Tag: one semester startup

Bob Metcalfe’s pitch for 3Com

Bob Metcalfe, photo courtesy of the University of Texas

At the Demo Day for One Semester Startup, one of the best pitches came from Ethernet co-inventor Bob Metcalfe.
Metcalfe, who moved to Austin in January, serves as professor of electrical engineering and director of innovation at the University of Texas at Austin.
This fall, Metcalfe, who also serves as general partner of Polaris Venture Partners, created a new class, One Semester Startup, along with Joshua Baer, entrepreneur and computer science specialist and John Butler, director of H.K. Entrepreneurship. On Thursday, 75 students pitched 20 startups.
But one of the most interesting ones came from Metcalfe, who halfway through the event, shared his 1980 pitch for 3Com, which sold Ethernet products. Just a few days earlier, Metcalfe had been in Japan receiving an award for his groundbreaking work at 3Com, according to this story in The Daily Texan, the UT newspaper.

A powerpoint slide form One Semester Startup

Metcalfe said he didn’t have any Powerpoint slides, because his company was founded eight years before Powerpoint. In fact, Metcalfe served on the board of directors of Forethought Inc. that invented Powerpoint, which Microsoft bought in 1987 for $14 million.
“3Com’s business plan is in my hand,” Metcalfe said. “It’s about 25 pages of text that was typed on an IBM Selectric typewriter.”
3Com stood for computers, communications and compatibility.
“Three standards and compatibility was our goal” Metcalfe said. “These three standards I’m about to mention were not standards at the time For example, UNIX (operating system), TCP-IP (networking technology) that was quite new. It would take 10 more years for it to be installed on the Internet.”
The last new standard they sought to establish was Ethernet, local area networking technology that allowed computer systems to share information.
“We were going to implement those three standards and sell them to other companies,” Metcalfe said.
But 3Com’s first product was a book. Metcalfe wrote a book outlining his vision for networked computers. Then he got a directory of venture capitalists in the Silicon Valley area and called them one by one and invited them to 3Com’s offices to listen to his pitch about the company. He talked to more than 100 venture capitalists during a two-year period, he said.
“They hated the pitch you are now hearing,” Metcalfe said. “But before I let them out, we got them to buy a copy of the book at $250 a copy. I would sell a book every single time.”
3Com’s second product was the implementation of TCP-IP networking technology on a 10 megabit per second modem. The company made Ethernet adapters for mini-computers and the Fax machines.
“Ethernet had been developed for PCs of which there weren’t any,” Metcalfe said.
The first Ethernet adapter cost $5,000, Metcalfe said.
“We anticipated there would be some price erosion,” Metcalfe said. “Ethernet adapters are now virtually free.”
Sun Microsystem was just getting started and bought 3Com’s multi-bus Ethernet.
“Very soon we were selling hundreds every month – hundreds of them,” Metcalfe said.
Then 3Com created an Ethernet product designed for a new computer called the IBM personal computer.
“Very soon we were shipping millions per month,” Metcalfe said. “This is what they call being in the vortex of the tornado and I recommend it highly.”
3Com decided to sell its product directly to consumers. But that was a really bad idea because the company didn’t have a way to reach those consumers.
“The next day we lucked out and they invented computer stores,” Metcalfe said. “We put our product in computer stores and the business took off.”
3Com had $5.7 billion in revenue in 1999.
“But everyone had $5.7 billion in revenue in 1999,” Metcalfe said.
Last year, 3Com became part of Hewlett Packard.
An audience member asked Metcalfe what would he do differently if he could change anything.
“Not one single thing” Metcalfe said. “It’s very dangerous to mess with the past. I would not change one thing about that outcome. It has all worked out perfectly and let’s not mess with it.”

UT’s One Semester Startup Demo Day

During the first One Semester Startup at the University of Texas, 75 students formed 20 companies.
Thursday night, the students behind those newly formed ventures pitched their startups to about 200 people, some students, university faculty, press, investors and entrepreneurs, gathered at the University of Texas stadium’s Red McCombs End Zone Club.
The pitches ranged from game apps to financial software to a solar powered car docking station to a new car company that wants to make 100 mile per gallon cars. The ideas centered around social networking, mobile and clean energy industries.
Professor of Innovation and Murchison Fellow of Free Enterprise Bob Metcalfe led the class along with Joshua Baer, entrepreneur and computer science specialist and John Butler, director of H.K. Entrepreneurship Center.
The class focused on fostering entrepreneurship among undergraduates.
Throughout the semester, about 50 mentors volunteered their time to help the students. They also got to listen to advice from successful entrepreneurs like Michael Dell.
Dell, who founded his computer company in his UT dorm room and then dropped out, spoke to the class a few weeks ago and shared his entrepreneurial experiences during a question and answer session with Metcalfe.
Out of the 20 companies, two admitted Thursday night that they would not continue beyond the end of the semester.
Elben Shira with VisualKite, a social media dashboard for businesses to display tweets, check-ins and promotions, told the crowd that the team of three built and then tested the concept and then decided that it would not work.
“We couldn’t figure out a way to scale,” Shira said. “The value we could produce was not worth the cost.”
All three of the founders are graduating soon and they’re going to work for local startups. Shira, a senior in computer science, graduates in a few days and will go to work for Mass Relevance.
He hasn’t given up entirely on entrepreneurship.
“It’s always in my head,” he said. “I feel like it’s inevitable that it will happen.”
Shira wrote a blog post a long time ago blasting UT for doing a poor job of fostering student entrepreneurship. So when he heard about the class, he signed up right away.
Magis Isotopes, which involves the magnetic separation of isotopes, also bit the dust.
Mariel Bolhouse, a senior in biomedical engineering, worked with a physics professor on the idea, which she brought to One Semester Startup.
“We’re working hard today to solve yesterday’s problems tomorrow,” Bolhouse said during her pitch.
The university funded the venture with $400,000 in research money, but it will take three years before the technology is ready for commercialization. Bolhouse will graduate soon and move to San Francisco.
“I’m going to find another startup,” Bolhouse said. “It’s something that I enjoy doing.”
The experience she gained in class has ignited her entrepreneurial spirit.
“It was a really good learning experience,” Bolhouse said. “You get to learn the business by doing it.”
Solspot plans to continue on and is already working on a prototype of its electric vehicle solar car charging station.
“We believe the future is in solar energy,” Agee Springer, chief engineer for Solspot said. “We also believe the electric vehicle is part of that future.”
Solspot is working with an electric vehicle manufacturer in India to create its canopy car charging stations.
Solspot breaks ground Jan. 4th on its first prototype at the J.J. Pickle Research campus. The structure will be complete by the end of February, Springer said. He expects to have the final model in production by fall of 2012.
One Semester Startup gave Solspot connections to further its product.
“We had already been incorporated when we joined the class,” Springer said. “We were struggling to find our way and now we are way further along.”
To date, Solspot has bootstrapped its venture, but now the company is looking for angel funding, Springer said. One member of his team will participate in the next One Semester Startup, he said.
“It’s been a really fantastic experience,” he said.
Solspot also worked with mentor Julie Haugh, who runs a solar power monitoring systems company Greenhouse Computers. Her solar technology helped Solspot develop its product, Haugh said.

Laura Beck talks with Raj Mistry, CEO & Co-founder of MowGoo

Laura Beck, chief shortie at StripedShirt, a T-shirt company and a technology public relations expert, served as a mentor to five companies. Beck met all 20 companies during a speed-dating event at the beginning of the semester. She watched them evolve and mature. “To see these companies more than four months later and what they have done, I’m just so impressed with our next generation of business people.”
Predictable Data, which corrects, standardizes and appends missing database information for marketers, also plans to continue. The idea began when Dwayne Smurdon and Tye Harrison entered a hacking competition and came in second. They decided to take their idea into

The team behind Predictable Data

One Semester Startup. Smurdon, a senior majoring in psychology and computer science and Harrison, a senior in computer science, already have customers. When they graduate, they’ll work on the business full time. The class has helped them immensely through mentorships and building a network, Smurdon said.
“It’s helped us to meet the right people at the right time,” Smurdon said.
Ben Dyer, chairman of TechDrawl and a mentor, applauded the class overall.
“I thought this was an extraordinarily well done course,” Dyer said. “I think there will be several real companies that come out of this venture.”
Zilker Motors was one that Dyer helped mentor that he thinks has a bright future. The company headed up by Mark Wise, a senior in finance and Chinese, already has $50,000 in angel funding and its first customer. It’s building the Z-100, a car that can go 100 miles on one gallon of gasoline.
“They have a lot of momentum,” Dyer said. “They’re hell bent on making a successful business out of it.”
Zilker Motors needs $9 million to take its car to market. It’s currently raising stage one funding of $500,000 and another $500,000 during stage two, in which it plans to complete a prototype within 9 months. The cars will sell for about $55,000 to $60,000, Wise said. He needs to sell 1,080 to break even.
“What One Semester Startup has helped us do is get us involved in the local investment community,” Wise said. “Also, the wealth of knowledge and experience the mentors bring is just phenomenal.”
The next One Semester Startup begins in January and Baer, one of its creators, plans to change a few things. He wants to attract students who already have a company underway. He wants people who are passionately committed to their project.
“I think this class really exceeded my expectations in some ways. The university made it easy for us to work. Overall, I was impressed with the students” Baer said.
Some of the companies will get angel and venture funding to continue on, Baer said. A number of venture capitalists and angel investors attended the pitch session.

The UT band practiced while the companies pitched.

“A lot of these students were going to do this with or without the class,” Baer said. “The class didn’t make them do this.”
Next semester’s class will have fewer students and fewer companies, Metcalfe said. He’s looking for well formed teams to work on companies together. Some of the students in this class had varying levels of commitment to the project, he said.
Russell Hinds, an angel investor, mentor and managing director of RSH Ventures, thought a lot of the companies were too early in their development for funding, but he planned to follow a few.
“It’s like a rock band, you don’t know it’s going to last,” Hinds said.
But Hinds praised the students’ innovative ideas.
“It’s nice to be on the cutting edge of new ideas that are coming into this world,” Hinds said. “This is the birthing place for new ideas.”

Ethernet inventor wants to network startups to solve the world’s energy crisis

Bob Metcalfe, left, talks with audience members at the Clean Energy Venture Summit 2011 in Austin, following his speech

A network of entrepreneurs will solve the energy crisis.
That’s the belief of Bob Metcalfe, professor of innovation at the University of Texas at Austin, founder of 3Com and co-inventor of Ethernet, a networking standard which links computers.
“The biggest lesson of the Internet that applies to energy is it was not built by incumbents but by startups fiercely competing,” Metcalfe told 400 people attending the Clean Energy Venture Summit 2011 Thursday afternoon.
“We have an ecology in which startups live,” Metcalfe said.
He dubs the current environment, the Doriot ecology, after the late George F. Doriot, a Harvard business school professor and one the first American venture capitalists.
The startup Doriot ecology contains six “major species,” including research professors, students, scaling entrepreneurs, venture capitalists, strategic partners and early adopters, Metcalfe said.
This semester, Metcalfe started a new program at the University of Texas called One-Semester Startup with 70 undergraduate students launching 20 companies. He is teaching them “how to use the machinery of free enterprise.” Out of the 20 companies, three of them are energy companies. One is Zilkermotors, which wants to create a 100 mile per gallon automobile.
“We’re not going to change venture capital to suit the requirements of energy,” Metcalfe said. “But we can change energy to meet the requirements of venture capital.”
Startup companies need to play within “this Doriot ecology,” he said.
One of the problems is that the energy startups are at the mercy of the turbulent energy marketplace.
“These poor startups in energy get slaughtered when the price of oil or solar goes down,” Metcalfe said. “In the last five years, the energy market has been disrupted by the discovery of vast amounts of natural gas. It’s cheap. It continues the de-carbonization of energy. So gas could damage startup innovation in energy.”
Also, the collapse and bankruptcy of Solyndra is a catastrophe for the “taxpayers and the government officers and the solar companies that are getting guilt by association,” Metcalfe said. In 2009, Solyndra received a $535 million loan guarantee from the Federal government to build a plant to make its solar photovoltaic panels. The company received millions more from venture capitalists and other investors.
“But it’s an inevitable catastrophe,” Metcalfe said. “I’m afraid we are learning the wrong lessons from Solyndra.”
Some people are saying that it is a really bad idea to manufacture anything in the U.S. in the wake of the Solyndra collapse. But that is “a bad lesson for us to learn from Solyndra,” Metcalfe said. The U.S. should be manufacturing solar panels, he said. Unfortunately, Solyndra’s bankruptcy has led to “the criminalization of entrepreneurial failure,” Metcalfe said. “That is a blow to our innovation system.”

The core lesson from Solyndra is “premature scaling,” Metcalfe said. The company faced enormous pressure to expand quickly and solve the environmental crisis and create jobs, he said. So it expanded its operations too quickly.

“Startups face lots of pressures to scale,” Metcalfe said. “You need to resist those pressures.”
Metcalfe has put his money in several clean tech companies. He has invested in five energy startups including Zigbee, which makes software for smart meters for the home. He also invested in Infinite Power Solutions, which makes the world’s smallest batteries and Sun Catalytix, an energy storage and renewable fuels technology company. Silicon wafer manufacturer, 1366 Technologies, another of his investments, has also received a $150 million loan guarantee from the Federal government. It is building a 10 megawatt plant to make sure the company’s technology can scale properly, Metcalfe said. The company has been damaged by the failure of Solyndra, he said. He also invests in SiOnyx, which makes black silicon used to enhance the response of photovoltaic cells.

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