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Startups: What Kind of Entity Should You Form?

October 8, 2013 / / 0 Comments

By SUSAN LAHEY
Reporter with Silicon Hills News

David Valenti, a partner with Reed & Scardino, photo by Susan Lahey

David Valenti, a partner with Reed & Scardino, photo by Susan Lahey

For most startups there are two ways to go in deciding what kind of business entity you should form: A limited liability company, or a Delaware Corporation, according to David Valenti, a partner with Reed & Scardino.
Valenti gave a presentation Tuesday on “What Kind of Entity Should I Form” for Austin Startup Week at the company’s offices, 301 Congress. About 30 people attended.
Among the questions Valenti said startups need to ask themselves are:

  • How much personal liability do I want?
  • Do I want to be able to transfer ownership?
  • How many owners are there going to be?
  • Will there be any foreign owners?
  • How do I intend to raise capital?
  • What kind of management structure do I want?
  • How much corporate maintenance do I want to do with respect to filing documents and meeting regulatory standards?

Of all the most common entities, sole proprietorship, general partnership, limited liability corporation, S Corporation or C Corporation, the LLC and C Corp make the most sense, Valenti said. Both limit the company’s liability, meaning that if there’s a lawsuit, it’s only against the company and not the owner’s personal assets. Both allow foreign partners—which S Corps don’t—which might be important if you hire a foreign national and want to offer equity as part of your compensation.
Also, he said, if a company wants to later convert to a C Corporation, it’s easier to do so from an LLC. The reason for that is that, with an S Corporation, the income of the company “passes through the company” and is reported as the personal income of the partners. With the others, the company’s income is separate and partners take a “reasonable salary.” VCs are often unable to invest in S Corps because some of their investors are non-profits and the profits of a company would “pass through” to the non-profit, violating the non-profit’s status.
If a company intends to bootstrap or raise only friends and family rounds, or even solicit investments from angels, it can do so as an LLC. If a company doesn’t intend to solicit VC funding for several years, setting up an LLC is relatively inexpensive–$300—as compared to the costs of a C Corporation which requires setting up a separate bank account, establishing bylaws and a board and other maintenance costs that could require the services of an attorney and accountant.
But if the company does intend to solicit VC funding, it should set up a Delaware Corporation.
“VCs will tell you they want to invest in a Delaware Corporation because Delaware is very settled on how corporations operate. The whole system set up to litigate corporate matters.”
There is no tax advantage, Valenti said, to setting up a corporation in another state like Nevada. At one time, the “tax friendly” status of the state where the entity was set up would ease a company’s tax burden, but that’s not the case any more. Startup partners, he said, should set up the entity in the state where they live and operate. And they shouldn’t use their home addresses if they have no office. They should setup an account with a company that provides a street address and suite number instead of a P.O. Box.
Reed & Scardino work in several areas of business law but have a special focus on startups and the issues surrounding founding a company. The firm is offering office hours during Startup Week for
companies looking for individual help.

Battle of the Bands and Made in Austin at Austin Startup Week

October 8, 2013 / / 1 Comment

By LAURA LOREK
Founder of Silicon Hills News

IMG_1478For the second year in a row, Eric Bandholz travelled from Spokane, Washington to attend Austin Startup Week.
“I lived here in 2003 and 2004 and I’ve been waiting for past ten years to get back here,” Bandholz said.
His favorite events during Austin Startup Week include epic office hours, the Startup Crawl and a UX Design mentorship meetup. The week long celebration of Austin’s technology entrepreneurs and industry is jammed packed with daily events at various venues around town.
The event kicked off Monday and runs through Friday.
Monday night, Bandholz manned a table for his company beardbrand at the Made in Austin Career Fair and later attended the Austin Technology Council’s Battle of the Bands at Mohawk.
Before the Battle of the Bands, 50 companies had tables at the Made in Austin Career Fair, sponsored by HP Cloud, CoolheadTech, Masters of Technology Commercialization Program at UT, Reed & Scardino LLP and PayPal.
IMG_1470Erik Larson and Frederick “Suizo” Mendler of TrueAbility, a site that tests the technical aptitude of Linux administrators and others, made the trip from San Antonio, to recruit a few new employees.
Other companies in attendance included Mutual Mobile, The TechMap, SpareFoot, MapMyFitness, StoryPress and Tech Ranch Austin.
Bandholz is one of ten people Jacqueline Hughes, organizer of Austin Startup Week, arranged to fly in for the event. Altogether, ten people flew in this year for Austin Startup Week, up from six last year, she said.
Overall, Hughes said she expects more than 4,000 people to attend the various events throughout the five days of Austin Startup Week, up from 2,500 people last year, she said.
Bandholz plans to move his company, beardbrand, to Austin in April. His business partner, Lindsey Reinders moved here a few months ago. IMG_1489Their ecommerce site sells products for the bearded lifestyle, Bandholz said.
“We foster style for the urban beardsman,” said Bandholz, who sports an impressed beard himself. “We do a lot of business on the Web. We could be located anywhere. Austin is our city of choice. We’re coming here because it’s a cool city.”
That’s the kind of thing Julie Huls, president of the Austin Technology Council, likes to hear. She arranged for the first ever Battle of the Bands Monday night at Mohawk. The event featured eight startup bands made up of technology workers at various startups around town.
“There’s similar patterns between musicians and technology people,” Huls said. “Music is a huge part of the technology industry in Austin. The technology industry wouldn’t be here without music. The two industries are symbiotic.”
The competing bands included Scorpio Rising, Digital Tiger (MapMyFitness), TroubleHawk (BuildASign), Thanks Light (Big Commerce), Boogaloo Grove (SpareFoot), The Pons (PeopleAdmin), Vorcha (ReachForce) and Hector Ward and the Big Time (Oracle).
IMG_1490TroubleHawk from BuildASign won the crowd favorite as measured by a clapping meter.
Vorcha won the judge’s favorite and as a prize gets time to record in Aryln Studios.

Captivate Picks up Where Game Developers Conference Online Left Off

October 7, 2013 / / 2 Comments

By SUSAN LAHEY
Reporter with Silicon Hills News

20131007_150634Last year, when the Game Developers Conference Online announced it was moving to Los Angeles, Jennifer Bullard, chair of the Austin chapter of the International Game Developers Association, immediately launched into planning a new conference that would remain in Austin. Captivate started Sunday morning at the Palmer Center with a keynote by Warren Spector and will continue until late Tuesday afternoon.
Bullard and co-creators’ objective was to create a conference of convergence, where artists, musicians, filmmakers and game designers could come together and learn more about supporting themselves through their art.

Convergence of Art and Business

A lot of these creatives, she said, have many different types of art in their experience and portfolios and are always having to redo their resumes to emphasize one area or another. “There are these huge swaths of people crossing back and forth and they’re not recognized for being on the cutting edge of convergence,” Bullard said.
The conference had several sessions on how to make money, handle legal issues such as what kind of company to create, how to network, how to craft an elevator pitch and how to build teams.
If someone identifies himself as a game designer but he hasn’t shipped any titles and he works at Walmart, Bullard said, he’s a Walmart employee.
“We want to help them earn a good living, and not a subsidized living,” she said. “In the creative space, you’re taught your craft. You’re not taught how to start a company or how to do marketing and PR….There’s a certain amount of DIY but it’s good to know how to do this yourself and where does that stop and hiring a professional start.”
Badges for the event ranged from a $25 badge for someone “who’s curious” up to $400 for professionals. About 1,200 people showed up for the event, which is about a third of the annual attendance of the GDC conference. But, said Bullard “I’ll get there in two to three years.” One problem may be that the conference was at the same time as Austin Startup Week, a conflict Bullard didn’t know about when she booked the space. But, she said, creatives tend not to go to Startup Week for some reason.

Session on Business Models With Meaning

Among Monday’s sessions was a session on Creative Ambitious Business Models That Change the World through Meaning. Panelists were Michelle Zadrozny of Helping the Aging, Needy and Disabled (HAND), and Rip Rowan and Tommy Darwin of Avail Design Group, a consulting firm that helps businesses grow and sustain their businesses.
Business and meaning, Darwin said, are yin and yang, they go together at the same time. The key, he said “is to get as close as you can to the people themselves trying to help. Deal with issues; don’t think hierarchies…..Talk to the people who are closest to the problem. Who is living in it. They’re a great source of ideas. Find out how they are already solving the problem. They have a lot of insights as to what will be valuable to them. Then when you have your idea, take it and go out to the people. As soon as you get a good guess, as soon as you get a good working notion, just start trying it. business is about getting a workable idea and a working version.”
“Become a student of all the different ways money flows into your area of interest….” Darwin said. “if you can find a way to get into that flow, you can support yourself. But you still have to do it with integrity. I’m not talking about pandering or selling out.”
Zadrozny talked about the benefits of technological advances like online applications for the Supplemental Nutrition Assistance Program. There are, she said, many challenges for the working poor just to survive, including the obstacle of paying for transportation to a job that didn’t pay enough to cover basic living expenses, let alone the transportation to get there.
One audience member brought up a video game where the player had to live out the issues of the working poor including the very question of whether to walk 15 blocks to save the bus fare the player needed for grocery money. A game that also showed decisions of the wealthy at the same time, panelists agreed, would be very helpful for actually changing behavior.
They also agreed that every endeavor, whether it’s a game or a documentary, needs a call to action so that people know what to do with their newfound perspective.
Tuesday’s sessions will include one on using improvisational theater to build teams, legal and business basics for startups, nine tech trends that will influence the next 10 years, and a keynote by Gary Hoover.

The Collaborative Economy Can Help Save the Planet

October 7, 2013 / / 0 Comments

By LAURA LOREK
Founder of Silicon Hills News

Robin-ChaseThe world is getting hotter.
In fact, it’s supposed to rise 11 degrees fahrenheit over land by the 2060s if we don’t meet our goals to reduce carbon impact, said Robin Chase, founder of Buzzcar, a peer-to-peer car sharing service and co-founder and former CEO of Zipcar, a car sharing service.
That means we must act now to institute drastic change to save our planet, Chase said during the afternoon keynote at South by Southwest Eco in Austin.
“I’m really, really focused on getting these jobs done,” she said.
Global warming is caused by Carbon Dioxide and air pollution trapped in the atmosphere, which acts like a blanket warming the earth when the sun heats it up. The biggest contributor to global warming is the burning of fossil fuels.
To solve the problem, Chase proposes Peers Incorporated, a partnership to drive the collaborative and shareable global economy.
“It’s a partnership between autonomous individuals and bigger institutions,” she said.
In 2000, when Chase launched Zipcar she saw an unfilled need and excess capacity in the marketplace.
On average, it costs $8,000 annually to own a car, but owners only drive them five percent of the time, Chase said.
The problem was people could only rent cars in 24 hour bundles.
“You couldn’t buy it in the way you actually consume it,” Chase said. “There was a real economic opportunity here.”
To address the problem, Chase created a platform for participation and treated Zipcar’s customers as its peer collaborators. They were not consumers, but co-creators.
“You wouldn’t rent a car for an hour if it was going to take you 20 minutes to get one,” Chase said. “Thanks to the Internet we could make that transaction cost really simple. We built this platform that allowed you to rent a car in 60 seconds.”
To create Zipcar, they would ask people for help all the time.
“We talked to them intimately about our desire to build a great company,” Chase said.
logoThe big shift in the Peers Incorporated method is to look at customers as collaborators and producers. Some of today’s most successful tech companies relied on this method to scale their platforms including Skype, Facebook, YouTube, Wikipedia, eBay and Flickr.
Chase discussed the power of the shareable economy to scale quickly.
For example, she said it took the largest global hotel company, InterContinental Hotel Group, 60 years to amass 645,000 hotel rooms in 4,400 hotels in 100 countries. And Hilton, the second largest, took 93 years to build 3,800 hotels with 610,000 rooms in 88 countries.
But it only took four years, for Airbnb, a peer-to-peer room rental service, to amass 650,000 rooms in 192 countries.
And Couchsurfing, which is nine years old, has 2.5 million rooms in 207 countries.
“It is the incredible pace of growth that is possible,” Chase said. “This new way of doing business is incredibly disruptive. And it provides some good opportunities for us.”
imgres-2The old industrialization model required companies to build a business as big as possible. It involved industrial strength, large investments, multi-year efforts, integration and aggregation of many parts, deep sector knowledge, diverse technical expertise, standard contracts and standardization, consistency, brand promise and globalization.
The new model relies on individual strength focusing on people, small non-government organizations and companies, small investments, short term sporadic efforts, delivery of small services, local knowledge, specific unique expertise offering customization, specialization, creativity, and personal social networks (trusted individuals.)
“With this model, we can capitalize on what individuals do best,” Chase said. “It’s this collaboration that I’m calling Peers Incorporated.”
It’s a platform for participation, she said.
“The individuals bring this incredible creativity,” Chase said. “Each side has to give a little that makes it interesting for the other side to play. Excess capacity is just permeating the whole thing. Platforms deliver economies that scale and high growth – that is what a platform is made to do.”
In addition to Airbnb, other examples include Etsy, a marketplace for selling things made by individuals, Fiverr, which has grown from 2010 to 2013 to offer 2.5 million gigs, or things people will do for $5. And even though the smartphone is only five years old, people have created more than 1.5 billion apps for Apple devices and Android devices.
The Peers Incorporated model lets people tap into “those tens of thousands, hundreds of thousands, millions of people outside of the room,” Chase said.
The Peers Incorporated model brings diversity, innovation, resilience and redundancy, Chase said.
Under that model, the economics of things completely change, she said.
imgres-3Her latest venture is Buzzcar, a peer-to-peer car sharing company in France that leverages the excess capacity of vehicle owners to rent out their cars to others. Buzzcar has a network of 7,000 cars across France, Chase said.
“I think of this excess capacity as a path toward abundance,” she said.
PeersIncorporated.com just launched based on case studies but this kind of disruption is happening in every single sector of the economy, Chase said.
For example, Global Forest Watch provides satellite images to let people find out what is happening in forests right now and shows deforestation happening in real time.
“It’s giving the power of the corporation to individuals,” Chase said.
Massive satellites and photographic evidence given to the tribe leader of a region in the Amazon in Brazil enables him to fight corporations to take back his land, Chase said.
“For me this is an example of a powerful platform for participation,” she said.
To end, she quoted Tim DeChristopher, a climate activist: “We are on track for such rapid and intense change, we might as well steer toward the world we want to see.”
Chase said there’s three things to do every day to build a sustainable world we want to live in:

  • Exploit excess capacity
  • Build Community Muscle – the future ahead is so hard – this is something we really have to do.
  • Focus on Platforms for Participation – scale and grow as fast as possible.

Intergovernmental Panel on Climate Change Report says that the world will use up its carbon budget in 30 years, Chase said.
“We should feel this incredible urgency,” she said.

For more on Robin Chase’s ideas, watch her Ted Talk from last year.

UTSA Holds Biannual Entrepreneur Boot Camp

October 6, 2013 / / 0 Comments

By ANDREW MOORE
Reporter with Silicon Hills News

Dirk Elmendorf and Pat Condon, co-founders of Rackspace, speaking at an Entrepreneurial Bootcamp at the University of Texas at San Antonio.

Dirk Elmendorf and Pat Condon, co-founders of Rackspace, speaking at an Entrepreneurial Bootcamp at the University of Texas at San Antonio.

To launch a business in college, students must master all kinds of skills.
They might have to make a business plan, find funding, do market research, sell products or services, stay on top of legal issues and intellectual property rights and sometimes figure out manufacturing.
This weekend, 150 University of Texas at San Antonio students got an edge on their competition. They covered these topics in less than eight hours in UTSA’s CITE Technology Entrepreneur Boot Camp. The camp featured ten speakers, including Rackspace Hosting co-founders Pat Condon and Dirk Elmendorf.
“Follow your own path. Don’t follow conventional wisdom necessarily,” Condon said. “Some of the conventional wisdom that we did follow that we shouldn’t of was: don’t serve your customers because you can’t make money doing it. Our history is littered with doing things because a lot of other people were doing it. It doesn’t necessarily mean you should be doing it that way too.”
Condon and Elmendorf discussed the triumphs and pitfalls of their experiences, speaking at length about a time when Rackspace’s customer support was more abysmal than fanatical. They encouraged the students to push forward with their ideas even if they didn’t feel qualified or smart enough to see them through.
“When you read hacker news, Techcrunch, all that stuff — it always feels like the founders are these anointed geniuses that are passed down from – well, there is founder worship,” Elmendorf said. “Because we give this presentation inside Rackspace, I never want someone who is joining to think it was founded by geniuses and they couldn’t contribute. We were idiots! We got lucky and we worked hard. If you can stick it out and do all those things you can make it.”
Other presenters included YUMIX founder Alex Garner, Jackson Walker Attorney William R. Borchers, and It’s 2Cool Ltd. CEO Deb Prost.
“I hope that I can inspire some of these folks to really take that nugget of an idea that they have and do all the blood, sweat, and tears that you have to do to get to where you really can market a product,” Prost said.
Held biannually, the CITE boot camp is open to students and faculty members and is designed to both inform and encourage students towards a life of entrepreneurship. The students came from a wide variety of situations. Some were getting ready to enter the $100,000 Student Technology Venture Competition with a team and a product. Others were part of the student CEO organization, part of the Certificate of Technology Entrepreneurial Management program, or simply entrepreneurship-minded students hoping to develop their skills.
“We’re taught in our program that whenever you have the opportunity to sit down and talk to people in the tech space that are from a different perspective, it’s always a good idea,” Business Senior Somer Baburek said.
Baburek is currently in the Business College’s entrepreneurship program and is preparing to enter the $100,000 competition with a medical device that wirelessly monitors fetal heart rates in labor and delivery. She attended the event to gain business knowledge and look for additional engineers for her team.
Engineering Senior Davis Richardson is also preparing for the competition, and attended to get better acquainted with the business side of startups. Richardson will be entering the competition with a device that trains students to design hydraulic systems.
“This is a really interesting opportunity because in the engineering college we spend all of our time looking at how to develop products internally,” Richardson said. “It’s not until here, or in electives, that we really get much insight into how this works outside the design process.”
Ramon Coronado and Tony Yuan at the UTSA Entrepreneurial Bootcamp

Ramon Coronado and Tony Yuan at the UTSA Entrepreneurial Bootcamp

Ph.D. Biomedical engineering students Ramon Coronado and Tony Yuan also attended the boot camp to buff their business skills. The two students are in UTSA’s Certificate of Technology Entrepreneurial Management program – an optional track designed to give Ph.D. students extra entrepreneurial training so they can launch their own businesses. Coronado and Yuan are currently preparing to launch Mobile Stem Care – which will help veterinarians take advantage of stem cell advancements.
“We have a lot of science in academia but no one around the department can teach us about business,” Coronado said. “Before this course we didn’t have the chance to see how to translate the technology [to market].”
The event also attracted younger students as well. Sophomore David Barrick is not involved in a competition or an entrepreneurship class, but he does have a few ideas for a tech company and attended to learn more about obtaining patents and talking to investors for seed funding.
“I saw this conference on a Tweet in Twitter for UTSA. I have been thinking of starting a tech company, so I saw this and said, ‘yea, this is for me’” said Barrick.
As of this weekend, 1,300 students have now gone through the CITE Technology Entrepreneurship Boot Camp at UTSA. CITE, short for Center of Innovation and Technology Entrepreneurship, is an interdisciplinary center for the colleges of engineering and business directed by Cory Hallam and Anita Leffel. While the boot camp is an achievement for the university, Hallam also sees the event as an essential part of an effort to grow the startup community, and the local economy, of San Antonio.
“We have to feed the pipeline of entrepreneurship in San Antonio, and these are students who will found companies now, found companies later, participate in three day startups, go be part of Geekdom,” Hallam said. “It’s great to be a contributor for San Antonio in that pipeline.”

FBI Busts $1.2 Billion Silk Road Illegal Online Marketplace with Ties to Austin

October 4, 2013 / / 0 Comments

By LAURA LOREK
Founder of Silicon Hills News

Ross William Ulbricht, alleged mastermind behind Silk Road, an illegal online marketplace for drugs, hacking software, forgeries and hit men. Photo from Ulbricht's LinkedIn Profile.

Ross William Ulbricht, alleged mastermind behind Silk Road, an illegal online marketplace for drugs, hacking software, forgeries and hit men. Photo from Ulbricht’s LinkedIn Profile.

The crazy tale of Ross William Ulbricht, also known as “Dread Pirate Roberts,” after a masked fictional character in the movie “The Princess Bride,” sounds like a HBO series on a renegade Internet entrepreneur gone wrong.
Ulbricht, 29, allegedly operated the Silk Road, a sprawling $1.2 billion black-market bazaar for drugs, computer hacking software, forgeries and hit man services. He founded the site, programmed its features and oversaw its operations on a daily basis, according to the Federal Bureau of Investigations.
The FBI arrested Ulbricht earlier this week on charges of narcotics trafficking, computer hacking and money laundering, according to a sealed criminal complaint by Christopher Tarbell, FBI special agent.

A Native of Austin

Ulbricht, who grew up in Austin and graduated from Westlake High School in 2002, is now in jail in San Francisco facing charges that carry several hundred years of jail time.
imgres-6The FBI arrested Ulbricht for owning and operating the underground website known as “Silk Road,” which provided a platform to sell heroin, cocaine, LSD and Methamphetamines. Ulbricht, under an alias “altoid” allegedly called the site “an anonymous Amazon.com.”
The complaint also alleges that the Silk Road provided a platform to trade “malicious software designed for computer hacking, such as password stealers, keyloggers, and remote access tools.” It also traded in other illicit goods and services through a payment system based on Bitcoins, an unregulated digital currency.
The FBI alleges that Ulbricht added a Bitcoin “tumbler” to the Silk Road payment system to “ensure that illegal transactions conducted on the site could not be traced to individual users.”
The two-year investigation of Silk Road, headed up by FBI Special Agent Tarbell, also involved agents of the Drug Enforcement Administration, the Internal Revenue Service, and Homeland Security Investigations.

So who is Ulbricht?

Ulbricht’s Facebook page reveals that he liked beer pong and crazy hat parties. He enjoyed movies like The Matrix, Office Space, Time Bandits and Lord of the Rings. His favorite books included Be Here Now, Hyperion, The Power of Now and Shogun.
His interests spanned money, partying, yoga, dancing, drumming and strength training.
He also focused on entrepreneurship and participated in a 3 Day Startup program in 2010. His LinkedIn profile listed his occupation as an “investment adviser and entrepreneur” based in Austin.
But the FBI alleges that starting in January of 2011 through September of this year, Ulbricht ran a global platform for drug dealers to sell controlled substances online.
And the plot deepened even further this year when Ulbricht allegedly “solicited a Silk Road user to execute a murder-for-hire of another Silk Road user, who was threatening to release the identities of thousands of users of the site,” according to the complaint.
The Silk Road operated on the “the onion router” or “tor” network, which provides anonymity to users.
“Based on my training and experience, Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today,” according to Tarbell. “Silk Road has been used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over a hundred thousand buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.”

All transactions took place using Bitcoins

Silk_Road_Marketplace_Item_ScreenThe site generated more than 9.5 million Bitcoins and collected 600,000 in Bitcoin commissions, equivalent to about $1.2 billion in sales and $80 million in commissions, according to Tarbell.
As of Sept. 23, the Silk Road had 13,000 items listed for sale under categories such as “cannabis,” “dissociatives,” “Ecstasy,” “Psychedelics,” and “Stimulants.” The items were sold in individual dosages and bulk orders.
During its investigation, law enforcement agents purchased more than 100 items of controlled substances such as cocaine, heroin, LSD and more from sellers on the Silk Road.
The Silk Road charged a commission, ranging from 8 percent to 15 percent, for every transaction on its site.

Hiring Hitmen

Tarbell also reported that Ulbricht took “it upon himself to police threats to the site from scammers and extortionists, and has demonstrated a willingness to use violence in doing so.”
In a second criminal complaint from the state of Maryland listed on the Baltimore Sun’s website, Ulbricht is alleged to have hired a hitman to kill an employee who he thought was stealing from Silk Road. He allegedly paid $80,000 to an undercover cop to execute the employee in January of 2013.
And in another case of hitman for hire a few months later, Tarbell outlines how Ulbricht allegedly sent messages to have a Silk Road user in Canada with a wife and three kids, named “FriendlyChemist,” killed for $150,000 or 1,670 bitcoins. The guy was trying to extort Ulbricht for $500,000 or else he would release the names and addresses of Silk Road users.

Ross Ulbricht, photo from Twitter

Ross Ulbricht, photo from Twitter

Ulbricht struck a deal with a user called “redandwhite.” After receiving his payment, that user messaged Ulbricht stating, “Your problem has been taken care of…. Rest easy though, because he won’t be blackmailing anyone again. Ever.” The user provided pictures to Ulbricht of the alleged dead body of the victim, but the police have been unable to find any record of a homicide occurring in White Rock, British Columbia on or about March 31, when this incident allegedly took place.

How did Ulbricht end up in jail?

He graduated from the University of Texas at Dallas with a Bachelor of Science degree in physics in 2006, according to his LinkedIn profile. Then he attended graduate school at the University of Pennsylvania School of Materials Science and Engineering.
On his LinkedIn profile, Ulbricht states that his goals shifted since graduate school and that he was focused on “creating an economic simulation” designed to “give people a first-hand experience of what it would be like to live in a world without the systemic use of force” by “institutions and governments.”
Tarbell believed that system to be Silk Road. He also reported that Ulbricht, under the alias “altoid” posted on different online forums to market Silk Road.

The Social Media Trail

The FBI heavily relied upon social media sites like LinkedIn, Facebook, Twitter and Google + to put together a profile of Ulbricht and link him back to Silk Road. For example, Ulbricht’s Google + profile listed his favorite YouTube videos, which included a number originating from Mises.org, the website of the Mises Institute, the world center of the Austrian School of Economics.
Ulbricht, under the alias DPR, had cited the “Austrian Economic theory” and the work of Ludwig von Mises and Murray Rothbard – economists closely associated with the “Misus Institute” as providing the philosophical underpinnings for Silk Road.
Ulbricht’s best friend is Rene Pinnell, founder of Hurricane Party and Forecast in Austin, which shut down in July of 2012. Pinnell moved to San Francisco shortly after that. Ulbricht was living at his parents house in Austin and moved shortly after that to join Pinnell in San Francisco.
In its complaint, the FBI reported that Ulbricht lived for a while with a friend who moved to San Francisco in September of 2012. That friend is believed to be Pinnell. They also made a YouTube video together interviewing each other for Story Corps, according to a posting on Pinnell’s personal website. The video shows Pinnell and Ulbricht in split screen talking about moving out to San Francisco, school friends, work, women and other interests. The two have known each other since sixth grade at West Ridge Middle School.

Josh, Frosty and other Aliases

In July of 2013, the U.S. Customs and Border Protection intercepted a package from Canada that contained nine counterfeit identity documents. Agents then visited Ulbricht at his house on 15th Street in San Francisco where he sublet a room for $1,000 monthly, which he paid in cash. He provided them with a copy of his real Texas driver’s license and said that his two other housemates currently only knew him by the fake name “Josh.”
He told the agents that “hypothetically anyone could go onto a website named “Silk Road” on “Tor” and purchase any drugs or fake identity documents the person wanted.”
“The agents also spoke with one of Ulbricht’s housemates at the address, who state that Ulbricht, whom he knew as “Josh,” was always home in his room on the computer.”
Tarbell concluded in his investigation that Ulbricht was stocking up on fake identities so he could rent multiple servers from hosting companies under false identities.
Ulbricht also used the alias “Frosty” posting in computer coding forums for help on programming his illegal underground website.
So how did a kid, who liked cliff jumping and snowboarding and grew up in Austin, got advanced degrees and studied to be an entrepreneur, go down such a bad path? That’s something that only Ulbricht knows. But one thing is for sure, this Silk Road didn’t lead to riches and the good life, but to the inside of a dingy jail cell. And if convicted, Ulbricht, a bright kid with so much promise, faces the possibility of spending the rest of his life in prison.
At a hearing on Friday, Ulbricht’s lawyer denied all charges including that Ulbricht ran the Silk Road website, according to the Los Angeles Times.

Bigcommerce Raises $40 Million from Revolution Growth

July 25, 2013 / / 3 Comments

imgres-10Bigcommerce, a site that lets anyone create an online store, raised $40 million from Revolution Growth.
Steve Case, co-founder of the Revolution Growth fund and founder of America Online, will also join Bigcommerce’s board.
The Austin-based company, founded by Eddie Machaalani and Mitchell Harper in 2009, has raised $75 million to date.
Bigcommerce’s software has already helped more than 35,000 companies launch online stores, market their businesses and build brands for just $25 a month. Its customers include Gibson Guitar, Zaggora.com, YETI Coolers and many more.
“Bigcommerce is a big idea that aligns perfectly with Revolution Growth’s philosophy: that technology can enable any entrepreneur, in any industry, located anywhere, to build a successful, high-growth business,” Case said in a news release.
Bigcommerce plans to use the funds to further develop its product and for marketing. The company is also hiring new employees.
“At our core, we are simply entrepreneurs helping other entrepreneurs build the business of their dreams,” Bigcommerce co-founder and co-CEO Mitchell Harper said in a news release.

SXSW Branches Out to Las Vegas

October 23, 2012 / / 1 Comment

Like countless pioneers, the quintessential Austin technology, music and film conference, South by Southwest ventures West.
SXSW announced Tuesday that it plans to host SXSW V2V in Las Vegas next August 11th to 14th at The Cosmopolitan of Las Vegas. The show will focus on entrepreneurial innovation. The four day event seeks to bring together startup companies and entrepreneurs with venture capitalists and mentors. The schedule can be found here.
Badges to attend the show are on sale now at the early bird rate of $695 through Dec. 14th and the prices go up from there with a walk up rate of $1,050.
The show will select some of its speakers and presentations from those submitted through its SXSW Panel Picker process. But SXSW V2V is also accepting new applications to speak through March 29th. The event is also seeking mentors and coaches.
The SXSW Las Vegas conference also features V2Venture, a two day pitch event focused on innovative startups. That program will begin accepting applications in January.
“With the growth and popularity of the startup-related programming across the SXSW family of events, it is clear that there is enough momentum to create a wholly unique and independent event focused on entrepreneurs,” SXSW V2V Producer Christine Auten said in a news release. “SXSW V2V will follow the same general strategy we have followed with other SXSW experiences. It is about turning creative ideas into reality — bringing visionaries to Vegas.”
“Las Vegas is repositioning itself as a hub for innovators and digital creatives. We are excited about all the new energy in this city. This is the perfect place for this small, offshoot event to find its voice and grow as the Las Vegas tech scene emerges onto the national scene,” SXSW Interactive director Hugh Forrest said in a news release. He visited Las Vegas and spoke to the technology community there last summer.

Bijoy Goswami on “We Are Austin Tech”

August 14, 2012 / / 0 Comments

Every week, We Are Austin Tech, a group of entrepreneurs, technologists and other volunteers release a video highlighting someone who has contributed to the local technology industry.
Last week’s video put the spotlight on Jason Cohen, founder of WPEngine and other startups including co-founding Capital Factory.
We Are Austin Tech seeks to tell the story of the city’s vibrant technology community blending the stories of veteran entrepreneurs with others involved in the industry such as public relations experts, journalists and more.
This week, the video features Bijoy Goswami, the founder of Bootstrap Austin. Susan Lahey, a reporter with Silicon Hills News, did this profile on him earlier this year.

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