Hosts: Steve Borsch, Tim Elliott, Graeme Thickins and Phil Wilson
Music: “Sugar Rush” by Beau Hall from the podsafe Music Alley

Discussed during the show:

• Is Kickstarter the new VC? Pebble: E-Paper Watch for iPhone and Android and Forget the money: Kickstarter turns Pebble into a platform
• Is it becoming TOO easy to be tracked online and, especially, with our smartphones? If You Have a Smart Phone, Anyone Can Now Track Your Every Move and 2006 AOL data search results leak and NYTimes: A Face Is Exposed for AOL Searcher No. 4417749
• Will It Blend
• StarTribune: Lean Times for Venture Capitalists 
• Indiegogo
• Kickstarter technology projects already funded 
• Bluetooth 4.0 
• Graffiti for Android
• Project Glass
• Naked TSA Protests Lead to Arrests, Mental Evaluations and Oregon Man Strips Down to Protest TSA 

Upcoming Events:

• April 21st: SaaS Class: Software-as-a-Service Smarts (SaaS Camp 2012) at CoCo Mpls
• April 25th: MSP WordPress User Group Meeting at 7pm, The Nerdery
• April 25th: MHTA Spring Conference, Minneapolis Convention Center
• May 21st: Predictive Analytics Forum, Medtronic’s Mounds View Campus
• June 5-8: eyeo Festival, Walker Art Center
• Weekly: TechMasters is a new Toastmasters chapter in Twin Cities for tech professionals

Press to Play Podcast:	Direct Link to Podcast MP3

Minnov8 Gang 165 – So, Lumia 900, why is your software half-baked? is a post from: Minnov8 and published under a Creative Commons license.

It just keeps getting bigger and bigger — and better!  A pre-party the night before was a new, fun twist this year, held at Vic’s, across the river from Downtown Minneapolis.  On Saturday, some 60 breakout sessions provided a wide array of learning and sharing experiences, along with awesome hallway discussions that were in full swing all day long — from 8:00 am all the way through the closing reception well after 6:00 pm.

Kudos to organizers Ben Edwards, Luke Francl, and Adrienne Peirce of Minnestar.org, and their many volunteers who work so hard to make this event successful. And thanks to all the great sponsors: Code42 Software, Fredrikson & Byron, 8th Bridge, W3i, ipHouse, August Ash, Bloom Health, Barcamp Tour, Split Rock Partners, ChowGirls, and Ech03.

It seems I say this every year, but it’s true (I’ve attended the last six annual events in their entirety):  the level of energy and enthusiasm about Minnesota Tech was more than I’ve ever experienced!  You can just sense the growth and excitement in our tech community. And, if you’re like me, you keep meeting so many more new and amazing people — technology and business professionals who are contributing to great new startups here in Minnesota, as well as to the broader technology industry in our state.  It was a pleasure to behold.  I had so many excellent conversations, trust me — there isn’t enough room in this blog post to tell you about them all <haha>.

But I can show you pics I shot Friday night and all day Saturday, which I posted on Instagram. Here’s a selection of those pics that I put into a Minnebar 2012 Flickr set.

Minnebar 2012: Tech Geek-Out Extraordinaire! is a post from: Minnov8 and published under a Creative Commons license.

LiveBlog: “MN Venture & Finance Conference” – 10/14/2010 is a post from: Minnov8 and published under a Creative Commons license.

This is great sport, people!  We can’t beat Wisconsin in college football for seven years straight, but, oh yeah, we got those cheeseheads when it comes to the game of innovation!  Or do we?  (And, Gopher fans, I won’t even bring up South Dakota.  Shees.)

“Innovation?  Jobs?  Has Minnesota lost it?  Not for one day in October we haven’t,” says The Collaborative in one of its promos.  “2010 marks our second full year of the worldwide recessionary malaise.  Our state’s economy is also not what anyone is calling ‘robust’.  Our unemployment rate is higher than it’s been in decades.  On the plus side, we’re still one of the brightest economies in the nation,” the pitch goes on to say.

“The positive gap between our jobless rate as compared to the nation is at its highest in 30 years… Yet we also hear many reports of our state losing its way in innovation.”

Can you sense the drama, people?  I’m nervously doing finger and hand exercises right now, in great anticipation of the nuances I may be able to capture on my Macbook or iPad (decisions, decisions) as I contemplate the live-blogging nirvana that awaits me Thursday.  It has me breathing heavy.

“Last year, in the throes of the recession, 54 companies gave presentations, 400+ investors and entrepreneurs came, shared, and discussed growth in tough times,” said Dan Carr, CEO of The Collaborative, in his announcement of this year’s event.  “It actually felt optimistic! These companies also go on to create jobs.  Lots of them.  Minnesota is 8th in the nation in venture backed employment: 365,000 jobs.”  (No word on how many of those people may have been laid off in recent times because those ventures couldn’t raise enough money.)

Carr continues:  “This year’s ‘homecoming’ promises another day-long celebration of ‘doing’ more than ‘hand wringing’.  It’s true that some of our greatest companies rise from difficult times.  Our annual conference has a knack for bringing together Minnesota’s best ‘Up & Comers’.”

The 2010 version of the conference will begin with a look at the current state of venture investing, by way of an opening address from John Taylor of the National Venture Capital Association.  That will be followed by 18 Presenting Companies giving seven-minute presentations, plus somewhere between 20 and 30 more startups in the “Entrepreneurial Showcase” giving one-minute introductions.  (I’ll be particularly interested to see if any of those entrepreneurs can make a impact in that minuscule amount of time.  I’ve heard several of the new 90-second “Alpha Pitches” at the last few DEMO conferences in California, most of which fail to impress, and they have 50% more time.)

Notable in the 2010 presenter group, says The Collaborative, is the mix of industries and stages… “reflecting Minnesota’s variety and also our strengths: Medtech (Inspire Medical Systems, Galil Medical, and InterValve) … Cleantech (EarthClean, tenKsolar and Packet Power) … Technology (Alvenda and Swift Knowledge) … and mouth guard maker Bite Tech … and more.”  (I don’t know about you, but I beam with pride when I tell people about Minnesota’s rich tradition in mouth protection.)

But wait, there’s more!  Panels and workshops during the day (speakers and panelists) will address these topics:

• Financing Innovation circa 2010:  Angel, Venture Capital, and Private Equity
• Medtech in 2010:  Innovating with New Science, Products, and Markets amid FDA and Reimbursement Challenges
• Next Generation Technology:  Minnesota’s Unique Advantages and Opportunities
• Financing in a Challenging Economy
• Exit Strategies
• Intellectual Property and Financing
• Going Public
• Planning Your Long-Term Financing Strategy

You can still register for the event.  And (pssst) I hear the “MHTA” might even have a $100-off discount code.

Some 350 or more are expected at the confab, Carr tells me.  Sure, I know most of them already — but the thought that some in the group may be potential new social media friends for me makes me almost giddy.  And, doggone it, I don’t even have to drive to Wisconsin or South Dakota to meet them.  (This conference has been attracting more and more out-of-state attendees in recent years, which is commendable.)

The Twitter hashtag for the event is #mnconf.  I wonder how many of the blue suits might be tweeting.  Not holding my breath on that, but maybe I’ll set my live-blog software to display all the tweets attendees are blurting out during the event.  It’s time we loosened up this venerable conference a bit — thank God Twitter happened, huh?

Watch for our post with the link to my live blog here on Minnov8, which we’ll have up by late Wednesday.

In Its 24th Year, Venture Conference Asks If Minnesota Has ‘Lost It’ is a post from: Minnov8 and published under a Creative Commons license.

Minnesota faces a crisis of competitiveness in attracting high-tech industries, and needs a comprehensive science and technology initiative to remedy the problem. A 16 member committee of experts from the public, academic and private sectors have been assembled to assess the challenge and make recommendations to the legislature, and on February 16th, Co-Chairman Dan Mallin (@danmallin, partner in Magnet360 and co-founder of the Minnesota Cup) presented the findings of the committee to the state legislature.

The full report is available on the DEED (Department of Employment and Economic Development) website here. Watch these videos in two parts and listen to the end for the recommendations the committee makes around incentives for investors to accelerate funding for startups and growth of companies in Minnesota:

http://www.youtube.com/watch?v=xxQ_-dLcKFg

http://www.youtube.com/watch?v=0DDzQJXW6Kw

Dan Mallin Presents MN Science & Tech Committee Findings is a post from: Minnov8 and published under a Creative Commons license.

And that was just the schmoozing part! 

There were lots of live demos going on in the theater adjoining, if you could squeeze yourself in there:

1. ArtsApp – like Monster.com for artists to submit multimedia (Dejen Tesfagiorgis)
2. ReliaCloud – a cloud computing platform that allows people to build scalable computing infrastructure on demand (Jason Baker, VISI)
3. Pedal Brain – advanced cycle computer based on the iPhone platform combined with web-based data analysis (Matt Bauer)
4. MinuteBids – an online bidding platform that makes it easy for property managers/owners to request and get bids for their property maintenance needs from top rated service providers (Jon Coudron)
5. Pedair – a many-to-many market place for people who love bikes (Andrew Korf)
6. MobileRealtyApps.com – Custom branded MLS home search apps for realtors on iPhone and Android (Aaron Kardell)
7. MileMarker - helps organizations capture ideas and prioritize them, making it easier to understand what to work on first (Bill Galfano)
8. Live Information Manager for Business – connects employees of an organization to their data and each other from anywhere in the world, all from within a single workspace (Roger Peters)
9. Mobile Roots – customized iPhone applications for campaigns (Lynn Smith)
10. WebSlide – provides you and your clients with a private, secure, easy-to-use system for uploading, sharing, and collaborating on designs without ever leaving your browser (Paul Armstrong)

Kudos to Luke Francl, Ben Edwards, and their team of volunteers for pulling off another great Minnedemo!  And a shout-out and huge thanks to the sponsors this time:

• TECHdotMN
• ipHouse
• W3i
• Livefront
• Split Rock Partners
• New Counsel

MN Tech Rocks – Last Night Was Proof is a post from: Minnov8 and published under a Creative Commons license.

I actually picked up the “who and how much” news tip on this story at the Social Media Club workshop Friday morning at Best Buy, from a deep-throat source I shall not name… :-)  And I decided to post it after we recorded our latest Minnov8 Gang podcast yesterday — in which, among other things, I chatted about this news with our guest, George Reese, CTO of enStratus, which shares offices with Alvenda.  (And Alvenda also uses enStratus’ cloud computing management tools.)  You may recall that Alvenda won the 2009 MN Cup business plan competition this past September — which was no small feat with more than 1100 entries.  The firm was only founded in 2008, and had announced initial funding in December 2008 (see its news page), from private investors it did not identify.  Two of its three founders hail, respectively, from retail powerhouses Retek (acquired by Oracle) and Target.com

What really launched Alvenda’s fortunes was the news this past summer that “social commerce” was coming to Facebook by way of  1-800-Flowers setting up the first online store there — with Alvenda’s technology behind it. Coverage of that development ensued on TechCrunch and in BusinessWeek, the Financial Times (registration required), and elsewhere, giving Alvenda quite a sudden high profile, the likes of which a Minnesota startup hasn’t seen in some time.  And that buzz certainly boosted the firm’s chances in the MN Cup judging that followed soon after.

Here’s a backgrounder page on Alvenda, which includes this quote from Wade Gerten, CEO, which I think captures the essence of what this breakout Minnesota startup is all about:

“We believe the majority of future online sales will happen offsite. Customers will be able to shop with brands wherever they happen to be whether they’re on YouTube, a favorite blogger Web site, or in Facebook. With innovative merchants like 1-800-Flowers, Alvenda is moving commerce forward to these touch points and is generating remarkable sales results.”

But the aforementioned flower store on Facebook is just the beginning of putting “shops next-door to the conversation,” as BusinessWeek so aptly puts it.  The FT.com story cited above, from August 2009, said at the time that “at least 20 more such storefronts will appear on Facebook in the next two months,” quoting Alvenda’s Gerten. The story said Gerten claimed contracts at the time to develop eight such storefronts, and that, since the 1-800-Flowers application launched, Alvenda had secured 12 more.  So, you can understand why there’s a flurry of activity at the firm these days.  FT.com quoted Gerten as saying the contracts were with “very large general merchandise retailers, and very large electronics retailers.”

Oh, I wonder whom that might include…

Alvenda Bags $5 Million in VC is a post from: Minnov8 and published under a Creative Commons license.

The Minnesota Department of Commerce just released this 2008 Investor Fraud Traps listing (in alphabetical order) and offer it as a warning:

Deficient Disclosure: The recent investigations by state securities regulators related to auction-rate securities (ARS) have reinforced that investors should remain cautious when pitched complex investment products accompanied by deficient disclosures or when advised to concentrate their investments too heavily in one investment product. It is best to avoid investment pitches that would lead you to put all of your eggs in one basket, especially if it’s a basket you don’t fully understand.

Energy Scams: The substantial increase in energy costs has made scams related to energy more prevalent. State and provincial securities regulators are seeing not only shady oil and gas investments, but also scams that promise the development of new technologies to increase the efficiency of energy consumption or to extract energy from sources previously thought too expensive to develop.

Online Affinity Fraud: In a new twist on affinity and online investment fraud, Tyler said NASAA members are concerned that unscrupulous individuals are trying to use social networking websites to lure people to meetings that may promote fraudulent or unsuitable investment products. “Social networking websites create an environment ripe for affinity fraud,” Tyler said. “Fraudsters can take advantage of the fact people freely share information with both their real and ‘virtual’ friends by posting it to their profile,” Tyler said. “Communication tools provided by some social networking websites make it easy to advertise and promote investment scams to a wide audience for free.” Investors need to do their own research before making an investment and should not simply rely on ‘expert’ advice given at a seminar or meeting.

Prime Bank Schemes: Promises of receipt of astronomical profits from vehicles that execute “off-shore trades of foreign bank debentures” only available to very wealthy people and cloaked in secrecy are the securities equivalent of a purse snatch. They simply do not exist, and once money is handed over, it will never be recovered.

Private Securities Offerings: Con artists are turning increasingly to private securities offerings under Rule 506 Regulation D of the Securities Act of 1933 to attract investors without having to go through the full registration process. Although sometimes legitimate, these offerings are often associated with fraud. Also, proceed with caution when encouraged to invest in “general partnership” or “limited liability companies.” Speculative deals often are packaged as such in an attempt to evade the consumer protection requirements of state and federal securities laws.

Promissory Notes: For sophisticated or corporate investors, promissory notes can be a good investment, providing a reasonable reward for those who are willing to accept the risk. However, promissory notes that are marketed broadly to the general public often turn out to be scams. Promissory notes are sold as instruments that guarantee above-market, fixed interest rates, while safeguarding their principal. When interest rates are low, investors may be enticed by the higher, fixed returns that promissory notes offer. These notes, however, can become vehicles for fraud when the issuer of the note has no intention or capability of ever delivering the returns promised by the sales person; leaving the note worth less than the paper on which it is printed.

Pump and Dump Schemes: E-mail and fax spam, phony press releases and telemarketing drives are the tools of fraudsters who “pump” up the value of low priced securities traded on the “pink” sheets which are then “dumped” on naïve investors who purchase the stock at inflated prices. The balloon breaks when the promoters no longer maintain the myth that there is value in the shares and investors are left holding worthless stock certificates.

Real Estate Investment Schemes: As the housing market continues to reel from the subprime lending crisis, schemes promising large returns from various types of real estate-related investments also are increasing. Some real estate alternatives may actually be worthless real estate investments that promoters are trying to dump off to unsuspecting retail investors. State and provincial securities regulators also note that “reverse mortgages” pose several risks: they may not be appropriate for a given investor; if the homeowner chooses the option of accepting the funds all at once in a lump sum it may create a sudden supply of cash that may be diverted into other bad investments; and they enable promoters to gain access to a senior citizen’s entire financial profile. Such disclosure of other assets can lead to yet more scams—and losses.

Sale and Leaseback Contracts: Seeking to avoid protections afforded under federal and state securities laws, investments in equipment or animals are proposed to investors with the promise of a high returns and a guaranteed future repurchase of the product at full invested price. While these investments are touted as safe, the buyback features are unfunded and illusory.

Unsuitable Sales: State and provincial securities regualtors continue to see the sale of complex hybrid financial products, such as variable and equity-indexed annuities, to investors for whom they are not suitable—typically seniors. These products frequently contain features so complicated that even licensed financial professionals are not adequately trained to understand them.

To read the North American Securities Administrators Association press releases about each category (which contain deeper explanations and more info), look at their “Top Investor Traps” page from which the MN Dept of Commerce alert was derived.

2008 Investor Fraud Traps is a post from: Minnov8 and published under a Creative Commons license.

A source inside the company described the recent moves as “the usual restructuring.” I was told that all VC-related activities are now under Rick Rommel, SVP-Emerging Business. Rommel reports to Kal Patel, whose title is EVP-Emerging Business. Also within Patel’s organization, I learned, is a second SVP-Emerging Business, Neil McPhail. My source tells me McPhail’s responsibilities are “less direct VC-related, although there is some overlap.” His main responsibilities relate to the stores and to the company’s “growth accelerator” initiative.

Yet another group within Best Buy is one that deals directly with the company’s own VC funding investments. That function has been headed for some time by Kuk Yi (first name pronounced “cook”), and is a part of the Finance function, specifically the Treasurer’s office. Yi also has a “dotted line” reporting relationship to Patel, I was told.

Late in March of 2008, a story broke via the blogosphere that Best Buy was forming a new VC fund of its own — actually two funds — which I later learned was an initiative headed by Kuk Yi, and it was seeking to hire Principals and Associates for those VC funds (as many as four positions). Here’s a blog post I did about the blog buzz and speculation going on at that time. The local Business Journal weekly broke the story in the Twin Cities media on March 28, picking up on the earliest blog reports.

No Action Since March?
The most surprising thing I learned from my sources recently is that no one has yet been hired for any of these positions. So, the question remains: just what is Best Buy doing in regard to formalizing its own venture investing function? And what changes, if any, can be expected in the liaison activity with the VC community at large, based on Nyman’s departure?

One thing is certain: Marti Nyman leaves Best Buy with a wealth of relationships with scores of VCs, including many of the most successful ones in Silicon Valley, where he spent much of his time. While assessing his next move, Nyman is doing business development consulting with a Twin Cities-based technology startup that had previously raised $5 million in venture capital and, he says, is on the verge of achieving significant adoption of its technology.

Best Buy Shakes Up VC Liaison Group is a post from: Minnov8 and published under a Creative Commons license.

According to the U’s own business development people (see link to Powerpoint presentation at bottom), the 20-year success record of the U’s technology company spinoffs is only half the university average nationally — and less than one-fourth the success record of the nation’s premier schools. What’s more, in one recent year (2004), for example, the U of MN spun off only one company compared to 14 at the University of Michigan and 16 at the University of Illinois. Why I am focusing here on spinoffs? Well, because, according the U’s own business development people, creating university spinoffs is “much more profitable than licensing (revenues)” to the school.

And, besides, the largest source of the U’s licensing revenues will run out soon. That was the focus of a recent Sunday feature in the StarTribune by my friend Thomas Lee, entitled U’s Transfer Problem: The University of Minnesota needs more eggs … and more baskets. With time running out on its royalty income stream, the U is scrambling to find the next Medtronic. An excerpt:

Judging from the university’s recent track record of converting its vast reservoir of research into cash, the U faces an uphill climb. The school that’s known for inventing the pacemaker, the heart valve and one of the Web’s first Internet browsers is desperate for a hit.

At a time when the state’s economy is slowing and its medical device sector is maturing, the U’s long commercialization slump has attracted the urgent attention of lawmakers, venture capitalists and others concerned about where Minnesota’s next Medtronic or St. Jude will come from.

The next day, we find this look at innovation at the U is a two-part series in the StarTribune, with another article appearing by Thomas Lee, this one entitled: His Job: Magician – The University of Minnesota’s research VP brings his experience honed in Madison to jump-start innovation in the Gopher state. In this piece, we hear about specific programs the U has undertaken since 2005 in an attempt to make up for the expected drop off in licensing revenues, starting next year.

One of Mulcahy’s first priorities when he arrived in Minnesota was to recruit industry professionals like former Honeywell executive Jay Schrankler to run the Office of Technology Commercialization. The office traditionally had been staffed with academics who had little or no business experience.

In the past, many of the university’s start-ups failed because the school lacked the business talent to fully develop the ideas before it sought outside capital, experts say.

The school hired a half dozen “strategy managers” with experience in fields like software, pharmaceuticals and medical devices to determine if faculty research or technology can be licensed or spun out into new companies. The Venture Center, under former investment banker Doug Johnson, launched a “CEO in Residence Program” in which outside entrepreneurs and business people regularly examine potential start-ups, mentor MBA students and help structure deals.

The article says the U has set some lofty goals compared to the numbers I cite in my first paragraph above. To wit:

Schrankler and Johnson say their goal is to spin off three companies a year, including one that has the potential to go public in five years with at least a $250 million market value. They also hope to generate $50 million to $60 million in royalty income annually.

Johnson said, “There is plenty of world-class technology at the U.” He cited a company called Orasi Medical, which the U recently spun out, and another university medical startup that several VC firms are interested in. He also cited the work of a medical researcher at the U, Dr. Doris Taylor, which recently received wide attention:

• Here’s the story as published by UMNnews: Researchers Create a New Heart in the Lab: Work Opens a New Path to Replacement of Hearts and Other Organs.

• The day before, the doctor’s work was published by the journal Nature Medicine: Technical Report abstract – Nature Medicine 14, 213 – 221 (2008).

• And here’s how the New York Times reported the breakthrough that same day: Researchers Create New Rat Heart in Lab.

Dr. Taylor will be the keynote speaker May 29 at the U of M Alumni Association’s 2008 Annual Celebration, being billed as “The Heart of Discovery,” and the featured guest is Earl Bakken, the founder of Medtronic. Tickets are available to the general public at the alumni association web site.

What’s the take of the investment community to the U’s latest initiatives in technology commercialization? Well, one VC gives the U a big thumbs-up. David Spreng is a Minnesota native (and U of M grad), and is now based in Palo Alto, CA, as Managing General Partner of Crescendo Ventures. On his blog, called “Lightbulb,” he wrote an upbeat blog post citing Doug Johnson’s CEO-in-residence program: The University of Minnesota May Have Cracked the Code.

(By the way, here’s a link to the Powerpoint presentation I mentioned at the beginning of this post, actually a PDF: A Presentation on Industry/Academic Partnerships, by Doug Johnson, Office of Business Development, University of Minnesota, which is dated May 2006.)

What’s your take on the U of M as a source of technology innovation? What about the Institute of Technology — are you aware of any promising new technologies coming out of the computer science and EE programs? Is medical technology sucking all the oxygen away from IT and Internet startups in Minnesota? And do the innovations that really matter happen outside the walls of academia, anyway?

Speak your piece in the comments.

The Latest on U of M Technology Innovation and Commercialization is a post from: Minnov8 and published under a Creative Commons license.