Tag: Seattle Start-ups

Madrona Labs Adds CTO, long time entrepreneur and big data, machine learning, computer vision technologist, Jay Bartot

New Role Brings Deeper Level of Technology Expertise to Madrona Venture Labs Team
We are thrilled to announce that Jay Bartot has joined our Madrona Venture Labs team as Chief Technology Officer. Jay has been the cofounder of four successful startups, each of which leveraged big data and machine learning to provide targeted services to consumers and businesses. These startups include Farecast, where Jay and I partnered to change how consumers purchase airline tickets by using algorithms to predict airfare price fluctuations.

Joining Madrona Venture Labs is like a homecoming for Jay, as Farecast was incubated at Madrona Venture Group and he worked closely with Madrona’s Managing Director Matt McIlwain and Venture Partner Oren Etzioni in the earliest days of the company’s formation. At Farecast, Jay and I formed a highly productive engineering and product partnership and we aim to bring that same collaborative spirit to our Labs culture.

Jay’s other startups include AdRelevance, acquired by Media Metrix, Medify acquired by Alliance Health and most recently Vhoto, acquired by Hulu. Jay brings a wealth of deep technical and engineering leadership experience to our team and in support of our spinout founding teams. With Jay onboard, we will look to explore new, innovative technical startup ideas that leverage his experience in machine-learning and data-mining.

Jay is one of the most creative and inventive engineering leaders I know and we could not be more excited about our future with his influence and leadership.

Every company is a technology company, but most don’t behave like one

In 2011, Marc Andreesen famously wrote a Wall Street Journal essay declaring that “software is eating the world.” Five years later, the five largest companies in the world by market capitalization are all software companies.

largestcosbymarketcap

However, in today’s information economy, Apple, Alphabet, Microsoft, Amazon, and Facebook are not the only important large technology companies. As technology becomes more and more pervasive across industries and functions, companies like Exxon, GE, Citi, and Walmart are all racing to become technology companies as well.

Today, we are less interested in the distinction between technology and non-technology companies (because there are very few successful companies that are not technology companies). Instead, it’s more interesting to ask questions like – Tesla is a technology company rapidly learning to become an automobile company, and Ford is an automobile company rapidly learning to become a technology company – which one is going to get there first?

In short, software is eating the world, but software companies aren’t the only ones taking a bite.

How do companies in real estate, finance, healthcare, manufacturing, or other industries that have traditionally not been recognized as technology industries become technology companies? What are some of the key learnings that we see from startups and companies that are successfully making this transition?

1. It starts at the highest level of leadership
Leading a transformation to become a successful technology company is not a job that can simply be tasked to the CTO or CIO. The level of engagement and investment to lead a successful transformation requires the CEO and board of directors to not only be fully bought in but to be the main drivers of the change.

Goldman Sachs has known for many years that technology is a key competitive advantage in financial services. In one recent WSJ article, a top Goldman executive valued a license for their risk measurement system at well over $1 billion, and possibly even up to $5 billion. They have since open-sourced the system in a move to attempt to drum up new business. More importantly, however, Goldman Sachs’ Chairman and CEO Lloyd Blankfein has repeatedly stated that “Goldman Sachs is a technology firm” and highlights the fact that Goldman Sachs actually employs more engineers than companies like Facebook, Twitter, or LinkedIn and often competes for talent and wins against top internet companies.

2. Talent is the most important asset of a technology company
One of the key drivers for the rapid growth of new technology companies is the low capital requirement to build a company today. New companies no longer need to buy hundreds of thousands of dollars of servers and equipment; instead, they can pay for servers on demand from cloud providers when needed.

This dynamic makes it more important than ever for companies to hire great people. In fact, a recent survey Madrona conducted in conjunction with its annual CIO Summit found that 89% of Fortune 500 CIOs say hiring top talent is their number one concern today.

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GE Youtube Channel.

GE has likely made the largest investment in this space to change the story that young engineers and college graduates hear about the company with a series of Youtube videos and television ads. Though it remains to be seen whether these videos work, GE has recognized that filling its talent pipeline with young engineers and technologists is critical and is investing accordingly.

3. Technology needs to be at the core of company culture, not an afterthought
At a company like Microsoft or Facebook, engineering positions are the most prestigious, highest status roles at the company. The founders and CEOs of technology companies are often engineers and may have even built early version of the products themselves.

For companies to successfully make the transition to become a technology company, cultures need to change to take into account the unique way that software development works and to highlight the importance of technology and the people who manage and build it.

One example of a move towards a developer friendly culture is happening at Walmart. WalmartLabs recently open sourced Electrode, the application platform that powers Walmart.com. Electrode is a modular platform that helps improve application performance, and Walmart is open sourcing the software to give back to the open source world and benefit from additional contributions from the community.

It is important to keep in mind that building a technology-driven culture is not just about free lunches and massages. As Joel Spolsky CEO of Stack Overflow said in a recent interview, “If you want to attract and keep developers, don’t emphasize ping-pong tables, lounges, fire pits and chocolate fountains. Give them private offices or let them work from home, because uninterrupted time to concentrate is the most important and scarcest commodity.”

4. Companies need to move fast and adopt agile practices
The pace of technology adoption is getting faster and faster every year. For example, it took decades for electricity and telephones to reach 50% of US households, but today it takes only years for new technologies like smartphones and tablets to reach a majority of the population. This underscores the importance for companies to continuously adopt new technologies that can enhance productivity and also to continuously experiment with new technologies that have the potential to be disruptive to the business.blackrock

An interesting anecdote from The Lean Startup, one of the manifestos for startup founders, is that Intuit holds themselves accountable to being innovative and agile by using two key metrics: (1) the number of customers using products that didn’t exist three years ago and (2) the percentage of revenue coming from offerings that did not exist three years ago. Historically for Intuit, it took a new product an average of 5.5 years to reach $50 million in revenue; at the time the book was written, they had multiple products generating $50 million in revenue that were less than a year old.

Particularly, as the world is moving towards cloud computing, continuous development and continuous updates are the name of the game. Agile development practices enable you to continuously deliver better experiences for your customers and waterfall development methodology is a relic of the past.

5. Companies need to look forward and avoid getting caught in the innovator’s dilemma
The classic case for why legacy competitors can do everything “right” and fail is the force of disruptive innovation described in Clayton Christensen’s The Innovator’s Dilemma. Businesses can reject innovations based on customers’ current needs while innovative upstarts develop products in a way that meets customers’ future needs.

Stratchery
Stratchery

Recently, we have seen automakers take very innovative approaches to automotive technology as autonomous vehicles move to the front and center of the startup world with the acquisitions of companies like Otto and Cruise and public pilots of new technologies like Uber’s self-driving cars in Pittsburgh or Tesla’s Autopilot feature.

Ford, in particular, has been very vocal about the autonomous future and the importance of working differently in the context of today’s technology-driven world. Ford’s CEO, Mark Fields, has written that “As little as four years ago, our approach was aligned with the thinking of most automakers today, which is taking incremental steps to achieve full autonomy by advancing driver assist technology. This is not how we look at it today. We learned that to achieve full autonomy, we’d have to take a completely different pathway.”

Conclusion
The race to become the market leader across a variety of sectors and geographies is speeding up amongst older incumbents and promising, young startups. Startups have a lot to learn from the established management and financial practices of incumbents, but incumbents have a lot to learn from startups as well. The companies, young or old, that use technology to best create competitive advantages for themselves will win.

Technology needs to be a fundamental fabric of the company’s DNA and culture as companies truly internalize that “Every company is a technology company”.

NFL Players Association launches business accelerator with Intel, Harvard, Madrona, others

By Taylor Soper, Geekwire.

For an NFL player, there is a lot more to life than what goes on in between the sidelines on Sundays. Sure, competing in the world’s premier football league is a remarkable achievement. But being a professional athlete also provides numerous business-related opportunities for both current and retired players alike.

Yet for many, the chance to maximize their value and influence — whether it’s inking a marketing deal, investing in a startup, or even joining a company as an employee — can sometimes be a difficult process.

That’s where the NFL Players Association wants to help.

The NFLPA, the union for NFL players, today launched the OneTeam Collective, a new organization modeled after a business accelerator but with its own spin that brings together the power of the NFL with a first-class list of founding partners that includes Intel, Harvard Innovation Lab, Kleiner Perkins Caufield & Byers (KPCB), LeadDog Marketing Group, Madrona Venture Group and the Sports Innovation Lab.

For the full article please go to Geekwire.

 

M87 – A New Wireless Infrastructure Company Comes to Seattle

The wireless infrastructure industry in the Pacific NW has a long history – from McCaw to AT&T Wireless to T-Mobile. Madrona is very excited to be announcing our investment in M87 which provides better connectivity over existing infrastructure to wireless consumers, infrastructure providers and app developers. This company brings together technology that is crucial as data on our wireless infrastructure increases 50% annually, with a team that is deep on technology and business leadership. Cole Brodman, who has over 25 years of wireless experience, much of it right here at T-Mobile, is also joining the company today as CEO. Cole is someone we have worked with over the last several years and we are excited to be backing a company he is behind.

M87’s technology focuses on the edge of the network. The idea of ‘edge networks’ is not new, early content distribution networks (CDNs) like Akamai started putting edge nodes at internet points of presence in 1998 in order to move content closer to end-users. We built a related system of audio/video streaming splitters in the same era at RealNetworks to exploit the multiplier effect of shared infrastructure and improve network performance.

Today’s mobile devices offer the ability to move the ‘edge of the network’ all the way to the end-user. Technologies such as Wifi Direct and LTE, which the majority of the world’s 4B+ mobile phones use, enable end points to redistribute content back into the network. M87’s technology taps into this ability and liberates an incredible array of new applications around industrial and consumer IoT, messaging and retail, presence awareness and instant connectivity. Two thirds of all US internet traffic is now mobile. Outside the US, the dominance of mobile networks, rather than terrestrial based internet, creates even more opportunity to improve networks and applications as emerging markets invest in new ways to expand coverage.

I’m most excited about the team and Seattle story M87 represents. Vidur Bhargava founded the company based on his research at the University of Texas and he partnered early with David Hampton who has terrific public wifi experience from his leadership of Wayport. They share Texas roots with M87 CEO Cole Brodman who moved to Seattle 21 years ago as an early product leader for Western Wireless. As CTO Cole led what became T-Mobile to more than 30M subscribers. Collectively, the m87 team has an exciting blend of experience and capabilities and we are fortunate that they are moving the company to Seattle. We will struggle to compete with their famous ‘BBQ’ but let’s welcome them to the world of coffee, a little rain and a great startup ecosystem.

And as a note the company’s name, M87, refers to one of the largest galaxies in our universe, Messier 87 that is one of the brightest sources of radio waves.

Renton High School Comes to Madrona for DiscoverU Week

This week, Madrona, Apptio and Smartsheet each hosted classes of students from Renton High School and Lindbergh High School from the Renton School District. This was part of Challenge Seattle’s support of DiscoverU – a week during which schools around Washington state focus on higher education and careers. Tom Alberg spearheaded our participation and shared some thoughts on how to think about what a VC does and what you need to start a business.

Madrona’s Daniel Li devised a short version of startup weekend for the students and we plunged on in with the help of the Greater Foundation and many volunteers. It was a great day that capped off a busy week at Madrona – this event followed both our CEO Summit and the annual UW Industrial Affiliates day.

We want to thank everyone who participated including Matt Bencke (Spare5), Dave Cotter (ReplyYes), Harmony Davis (Madrona Labs), Matt Terich (Madrona Labs), Taylor Soper (Geekwire) Andrew McGee (Greater Foundation), and Madrona employees, Lena Klassen, Bill Richter, Julie Sandler, Linda Lian, David Rosenthal, and Amy Corley.

We finished the afternoon inspired by the creativity and energy of the students and full of optimism about the next generation of students.

Below are the business ideas that the students developed, presented and explained:

Shark Tank Winner

Reliefinate – A place for teens to go to relax, hang out, work out or meditate when you are feeling low

Runners up

Trackify – Ever lost something? Trackify will help you find it

Style.me – Free and premium personal stylist services for teens

Move me – Moving is a pain but Move Me organizes all the hard part for you

Erryfast – Get your errands done by other people when you are too busy

Friendpop- Helps you find friends who have your interests

Photo credit: Greater Foundation Pictured: students and Madrona Associate Linda Lian

DiscoverU – Tom Alberg’s Advice to High School Students

Note: As part of The Road Map Project’s DiscoverU Campaign to get high school students to think about higher education, Madrona hosted more than 30 students from Renton High School to learn about jobs in the startup world. Tom Alberg shares this post as his thoughts for students who are thinking about working in the industry.

Here is a link to the DiscoverU website – www.discoveruwa.org

Where did you go to school?

I graduated from Ballard High School in Seattle. It wasn’t the best high school in the city. All the teachers weren’t great but some were amazing. I was OK in math but not great. I got a C in geometry in high school. But some teachers encouraged me and I decided to work hard to improve so I could get into college.

I majored in government in college and got pretty good at math which I have to use every day in my work.

What do you do at work?

I am a partner in a venture capital firm in Seattle. We don’t have thousands of employees like Boeing. We also don’t build airplanes. But we help create new businesses. Companies that someday might grow to be a Boeing or a Microsoft or an Amazon.com.

What do you invest in?

We invest in people — people who have a dream about starting a company and building it into a success. Many of the people we invest in are young – under 30. I call that young.

Many are first or second generation immigrant Americans. Either they or their parents were born in a foreign country. The CEOs of at least fifteen of our fifty companies are first or second generation immigrants.

Every day someone comes into our office with an idea for a new company. We meet with over 500 every year.

Today we have over 60 active startup companies we have invested in and are working with to help them grow.

What does it take to start a company?

First, you need an idea to start a company. Hopefully, it’s a product or service that people will want to pay for. Some years ago, I met a young person who had an idea about selling books on the Internet. His name was Jeff Bezos and the company was Amazon.

Everyone has an idea for a new business. Some are good and some are not as good, but give it a try. How about delivering lunches for $11 from restaurants to people in their offices. We have one of those. It’s called Peach. You may have a better idea. Is there something you are passionate about? Maybe there is business idea involving your interests.

Do you need a team?

You need to be able to build a team. One person can’t do it all. This is the same as a winning basketball or football team. You need people with different skills who can work together. You do that every day when you play a sport or complete a group project – you know who is good at what and sometimes you push your friends to do stuff they don’t like. We can all learn to do new things

You need to be persistent even when people tell you that your idea or even you are crazy.

Does it take hard work to build a company?

To build a successful company you need to work hard and learn. Jeff Bezos had done a lot of work to analyze the book market and the Internet. He was open to new ideas. He also listened and learned as built his company. The first company name he picked was Abracadabra but someone told him it sounded like Cadaver so he renamed it Amazon. You need to learn from others.

I visited the University of Washington recently and met with two young students who are trying to launch a company that is using virtual reality to visualize organs inside the human body. I was able to grab a heart, rotate and examine its insides – all visually of course. They are working with local doctors and hospitals to test it. They call their company CadaVR – I thought it was pretty cool.

2016-10 Tom Alberg - Hay Truck
Summer job – Loading and unloading hay

What size are your companies?

Our companies start out small. One or two people working hard with an idea. They don’t need a lot of money at first. If they have a product or service that others want to pay for, then they will need more money to grow. And they come to see people like us. Or ask their friends and co-workers to invest.

What do some of your companies do?

Our companies include Redfin, which sells homes through the Internet, a restaurant delivery business, two companies that are developing products for virtual reality, a drone company that lets people at home pilot a drone from afar, a company that will deliver gasoline to your car in a workplace parking lot or mall, a company that helps you take care of your pets, and a company that sells men’s clothing over the Internet that is tailored to your measurements.

We also start companies in our Madrona Labs. Labs has six full time employees and is run by a UW grad. We’ve been lucky to work with him on multiple companies from the time was an undergrad. He started companies while still at the UW to make some money. He then went on to run and start other companies and now he is working with a team to come up with a lot of ideas to test out.

Who do your companies hire?

Our companies hire lots of UW grads. Some majored in computer science. Other pursued business courses, sales, marketing, graphic design. It takes all kinds of skills. I would love to have you major in computer science but whatever your interest, work hard at it, be persistent.

How do you see the future?

You are growing up in an exciting time. New inventions are happening every day. Some are being invented at big companies. Like Amazon. Others like Facebook are big now but started in a dorm room. There are hundreds of small companies right now in Seattle that could be the next Amazon or Facebook.

Whether you are interested in a big company or a small startup, there will be lots of opportunities for you. For a good job, however, you are going to have to finish high school. And increasingly jobs in the future will require that you go to college or to a community college to learn specific job-related skills.

Because of all the opportunity I see for you, I would be happy to be starting over.

A Call to Action for Angels in Cloud City

As recent entrants into the Venture Capital world, we continue to be positively surprised by the vibrancy of the start-up activity, the quality of tech talent and the richness of the innovation ecosystem in Seattle. Neither of us are new to the technology scene. Soma has been with Microsoft for a couple of decades since its early years, and Linda was previously at a security start-up in San Francisco. However, VC is a different game and we didn’t know quite what to expect from the Rainy City. It was not long before we discerned that unlike the Bay Area, the Seattle start-up community is tight knit and perhaps quieter, but no less innovative.

Much has been made in the past regarding Seattle’s lack of available early stage angel investments especially relative to the size of the ecosystem and the depth of the city’s talent pool. However, recent data suggests this is changing.

Seattle angel deals grew a whopping 80% (in 2015)

Linda Lian

According to Pitchbook, angel-backed deals grew only 10.6% in California in 2015, compared to a 58.1% increase in the Pacific Northwest. Within the core tech verticals of information and B2B, Seattle angel deals grew a whopping 80%.

Angel investing chart

 

Data: Pitchbook

This clearly indicates that angel funding growth in the Pacific Northwest is not only accelerating, but bucking national growth trends.

The city’s resistance against boom-and-bust investment cycles certainly lies in its strength within the fast-growing cloud space. However, there is a lot more in Seattle’s wheelhouse than just cloud. Seattle is also a burgeoning worldwide hub for VR technology and space exploration in addition to pioneers in ML/AI, chatbots, and natural user interfaces.

 

. . . if Seattle is to fully capitalize on its talent and resources, more of the area’s successful technology execs and veterans must leave the sidelines and get in the game

S. Somasegar

While Seattle’s growth has been remarkable and talent is in no shortage, there is still much to be done before the city’s full potential can be realized. According to a recent BCG report, there are 1.4x the number of angel investors relative to ultra high net worth individuals in the Bay Area. In Seattle, that same ratio is half. The extremity of the comparison must be taken with a grain of salt, as San Francisco’s core cultural identity cannot be separated from the reputation of the city’s startup ecosystem. The age distribution of SF’s wealthy is also likely to skew younger than Seattle. However, this does indicate that if Seattle is to fully capitalize on its talent and resources, more of the area’s successful technology execs and veterans must leave the sidelines and get in the game.

As an angel investor himself prior to joining Madrona, Soma believes angel investing is one of the best ways for a technologist to give back to the innovation ecosystem. This comes not only in the form of capital, but perhaps more importantly in mentorship, guidance and valuable relationships.

somasagar-grid

For angels that are already actively investing, they can also make a more substantial impact by getting involved with great entrepreneurs or products earlier in the funding cycle and not wait for somebody else to “bell the cat”. While Seattle’s strengths in B2B and enterprise software are indisputable, the willingness for the community to step out of its comfort zone to help nurture and develop consumer-facing companies that sometimes have the characteristic of viral growth before monetization kicks in could be the key to Seattle’s next big win.

It is amazing to see the wonderful, vibrant start-up activity that is getting bigger and broader every day. Seattle and the Pacific Northwest have an amazing amount of potential to be a phenomenal technology and innovation hub and we are excited to be a part of that journey.

McIlwain and DeVore Share their Thoughts on the Seattle Startup Scene

Will a new crop of Seattle startups rise to world domination? Will virtual or augmented reality applications create the next powerhouse tech company?

Those are two of the overriding hopes and ambitions emerging from the Seattle segment of my informal cross-country survey of leading investors as I seek to unearth core investment themes and premises as we dive into 2016.

Introducing the Seattle Technology Universe 2015

Today we are proud to introduce the Seattle Technology Universe map. This map, the result of hundreds of hours of research, discussion, and associated work, has been a true community effort spearheaded by Madrona and the WTIA. Along with sponsors the University of Washington, Cooley, Davis Wright Tremaine, Perkins Coie, and Wilson Sonsini Goodrich & Rosati, many people who have been deeply involved with startups in the region for years added their time to help sift through the data and offer commentary, suggestions, and a lot of reminiscing.

Continue reading “Introducing the Seattle Technology Universe 2015”