Minnov8

Showcasing Minnesota Technology Innovation

Minnov8 Gang 92: Can I Get Your Card?

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The Gang reviews the big tech stories of the week and then brings on our guest, Lief Larson, CEO of Workface, Inc. (& BusinessCard2). We hear about Lief’s background, a bit about his extensive serial entrepreneurial activities, and what led to the recent acquisition of Card.ly (see this post for more).

Hosts: Steve Borsch, Tim Elliott, Graeme Thickins and Phil Wilson.
Music: The Brymers & their song “Do You Think” via the podsafe Music Alley.

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The Podcast

Podcast: Download (Duration: 50:03 — 29.1MB)

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Discussed During the Show:

Workface Acquires Card.ly

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Entrepreneur and friend of Minnov8, Lief Larson of Workface, Inc and BusinessCard2 in Minneapolis, has leapt forward on his vision to make BusinessCard2 the delivery mechanism to, “…empower business people to create, promote, and broadcast their unique professional persona throughout the internet” by acquiring Card.ly.

Any offering like BusinessCard2 requires critical mass to be effective. The more that people adopt and use this free service, the more powerful it becomes. As Lief has accelerated the number of people using the service, he and his team won’t be satisified until it becomes the primary way people encapsulate their value propositions and is a one-stop-shop for contact info, marketing of products and services, and even more portable on the web than it is today.

For competitive purposes Lief keeps intentionally quiet on disclosures of the exact reasons for this acquisition, but I suspect the customer base was one reason (that critical mass imperative is why) but undoubtedly there was other value not readily apparent that makes this a smart move for Workface.

The press release is after the jump. Congrats Lief and team!…  [Read More…]

Risks for Investors and Entrepreneurs

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A local Minnesota serial entrepreneur, Philip Hotchkiss, gave me a heads-up on this post from a a serial entrepreneur turned VC, Mark Suster. After reading it I was compelled to post about it here on Minnov8 and strongly encourage you to read it.

Though I’m a glass-is-more-than-half-full kind of guy and am constantly seeking out silver linings, opportunities and the positive, I wouldn’t be a good risk manager if part of that seeking didn’t acknowledge input that pointed out the downsides and the negative so I could modify our business strategies.

Suster starts off talking about the “funding frenzy” occurring in 2010 and later in the article discusses why this concerns him. He points out that the US economy has structural employment issues, consumer’s “piggy banks” (i.e., their houses) are empty, the appetite for government stimulus has waned, and what he sees as an end-of-year stock market sell-off will negatively affect VCs and angel investors.

His argument is that 2011 is likely to be bleak and that this year’s initial funding rounds, while fabulous due to that funding frenzy, could leave entrepreneurs in a “funding gap” as VC money dries up.

If you have time, read the entire article of if not, this post was originally published in a shorter format in the Wall Street Journal online.  Either way, read it.

Startup Succession Planning

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http://www.flickr.com/photos/furnari/177545342/

A survey of over 140 North American CEOs revealed that nearly half of their companies do not have a succession plan:

While 69% of respondents think that a CEO successor needs to be “ready now” to step into the shoes of the departing CEO, only 54% are grooming an executive for this position.

Part of the reason, as Felix Salmon points out, is that corporate boards like to hire the next big star to take over. That may work for big corporations (sometimes), but startups that lose an owner may founder and die without a clear successor to take over.

Startups are often personality-driven, but that does not mean they have to end when the driving personality leaves. A succession plan is simply an answer to the question “what do you want to happen if the owner leaves or dies or something?”

At a minimum, take care of these four things:

  1. Pick and train a successor;
  2. Make sure the owner’s will passes on the business;
  3. If necessary, use a buy-sell agreement to pass on the owner’s interest; and
  4. Fund the transition costs with a life insurance policy on the owner.

A succession plan is like a business’s will. And just like a will, you’ll gain peace of mind once you have one in place.

Sam Glover is a Minneapolis business lawyer for geeks. He also edits the law firm marketing and practice blog Lawyerist, Lawyerist, and Caveat Emptor, a consumer law blog, and speaks frequently on law practice and lawyering.

Startups Aren’t Everything…They’re the ONLY Thing

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On my continuing quest to discover new sources of data and insight about startups, I came across a very interesting read today—and received something from TheDeets’ Ed Kohler—and wanted to share both with you.

A new study (PDF) by the Kauffman Foundation paints a very different picture about the importance of startups:

When it comes to U.S. job growth, startup companies aren’t everything. They’re the only thing. It’s well understood that existing companies of all sizes constantly create – and destroy – jobs. Conventional wisdom, then, might suppose that annual net job gain is positive at these companies. A study released today by the Ewing Marion Kauffman Foundation, however, shows that this rarely is the case. In fact, net job growth occurs in the U.S. economy only through startup firms.

The Kauffman Foundation was established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman. Based in Kansas City, Missouri, the Kauffman Foundation is among the thirty largest foundations in the United States with an asset base of approximately $2 billion.

You really need to spend some time at the Kauffman site since they have a wealth of research reports (all free) as well as this nifty Flash-based startup visualization tool.

But while it’s interesting and enlightening to see all of the efforts going on with startups around the country, the data about Minnesota was a bit disconcerting…until I thought about it for awhile….  [Read More…]

Minnesota Cup Announces Finalists

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This just in from the folks at the Minnesota Cup, a phenomenal event for startup Minnesota:

“The Minnesota Cup is a statewide entrepreneurial contest that seeks out and supports Minnesota’s newest and most innovative business ideas, today announced the finalists for the 6th Annual Minnesota Cup competition. Finalists include a company that is developing the world’s first multilingual medical communication system and another with a revolutionary greenhouse technology for growers in any climate.

“Given the great success of so many of last year’s Minnesota Cup finalists, we’re thrilled to see some of the best and most promising business ideas in our program’s history this year,” said Scott Litman, Minnesota Cup co-founder. “These finalists are a true testament to the great entrepreneurial ideas that come from the state of Minnesota, and we look forward to honoring them at our awards ceremony in September.”

Read the full release after the jump. …  [Read More…]

Is Perception the Reality with MN Venture Funding?

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All the effort underway to kickstart innovation and entrepreneurial activity ((e.g., MHTA; MNCup; MOJO MN; Minnedemo/Minnebar; Minnov8; tech.mn) is clearly a reaction to the nearly terminal decline of risk taking and venture funding in Minnesota. Wherever there is a vacuum, something will fill it!

How true is the perception that Minnesota lacks funding and risk-taking venture capitalists? If you read these three things below, you’ll see that it’s highly likely perception is reality.

  • Having Eric Caron (@ecaron) point out this thread to me at Hacker News which was sparked by someone submitting this tech.mn article for discussion. While commenters have usernames vs. real ones and there is a lot of anecdotal discussion in the thread, it’s a troubling read since this is how many startups feel about being here in Minnesota
  • Next I fired up my iPad RSS reader in order to skim the top tech sites I read at breakfast each morning. I immediately was presented with an incredibly contrarian-to-Minnesota-VC-funding-experience in an article on the tech site GigaOM entitled, “Seed Stage Investments Jump Sharply in Q2 2010.” It begins with this: “If there were any doubts that the entrepreneurial activity is hitting new highs, then the new data from the National Venture Capital Association puts them to rest –venture capitalists invested $6.5 billion in 906 deals during the second quarter of 2010, thanks to a renewed interest in seed and early stage companies along with new found enthusiasm for clean technology-oriented startups. This is in sharp contrast to a slowdown in the new money flowing into venture funds themselves.“
  • In a pretty clear sign that everyone’s perception is reality came when I popped open StarTribune.com’s business section this morning and this article leapt out at me, “Venture capital still scarce in Minnesota.” It led with this: “Venture capital investments in emerging Minnesota companies perked up a bit in the second quarter but remained on track for the weakest year in 15 years of record-keeping, according to data being released Friday.“

The passing of the Angel Tax Credit will go a long way to tap in to the seed stage momentum GigaOM reported on this morning. Read Why Now? MN Legislature Passes Bill w/Angel Investment Tax Credit and Angel-backed Startups 30-50% More Likely To Be Successful to learn more about seed stage investing in Minnesota…

…but then tell us what else needs to be done? Make your voice heard in the comments!

The Joy of Infiltration Champions Open Game Development

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The mind of Zach Johnson is an interesting place. While much of it remains unexplored it’s filled with plenty of ideas, projects and fun. We last talked with Zach about Scribbls, a great site where doodles can give birth to hilarious results that he and his Watermelon Sauce partner Paul Armstrong developed.

His most recent work comes from his own Zachstronaut, which he describes as a “web rocket-lab” site to showcase his love for the internet and gaming as well as his experiments. The result of that work is his internet game Infiltration.

Infiltration was built in response to blog Boing Boing‘s call for games to be developed that were inspired by “chip music“. (You can vote for Infiltration through today, 7/15). Most likely very familiar to gamer cycles but not far beyond, chip music is inspired by early video game soundtracks. Think Asteroids, Pac Man and a host of Nintendo games. Grab a Casio keyboard and hang on…

Johnson, a fan of this unique musical genre, has spent more than his fair share of time listening to chip music and envisioning the game activity that it might accompany. A User Experience developer at Worrell, he says, “Video games contributed to shaping my entire career in computers.” It was clearly a natural for him to develop a chip music inspired game.

Indie game developer game designs tend to be very simplistic, with an almost nostalgic look and feel. “Part of the design is a nod to the old school music but it’s probably more about the amount of time and money indie game developers have to spend on the games.” He goes on to note, “It took nine people a year to write Pac Man, I wrote this in about 30 hours.”

Johnson also saw an opportunity to advance his passion for open programming. “I wanted to make a game that didn’t need a plugin.” Hence the use of Javascript, allowing the ability to play the game directly from your browser. “Javascript and browser based games offer a very low barrier of entry.” notes Johnson.

The use of coding language like Javascript and HTML5 is on the rise as many see the use of Flash diminishing. “I don’t hate Flash, but it’s obvious it is going the way of the Dodo.” according to Johnson referencing the ownership and closed nature of the language. “I always bet on the openess of  web.” When developing the game and entering the Boing Boing contest (Did I mention you could vote for his game through 7/16.) Zach thought that the use of Javascript would allow him to be more unique and give him an upper hand. But “The use of Javascript was more prevalent than I thought…which is good.” Nearly half the games submitted use it.

httpvh://www.youtube.com/watch?v=JhvupyRdR5I&feature=player_embedded

The design of the game and the participation in the contest serves Johnson in number of ways. First and foremost, it’s a hobby. It also clearly promotes his programming skills and many projects while allowing him to share his passion for open web design. In addition, while he could have spent much more time on the game he appreciates the short-term goal. “The competition set a deadline. Otherwise I can spend a lot of time on it. I need to make a game I need to get done.”

Where does he see this indie game developer movement going? “There are plenty of applications from entertainment to art to even civil engagement. Imagine someone demonstrating the need for better routing of traffic through a game.” He also notes a very basic result. “If I can make little tidbits of joy for someone, that’s great.”

Method Patents: Good or Bad?

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On July 31, 1790, the first U.S. patent was issued to Samuel Hopkins for an improvement "in the making of Pot ash and Pearl ash by a new Apparatus and Process" and signed by then President George Washington.

Let’s say you’ve founded a startup and think you have a completely original idea no one has thought of before with new approaches to the way an old process works. You might then think all you have to do is patent that process and you can achieve the protection patenting is all about: excluding others from copying you.

Oh, if it were only so simple. The world of patents has become incredibly complex and is a minefield just waiting for a startup to get traction selling their offering before the unaware entrepreneur takes a step, hears a click, and thinks “Oh-oh” just before the “patent landmine” blows up. This is especially true in the area of method (i.e., process) patents but there’s hope.

Ernest Grumbles III

Ernest Grumbles III, an intellectual property attorney with Merchant & Gould and co-founder of MOJO MN, has one of the best posts I’ve read yet at StarTribune on the current state of method patents (and it’s obvious why you need somebody like him to ensure your idea is capable of being patented or even worthy of protection). As Ernest points out, method patents are neither good nor bad and are granted based on the merits of the claim and its level of abstraction. If you have a method idea you’re already moving forward on (or are about to) then you owe it to yourself, and your current and future investors, to make certain you are protected and that you wrap that idea in a way that minimizes abstraction and ensures you’re granted that patent!

That said, calls for patent reform are growing louder by the week and many of us who see some patents as ways to extort money from entrepreneurs and innovators or stifle innovation, hope the U.S. Patent & Trademark Office moves faster on reform.

Until there are significantly more precedents set in the area of method patents, people like Ernest will have no shortage of work and startups no end of concern over whether a method idea is too abstract to be patented or likely infringing on some obscure patent already granted.

MentorMate: Turning Vision in to Software

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One of the most challenging things to do as a startup, entrepreneur, or any leader looking to manifest a vision or outcome in software, is finding a trusted partner with whom to turn that vision in to reality. MentorMate, a mobile, application & web software development company in Minneapolis, does this sort of work all the time and might be a firm you’ve never heard of before!

CEO Björn Stansvik and I grabbed lunch last week to discuss his company, their approach, some of the things they do and where they’re headed. To say they’re accomplished is an understatement (the firm is on the State of MN approved vendor list; they’re delivering numerous mobile apps and focusing on cell phone application development; and even creating translation apps) Stansvik himself has quite a list of accomplishments himself.

Björn Stansvik, CEO

Deciding to come to this country as a tourist many years ago, he was focused on getting a work visa and staying in this land of opportunity. He ended up finding a company for whom he wrote an 80+ page market analysis of opportunities for their product in another country and politely inserted himself in to their company by asking for a computer and desk. They declined, but he appeared anyway and worked for free for two weeks. They sponsored and hired him.

The way he tells the story you can see how this is a man who becomes totally focused and consumed with a goal, achieves it, and goes on to the next one. Quite impressive but the proof is always in the deliverable for a company in this space, right? Let’s take a look at two that are public and visible….  [Read More…]