and they got a greater reception to it, Allgood said.
Customer interviews will lead you to the holy grail of product market fit, Allgood said. One of the most important things you can do in the early stage is get out of the building and talk to customers, he said.
Next up, Paul Ahlstrom of Alta Ventures Mexico gave an overview of the state of the incubator market. He said we’re in a bubble. In 2005, only one accelerator existed. Today, 150 accelerators and incubators exist and only 13 percent have had a company exit, he said. He predicts 95 percent of the incubators and accelerators will fail. He compared this time to the Dot Com bubble. He also said many VC firms will fail and only the top tier VCs will remain.
But Dave McClure, founder of 500 Startups, and the next to take the stage, totally disagreed with Ahlstrom.
“We are at the very beginning of incubators and accelerators,” McClure said.
No one complains that there are too many business schools, he said.
At one point in his talk about “Why Incubators Hate Your Startup,” McClure yelled at the audience that most of the entrepreneurs in the room would fail.
And the number one reason why they would fail is that they would not be able to figure out how to acquire customers at a reasonable cost, he said.
SpreadFast, a maker of social marketing software, announced today that it has raised $18 million in venture capital.
OpenView Venture Partners led the round with additional investment from Austin Ventures and InterWest Partners.
The Austin-based startup plans to use the money to hire employees and further develop its product.
“For the past few years we have been tracking the social media management space and believe the market is at an inflection point. Companies are no longer concerned with Likes, but rather with building real customer engagement and value across their social networks,” Adam Marcus, Managing Director at OpenView Venture Partners, said in a news release. “We believe Spredfast has built the only true enterprise-class product to help the Fortune 1000 manage this incredibly important channel. We couldn’t be happier to partner with this tremendous team to build a category-defining company.”
Spredfast’s customers include AT&T, Caterpillar, Rackspace, Starbucks, AAA, T. Rowe Price, Whole Food Market and Warner Brothers.
The company recently integrated Bazaarvoice ratings and reviews into its platform for easy social amplification of authentic word-of-mouth.
“Social is rapidly becoming the preferred interaction mechanism for consumers and business people alike. The time is fast approaching when your customers will no longer email or call you — they will send out a signal via social and expect a thoughtful response. They’ll expect you to know about them and for you to offer them something of value for their attention,” Rod Favaron, CEO of Spredfast said in a news release. “Spredfast’s customers understand the strategic advantage of laying the technical and organizational foundation for this future now, working with a trusted partner whose entire focus is social.”
Austin’s top technology company, Dell announced today that it has signed a deal with Founder Michael Dell and Silver Lake to acquire the company and take it private in a deal valued at $24.4 billion.
Under the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock. The price represents a 25 percent premium over Dell’s closing share price of $10.88 on Jan. 11, the last day of trading before rumor slipped out about the company going private.
The buyers will acquire for cash all of the outstanding shares of Dell not held by Mr. Dell and certain other members of management.
The transaction is expected to close before the end of Dell’s second quarter pending regulatory and shareholder approval.
“The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders,” Alex Mandl, lead director of Dell’s Board of Directors, said in a news release. “Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake.”
Dell said the transaction opens “an exciting new chapter for Dell, our customers and team members. We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise. Dell has made solid progress executing this strategy over the past four years, but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision. I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation. We are committed to delivering an unmatched customer experience and excited to pursue the path ahead.”
BY ANDREW MOORE
Reporter with Silicon Hills News
Nathan Green’s company, Campus2Careers, is proof of the power of interns.
Green runs the entire operation with a staff of five interns, himself, and one developer paid full time. Campus2Careers.com is a job board for college students and graduates used by many colleges across Texas. Job boards have limitations however, and Green is now looking at a new way to connect students and employers more effectively through internship programs.
“We are the largest student job board in the state of Texas – 250,000 students and 20,000 jobs – some great numbers,” said Green. “But at the end of the day, job boards suck – because there’s nothing personal about them.”
Nathan Green. Founder and President of Campus2Careers, photos by Samantha Davis
“A student is 50 percent more likely to start his or her own small business years from now if they had an internship with a small business,” claims Green. “Students today are the future small business owners of Texas.”
Campus2Careers has helped place around 2,000 students in the eight events they’ve held so far. Their surveys indicate that companies have hired 450 interns for full time jobs.
Green spends the first 30 minutes of his fairs coaching companies on how to make the most out of their interns. He advises companies to pay interns a stipend, keep them on for at least a year, get them business cards to make them feel invested in the company, and use them to test out new ideas – such as establishing a social media presence for the company.
“You could go right now and hire an agency at about $5,000 a month to manage your social media here in San Antonio. That could be the best investment you could make,” said Green. “What I am saying is — why don’t you spend $500 a month with an intern and then see if it’s worthwhile.”
Green also gave the companies guidelines and advice for creating a structured internship program.
After chatting with the students that attended, many companies were impressed at the potential the interns offered.“I’m surprised that as many interns know about e-commerce,” said Gerry Gerardo of Orion 2013 – a company that helps other companies establish an online presence. “I was expecting just a few here and there, but a lot of them know about it.”
Sportybird.io, which was just awarded funding by Geekdom in January, found several candidates that could help grow their company and have already scheduled interviews.
“I’ve been pleasantly surprised,” said Founder Joshua Swank — speaking about the students interviewed. “Two of them we already really like for two positions.”
The students spoke with non-profit companies as well. National non-profit City Year is expanding in San Antonio and working to help high school kids stay on track and graduate. Admissions Manager Abraham Johns sees interns as an important part of their operation.
“As a non-profit we don’t have tons of money so it’s good to get that young-adult, eager-to-do-anything vibe and put them on social media or put them on marketing for our program,” said Johns.
Of the 450 students that registered, Campus2Careers estimates that around 350 showed up. Students like Kristan Heart, who attends UTSA but has not declared a major, sees the fair as an opportunity to broaden her horizons.“Seeing these other Job offers for internships – it’s kind of motivating to see what else is out there,” said Heart.
For some students, the experience opened new doors.
“This is the first time I’ve ever done anything like this for an internship, or even looked to go into an internship,” said UTSA student Ashley Stephens. “I’m getting really good feedback from every person at the different tables so it’s really exciting.”
To make the most of their opportunities, Green advises students to put together a strong résumé, research the attending companies before hand, and get themselves business cards so they can exchange them for a prospective employer’s business card.
Campus2Careers plans to hold additional internship fairs in the future. They have already held events in San Antonio, Austin, Dallas, and Houston. Campus2Careers organizes the events in partnership with the Governor’s office and the Texas Foundation for Innovative Communities. The San Antonio event was sponsored by Constant Contact – an e-mail marketing software company for small businesses. Geekdom of San Antonio was a promotional partner and invited several of its portfolio companies.
Crowdfunding is getting a lot of attention as an alternative way to finance a project or a startup company.
The first Crowdfund Texas Conference took place earlier this year.
While countless companies have raised millions of dollars through crowdfunding sites like IndieGoGo, Kickstarter and Hubrocket for all kinds of projects, crowdfunding is not without its perils.
A Kickstarter backer sued a project creator last year after he failed to deliver the product he promised.
And soon the Securities and Exchange Commission is expected to release rules to govern equity-based crowdfunding that will allows companies to raise funds from small investors.
So I created this Slideshare to give some information the state of the industry today.
Crowdfunding from Laura Lorek
At BlogItSA on Saturday at Geekdom in downtown San Antonio, I gave a presentation on ways to tell stories using online tools.
I’ve embedded the slideshare presentation here because these tools are also helpful for startups to blog events and news in their industry.
If you’re looking for an internship, there’s an event on Saturday that offers lots of possibilities.
More than 20 agencies, chambers and other organizations along with 13 colleges and universities, the Governor’s office and Campus2Careers are putting on InternInSanAntonio to connect students with employers looking for interns.
The event takes place Saturday, Feb. 2, from 2 p.m. to 5 p.m. at Grantham Center at the Tripoint YMCS at 3233 N. St. Mary’s, San Antonio.
More than 80 local companies are offering more than 200 Spring internships and the event is expected to attract more than 600 students.
