On the heels of Renaissance Venture Capital announcing earlier this month that it had its first close of $60 million on its second fund, the Michigan Venture Capital Association (MCVA) released its annual report on the state of Michigan’s venture ecosystem. Its findings? More venture capital—a 64 percent increase in the past five years—and more deals. This optimism seems to square with regional venture capital data released by MoneyTree in April, which reported five deals in Detroit during the first quarter of 2012, with a total investment of $15.1 million. According to the MoneyTree report, the last time five deals were closed in Detroit in a single quarter was back in the second quarter of 2000. By contrast, three deals worth a total investment of $1.5 million were closed in the first quarter of 2011.

Michigan’s VC scene bucked the national trend of an overall decrease in venture activity. According to the same MoneyTree report, which is prepared by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, first-quarter venture capital investments fell 19 percent nationwide in terms of money and 15 percent in terms of deal numbers compared to the fourth quarter of 2011. In Michigan, venture capital investments in Q1 fell by 11 percent over the previous quarter, but the number of deals quadrupled.

The MVCA data shows that investments concentrated in Life Sciences (40 percent), clean tech (18 percent) and IT (18 percent). New to the report this year are figures on what state-backed venture funds are contributing to the economy: The MCVA estimates that companies supported by the $215 Venture Michigan Fund alone have put $50 million back into the economy in the form of salaries paid and services purchased.

Key findings in the MCVA’s report include that the number of venture firms and capital under management both increased. There are currently 54 venture capital firms in Michigan with 335 active portfolio companies. Of the $3 billion of venture capital under management, roughly $370 million is available for new investments both inside and outside of Michigan.

During 2011, Michigan startup companies received $191 million in capital investment. There were 38 total investments, which included 22 new companies that raised a first round of funding.

In 2011, four Michigan VC firms—Arboretum Ventures, Plymouth Venture Partners, and the local offices of MK Capital and Arsenal Ventures—successfully closed funds and raised a total of $348 million. The MCVA report says that Michigan now has six funds that are over $100 million. Small and mid-size funds continue to grow, as well, with eight funds between $50 million and $100 million and 13 funds with less than $50 million. There were three significant exits in 2011 out of a total of 13 exits: Accuri Cytometers (reported to be $205 million), Ecosynthetix ($100 million), and Micronics (undisclosed, but it’s electronics giant Sony that purchased the company).

Staying with the theme of optimism, the MCVA report predicts that by 2016, Michigan will be “a nationally known top venture capital location,” with both venture and angel capital communities playing a “meaningful” role in Michigan’s revitalization. While that remains to be seen, the numbers do seem to indicate strong forward motion.

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San Diego Xconomist Evan Snyder has been called a “stem cell revolutionary” and is regarded as a father in the field of stem cell research. When we talked in his office at San Diego’s Sanford-Burnham Medical Research Institute, he told me he isolated the first neural stem cell in the mid-1980s, as well as the first human neural stem cell in 1998. Snyder’s team demonstrated the concept of stem cell pathotropism (the ability of stem cells to home in on injured or diseased regions of the brain) and helped to establish the concept that stem cells can be used to regenerate and repair diseased and damaged tissue.

He arrived in San Diego in 2003 to serve as a professor and director of the Stem Cells and Regenerative Biology Program at the Sanford-Burnham. He also is a scientific leader and researcher at San Diego’s new $127 million Sanford Consortium for Regenerative Medicine. While Snyder is focused primarily on basic research, he talked with me about the prospects for commercial development of stem cell technology—and how the much-publicized regenerative properties of stem cells, while holding tremendous long-term promise, will likely not be the focus of the first market successes. Our conversation, which I’ve condensed and edited, follows here.

Xconomy: My general impression is that much of the early promise and enthusiasm over stem cells has been dissipating.

Evan Snyder: I don’t think I would agree with that. I think there’s an enormous amount of promise.

X: I mean in terms of using stem cells in commercial applications.

ES: What the companies and the public thought was that it wouldn’t take any work, that you’d have a cell and you would sprinkle it with pixie dust and everything would get better. That was certainly unrealistic. It might have been fomented by scientists in the early days who were just totally enamored of the fact that you had cells that could read environmental cues and go down different pathways, and they seemed to do this based on their own intrinsic programming.

But the fine-tuning in the use of stem cells still comes down to really understanding the biology of the cell. That also entails understanding the biology of development, because … Next Page »

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On the iPhone, the first page of the home screen—the one you see when you wake up the device—has room for only 20 apps, counting those in the dock. The iPad home screen holds 26. For me, that means the home screen is prime real estate, reserved only for the apps I use most often. So it was a big deal when I decided earlier this month to demote Instapaper to a folder on page two and give its spot to Pocket.

This reborn reading app—which was known until April 17 as Read It Later—earned its coveted position by doing just about everything Instapaper does, but with some extra visual pizazz. And what is that, exactly? Once you’ve installed the Pocket plugin or bookmarklet in your desktop or mobile Web browser, you can save anything you find on the Web—an article, a video, a photo, a recipe, or even a cool pair of glasses at Warby Parker—to your Pocket account. Then later you can peruse it, sans ads and other clutter, using the Pocket app on your mobile device.

Along with Instapaper, Readability, Longform, Zite, Flipboard, and others apps, Pocket is part of a new generation of services that treat the desktop Web as a place to discover content, but let you shift your actual consumption of that content to a more comfortable time and place—i.e., when you’re vegging on the couch with your iPad, or standing in line at the grocery store with your smartphone.

Pocket founder and CEO Nate Weiner

I wasn’t a big fan of Read It Later. Its design was dark and ponderous, which meant its only big selling point was the fact that it worked on more devices than the other reading apps (there were Read It Later apps for iOS, Android, and the Kindle Fire). So I was all the more intrigued by the app’s remarkable transformation into Pocket, which has a far friendlier design and a clearer value proposition. (One problem with the old app was that it wasn’t obvious that it could be used to save videos and other non-textual items.) I wanted to get the behind-the-scenes story of the relaunch from Pocket’s founder and CEO, Nate Weiner, and I finally got a chance to visit him at the startup’s downtown San Francisco office this week. Our edited conversation is reproduced below.

What’s clear from our talk is that Weiner pays close attention to the changing habits of consumers on the Web, and that he hopes to position Pocket to leapfrog over the other time-shifting apps by making the “save for later” experience on Pocket as simple and compelling as possible. Up to now, explaining what the app does and how it relates to the desktop Web has been tricky. So even with a user base of 4.5 million people, the app is reaching “maybe only 1 percent of the entire available market,” Weiner says.

But the battle for the other 99 percent is being fought right now. As more people buy smartphones and tablets, the contrast between the noise, clutter, and commercialism of the desktop Web and the ease, comfort, and cleanliness of mobile app experiences will only grow more acute. So it’s really only a matter of time before time-shifting one’s consumption of Web content using apps like Pocket becomes as common as time-shifting one’s television viewing using a DVR. The question is who will be the new TiVo—the company that makes saving Web content so easy it’s no longer considered a geeky chore.

All of this is scary stuff for publishers, of course. They were just starting to figure out how to monetize content on the desktop Web when the advent of the iPhone in June 2007 changed everything about digital content consumption. (Weiner, now 28, built the first version of Read It Later that same summer, while holding down a day job at a Minneapolis Web design firm.) At Pocket, Weiner says, the goal is to find ways to turn the time-shifting habit into a plus for publishers, perhaps by offering them an inside look at the data the startup gathers about how people use and share content once they’ve “Pocketed” it. In the future, Weiner says, Pocket might even provide ways for publishers to sell content or advertising through the app. (Pocket doesn’t currently show ads, and wouldn’t until there’s a fair way to share the revenue with publishers, Weiner says.)

Pocket has hired Mark Armstrong, the founder and head curator at Longreads, as its editorial director, and part of his job, according to Weiner, is to reach out to publishers and explore the various options for cooperation. “Right now there is no silver bullet, and the most important thing for us to be doing is to experiment and see what works and what doesn’t,” Weiner says. He says he’s acutely aware that the fortunes of Pocket, which is now eight employees strong, ultimately rest on the health of the content industry: “If [we] don’t figure it out, there will be no content to save, because nobody will be writing it.”

Here’s the full interview.

Wade Roush: From what I’ve read, you’d been planning the rebranding for a long time—actually, ever since you closed Read It Later’s $2.5 million Series A round back in early 2011. What was the thinking behind the change?

Nate Weiner: Yeah, I knew that we needed to rebrand by that time. For one thing, we had launched this feature on Read It Later called Digest. With Pocket, we have killed it off, but it was a magazine-type view that would auto-categorize things. I learned pretty quickly from that that people didn’t care about the categorization, but the thing they liked was the view. So I knew that the visual piece had to be brought forward a lot more. But more important, … Next Page »

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A young member of a prominent Michigan family known for its wealth, its power in political circles, and its philanthropy has launched a new endeavor to try to stoke the flames of entrepreneurship in West Michigan.

The DeVos family looms large in Michigan, particularly in Grand Rapids, the second-largest city in the state. They are billionaires thanks to the Amway Corporation, which Richard DeVos co-founded in 1959. They give a lot of money back to their community—the DeVos name is stamped on quite a few buildings in West Michigan—and the family is also deeply involved in politics. Dick DeVos, Richard’s son, ran unsuccessfully for governor of Michigan in 2006, and Richard, Dick, and Dick’s wife Betsy are considered on par with the Koch brothers in terms of their influence in conservative politics.

Though 30-year-old Rick DeVos shares some of his father Dick’s physical features, he has chosen a different philanthropic path. Instead of funneling money to the American Enterprise Institute or Focus on the Family, he has chosen put his cash behind efforts to build entrepreneurship and civic participation in West Michigan. His official biography for ArtPrize, which he launched in 2009, says that he wants to “focus on endeavors that create, expand, or enlighten conversation.” ArtPrize has certainly done that. Last year, it drew competitors and spectators from all over the world—more than 300,000 of them. The $1.4 million in prizes helps, but so does the uniqueness of the event: Any artist in the world is invited to compete, any property owner in Grand Rapids can offer its space as a venue to host artwork, and crowds of people walk around the city over a period of several days voting on which pieces they like best. Rick DeVos is fond of calling it a social experiment, but it’s on its way to becoming one of the most popular annual events in Michigan.

Last month, Rick DeVos launched Start Garden, a $15 million seed fund. What makes it different from other funds is that Start Garden invests in increments. Every week, the fund invests $5,000 in two ideas for potential companies: one picked by Start Garden and one selected through a public vote. (Anyone with a Facebook account can vote for five ideas per week.) “Five thousand dollars is enough to validate something,” DeVos says. “I want to invest in people who can provide something to validate.”

Those who are granted $5,000 must come back to Grand Rapids within two months to update the Start Garden team on their progress and prove, as DeVos puts it, that … Next Page »

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Don’t you hate it when you read an article about a promising new company and then you never hear anything about it again? We do too, which is why we’ve checked in with Loveland Technologies, Axonia Medical, and 3D Biomatrix for updates on the state of their operations, new milestones, and future plans.

Loveland Technologies: Projects Covered in ‘Awesome Sauce’

Loveland Technologies, a Detroit IT company started by San Francisco transplant Jerry Paffendorf whose motto is “changing the urban landscape with community maps, fundraising, and a dash of awesome sauce,” has enjoyed some mainstream recognition since we last spoke. “Our stock does seem to be rising in more traditional ways,” Paffendorf says.

In April, Loveland got a $7,500 grant from the Knight Foundation for its Imagine Detroit Together project, which combines technology and grassroots organizing to encourage residents to participate in large-scale demonstrations of civic unity. Imagine Detroit Together was behind the crowdfunding effort to get a painting by local artist Miguel “BeloZro” Yeoman up on a billboard near I-94. The painting, titled “The Rebuild,” featured futuristic Ford, GM, and Chrysler workers surrounding a globe along with the phrase, “Imagine Detroit working together?” Though Imagine Detroit Together was able to raise the $3,500 needed to slap “The Rebuild” up on the billboard, the billboard owners, fearing a lawsuit, required that Yeoman cover the logos of the Big 3 before they would display the painting.

Despite that experience, Paffendorf says he looks forward to working with Yeoman’s partner/manager James Feagin again. “He has a lot of interesting ideas for how to bring diverse groups into Detroit,” Paffendorf says. One idea is Peak Population Day, where organizers would try to lure 1.3 million people to the city for a massive block party along Woodward Avenue from the Riverfront to 8 Mile. That will require building some digital tools for organizing big groups, which Loveland is working on now.

Perhaps the unlikeliest partnership Loveland has formed is with Nora Maroun, wife of the controversial billionaire Manuel “Matty” Maroun, who owns the busy Ambassador Bridge crossing to Canada. (Yes, that’s right—a privately owned border crossing. Only in Detroit.) Maroun has his share of critics, particularly in southwest Detroit, where a t-shirt depicting him as Mr. Burns from “The Simpsons” was popular a few years ago. In addition to the bridge, he owns Michigan Central Station, a.k.a. Detroit’s Most Famous Ruin, a crumbling former train station that was designed by the same architectural firms that designed New York City’s Grand Central Station.

Central Station has long been a conundrum because it’s considered too solidly built to demolish without a prohibitive price tag, and too ruined to be restored without a similarly prohibitive investment. (Though one would imagine if anyone had the money to do either of these things, it would be the 854th richest person in the world, perhaps with an assist from the man he’s tied for 854th richest person with, but that’s an op-ed for another day.) Instead, Maroun has put his wife Nora in charge of working with Loveland on Talk to the Station, a website gathering public suggestions for what to do with the blighted monolith. Residents are invited to share their ideas for preservation via text, voicemail, or online submission. The idea is to foster open, inclusive dialogue that Maroun has pledged to keep her eye on. Though there are no guarantees, to have this discussion in a public forum is actually a pretty big step. (Paffendorf, by the way, has nothing but good things to say about Mrs. Maroun.)

Loveland also continues its work with Why Don’t We Own This, which maps all of the vacant land in Detroit, and Paffendorf says the city is definitely paying attention (finally!), but that nothing official is in place yet. And that crowdfunded Robocop statue? It’s still being built rather painstakingly by hand; keep track of its progress here.

Axonia Medical Raises More Seed Financing

Harry Ledebur, president and CEO of Kalamazoo, MI-based Axonia Medical, says the company has just raised its second million in seed financing. Ann Arbor SPARK’s pre-seed fund and Western Michigan University’s Biosciences Research and Commercialization Center contributed to the round. Ledebur says that Axonia now has enough operating capital to take it through January 2014 as it continues to work toward clinical trials.

As I wrote in a January article about Axonia, the company’s technology, which is spun out of the University of Pennsylvania, hinges on the production of axons, the long thin parts of nerve cells that carry signals to distant target cells. Unlike other regenerative treatments in development, Axonia uses … Next Page »

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According to Monster.com, there are currently 841 open software and IT development jobs in Michigan. Compare that to 319 jobs in manufacturing, 487 in healthcare, and a dismal 46 in creative and design. It’s something I hear often in my line of work: There is a severe shortage of software development talent in Michigan, and people with the necessary skills can essentially find a job immediately.

It’s with this talent shortage in mind that the Michigan Economic Development Corporation (MEDC) launched the Shifting Code initiative, a job retraining program that graduated its first 26 participants last week. According to Ann Arbor SPARK, one of the organizations that administers the program, 20 companies participated in Shifting Code and 65 percent of graduates have already found jobs at places like Ford and SRT Solutions.

Loosely modeled after the Shifting Gears initiative, a four-month “career transition” program that retrains seasoned professionals for jobs in growth sectors or with small startups, Shifting Code is designed to address the changing needs of Michigan’s employers as the state tries to diversify its manufacturing economy. The Shifting Code program includes an assessment, classroom training, mentorship, and a practicum/internship component. Upon graduation, many participants go on to start full-time or contract jobs with participating employers.

“Governor [Rick] Snyder has really taken note of the IT skills gap,” says Donna Doleman, vice president of marketing, communications, and talent at Ann Arbor SPARK, pointing out that Snyder called for this type of program as part of his “talent message” last year. “The challenge is that many IT professionals may not have a background in a specific language that employers are looking for, which is where Shifting Code comes in.”

Doleman says organizers expected about 50 people to be interested in the first informational session, which was held in January. Instead, about 700 people expressed a desire to participate. Because of that high level of interest and the fact that it costs the state between $1,000 and $1,500 to train each Shifting Code participant, the program has a competitive application process. (In addition, each participant pays a $100 registration fee.)

In addition to Ann Arbor SPARK, the MEDC is partnering with the Workforce Intelligence Network and Oakland Community College on Shifting Code, says Amy Cell, the MEDC’s senior vice-president of talent enhancement. She expects that 10 groups will graduate from the program by the end of 2012. The first classes are learning Drupal and JavaScript, and later groups will focus on the .Net framework and other languages depending on the needs of employers.

Most classes, which are held on nights and weekends, are at the intermediate level, though Cell says Shifting Code does provide some entry-level classes. “Most people in the program have a technical background and some prior software experience,” she says, adding that they often have been trained in outdated software languages. “We’re looking for the best fit to meet the needs of employers.”

Subha Ramadoss graduated from Shifting Code last week and on Monday, she started a new job with Commerce Guys, a French e-commerce company with … Next Page »

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[Updated: 9:20 pm PT] Only a few companies have ever been successful enough to call themselves Big Biotechs. If boards and shareholders lack vision and guts, we’ll look back in a few years and wonder why the Big Biotechs went extinct.

The group of Big Biotechs includes companies like Amgen, Gilead Sciences, Biogen Idec, and Celgene. They grew from scrappy venture-backed startups with a dream into big, independent, profitable, diversified enterprises. They have enduring ability to create new jobs and new medicines. They are like ballasts in a stormy industry.

There are several challenges in the market today that make it harder than ever to create companies like these. The biotech venture community can’t afford to build startups anymore that have Big Biotech aspirations; there’s only a lukewarm biotech IPO market; and Big Pharma companies have an endless appetite for acquisitions to replace their aging drugs with expiring patents. Wall Street values the short-term payday over long-term potential.

All of these factors are conspiring to put a lot of pressure on biotech companies to sell to Big Pharma companies. You’ve seen it with GlaxoSmithKline’s $2.6 billion hostile bid to acquire Rockville, MD-based Human Genome Sciences (NASDAQ: HGSI). San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) is reportedly another object of Big Pharma desire. If these deals get done, they could end up tipping over a set of M&A dominos that would significantly change the biotech industry—and not necessarily for the better.

Richard Pops

“We’re at a unique moment in the history of the industry,” says Alkermes CEO Richard Pops. “When you look at the companies in the $2-plus billion market valuation tier, it is an incredibly important time and an incredibly vulnerable time. These companies are big enough to help to solve big problems in Big Pharma.

“If you are a Big Pharma company facing a patent cliff, you really have a huge revenue gap to fill, and small companies don’t really help you. They aren’t scaled to solve your problem. And this is precisely why companies in this valuation tier are so vulnerable. When you have a $2 billion valuation, it’s usually because something made your company an economic enterprise rather than a big science project.”

Pops runs one of the Big Biotechs. Rather than being acquired by a Big Pharma company that might want its technology that makes drugs last longer in the blood, Alkermes decided to do the acquiring. It bought Elan Drug Technologies, in a move that turned it into a trans-Atlantic 1,200-employee enterprise with revenue streams from multiple products—and a good shot at profitability for the long haul.

[Updated to add Ariad and Pharmacyclics.] A fair number of companies out there have some realistic chance to be members of the Big Biotech class. I count 23 companies in the NASDAQ Biotech Index with market valuations of more than $2 billion. Will they remain independent, like Alkermes, or go extinct? You can size up the list here yourself.

When I look at this list, a few things jump out. Amgen, Gilead, and others at the top have gotten so big and rich that someone would really have to move mountains to buy them. At the bottom of the list are a few little companies, like Vivus, that are surely built for quick and easy takeover. What concerns me more are the companies in the middle. They are the ones with compelling technologies, strong management teams, and at least … Next Page »

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Paul Angott is an idea man. He holds 40 patents on products such as a clock thermostat, a wireless doorbell, and a laser-guided, unmanned mower for football fields and golf courses. Throughout his career, he’s launched five companies and raised more than $10 million for his various entrepreneurial endeavors, sold more than $100 million worth of his products, and taken 30 of these products from concept to market. Now, with a new company based in Bloomfield Hills, MI called Angott Medical Products, he wants to revolutionize testing for breast cancer.

“Our goal is to save 10,000 lives per year,” Angott says. “If you detect breast cancer at stage one and it hasn’t spread to the lymph nodes, the survival rate is about 98 percent. Our test, which is an adjunct clinical breast exam, can detect a tumor at one centimeter in diameter 95 percent of the time.”

Angott’s prototype device tests for breast cancer using 3-D advanced thermal profiling. During the test, a woman lies with her arms stretched over her head on a specially designed exam table. The woman puts her hands on a cold bar that is part of the table, bringing the her body temperature down, while a camera snaps a series of images of her chest. That’s where the thermal imaging kicks in: blood vessels that feed a tumor won’t cool down with the rest of the body, making them stand out on a thermal image. The only portion of the test that touches a woman’s body is the cold bar.

The test captures data digitally and then uses special software to interpret the results, which Angott says eliminates the need for highly trained specialists. The test also works with women of any age woman and with breasts of any density—a difference from mammograms, which don’t work as well on dense breasts, he notes.

Angott emphasizes that his test is not meant to replace mammograms, but augment clinical breast exams. He adds that the device doesn’t cause any pain or emit radiation, is non-invasive, and doesn’t cost a lot to administer—all of which are common criticisms of the industry-standard mammogram. Angott plans to sell his device for $15,000, with $15 per test going to the doctor that administers it.

He became interested in the field of breast cancer detection after watching his mother struggle with the disease. She had two mastectomies 13 years apart, but finally succumbed to the disease 20 years ago. “Watching the physical and emotional agony she went through was devastating,” he says. “She was angry with God. It’s a devastating disease, and I think having breast cancer is one of women’s biggest fears. So I figured I’d just try to solve the problem.”

With no medical background, Angott says he spent about 10,000 hours researching breast cancer. Eventually, he hit upon the idea of using thermography as a means of detection. (Thermography, he admits, was once commonly used in the era before mammograms before falling out of favor with most doctors, who felt it generated too many false positive readings.)

He researched thermal imaging clinics around the world and stumbled upon a method developed by a doctor who took more than a million images over 40 years and studied the what occurred in thermal images after a patient put her hand in cold water. The “cold challenge” causes a fight or flight response in the body that makes blood vessels constrict and the body’s temperature drop. Blood vessels that form around tumors don’t constrict during a cold-temperature challenge, Angott adds, so the thermal imaging detects the heat they give off. He took those ideas and adapted them when building his device.

Angott, who won TechTown’s 2011 Entrepreneur of the Year award, estimates he’ll need between $5 million and $6 million to get his prototype to market. He’s already invested $1 million of his own money and picked up an additional $1 million from angel investors. Ann Arbor SPARK and the federal government have also invested in his company. The reaction from the medical establishment so far has been good, he says, with 63 percent of the 240 doctors he polled expressing interest in offering their patients his test. Now, he’s seeking more angel investors to raise the money needed to get his product to market.

“In 480 B.C., women used to put mud on their breasts to see how it dried,” Angott says, noting that a breast that contains a tumor is a few degrees warmer to the touch than a breast without a tumor. “This is technology that has been used for a long time because it works.”

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To whom much is given, much shall be required.

Regular readers know that I’m not in the habit of quoting scripture. But this line found in the gospels of Matthew, Mark, and Luke has a bit of new relevance this morning, as Facebook’s initial public offering—valuing the company at $106 billion at the opening bell on the NASDAQ Exchange—begins a process that will turn hundreds of Facebook shareholders, including current and former employees, into millionaires.

The real windfall won’t come until later this year: lock-up rules mean insiders and other major shareholders can’t start selling their shares until three to six months after the IPO. But that’s actually sort of convenient, because it leaves these soon-to-be-tycoons some time to think about what they’ll do with their new resources.

Of course, there will be the inevitable, entirely reasonable burst of materialism. Silicon Valley’s realtors, travel agents, and Tesla dealers will experience a welcome bump in business. A lot of old Ikea furniture and Sony stereo equipment will end up on the curbs of Palo Alto, displaced by Ligne Roset and Bang & Olufsen.

But if Facebookers are anything like their predecessors at PayPal and Google, their new toys won’t distract them for long. They’ll eventually fan out across Silicon Valley and found their own startups, or start investing in their friends’ companies, or both.

“You are going to make hundreds of millionaires and see a lot of new startup activity, because these kids are going to start companies on their own,” says Vivek Wadhwa, a scholar of entrepreneurship with appointments at Stanford, Duke, Emory, and Singularity University. “It’s going to be a big boom for Silicon Valley.”

Now, if you only looked at the record to date, you wouldn’t get the impression that Facebook’s alumni are especially prolific—and you’d be forgiven for wondering if they have any interests outside of social networking, collaboration tools, and Web infrastructure technologies. With help from CB Insights, which has been preparing its own study of the “Facebook Mafia,” I did a search for companies founded by Facebook alumni, and turned up fewer than a dozen examples:

Asana (Web-based task management) – Dustin Moskovitz, Justin Rosenstein
Cloudera (Apache Hadoop distributions) – Jeff Hammerbacher
Cove (collaboration, acquired by Dropbox) – Aditya Agarwal, Ruchi Sanghvi
Daily Strength (online support groups) – Doug Hirsch
Jumo (social networking for non-profits, merged with GOOD) – Chris Hughes
MemSQL (database management software) – Eric Frenkiel
Path (social networking and media sharing) – Dave Morin
Peixe Urbano (Brazilian local commerce site) – Julio Vasconcellos
Quora (question answering) – Adam D’Angelo, Charlie Cheever
Storm8 (mobile games) – Perry Tam, William Siu
Trialpay (targeted advertising) – Eddie Lim

This isn’t a terribly long list, at least compared to the number of companies created by ex-PayPal people or ex-Googlers. But the real Facebook diaspora may only get underway six to 18 months from now, as the lock-up period expires and Facebook employees realize that working for a public company isn’t nearly as fun as working for a startup. An IPO is “like getting married,” Wadhwa points out. “The engagement is fun but after that you have all these responsibilities. Every quarter you are accountable to the public markets, and if anything goes the slightest bit wrong things get very nasty. The Silicon Valley kids won’t like it.”

So let’s say it’s early 2013 and antsy young engineers and product managers are leaving Facebook in droves and setting up their own companies. What big problems should they tackle? Or, as venture capitalist Michael Greeley put it yesterday, “What is to become of all this liquidity?”

It would be understandable, but disappointing, if ex-Facebookers only pursued the things we already know they’re good at. It’s clear that when you gather a team of star Stanford- and MIT-trained engineers, lock them in a room with a case of Red Bull, and give them some big-data problem—say, how to store and retrieve camera-phone photos from 800 million people—they can devise diabolically efficient algorithms to solve it. But how many more mobile social apps, enterprise collaboration tools, and infinitely scalable databases does the world really need?

The sad truth is that today’s startup founders swarm around a small thicket of opportunities in the cloud, mobile, and Web spaces. Even one of the valley’s leading iconoclasts, Y Combinator founder Paul Graham, occasionally seems to have trouble thinking outside the Internet box. As a sort of dare to rising entrepreneurs, Graham recently published a list of “frighteningly ambitious” startup ideas. But at least three of the ideas on the seven-item list—a new search engine, a replacement for e-mail, and a better delivery mechanism for digital entertainment—are just more of the same.

To make the most of their skills—and the long careers they have ahead of them—the coming crowd of Facebook alumni would do well to look outside Silicon Valley for problems to solve. Here are just a few of the ways they could profitably direct their brainpower:

Build untraceable communications tools for activists and dissidents. Twitter, Facebook, and text messaging worked great for organizers of the Arab Spring uprisings—until their governments caught on and started using the same tools to hunt them down. The assignment here: build a system that protects the user’s identity absolutely. Of course, any tool that helps dissidents could also be used by terrorists. Or could it? Figuring out how to favor the white hats over the black would be part of the challenge here.

Create a truly great, cross-platform customer service and support system. Part of being civilized means dealing with the bureaucracies in our lives, whether they’re our governments, our employers, our healthcare providers, or our ISPs. We need technologies that … Next Page »

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So here is my obligatory post on Facebook…which will be the most spectacular IPO of a venture-backed company in the history of mankind…and it just priced tonight.

The shares priced at $38 giving the company a market cap of $104 billion fully diluted, raising $16 billion in proceeds. Of the 421 million shares being sold, 57 percent (or 241 million shares) are being sold by insiders; in the past few years only LinkedIn and Pandora had a higher percentage of shares coming from insiders. Assuming the “green shoe” over-allotment option is exercised, the total amount of proceeds will exceed $18.4 billion. And this is where I want to focus.

Putting aside the potential negative signaling of all this insider selling—and General Motor’s voting with their feet (or tires) this week—what is the impact on the VC industry with all this liquidity? First—according to Fortune—some of the numbers:

—Individual shareholders (mostly Zuckerberg) are selling $3.2 billion of stock and will retain stock worth $27.7 billion

—Institutional shareholders are selling $8.3BN of stock and will still hold $15.8 billion

—This does not include the existing institutional investors (T. Rowe Price, Andreessen Horowitz) which hold about $1 billion of stock and are not selling, nor does it include all the other employees who are now fabulously wealthy

—Of the institutional investors, $5.1 billion of stock being sold is held by institutions which have traditional LPs and/or are themselves LPs. This same group of investors will still have $10.6 billion of Facebook stock yet to be sold.

For me what is most interesting is to speculate about what is to become of all this liquidity. The venture industry has struggled mightily to raise capital; in the past few years the VC industry has raised between $12 to $15 billion annually. As these proceeds are realized and distributed, do much of these dollars get recycled—that is, will underlying LPs begin to increase their allocations to VC as they start to see Facebook distributions? The math suggests that one year’s worth of VC fundraising is now in around half a dozen VC firms fortunate enough to have invested in Facebook!

Additionally, we are watching a very deep and wealthy pool of new angel investors get created and collectively they will play a powerful role in the next wave of great company formation. Much like the “PayPal Mafia” from the last decade which sponsored many of this cycle’s great companies, the Facebook Mafia should do the same over the course of the next decade. These individual investors themselves could become significant LP’s in many venture funds which, if that were to be the case, would further drive VC industry expansion.

Or is this just all wishful dreaming?

This essay originally appeared today on Michael Greeley’s blog, On the Flying Bridge.

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Yesterday, we published an article about why VC guru Jason Mendelson is feeling bullish about Michigan as a hub for entrepreneurship. He pointed out that the state’s tendency toward collaboration is an important asset that should continue to be championed. Vijay Mehra, CEO of Think Tech Labs, wholeheartedly agrees. It’s exactly the reason that, six months ago, he relocated his growing company from Miami to Ann Arbor.

Think Tech Labs is an IT and cloud computing consultancy that specializes in the implementation and optimization of Salesforce.com, NetSuite, and Google Apps.  Its REthink product, which helps realtors manage customer relationships, is a top Salesforce app and last year won a Salesforce AppExchange Customer Choice award. “Out of the box, Salesforce is not tailored to the real estate market,” Mehra says. “It’s geared toward the traditional sales person. If you look at real estate, it’s a very defined business methodology, and we’ve completely tailored REthink to mirror the residential or commercial real estate process.”

REthink’s customers pay between $49 and $107 per month for customized automation, dashboards, email templates, and analytics accessible by desktop computer or mobile device. Think Tech Labs also offers REthink customers help with website design, search engine marketing, training, and 24-hour tech support. Mehra says that REthink has been so successful that Think Tech Labs now plans to create a similar product geared toward the financial services sector.

Mehra studied engineering, but found himself working for a commercial real estate firm in New York City. He was constantly frustrated with the way his colleagues kept track of their sales calls. “A lot of people were so backwards about managing data, and, because of Salesforce, I knew there was a better way,” he says. “I pitched it to my boss and he said no. So I left to start my own company.”

Mehra couldn’t afford to grow his business in New York, so he relocated to Miami Beach. However, that soon proved to be a mistake, he says. “It’s a beautiful place, but they have no entrepreneurial spirit,” he adds.

When deciding where to move Think Tech Labs, he considered San Francisco; Austin, TX; the Research Triangle area of North Carolina; and Ann Arbor. Ann Arbor impressed Mehra the most, he says, because the talent was “phenomenal” and it was a cost-effective, intimate community. “It’s very entrepreneurial—a lot of people want to be in the startup space,” he adds. “The vibe is really cool.”

Think Tech Labs is now an Ann Arbor SPARK Central tenant with six employees, though Mehra hopes to have more than 20 employees by the end of the year. He expects revenue will soon hit seven figures, and says the bootstrapped company has grown 200 percent in the past four years.

His next goal is to add the state of Michigan to Think Tech Lab’s list of clients, which includes Ann Arbor SPARK and New York University. The state manages hundreds of different initiatives, many under the Michigan Economic Development Corporation’s umbrella, and Mehra wants to train unemployed recent graduates in how to implement Salesforce’s technology to maximize the platform. The work Think Tech Labs has done with SPARK will serve as a sort of pilot program to show the state what’s possible. “There are so many inefficiencies,” he says. “We’d love the opportunity to work with the state of Michigan and show them what’s possible.”

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A few years back, molecular geneticist Tom Maniatis was approached by a Harvard Business School student with a heart-wrenching story. The student, Avichai Kremer, then 29, had been diagnosed with amyotrophic lateral sclerosis (ALS), otherwise known as Lou Gehrig’s disease. Kremer had an unusual idea: He wanted to advance ALS research by offering million-dollar prizes to scientists who made meaningful contributions to research into the disease.

Maniatis was both skeptical and intrigued. He had lost his sister to ALS, and was the longtime chair of the research and drug-development committees for the Amyotrophic Lateral Sclerosis Association. “The prize model had never been tried in life sciences,” says Maniatis, who is now a professor and chair of the department of biochemistry and molecular biophysics at the Columbia University College of Physicians and Surgeons (and one of our Xconomists). “At the time Avi entered the scene, the ALS community was pretty small. And the drug companies did not see it as a profitable pursuit.

As it turns out, Maniatis says, ALS was a perfect model for a prize-based research approach. In 2006, Kremer’s idea became Prize4Life, a Cambridge, MA-based nonprofit that is now one of the most influential forces in ALS research. In addition to offering a $1 million research prize each year—-the latest of which will be announced at a fundraising gala in New York on June 6—Prize4Life has spearheaded several programs designed to mobilize and energize scientists working in ALS. Kremer and a handful of his HBS classmates are running the entire endeavor, says Maniatis, who is a member of Prize4Life’s scientific advisory board. “They had such an affection and respect for Avi that many of them put off jobs to stay in Cambridge and work for this nonprofit,” he says.

Kremer and his classmates spent more than 1,000 hours talking to experts from the drug industry, academia, and nonprofits, before officially launching Prize4Life’s model. “What inspired me was the success of the Ansari X-Prize,” Kremer says in an e-mail, referring to the California organization that provides incentives to researchers in education, energy, the environment, life sciences, and exploration. “It proved to me that a prize can correct a market failure.” In Prize4Life’s case, he explains, that market failure is the lack of capital “to focus innovation coming from academia and small biotechs on ALS,” he says.

This year’s award will mark the third effort by Prize4Life to support ALS scientists with $1 million in research funding. In 2010, 33 teams of scientists—about half of whom came from academia and the other half from pharma companies—competed for the organization’s first $1 million award by proposing treatment protocols meant to extend the lives of mice with ALS by 25 percent. Ultimately, none of the teams met the goals set out by Prize4Life, and the $1 million prize went unclaimed, though several of the applicants are continuing their research with the organization’s support. (Prize4Life also sponsors a number of smaller research grants.)

Last year, Prize4Life awarded $1 million to Seward Rutkove, co-founder of Woburn, MA-based Convergence Medical Devices, for his work developing a biomarker that can measure the progression of ALS in patients. The tool is designed to make clinical trials of potential new drugs more efficient.

This year’s major prize will be a revival of the inaugural award’s goal—the promise of $1 million for research that demonstrates 25 percent survival in ALS mice. “In the previous round, no one was able to achieve that, but there are so many … Next Page »

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If the turnout at yesterday’s Michigan Growth Capital Symposium is any indication, our fair state is on the upswing. The conference, in its 31st year, had roughly 450 venture capitalists, entrepreneurs, academics, and government officials in attendance. Jason Mendelson, called “the Elvis of innovation” by this very publication, gave the keynote speech titled, “The Velocity of the Midwest Venture Capital Ecosystem: Sleeping Giants or Momentary Blips?”

Mendelson is the managing director and co-founder of the Foundry Group, a Boulder, CO fund that makes investments in early-stage information technology, Internet, and software startups. He grew up in metro Detroit and graduated from the University of Michigan. Upon finishing law school at U-M, he realized he was frustrated with what he saw as Michigan’s prevailing attitude—fostered by the auto industry—that seniority was all that mattered. Nobody seemed to care what the new guy had to say, even if the new guy had a potentially million-dollar idea. So he decamped to Silicon Valley and went on to serve as managing director and general counsel for Mobius Venture Capital.

Mendelson was in Silicon Valley for the first tech bubble, and he was still there, he says, after “the keg ran dry.” He describes Silicon Valley as an ice-hearted entrepreneurial machine, and not one other cities should necessarily seek to replicate. In his description, Silicon Valley is a place so consumed with competition that virtually the only pleasure in life comes from relishing in the setbacks and failures of others. It’s a toxic place that nobody much likes living in, he claims. Not surprisingly, he fled to Boulder in 2006.

Once he and his partners established the Foundry Group, they decided they would need to “level up” Boulder’s entrepreneurial scene by leveraging the University of Colorado, working to attract capital from outside the region, establishing rigorous entrepreneurial mentorship and development programs through the TechStars accelerator, and cultivating a community where collaboration is key. Now, Mendelson says, Boulder, a city of about 100,000 people, is ranked fourth in the nation in terms of new company formations and companies getting funded.

Before setting up shop in Boulder, Mendelson came to Ann Arbor in 2005 as “a VC with a checkbook.” He came ready to invest in the software/IT space, but he found … nothing. Not one company piqued his interest enough to cut a check. He came back … Next Page »

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[Updated: 1:30 pm PT, 5/17/12] One of the big dreams in biotech over the past 35 years has been to make drugs that work like “smart bombs” by destroying tumors while minimizing collateral damage. Scientists have learned this is no easy thing, but now that a couple of these types of drugs have been shown to work, a new wave of companies is emerging to see if they can finally turn this vision into reality.

Targeted antibody drugs have been around for a long time, and have been shown to do a lot of good for patients. Some of the world’s best-selling medicines are designed to specifically hone in on cancer cells while mostly sparing healthy tissues. Yet it’s only been in the last several years that a couple of companies—Seattle Genetics and Genentech—have shown proof in clinical trials that they can go a step further than what’s been done with so-called “naked” antibodies. The concept is simple: Take a regular antibody, link it to a toxin, and design the combination so that it unleashes a killer payload on tumors. Done right, you ought to have a drug with more punch than traditional antibodies or chemotherapy.

The idea of making “empowered” or “armed” antibodies is known more formally in industry circles as the antibody-drug conjugate (ADC) business. Most previous attempts to amplify antibodies in the past failed because the toxins broke off and started floating around the bloodstream. That meant the drug never got to the right place, and the treatment caused similar side effects to standard chemotherapy. Seattle Genetics overcame that hurdle with the FDA approval last year of its lymphoma drug brentuximab vedotin (Adcetris). And Genentech is in late-stage trials of its souped-up version of Herceptin called trastuzumab emtansine (T-DM1). Both of these drugs have shown in clinical trials that they can be powerful anti-tumor weapons in very sick cancer patients. And not surprisingly, these successes have inspired a new group of genetic engineers to see what they can do to turn antibody-drug conjugates into mainstream cancer medicines.

“We as an industry now have a lot of experience with naked antibodies for cancer, and some of them are very good, but we know they aren’t perfect,” says Bill Newell, the CEO of South San Francisco-based Sutro Biopharma, a venture-backed startup. “They aren’t magic bullets. But I think as people recognize the valuable contribution antibodies have made to cancer, they naturally ask themselves, ‘how can we make them better?’ Essentially, antibodies are good, but antibodies with a payload may be even better.”

There is so much enthusiasm for the emerging antibody-drug conjugate movement that there’s even a World ADC Summit, now in its third year, scheduled for this October in San Francisco. Given the increasing interest among venture-backed companies that are seeking to come up with new antibody-drug conjugates, or provide new enabling technologies, I thought it would useful to put together a list of companies seeking to play a role. If I’ve overlooked a company you know of, please send me a note at ltimmerman@xconomy.com so I can update the list.

T-DM1. Image courtesy of Genentech

Genentech (South San Francisco). The biotech giant, part of Switzerland-based Roche, has the broadest and deepest experience with antibody-drug conjugates in the world. The company uses technology from Seattle Genetics and ImmunoGen in some cases to make ADCs, but it also has its own proprietary techniques which it doesn’t license outside the company. Genentech has had its most high-profile success with T-DM1, but that’s just one of 25 different antibody-drug conjugates in various stages of development, from discovery through late clinical trials. Nine of Genentech’s 38 cancer drugs in clinical trials—roughly one-fourth of the portfolio—belong to this new class of empowered antibodies. “We’ve really invested heavily in this technology and have the breadth and depth of our pipeline to show for it,” says Genentech spokeswoman Krysta Pellegrino. For a detailed rundown of Genentech’s ADC programs, click here.

Seattle Genetics (Bothell, WA). Seattle Genetics (NASDAQ: SGEN) is one of the two mainstays of the armed antibody field, along with Waltham, MA-based ImmunoGen (NASDAQ: IMGN). The company was founded in 1998 after Bristol-Myers Squibb closed down a Seattle research center that had been dedicated to developing antibody-drug conjugate technology. Besides its work on the new lymphoma drug Adcetris, the company lists six other empowered antibodies in clinical and preclinical development on its website. The company also licenses out its antibody-drug linking technology to other drug developers working on specific projects. The list of collaborators includes Genentech, Bayer, Celldex Therapeutics, Progenics Pharmaceuticals, Astellas Pharma, Daiichi Sankyo, Millennium:Takeda, GlaxoSmithKline, Genmab, Pfizer, and Abbott Laboratories.

ImmunoGen (Waltham, MA). ImmunoGen (NASDAQ: [[ticker:IMGN]) is the other stalwart of the empowered antibody world, having been founded way back in 1981. The company has never made a profit in all those years, and has had some very lean years, but it has been resurgent of late. That’s because it licensed its antibody-drug linking technology more than a decade ago to Genentech, which has used it to make T-DM1. That drug isn’t yet FDA approved, but it passed a pivotal clinical trial back in March, which was the last major milestone it needed to clear before seeking the regulatory green-light. ImmunoGen stands to collect a modest royalty on that product, and like Seattle Genetics, it seeks to use its antibody-drug conjugate technology for its own internal drug candidates, while also making some money by licensing it to other companies working on specific projects. Eli Lilly, Novartis, Amgen, Genentech, Biotest, Bayer, and Sanofi are among its collaborators.

Bristol-Myers Squibb (New York). The pharmaceutical company (NYSE: BMY), which once invested so heavily … Next Page »

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Qualcomm (NASDAQ: QCOM) plans to use its well-established model in technology licensing as it advances innovations in wireless charging of electric vehicles (EVs), smartphones, and other devices, according to Qualcomm’s top European executive, Andrew Gilbert.

The San Diego wireless giant, which announced the formation of a wireless charging standards organization with Samsung last week, also remains on track to demonstrate its new charging technology for electric vehicles (EVs) in London this year, Gilbert said. The San Diego wireless technologies giant announced its plans to showcase the new technology with as many as 50 battery-powered taxis in November, shortly after acquiring HaloIPT, the startup developing the technology.

PM David Cameron (left) and Andrew Gilbert

Gilbert came through San Diego accompanied by a deep-green, all-electric Le Mans prototype racer that England’s Drayson Racing Technologies unveiled in London a few months ago. The Lola-Drayson B12/69 EV, which replaced a 5.5-liter Judd engine with a pure electric drive on a standard Le Mans chassis, is projected to reach speeds of 200 mph, and was designed for pit stop recharging with the HaloIPT charging system.

The Drayson racecar traveled thousands of miles to get to San Diego, but Drayson has not conducted any road tests with the vehicle yet. Gilbert said Drayson plans to begin testing its EV racer in coming months as part of a broader campaign to get the International Automobile Federation to sanction an EV competition—perhaps as soon as the souped-up EVs can race for more than 15 minutes before recharging.

During his San Diego pit stop, Gilbert also noted that Qualcomm and Samsung announced the formation of the Alliance for Wireless Power (A4WP) last week during the CTIA conference in New Orleans. As Gilbert noted, wireless electricity transmission has been around since the days of Nikola Tesla (1856-1943) and there may be as many as 20 other companies developing wireless charging technologies. The alliance plans to focus initially on wireless charging technology for devices, but the group expects to gradually draw in members from the automotive sector as well.

Qualcomm has been working in the transportation sector since the company began, mostly in telematics, and continues to provide “silicon and software” for content streaming, navigation services, and related technologies, including GM’s OnStar service. “We work directly or indirectly with … Next Page »

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JumpStart Inc., a Cleveland-based nonprofit focused on entrepreneurship and economic development, will team with the New Economy Initiative (NEI) to open a new high-tech accelerator in Detroit, says NEI executive director David Egner. Egner (an Xconomist) says a variety of state and regional investors will fund the accelerator and he expects it to have an annual operating budget of between $1.5 million and $3 million.

Egner says the accelerator, which will likely open this fall inside TechTown, will join a field of local accelerators and incubators that some feel is already too crowded given the relatively small geographic area they cover in Southeast Michigan. But Egner says that although accelerators like TechTown and Ann Arbor SPARK nurture high-tech startups, they aren’t solely devoted to them. “We don’t have a designated organization doing marketing to increase deal flow,” he says. “There currently isn’t capacity to go out and find new deals. We’ll have a $5 million fund with the ability to move $250,000 per deal.”

What Detroit has that still hasn’t been fully capitalized upon, Egner argues, is an innovation corridor that stretches from Dan Gilbert’s buildings downtown to Henry Ford Hospital in New Center. “That three and a half miles could be one of the most innovative districts in the country, and we’ll help to accelerate that corridor,” he says, adding that innovation is already flourishing in places like Wayne State, the Detroit Medical Center, Next Energy, Bizdom, D:Hive, Sustainable Water Works, the Detroit Creative Corridor Center, Inforum, and all the startups housed in the Madison Building. The NEI is itself a $100 million initiative formed in 2008 to increase economic activity in … Next Page »

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Anyone in business journalism knows full well the power of the Gerald Loeb Awards for Distinguished Business and Financial Journalism. Loeb was a founding partner of E.F. Hutton and a noted author and columnist, and the awards he created in 1957 to promote and recognize great writing and reporting for individual investors have become something akin to the Pulitzer Prizes of business news—the highest honor the field has. To put it mildly, invoking the E.F. Hutton slogan, when the Loeb Awards talk, people listen.

So it is with great pleasure that I share with our readers, underwriters, and other supporters the news announced today that Xconomy National Biotech Editor Luke Timmerman has been named one of four finalists in the blogging category of this year’s Loeb Awards. (This is highly deserved, since Luke can do it all—from breaking news to in-depth profiles to his insightful, extremely popular BioBeat column.)

It is a particularly great honor because Xconomy is the only independent, standalone blog represented in any of this year’s 13 categories, which span newspapers, magazines, books, breaking news, commentary, and more. The other three finalists in the blogging category hail from The New York Times, The Washington Post, and Reuters.

Xconomy is not yet five years old, and to be named alongside such venerable and respected organizations is a great honor—and a tribute not just to Luke but to the entire Xconomy team that works hard each day to bring great journalism and in-depth reporting to our readers. We firmly believe there is still a place for objective, high-quality news, features, and analysis in this day and age of content inundation from all spheres—much of it poorly vetted, or written simply to drive page views—and it is especially gratifying to have that dedication recognized.

Winners will be announced at a banquet in New York on June 26. Thank you Loeb Awards—and congratulations (and good luck) to Luke!

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[This is the third in a series of posts about A New Kind of Science. Previous posts have covered the original reaction to the book and what’s happened since it was published. This post first appeared on Wolfram's blog---Eds.]

Today ten years have passed since A New Kind of Science (”the NKS book”) was published. But in many ways the development that started with the book is still only just beginning. And over the next several decades I think its effects will inexorably become ever more obvious and important.

Indeed, even at an everyday level I expect that in time there will be all sorts of visible reminders of NKS all around us. Today we are continually exposed to technology and engineering that is directly descended from the development of the mathematical approach to science that began in earnest three centuries ago. Sometime hence I believe a large portion of our technology will instead come from NKS ideas. It will not be created incrementally from components whose behavior we can analyze with traditional mathematics and related methods. Rather it will in effect be “mined” by searching the abstract computational universe of possible simple programs.

And even at a visual level this will have obvious consequences. For today’s technological systems tend to be full of simple geometrical shapes (like beams and boxes) and simple patterns of behavior that we can readily understand and analyze. But when our technology comes from NKS and from mining the computational universe there will not be such obvious simplicity. Instead, even though the underlying rules will often be quite simple, the overall behavior that we see will often be in a sense irreducibly complex.

So as one small indication of what is to come—and as part of celebrating the first decade of A New Kind of Science—starting today, when Wolfram|Alpha is computing, it will no longer display a simple rotating geometric shape, but will instead run a simple program (currently, a 2D cellular automaton) from the computational universe found by searching for a system with the right kind of visually engaging behavior.

This doesn’t look like the typical output of an engineering design process. There’s something much more “organic” and “natural” about it. And in a sense this is a direct example of what launched my work on A New Kind of Science three decades ago. The traditional mathematical approach to science has had great success in letting us understand systems in nature and elsewhere whose behavior shows a certain regularity and simplicity. But I was interested in finding ways to model the many kinds of systems that we see throughout the natural world whose behavior is much more complex.

And my key realization was that the computational universe of simple programs (such as cellular automata) provides an immensely rich source for such modeling. Traditional intuition would have led us to think that simple programs would always somehow have simple behavior. But my first crucial discovery was that this is not the case, and that in fact even remarkably simple programs can produce extremely complex behavior—that reproduces all sorts of phenomena we see in nature.

And it was from this beginning—over the course of nearly 20 years—that I developed the ideas and results in A New Kind of Science. The book focused on studying the abstract science of the computational universe—its phenomena and principles—and showing how this helps us make progress on a whole variety of problems in science. But from the foundations laid down in the book much else can be built—not least a new kind of technology.

This is already off to a good start, and over the next decade or two I expect dramatic progress in the application of NKS to all sorts of technology. In a typical case, one will start from some objective one wants to achieve. Then, either through knowledge of the basic science of the computational universe, or by some kind of explicit search, one will find a system that achieves this objective—often in ways no human would ever imagine or come up with. We have done this countless times over the years for algorithms used in Mathematica and Wolfram|Alpha. But the same approach applies not just to programs implemented in software, but also to all kinds of other structures and processes.

Today our technological world is full of periodic patterns and other simple forms. But rarely will these ultimately be the best ways to achieve the objectives for which they are intended. And with NKS, by mining the computational universe, we have access to a much broader set of possibilities—which to us will typically look much more complex and perhaps random.

How does this relate to the kinds of patterns and forms that we see in nature? One of the discoveries of NKS is that nature samples a broader swath of the computational universe than we reach with typical methods of mathematics or engineering. But it too is limited, whether because natural selection tends to favor incremental change, or because some physical process just follows one particular rule. But when we create technology, we are free to sample the whole computational universe—so in a sense we can greatly generalize the mechanisms that nature uses.

Some of the consequences of this will be readily visible in the actual forms of technological objects we use. But many more will involve internal structures and processes. And here we will often see the consequences of a central discovery of NKS: the Principle of Computational Equivalence—which implies that even when the underlying rules or components of a system are simple, the behavior of the system can correspond to a computation that is essentially as sophisticated as anything. And one thing this means is that a huge range of systems are capable in effect not just of acting in one particular way, but of being programmed to act in almost arbitrary ways.

Today most mechanical systems we have are built for quite specific purposes. But in the future I have no doubt that with NKS approaches, it will for instance become common to see arbitrarily “programmable” mechanical systems. One example I expect will be modular robots consisting of large numbers of fairly simple and probably identical elements, in which almost any mechanical action can be achieved by an appropriate sequence of small-scale motions, typically combined in ways that were found by mining the computational universe.

Similar things will happen at a molecular level too. For example, today we tend to have bulk materials that are either perfect periodic crystals, or have atoms arranged in a random amorphous way. NKS implies that there can also be “computational materials” that are grown by simple underlying rules, but which end up with much more elaborate patterns of atoms—with all sorts of bizarre and potentially extremely useful properties.

When it comes to computing, we might think that to have a system at a molecular scale act as a computer we would need to find microscopic analogs of all the usual elements that exist in today’s electronic computers. But what NKS shows us is that in fact there can be much simpler elements—more readily achievable with molecules—that nevertheless support computation, and for which the effort of compiling from current traditional forms of computation is not even too great.

An important application of these kinds of ideas is in medicine. Biology is essentially the only existing example where something akin to molecular-scale computation already occurs. But existing drugs tend to operate only in very simple ways, for example just binding to a fixed molecular target. But with NKS methods one can expect instead to create “algorithmic drugs”, that in effect do a computation to determine how they should act—and can also be programmable for different cases.

NKS will also no doubt be important in figuring out how to set up synthetic biological organisms. Many processes in existing organisms are probably best understood in terms of simple programs and NKS ideas. And when it comes to creating new biological mechanisms, NKS methods are the obvious way to take underlying molecular biology and find schemes for building sophisticated functionality on the basis of it.

Biology gives us ways to create particular kinds of molecular structures, like proteins. But I suspect that with NKS methods it will finally be possible to build an essentially universal constructor, that can in effect be programmed to make an almost arbitrary structure out of atoms. The form of this universal constructor will no doubt be found by searching the computational universe—and its operation will likely be nothing close to anything one would recognize from traditional engineering practice.

An important feature of NKS methods is that they dramatically change the economics of invention and creativity. In the past, to create or invent something new and original has always required explicit human effort. But now the computational universe in effect gives us … Next Page »

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The pistons of the biggest publicity engine in cancer R&D will start firing this week. It’s time to behold the annual rite of the American Society of Clinical Oncology (ASCO) meeting, the biggest event for showing off what’s new and interesting in the treatment of cancer.

This conference, officially held June 1-5 at McCormick Place in Chicago, draws more than 25,000 physicians, pharmaceutical companies, investors, and journalists every year. Organizers have spent years carefully orchestrating this show to make sure it’s the place for all kinds of market-moving, medical practice-changing, and front-page leading news about cancer. Partly to help drum up suspense, things really get started this week, as thousands of (often outdated and incomplete) abstracts of clinical trial results are posted on the ASCO website, as a preview of coming attractions in Chicago. The abstracts are due out at 6 pm ET on Wednesday.

Despite the excessive hype in this business, where a few extra months of survival counts as a breakthrough, there are really encouraging things happening in cancer treatment. There’s undoubtedly tons of money to be made, which explains a lot about the spectacle that is ASCO. Health insurers now spend an estimated $80 billion a year on cancer care worldwide, and spending in the U.S. is expected to climb an eye-popping 42 percent by the end of 2013, according to a report last year by Medco Health Solutions. There are now about 900 cancer drugs in development.

Most of those drugs will suffer quiet deaths, and never get close to the marketplace, because they aren’t safe enough or don’t work well enough. But here’s a rundown on eight drugs from biotech companies around the U.S. that are sure to make news at this year’s ASCO because they are either on the cusp of reaching the market, or just beginning to scratch the surface of their potential:

—Genentech’s trastuzumab-DM1 (T-DM1) for breast cancer. Evidence has been mounting for years that this “souped-up” antibody drug could be much more potent than Genentech’s original trastuzumab (Herceptin), the pioneering breast cancer medicine that’s almost 15 years old. Now the South San Francisco-based company, a unit of Roche, is getting ready to present data from a pivotal study of 991 women with breast cancer. These women had previously gotten Herceptin, and were randomly assigned to get either T-DM1 or a combo of GlaxoSmithKline’s lapatinib (Tykerb) and capecitabine (Xeloda) chemotherapy.

Genentech said in March that T-DM1 met its main goal of slowing the spread of tumors, and that it was good enough for the company to seek FDA approval of the drug later this year. This study, known as Emilia, also measured survival times. Data on the tumor progression times, and an interim look at overall survival time, will be made public the first full day of ASCO presentations on Saturday, June 2, according to Genentech spokeswoman Emmy Wang. Besides Genentech, this disclosure also means quite a bit to Waltham, MA-based ImmunoGen (NASDAQ: IMGN), which developed antibody-drug linking technology that it licensed to Genentech, in exchange for a “mid-single digit” percentage royalty on worldwide sales of T-DM1.

Partly because this drug is working against a high-profile disease like breast cancer, and partly because of its groundbreaking science as a sort of anti-cancer smart bomb, I’d bet that this drug will be the star of the show at this year’s ASCO. The presentation also happens to be timed for the deadlines of the nation’s major Sunday newspapers. Watch for the headlines on June 3.

Aveo Pharmaceuticals CEO Tuan Ha-Ngoc

—Aveo Pharmaceuticals’ tivozanib for renal cell carcinoma (kidney cancer). The Cambridge, MA-based biotech company (NASDAQ: AVEO) has its biggest-ever presentation coming up this year at ASCO. The company released basic results in January, from a study of 517 patients with renal cell carcinoma, which showed its tivozanib compound was able to keep tumors from spreading for a median of 11.9 months, compared with 9.1 months for sorafenib (Nexavar), an FDA-approved drug sold by Bayer and Onyx Pharmaceuticals. The study was designed to show the Aveo drug could keep tumors from spreading for about an extra three months, so it barely passed. Aveo’s stock fell after the results, but the company has said it is hiring aggressively and getting ready to seek FDA approval. Physicians, investors, and competitors will get their first detailed glimpse at ASCO into what has made Aveo so bullish about tivozanib’s prospects. New details “could provide additional evidence to support a differentiated product profile based on safety,” said Jason Kantor, an analyst with RBC Capital Markets, in a note to clients May 3.

—Onyx Pharmaceuticals/Bayer’s regorafenib for colorectal cancer and GIST. South San Francisco-based Onyx (NASDAQ: ONXX) has been on a roll of late, and it will give physicians and investors a lot of information to chew over at ASCO. Onyx is planning to present data from a pivotal study of regorafenib, a follow-on cancer compound that builds on its success with sorafenib (Nexavar). The company said in January that this new compound offered a slim advantage of about six weeks extra survival time for some very sick patients with colorectal cancer. More data on that trial is expected at ASCO, and so is some new information about regorafenib as a treatment for gastrointestinal stromal tumors (GIST).

The company also will have more to say about … Next Page »

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Ferndale, MI-based Livio Radio announced this week that it has won the Frost & Sullivan 2012 New Product Innovation Award for its Livio Connect API. The technology connects mobile apps on drivers’ phones to their cars, allowing the apps to show up on the stereo’s dashboard touchscreen.

Frost & Sullivan is a trusted auto analyst, says Livio’s founder and CEO Jake Sigal, so the the award carries with it third-party validation as the company works to secure partnerships with both auto manufacturers and software developers. ”It’s a big win for a small company in Ferndale, Michigan,” he adds. “Now OEMs will be able to read Frost & Sullivan’s explanation of why our technology is great for their cars.”

Sigal launched the company—which now has 15 full-time employees—from his spare bedroom in 2008, with the goal of making Internet radio products accessible to people like his mother and her friends. In 2009, Livio launched stand-alone tabletop radios built to stream NPR’s or Pandora’s online content. In 2010, Beringea, Michigan’s largest venture capital firm, invested in the company to help it scale and launch new products.

Though Sigal says hardware like the standalone radios are still a big part of his company’s revenues—and that Livio recently inked a deal with Wal-Mart to carry the radios on its shelves—the focus now is on software. Livio is continuing to add functionality to its API according to the needs of developers, Sigal says. Livio also offers a product called called Carmen, which can record content from Internet radio stations for playback in the car; Bluetooth Internet radio kits for iPhone and Andriod; and an app called Car Internet Radio that carries 45,000 stations from around the world.

Though Sigal won’t disclose any specific numbers, he says business is good enough that the company is hiring and expanding its office to accomodate growth. Despite the current gold rush in mobile app development, Sigal already has his eyes on the future, when the consumer craze for accessing mobile apps in cars will give way to the desire to connect directly to websites. ”We’re doing a lot of work with HTML5 and the new technology that will replace apps,” Sigal says. “We’ve always been a company that does things our own way.”

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