Seniors graduating last weekend from Babson College, the entrepreneurship-focused campus just outside Boston, were treated to a commencement speech from someone who’s got to be one of their biggest heroes: Reid Hoffman, the billionaire co-founder, executive chairman, and former CEO of LinkedIn. (He’s also an author, a venture investor with Greylock Partners, a member of numerous corporate and advisory boards, and a frequent man about Boston.)

In keeping with the mission of LinkedIn and the theme of his recent book, The Startup of You, Hoffman argued in his address that old ideas about stepwise career progress are dead, and that all workers today need to think more like entrepreneurs. “Whereas we used to have a career ladder, now we have a career jungle gym,” Hoffman said. “You need to climb sideways and sometimes down; sometimes you need to swing and jump from one set of bars to the next. And, to extend the metaphor, sometimes you need to spring from the jungle gym and establish your own turf somewhere else on the playground.”

The speech gave an interesting glimpse into Hoffman’s mind—and into the mindset recent college graduates will need to adopt if they hope to start new businesses or dive into the startup scene around Boston, the Bay Area, and other innovation hubs. We asked Babson College for permission to reproduce the address in full. Here it is. (For a video of the speech, scroll to the end of the text.)

* * *

I recently co-authored a book called The Startup of You. I know that you all know this, because in honor and respect of your achievement of graduating today, I have gifted a copy to each of you. In it, I began with a quote from Mohammed Yunus. I will begin today with the same quotation:

“All Humans were born entrepreneurs. In the caves, we were all self-employed. Finding food, feeding ourselves. That is how human history began. As civilization came, we suppressed it. We became “labor” because they stamped us “You are labor.” ”

I begin with this quotation because entrepreneurs are important. Here in the U.S., we have always known this because we have an entrepreneurial nation.

We have founding “fathers” of the nation; in parallel, entrepreneurs are founders of companies.

The vast majority of people in the U.S. are descendants of immigrants who took a huge gamble to cross an ocean and come to a new land; in parallel, many entrepreneurial companies emerge from immigrant founders and immigrant talent who come here to build these companies.

The American dream is the ability to make your own destiny, through hard work, perseverance, and some combination of intelligence and luck. In parallel, new entrepreneurial companies succeed on the same basis.

Generally, many people think of entrepreneurs as the (relatively few) individuals who take their own isolated path initially away from society. Few entrepreneurs succeed, but when they do they create products, companies, and jobs for many others. These products, companies, and jobs are part of the ongoing health of a society.

And this is really important; just consider the current unemployment rates. We wish that we had more entrepreneurs creating more businesses.

However, in the modern world, entrepreneurship is even more important than the creation of companies and jobs.

Entrepreneurial talents, skills, and mindsets now apply to all jobs and professions. This is new, brought about by the accelerating change in the world from globalization and technology.

In the last decades, there was a notion of pursuing a career ladder.

You would graduate from a good college – like you are today – and you would select from a set of employers who want you to join the first rung of a career ladder. You might have some choices around industry – finance, transport, technology – or function – sales, marketing, finance, product development – but fundamentally you would seek and choose a path.

In choosing a path, you would then work at one or more companies, and work your way up the steps of a career ladder or (if fortunate) a career escalator. Inevitably, with some hard work and a little luck, you would … Next Page »

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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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When the X Prize Foundation’s Peter Diamandis took the stage in San Diego this morning at the Wireless-Life Sciences Alliance (WLSA) annual convergence summit, he said it was the perfect audience for announcing the foundation’s newest competition—the “Nokia Sensing X Challenge.”

The challenge, organized through a partnership with the Finnish wireless device manufacturer, is offering a total pool of $2.25 million in incentive prizes over the next three years to stimulate the development of health sensors and wireless sensing technologies.

“We’re living in a day and age where really small teams of individuals—people like yourselves—are empowered to do the things that only large corporations and governments could do before,” Diamandis told the audience. “We’re looking to foment, to push forward, to celebrate, to announce a new generation of healthcare biometric sensors.”

The competition that Diamandis outlined will offer $750,000 a year, beginning in 2013, to teams that have developed “the most outstanding” sensors for drastically improving the quality, accuracy, and ease of monitoring a person’s health. There will be multiple winners each year, but how many and how much prize money will be awarded to each team has not yet been determined, Diamandis later told me.

“We aim to facilitate and inspire research in an area where we are also seriously exploring,” said Nokia chief technology officer Henry Tirri, who joined Diamandis on the stage. The type of “open innovation” promoted by the X Prize competition “has proven to be a very interesting and engaging method of opening a very broad amount of innovation in a very different way,” Tirri added.

“Our goal is to create an ecosystem of the innovators and companies out there, and to give them the platform to really show your stuff to the entire planet,” Diamandis said.

“Why are we doing this? Number one, we need better sensors,” Diamandis added. “My car, my airplane, and my computer have more biometric sensing capabilities that we do as humans. We should be creating gigabytes of data per day about our bodies’ health, monitoring every single moment, every single second of what we do. The fact that it doesn’t exist right now is terrible.”

The timing is ideal, Diamandis explained, because … Next Page »

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Very few people in the mobile industry will disagree that mobile payments are today’s biggest challenge for developers. In the Apple universe, there is a strong solution to the problem: Apple simply requires users to register their credit cards before they can use any services. But this approach only works for a very small segment of high end users in the developed world. For ecosystems outside of Apple’s, mobile payments simply do not work. Inconvenient credit card forms that are impossible to complete on the mobile device, fragmented carrier billing solutions, and tons of other methods have been tried without any real success. As a result, developers on platforms like Android are able to make much less money per user than they are making in Apple’s ecosystem.

As a lot of app makers gravitate towards freemium business models driven by in-app transactions, the lack of payment mechanisms becomes even more of a problem. There is, however, one emerging solution. If you look at the average revenue per user (ARPU) for social games powered by in-app transactions, such as OMGPOP’s Draw Something, it’s clear that the most powerful way to make big money is through what I call nanotransactions. Microtransactions in the range of $1-$5, usually implemented via carrier billing services such as premium SMS, provided the monetization basis for the Mobile 1.0 era of ringtones, wallpapers and Java/Brew games. In nanotransactions, the values exchanged are a few pennies only, but the high number of these small in-app transactions makes up for the size, often leading to much higher revenues overall per user of $10 and higher.

The only big problem with nanotransactions is that the value of the transaction is way less than the effort of actually doing it (completing credit card authorization, sending a premium SMS or even typing a PIN code to access your wallet). Unfortunately, given the very nature of money (which requires security, fraud, data protection, and proper regulatory compliance), it is just physically impossible to improve the user experience much.

But I think this problem can be solved with the help of virtual currencies that are not directly linked to real money. Bear with me as I explain.

As money theory suggests, a currency can successfully function if it satisfies two criteria: It must be backed by real value (just as old currencies were backed by gold) and it must be liquid (meaning it could at any time be freely exchanged into that value). Now, in the global mobile ecosystem, there are a lot of valuables that could be used to back virtual currencies, the most notable of which is consumer attention and engagement.

Already, billions of dollars per year are being spent on mobile marketing, which means that mobile users are generating value for advertisers simply by doing things on mobile, like using social networks, browsing websites, or downloading apps. In fact, if an advertiser pays an ad network or another promotional channel $1 per promoted app download, the assumption is that the user installing that app will generate at least that much value just by choosing to download the app, or in other words just for his or her own willingness to try it out. From that perspective, every aspect of user engagement has value to it—from checking the weather on a website to browsing an app store and downloading apps.

Now, if a portion of that value were passed back to the user (just like all traditional loyalty programs do with points, airline miles, etc.), and if it were stored and made available for the user to freely spend, it would create a currency solution that is not linked to real money at all. From the example above, even if 50 percent of the $1 value were passed on to the user himself, downloading just one promoted app would top up the balance by $0.50. In the nanotransactions economy, where individual items are priced at a few pennies each, that’s real money.

The best part is that the virtual nature of the currency would solve all the problems of the traditional money, like regulatory security requirements, high carrier taxes, inconvenient payment data collection forms, and so on. Transactions would be as simple as pressing one “buy” button, without any registrations and PIN codes—even simpler than on iTunes, where you still have to type your password.

My company, GetJar, launched just this kind of consumer loyalty based virtual currency platform, GetJar Gold, earlier in the year. The program rewards GetJar users with Gold “coins” for app downloads. We also provided developers with a software development kit that they can use to incorporate GetJar Gold into their apps and accept Gold coins as a way of payment for in-application items. Across the board, developers using the solution have seen 100 percent increases in conversions when augmenting the traditional payment options with the virtual currency.

I believe all the conveniences of virtual currencies are forcing a major shift in the near future and that this mechanism will account for as much as half or more of all in-app transactions. I will be very curious to see the dynamics between “local” (i.e. supported in one app only) and “global” (supported across a range of apps and developers) virtual currencies evolve. While each type does have specific advantages to an individual developer, I personally believe that ultimately, a few global currencies will become dominant. In any case, the mobile industry will benefit massively from much improved monetization for the developer and better user experiences with a greater choice for the consumer.

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The next time you feel like complaining about your startup job, take a second to imagine would how much harder it would be if you were behind bars at San Quentin.

Lest you think I’m pulling this comparison out of thin air, read on. Last week, in an unprecedented ceremony inside the walls of the notoriously crowded state prison in Marin County, five inmates and one former prisoner marked the completion of The Last Mile, a nine-month program designed to prepare them for employment in the Silicon Valley technology world after their release.

These men aren’t allowed to run businesses from inside the prison. They don’t even have direct access to the Internet, let alone smartphones or any of the other gadgets or services transforming the world outside the walls. But as Last Mile participants, they were required to learn how modern computing and communications technologies work, develop business plans for their dream companies, and finally pitch their ideas to an audience of investors, businesspeople, and government officials at a climactic demo day.

In their presentations, the participants showed the kind of dedication and quick thinking that any startup founder would want to see in an employee—or that any investor would want to see in a founder. And they’ve found this focus in the face of remarkable adversity, both in their personal pasts and in the prison environment. “There is talent behind the walls,” says Chris Redlitz, the San Francisco-based venture investor who co-founded the program. “You just have to find it and nurture it.”

The Last Mile's inaugural class and founders. Left to right: Tulio Cardozo, E. "Phil" Phillips, James Cavitt, David Monroe, Chrisfino Kenyatta Leal, Beverly Parenti (co-founder), James Houston, Chris Redlitz (co-founder)

At Redlitz’s invitation, I drove to San Quentin last Friday for the inspiring and occasionally emotional ceremony, which took place in the prison’s large Protestant chapel. Attending alongside the 40-some investors and entrepreneurs were Matt Cate, Secretary of the California Department of Corrections and Rehabilitation; Anne Gust Brown, wife of California Gov. Jerry Brown; and about 60 onlookers from the prison’s general population.

Needless to say, this was unlike any other startup event I’ve witnessed. To start, those of us visiting the prison had to leave our laptops, phones, and cameras at home. We were allowed to bring only our car keys, driver’s licenses, notebooks, pens, and business cards. As we walked single-file through the facility’s forbidding, castle-like maw, we signed a logbook, had our wrists stamped with ultraviolet ink, and passed through a pair of clanging security gates.

Then there were the presenters, who weren’t your typical crew of fresh-faced young entrepreneurs. James Cavitt, 33, is serving 25 years to life for a home invasion robbery. He was convicted at age 17. James Houston, 38, is serving 15 years to life for a drug-related murder. Chrisfino Kenyatta Leal, 43, got an indeterminate sentence under California’s three-strikes law as an ex-felon in possession of a firearm. David Monroe, 29, is serving 15 years to life for a gang killing. He was convicted at age 15. E. “Phil” Phillips, who is in his early 40s, has served 17 years of a 38- to-life sentence for second-degree murder.

A sixth member of the founding Last Mile class, Tulio Cardozo, is a former San Quentin inmate who finished his sentence and has since been helping Redlitz and his co-founders, Kathleen Jackson and Beverly Parenti, to administer the program. The ceremony marked Cardozo’s first time inside the facility since his release. (As we were waiting outside the prison gate, I asked him what it was like being back. “It probably won’t sink in until I’m past these doors,” he said.)

Once the introductions and speeches were out of the way, however, the presentations from Last Mile participants were as smooth and upbeat as anything you’d see at a Silicon Valley demo day, spanning markets from clothing to hair care to digital music and home entertainment.

It was the culmination of a lot of hard work. Since September, Redlitz said, the men have been reading business books, learning computer and software skills, meeting with outside mentors, formulating ideas for the businesses they’d like to run, practicing their elevator pitches, and polishing their PowerPoint decks.

The big difference between The Last Mile and a typical accelerator, of course, is that the participants who are still inmates won’t be able to start building or testing their actual products until they get out. For most of these men, parole is still years away, and some have no definite release date.

“Not all of these ideas will see the light of day, but what we asked them to do is think big,” Redlitz told me the day after the event. “I had an investor who was there e-mail me, saying he loved [Leal’s pitch]. He said ‘If that had been a Y Combinator presentation, it would have been funded.’”

Four of the six presentations were off the record, given that it’s unclear when, or if, the ideas will get off the ground. But Cardozo’s startup, called Collaborative Benefit, is already  … Next Page »

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“What if we thought of it as a canvas, rather than a bridge?”

That’s the question that occurred to Ben Davis as he was sitting outside the San Francisco Ferry Building one Saturday morning in September 2010, gazing at the western span of the San Francisco-Oakland Bay Bridge. Not long after, he got a chance to propose the idea to New York artist Leo Villareal—and now he’s running a non-profit dedicated to using the bridge as the framework for a massive Villareal “light sculpture” called Bay Lights.

The plan, if enough money can be raised, is to mount 25,000 individually addressable LEDs on the bridge’s suspension cables, turning the iconic structure into to a giant display for a shimmering, never-repeating constellation of patterns. (You have to watch the video rendering below, created by two employees at Pixar, to fully grok the concept.) The two-year, $8 million light show would come at a key time in the Bay Area, coinciding with the America’s Cup regatta, the opening of the new eastern span of the Bay Bridge, the completion of the new Exploratorium, and several other signature events. Analysts predict it could be seen by as many as 50 million people and bring the city $97 million in added tourist dollars.

Private backers, including prominent Bay Area entrepreneur-investors such as Ron Conway, Matt Mullenweg, and Adam Gross, have already committed $5 million for the project. But there isn’t much time left raise the rest. Davis says Caltrans, the state agency that controls the Bay Bridge, wants the organization to show it has $7 million in the bank before construction begins in July. “It doesn’t happen if we don’t raise $2 million more by July 1,” he says.

So Bay Lights is appealing to the technology community to help it complete a crash fundraising effort. The organization is urging Bay Area entrepreneurs and engineers to use social media, including Twitter and Facebook, to form teams of contributors. The teams that raise the most money but June 30 will win a variety of perqs, such as an invitation to a City Hall reception with Villareal and civic leaders. The top fundraising team gets a dinner with Villareal and invitations to the grand lighting gala and VIP pre-party.

[Story continues below video]

Why should the tech community be willing to pony up for public art? Maybe because Villareal’s design is partly a paean to technology. After all, it’s a Burning Man-style light show on a canvas a mile and half long. “The piece really reflects the beautiful synthesis between art and technology here in the Bay Area,” says Davis. “It’s reflective of the quality of life that we enjoy and our ability to inspire one another.”

Also, it’s just damn cool, and for two years every smartphone-toting tourist in San Francisco will be posting photos and videos of the light show to Instagram and Facebook. “Knowing that it will be widely shared and passed around through new means of technology, we are encouraging the technology community to get involved,” Davis says. Local technology leaders, he says, “have a track record of being able to band together in coopetition and make some great things happen for the region.”

The Bay Bridge, which is actually three bridges in one (two suspension bridges on the San Francisco side of Yerba Buena Island and a seismically dicey truss bridge on the Oakland side), turned 75 years old last year. But it has always labored in the shadow of its more famous sibling, the Golden Gate Bridge. As soon as the Golden Gate opened in … Next Page »

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SocialEyes, a startup with roots in RealNetworks and financial backing from Bellevue, WA’s Ignition Partners, is changing directions.

The company unveiled a group video-chat service tied to Facebook just last spring. But the startup left that product in the dust a few months later, after realizing there wasn’t a clear path to making it work on mobile devices, CEO Rob Williams says.

First of all, the Web browser-based video chat service was built around Adobe’s Flash software, which famously doesn’t work on Apple’s iPhone platform—a pretty big strike against a mobile strategy, and one that SocialEyes found too daunting to engineer around.

Secondly, Facebook’s user sign-in hadn’t become a widely used tool for mobile users, part of the social network’s larger struggles to expand its footprint into mobile. And all the while, SocialEyes was seeing mobile growth explode, Williams says, knowing that’s where it needed to be to really make a dent.

So, after tapping its video chat user base for market research and taking the plans back to its investors, SocialEyes jumped on a completely different idea: multimedia voice calling for smartphones.

The result is an application called Sidecar—quietly available on Android phones for some time, and just now showing up in the iPhone app store.

Sidecar tackles the idea that voice calls should be reinvented from scratch for the smartphone age, incorporating the galaxy of communication and computing tools that those devices now boast.

“All of the innovation on your smartphone really has been on the data side of the phone,” Williams says. “The voice call really hasn’t changed since we moved from wired phones to feature phones to smartphones.”

Right now, the actual phone part of your smartphone is still stuck in a separate part of the device, used mostly for voice calls (and, in some cases, video calling). Using the phone’s other elements requires a fair bit of scrolling around inside the device—grabbing photos or locations to share, for instance, or looking up someone else’s number.

The Sidecar app ties all of those things together, making a phone call a much richer multimedia affair. Users can show each other live video of what they’re seeing, for example, or pull up an online map that shows both parties the destination where they’re planning to meet. Callers also can easily grab photos and contacts to send along to the person on the other end or send text messages. All of the digital goodies shared during the call are organized inside the app so they can be easily pulled up after the talking’s over.

Sidecar isn’t the only company aiming at this target. The most direct competitor I could find is Thrutu, a very similar idea that Xconomy’s Wade Roush has profiled. You could also zoom out to include other players in IP voice and video calling, like Skype, Tango, and Viber.

Importantly, Sidecar works across the two most popular smartphone platforms, iOS and Android—meaning that iPhone users can call friends who have the app on an Android phone, and everything works together. You can’t get all of the features unless both callers have the app installed, but Sidecar can still place an Internet voice call over wifi if only one user has it in place.

One thing Sidecar doesn’t offer, curiously, is two-way video calling. There’s a video transmission element already built into the app with its “see what I see” video streaming feature, but that’s meant to let one caller show another the concert they’re at, or the part on the sink that they’re trying to fix, for instance.

Williams says that’s a question of quality and data use. If you’re offering two-way video calling, the app sucks up a large amount of bandwidth to essentially pipe relatively bland videos of static faces in two directions. Sidecar’s approach allows it to consume a much smaller ongoing slice of bandwidth for the voice call, with an uptick for a one-way video that’s of higher quality, and then back down to the voice mode.

“You never say never, but really we’re very much about sharing—to have the ability to tell people what’s going on where you are,” Williams says. Video calling, by contrast, is something “you pretty much only ever use to show your grandmother the kids.”

That’s not a bad point, but personally I still wonder why not offer video calling as an option. Perhaps it’s a matter of consuming too much bandwidth for a small startup, or of trying to differentiate itself from other offerings in the market.

But as many app developers have found, users can be incredibly fickle when it comes to their digital products, aggressively giving out bad ratings if an app doesn’t live up to their expectations—even if the product is totally free to use. As consumers, we’ve quickly come to expect it all.

Those are questions that will be answered down the road as Sidecar tries to amass a user base and get ahead in the race to redefine smartphone calling. Its predecessor company raised a total of about $5 million, with most of that coming from Ignition. The startup now has about 10 people on staff, spread between an office in Seattle and headquarters in San Francisco.

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Crowdsourcing design startup 99designs is putting its own product to the test with a competition to redesign its homepage. The company, which connects businesses in need of design help with freelancers willing to compete for design work, wrote a request of its own, asking its 158,000 registered designers to revamp its site for a chance to win one of three $1000 prizes.

To company CEO Patrick Llewellyn, using 99designs is a great way for any lithe start-up to get design help without stretching its resources. “We’ve got lots of different projects on the go, and not enough design resources internally,” he says. “What better way of thinking about how we can do this than running a contest for our community?”

Each contest on 99designs works like this: customers can create a brief to give designers a clear, detailed idea of what they’re looking for, from logos to websites to stationary, mobile apps and more. Depending on their budgets, they can choose between bronze, silver and gold packages (for example, between $299 and $699 for a logo, or between $599 and $1,499 for a website). Then, as designers submit ideas, customers can collaborate with them, explaining what they like and don’t like. Once users find something they want, they pick the winner and get the final design and a copyright for the original work. 99designs gets a cut that averages between 20and 30 percent of the fee, and the rest goes to the designer. Simple.

99designs CEO Patrick Llewellyn

This isn’t the first time 99designs has started its own contest. In the past the company has hosted light-hearted challenges, like a contest to invent a new hairstyle, and more timely ones, like designing a new logo for The Gap after the retailer’s revised mark was widely panned back in 2010. But this time, contest entrants will be putting their work in front of famous guest judges, including lean startup guru Eric Ries, Airbnb co-founder Joe Gebbia, and 99designs co-founder Mark Harbottle.

Though bringing in such heavy hitters could be seen as a move to push back against 99designs detractors who have complained that high volume doesn’t make up for low-quality design work, Llewellyn says it’s simply a smart move by a smaller company in need of design help.

“The driver for us is that we need this work done,” Llewellyn says. “It’s less about what other people think. But if that’s an offshoot and we get to show off some cool work, that will be great.”

99designs has a transoceanic origin story. Back in 1998, a Canadian teenager named Matt Mickiewicz needed to build a website, so he documented his experience online, giving advice to others. As Mickeiwicz’s Web design forum grew, Harbottle, who lived in Melbourne, began selling his software through the site. Eventually, Harbottle realized that it was a great business opportunity, so he reached out to Mickiewicz and suggested that they go into business together.

Despite his Web prowess, Mickiewicz was only seventeen. So he stayed in Canada, and Mickiewicz and Harbottle built their company, called Sitepoint, via long-distance collaboration. At the time, Sitepoint distributed books on design and development and hosted different forums including a Web development and designer forum. Soon, designers took over the threads, inventing a sort of design tennis match where people would post fictional briefs and hold contests to see who could come up with the best design. At first it was just for fun, a way for designers to bounce ideas off each other. But then a designer building a website in need of a logo asked the forum to submit logo ideas, and offered to pay them if he picked one.

“All of this was just happening in a forum thread,” Llewellyn says. “Mark saw all of this activity and said, ’I wonder if there is a business here?’”

Harbottle decided to start charging a listing fee to see if that killed off the forum. But people were willing to pay $10 to post a brief. Then $20. In 2008, Sitepoint spun out 99designs as its own product.

“It was essentially observing a naturally occurring behavior inside this designer forum, then creating a minimally viable product,” Llewellyn says. “It was a wacky start-up in this little business called Sitepoint.”

Four years after it was founded, the company has grown to more than 55 employees, relocated its headquarters from Melbourne to San Francisco, hosted 136,000 design contests, and paid out $33.8 million to designers. In 2012 alone, the company expects to pay out $25 million.

“It’s been a really interesting ride,” Llewellyn says. “The most interesting thing is that for the first 3½ years of existence, we didn’t spend any money on marketing. We were all word of mouth. We had a really big … Next Page »

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If you’ve ever wondered how quickly an alien army like the one in Independence Day could subdue humanity, worry no more. From the ingenuity on display at Maker Faire, it’s pretty clear that we’d be saved by the large and growing corps of civilian tinkerers, who could probably take down a space cruiser using nothing more than duct tape, a Roomba, an Arduino board, and a few LED lights.

This year’s Maker Faire Bay Area happened May 19 and 20 (and was preceded by a special Education Day on May 17). I spent Saturday afternoon wandering the event enormous expo halls at the San Mateo Event Center, home to the Faire since its inception in 2006, and used iMovie on my iPhone to hack together the short video below, showing everything from a Lego train set to NASA Ames Research Center’s “Phonesats” (microsatellites powered by Android phones).

The creation of Make Magazine and O’Reilly Media, the event is basically the world’s geekiest county fair—think Burning Man meets the Intel Science Talent Search. And it’s become enormously popular: according to the San Jose Mercury News, the event attracted 120,000 people on Saturday alone, snarling traffic for miles around. (I got smart this year and arrived via Caltrain.)

It would be fruitless to ask whether Maker Faire is the product of the massive maker movement blossoming in the U.S.—with thousands of people taking up soldering irons and building their own fire-breathing robots and remote-controlled spy planes—or the stimulus behind this movement. It’s clearly both. Though the event is a Bay Area creation, it has since spawned clones in Detroit, New York, and—for the first time this summer—Kansas City, MO. Community-run “mini maker faires” have also sprung up in cities from Atlanta to Vancouver. While the tech-media spotlight seems stuck on stories like the Facebook IPO, the Faire was a great reminder that real innovation starts in the nation’s garages and dorm rooms.

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Sue Siegel, one of the leading venture investors in the field of personalized medicine, is leaving her gig as a general partner at Mohr Davidow Ventures to join GE as the CEO of its $6 billion healthymagination unit, which is seeking to foster innovations that lower healthcare costs.

Siegel, 52, was the president of Santa Clara, CA-based Affymetrix (NASDAQ: AFFX) before joining MDV to help lead its push in molecular diagnostics and digital health. At MDV, she participated in the firm’s investments in Menlo Park, CA-based Pacific Biosciences (NASDAQ: [[ticker:PACB]), Foster City, CA-based Navigenics, Lexington, MA-based RainDance Technologies and Waltham, MA-based On-Q-ity among others.

The healthymagination program is a sizable one, even by GE (NYSE: GE) standards. The industrial giant has said it plans to invest $3 billion in R&D to foster at least 100 innovations to lower health care costs by 2015. The rest of the money is set aside for financing and technology development to bring health IT to rural and underserved areas. Mohr Davidow, along with other VC firms like Kleiner Perkins Caufield & Byers, Venrock, and MPM Capital, has been involved with GE in figuring out ways to put that money to work, partly through a $100 million global open innovation challenge, which will award prizes to innovative startup teams.

Siegel replaces Mike Barber at healthymagination, as he will be moving on to a new role as vice president and general manager of molecular imaging at GE Healthcare.

“Sue Siegel’s great passion for advancing healthcare is matched by her keen understanding of innovation, her sharp business sense, and her proven leadership,” GE Chairman and CEO Jeff Immelt said in a statement. “As we continue to work with our partners to revolutionize health, we need a leader to connect GE with new healthcare businesses, thought leaders and governments.”

“We are very happy for Sue and believe her move to GE is a positive both for her and for us,” Pamela Mahoney, a spokeswoman for MDV, said in an email. “Her new role at GE will allow her to continue to pursue her deep passion for personalized medicine and the technologies that enable it on perhaps the world’s best platform for doing so.”

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We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win…

—John F. Kennedy, September 1962

I teach entrepreneurship to about 50 student teams a year from engineering schools at Stanford, Berkeley, and Columbia. For the National Science Foundation Innovation Corps this year I’ll also teach roughly 150 teams led by professors who want to commercialize their inventions. Our extended teaching team includes venture capitalists with decades of experience.

The irony is that as good as some of these nascent startups are in material science, sensors, robotics, medical devices, life sciences, etc., more and more frequently VCs whose firms would have looked at these deals or invested in these sectors, are now only interested in whether it runs on a smartphone or tablet.

And who can blame them.

Facebook and Social Media

Facebook has adroitly capitalized on market forces on a scale never seen in the history of commerce. For the first time, startups can today think about a Total Available Market in the billions of users (smartphones, tablets, PCs, etc.) and aim for hundreds of millions of customers. Second, social needs previously done face-to-face (friends, entertainment, communication, dating, gambling, etc.) are now moving to a computing device. And those customers may be using their devices/apps continuously. This intersection of a customer base of billions of people with applications that are used/needed 24/7 never existed before. The potential revenue and profits from these users (or advertisers who want to reach them) and the speed of scale of the winning companies can be breathtaking.

The Facebook IPO has reinforced the new calculus for investors. In the past, if you were a great VC, you could make $100 million on an investment in 5-7 years. Today, social media startups can return hundreds of millions or even billions in less than 3 years. Software is truly eating the world.

If investors have a choice of investing in a blockbuster cancer drug that will pay them nothing for fifteen years or a social media application that can go big in a few years, which do you think they’re going to pick? If you’re a VC firm, you’re phasing out your life science division.

As investors funding cleantech watch the Chinese dump cheap solar cells in the U.S. and put U.S. startups out of business, do you think they’re going to continue to fund solar? And as clantech VCs have painfully learned, trying to scale cleantech past demonstration plants to industrial scale takes capital and time past the resources of venture capital. A new car company? It takes at least a decade and needs at least a billion dollars. Compared to iOS/Android apps, all that other stuff is hard and the returns take forever.

Instead, the investor money is moving to social media. Because of the size of the market and the nature of the applications, the returns are quick—and huge.

New VCs focused on both the early and late stage of social media have transformed the VC landscape. (I’m an investor in many of these venture firms.) But what’s great for making tons of money may not be the same as what’s great for innovation or for our country.

Entrepreneurial clusters like Silicon Valley (or New York, Boston, Austin, Beijing, etc.) are not just smart people and smart universities working on interesting things. If that were true we’d all still be in our parents’ garages or labs. Centers of innovation require investors funding smart people working on interesting things—and they invest in those they believe will make their funds the most money. And for Silicon Valley the investor flight to social media marks the beginning of the end of the era of venture capital-backed big ideas in science and technology.

Don’t Worry We Always Bounce Back,

The common wisdom is that Silicon Valley has always gone through waves of innovation and each time it bounces back by reinventing itself.

[The idea of each of these waves of having a clean beginning and end is a simplification. But it makes the point that each wave was a new investment thesis with a new class of investors as well as startups.]

The reality is that it took venture capital almost a decade to recover from the dot-com bubble. And when it did, Super Angels and new late stage investors whose focus was social media had remade the landscape, and the investing thesis of the winners had changed. This time the pot of gold of social media may permanently change that story.

What Next

It’s sobering to realize that the disruptive startups in the last few years not in social media—Tesla Motors, SpaceX, Google driverless cars, Google Glasses—were the efforts of two individuals, Elon Musk and Sebastian Thrun (with the backing of Google). (The smartphone and tablet computer, the other two revolutionary products were created by one visionary in one extraordinary company.)

We can hope that as the Social Media wave runs its course a new wave of innovation will follow. We can hope that some VCs remain contrarian investors and avoid the herd. And that some of the newly monied social media entrepreneurs invest in their dreams. But if not, the long-term consequences for our national interests will be less than optimal.

For decades the unwritten manifesto for Silicon Valley VCs has been: We choose to invest in ideas, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.

Here’s hoping that one day they will do it again.

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iPierian used to be known as a stem cell company, when stem cells were all the rage. But now it’s taking on a new identity as an antibody drug developer that happens to use stem cells as a tool for discovery.

The South San Francisco-based company is announcing today that it has found a new direction under CEO Nancy Stagliano, who took over back in September. The company is now zeroing in on making antibody drugs for neurodegenerative diseases like Alzheimer’s, which are affected by the Tau protein and the Complement biological pathway.

iPierian is also announcing today it has hired Pamela Conley, the former vice president of research at South San Francisco-based Portola Pharmaceuticals, to oversee the iPierian stem-cell technology and the tangible drugs that are supposed to come out of it.

The shift shouldn’t be that surprising. Stagliano is a neuroscientist by training, her last startup (South San Francisco-based CytomX Therapeutics) is an antibody drug developer, and Big Pharma companies are desperately searching for anything half-decent at slowing down neurodegenerative diseases like Alzheimer’s. The work at iPierian is still very much in the early stages, as Stagliano says she hopes to enter clinical trials in 2014.

If the company can do that, it would be a step ahead for the use of so-called induced pluripotent stem cells (IPSCs) for drug development. And it would give iPierian’s prominent crew of backers—including Kleiner Perkins Caufield & Byers, Google Ventures, and GlaxoSmithKline’s SR One—a new shot at getting a return on more than $50 million in investment. The company has gone through a series of strategy shifts in its brief history, as it had five CEOs pass through in its first three years.

Nancy Stagliano

“My big vision is this is the tip of the iceberg for IPSC cells,” Stagliano says. “We’ve made a lot of progress with the platform in Alzheimer’s and the disease models we’ve created. Because of that success, we’ve narrowed down and prioritized these two areas. We’re going where the science is taking us.”

Scientists at iPierian over the last six months have spent time working to make stem cell technology useful for drug development. The basic idea is to take ordinary adult cells like those from skin or blood, and reprogram them into a stem-cell state so they can be coaxed to differentiate into any other cell in the body. By doing that, scientists have found they can make adult human neurons in the lab dish, which can be used as models to see what happens in disease, or how drugs might interact with actual neurons.

Using cells from many different individuals also gives scientists a better idea how the disease varies from person to person, and how different molecular subtypes of disease might respond differently to certain targeted therapies.

iPierian has used its stem cell technology in recent months which has given it new insights about targets to go after on the Tau protein and in the Complement pathway, Stagliano says. While most Big Pharma companies are focused on reducing the accumulation of amyloid beta plaques as a way of fighting Alzheimer’s or frontotemporal dementia, some scientists believe the accumulation of tangles of Tau proteins might be just as important to the disease. Drug companies are also targeting Tau, but most are focused on making conventional small molecule drugs against biological targets inside cells, Stagliano says.

Based on insights it has gotten from its IPSC technology, iPierian says it believes it has found a target on the surface of cells, which is an accessible area for antibody drugs. Stagliano isn’t naming … 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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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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CardioKinetix has spent 10 years and $80 million in venture capital working on an implantable device for people with heart failure. Now it’s got some evidence that suggests it could be on track with a real product.

The Menlo Park, CA-based company is announcing today it has passed a study of 31 patients who got an implantable device designed to help the heart beat more efficiently after the muscle is damaged by a heart attack. About 16 percent of the patients died or had to be hospitalized within one year of getting the heart failure implant, and 32.3 percent suffered that fate within two years.

The trial lacked a control group, so it’s impossible to directly compare how those patients would have done otherwise. But historic studies have shown that about 40 percent of patients can expect to die or be hospitalized after one year, and about 60-65 percent would normally end up that way on standard treatments, according to CardioKinetix’s executive director of therapy development, Barry Templin.

The findings, being presented today at the EuroPCR meeting in Paris, mean that CardioKinetix is now in position to see if its product can really pass muster in a more rigorous study of 500 heart failure patients in the U.S.—the kind of evidence it will need to win FDA approval. The CardioKinetix device isn’t intended to help all of the 2.5 million people worldwide diagnosed annually with different types of heart failure, but it could end up being a new option for about 20-30 percent of patients with a form of this chronic disease, Templin says.

“Our device isn’t just a quick fix, we’re seeing long term benefit,” Templin says. One of the study’s investigators, Marco Costa of the Interventional Cardiovascular Center at Case Western Reserve University, gushed in a company statement saying, “it is difficult to contain our enthusiasm because the procedure is relatively simple and the outcomes are surprisingly remarkable for such a high-risk population. The sustained and concordant improvements in symptoms, heart function, and clinical outcomes are compelling, with a very acceptable safety profile.”

Before diving in too deep into the details of this study, a little background is required on what CardioKinetix is attempting to do. The private company got its start in 2002, and has raised its cash from a well-known syndicate that includes SV Life Sciences, New Leaf Venture Partners, U.S. Venture Partners, Panorama Capital, and H&Q Healthcare Investors. CardioKinetix has about 30 employees today, Templin says.

The big idea at CardioKinetix is to develop what it calls its Parachute Ventricular Partitioning Device. The way this works, a technician slides a narrow catheter into a patient’s femoral artery in the leg, threads it into the heart with the Parachute device tightly bound to the catheter. Once inside the heart’s left ventricle, the device gets popped open like a parachute, and it has tiny hooks on the edge that enable to to anchor itself in position in the heart muscle. The procedure is supposed to take 40-60 minutes.

Once the implant is in place, physicians hope to essentially wall off part of the heart muscle that gets loose and damaged after a heart attack, which makes it harder for the heart to pump blood in and out efficiently. Walling off part of the heart … 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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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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It’s old news that tech startups in San Francisco and Silicon Valley are locked in a fierce competition for the most talented engineers, product managers, and business development staff. But you might be surprised how far some companies are going these days to portray their workplaces as virtual Disneylands for employees.

At a Tuesday night event organized by Y Combinator, the Mountain View, CA-based startup incubator, founders from 14 YC–backed startups with open positions described their businesses, their company cultures, and their hiring needs to a standing-room-only crowd of job seekers. Naturally, the founders emphasized to the (overwhelmingly male, overwhelmingly 20-something) audience how their businesses are booming and how newly hired engineers get to tackle hard problems from day one. But many also went out of their way to mention the oddities, idiosyncrasies, and special benefits that make their companies oh-so-cool to work for.

Here’s the skinny on some of the more unusual perqs and procedures at eight of the companies, most of which are based in San Francisco. (If you’re looking for a startup job but you missed the Y Combinator event, I advise you to find a friend who was there and get them to fill you in about Paul Graham’s talk, which was riveting but off the record.)

Weebly, which offers online tools for building websites, has a secret room in its office, behind a movable bookcase. If you get hired there, they’ll show you which book to pull to activate the bookcase. The office also has a bricked-over entrance to a network of secret tunnels used by rum-runners during Prohibition. In addition to these architectural distinctions, Weebly has an unlimited vacation policy, and every employee gets a set of noise-canceling Bose headphones.

Hipmunk, which is developing new interfaces for flight and hotel searches in an effort to outdo incumbents like Kayak and Expedia, handles its entire employee screening process via e-mail and other electronic means. “I don’t know how to fire someone that I like, and if I meet you I’ll probably like you,” said co-founder Steve Huffman. “So I don’t like to meet people unless I think we are going to hire them.”

Optimizely, which is building easy-to-use tools for automated A/B testing of websites, says it is now processing 15 billion page requests per month, but has only five engineers. “If you join us tomorrow you will literally be responsible for one-sixth of those 15 billion requests,” said co-founder Pete Koomen. Presumably, this was meant as an enticement rather than a warning.

Parse, which has built a cloud platform for mobile applications (it’s similar to Heroku for Web applications), offers employees catered lunch and dinner every day and a choice of computer hardware, according to co-founder Tikhon Barnstam.

At Mixpanel, which offers an analytics platform for developers of Web and mobile applications, the entire company is currently engaged in a mustache-growing contest. (They’re all dudes, so it works out.) “Mine is very faint,” says founder Suhail Doshi. “We have a culture of goofiness—we’re eccentric, weird, and fun.”

At Exec, the on-demand job site led by Justin.tv founder Justin Kan, all new employees get a green dinosaur hoodie. (Kan models the hoodie, above right, in a still from a video posted to Socialcam). There’s also a treadmill desk for employees who want to work out while they work.

Carwoo, which matches car buyers with local dealerships, has a DJ booth in its office, which becomes the nerve center for a quarterly office rave.

Airbnb, the fast-growing site for people who want to rent out their extra bedroom (or cabin, or couch), gives each employee $500 per quarter to spend on Airbnb rentals. The company also offers yoga classes, field trips, and a dog-friendly workplace. And there are periodic “Hackairthons” when employees stay up all night working on new features. Which sounds a lot like a typical shift for many of these startups.

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Ever get the feeling that social media services didn’t really think through the privacy and legal problems they might run into? Turns out, you’re probably right.

Del Harvey saw it firsthand. When she joined the fledgling company in late 2008, Harvey quizzed co-founders Biz Stone and Evan Williams about how they might handle spam. “And Biz was like, ‘You know, I don’t think it will ever really be a problem. I mean, you can choose who you follow,’” Harvey says. “And I was like, oh dear.”

OK, she thought—how are you guys planning on dealing with trademarks? “Biz was like, `We applied for one for Twitter,’” Harvey says. “And I was like, yes—and other people’s trademarks on Twitter? `Well, we’re not going to use them.’”

These days, things are a lot different. Harvey is Twitter’s director of trust and safety, where she oversees a team of nearly 40 people dealing with legal issues, user privacy, account abuse, and all kinds of other thorny problems.

Del Harvey

But that doesn’t meant engineers have always thought through the ways the tools they build might be misused, misunderstood, or twisted one they get out into the big, bad world.

When an engineer builds a new product, “They’re like, `Oh my God, I made this thing and it’s going to make kittens for everybody,’” Harvey said at the Privacy Identity Innovation summit in Seattle. “And you’re like, `Right, I see that it makes kittens. But did you see that it also shoots bullets?’”

In an era when new apps and services spread with viral speed, the tech industry’s builder-centric culture can collide with a huge base of “normal” users very quickly, generating reactions the product designers hadn’t considered.

As the privacy heads of Google+ and Facebook discussed yesterday, it becomes important for social media companies to have internal watchdogs over privacy issues. But many of these companies have been growing so quickly that the watchdogs can’t always keep up.

Earlier this year, Twitter was among the popular services criticized for accessing and storing smartphone-app users’ phone contact information without explicitly saying so. The company later changed its guidelines to make its procedures clearer, and the safety team realized it had to keep an eye on practices in this area. “What I learned from it was I needed to assign a person to that team, too,” Harvey told moderator Todd Bishop, co-founder of the Seattle tech news site GeekWire.

“We’re not necessarily the ideas people. We’re more of the dream-crushers, I think,” Harvey says of her group. Their work revolves around a fundamental question for Twitter’s developers: “How can we let you do this thing that is really awesome and amazing, and does in fact make kittens, while also removing this component of it that will be misunderstood?”

With more than 140 million active users, that’s a pretty big job. Consider the complexities of dealing with spammers, the source of many Twitter users’ aggravations when a hijacked account starts sending provocatively worded direct messages to other users.

The problem can be hard to get a handle on, Harvey says, because spammers are often several steps ahead. If they get a large chunk of usernames and passwords from an illicit source, a spammer might only target half of them for an initial attack. Twitter can stamp out problems on the profiles that it finds being abused, but there’s another universe of accounts ready to be exploited that the company doesn’t necessarily even know about, she says.

Users have to have some responsibility to be aware of their surroundings as well, Harvey says.

“A lot of what we’re working on is education,” she says. For example, she says, secure browsing—signified by ‘https’ in the Web address—is the default setting for Twitter’s webpage. “So when you’re going to sign in, double-check the address bar. If you’ve clicked on a [direct message] link and it takes you to a page where you have to sign in—why?”

To me, that sounds like a pretty high degree of sophistication to expect an everyday user to grasp, particularly since online scammers will always find another chink in the armor once their current routes get shut off. If services like Twitter can make it easier to see when you’re in shady territory, increasingly savvy users might be able to meet them halfway. But there will be plenty of work for people like Harvey—and maybe some more dream-crushers added to the arsenal.

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