When you build a fast-growing business, there are bound to be a few “oh shit” moments. Darrell Cavens, the CEO of moms-and-kids retailer Zulily, knows that feeling well.

Cavens runs one of the fastest growing startups in the Seattle area, a private-sales site that has amassed more than 5 million daily e-mail subscribers since launching publicly in early 2010. Today, Cavens says, Zulily has more than 300 employees and adds about 5,000 products to its site each day. Its headquarters includes 17 photo studios just to showcase the new product samples that constantly roll in.

But last summer, all that growth meant Zulily was facing some big problems. The company was selling more than it could get out the door, even though it had contracted with a Fortune 500 company to handle all of its shipping logistics.

“We said `Wow, we’re going to outsource this, it’s going to be great. We’re going to focus on the marketing and the merchandising, these guys are going to handle this,’” Cavens says. “Within five months, we blew them out of the water, to the point where they were busing in staff from around the country. They were bringing management in, they were bringing in their special operations engineering teams to come and figure out how the heck did they get in this situation.”

Zulily’s business is a twist on traditional e-commerce known as flash sales or private sales, a model also followed by upstarts like Gilt Groupe and Fab.com. These companies contract with suppliers to sell their products directly to a membership list, often offering significant discounts.

Private-sale sites typically focus on “curating” their product offerings, aiming for an affordable high-end brand. They typically don’t hold stock themselves, instead generating supplier orders as they accumulate demand from customers.

Zulily’s niche is clothing and products for babies, kids, and moms—a cute sun dress for your daughter, wall art for the nursery, sandals and heels for mom. By last summer, business was booming enough that Zulily had a week’s worth of customer orders sitting on its dock waiting to be sent out for shipping at the contractor’s distribution center.

Cavens, speaking at last night’s University of Washington’s Business Plan Competition, estimated the backlog was nearly 300,000 units deep. “So we sat down in August of last year and said, `Oh shit—we’re in a world of hurt,’” Cavens recalled. The cure was clear, he says: Zulily had to bring shipping in-house, and build its own fulfillment center.

The team charged with investigating that project came back to Zulily’s executives and said it would take a year. With the holiday season coming up and customers getting upset with shipping lags, Cavens and company said that wouldn’t cut it. The second estimate was eight months—also too long, he says.

“So we sat down and said, we want to hit Nov. 1. This was the end of August, first of September,” Cavens says. That was impossible, the team replied. But they Zulily’s leaders went down the list and tried to get each item done as fast as possible—getting a building, finding a software product to handle the logistics, and hiring all of the people to make it happen.

“This was a Friday. We went out on a Monday, hopped on an airplane, went and leased space in Reno, NV. We went and found a software solution by the end of the week. We hired a consulting firm the following week to help us staff, and we had 200 employees in Nevada with an operating fulfillment center eight weeks later,” Cavens says. “We then went and opened another fulfillment center 10 weeks later on the East Coast, just because we’re a little bit crazy.”

That’s the pace of an Internet-fueled consumer business today—if the entrepreneurs hit their target right, and get a little lucky. “It can be done. If you’re running fast, looking at how can you as opposed to how can’t you,” Cavens says. “It’s built in our DNA. It’s what we do every single day.”

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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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Greg Pass is bringing more technology “street cred” to the team that is establishing the applied science and engineering campus on Roosevelt Island in New York. The former chief technology officer of Twitter on Wednesday was named the founding entrepreneurial officer for CornellNYC Tech, a $2 billion school to be built in the city.

The planned campus got a boost early this week when Google announced it would give free space at its New York offices to house CornellNYC Tech classes over the next five years while the permanent home is built. The addition of Cornell alum Pass brings a notable name from the innovation community to the campus. Pass spoke to Xconomy about his role in helping to shape CornellNYC Tech and his hopes for the growing technology scene here.

Xconomy: What is an entrepreneurial officer?

Greg Pass: This is a new position that we’ve created to make sure someone is focused on making sure the academic program and the industry partnerships that we create result in entrepreneurial value for students, faculty, and the New York tech scene.

X: What got you interested in joining this project?

GP: It was an opportunity that blindsided me. I didn’t expect to be involved in helping to build a new school and program. I don’t know how you say no to an opportunity to build a new school from the ground up in New York while the city is surging in tech right now. It’s a unique opportunity for me to give back to my profession in a fundamental way.

X: What will your duties be as the campus develops and after it opens its doors?

GP: This is a fundamental role, not just an advisory role. On an ongoing basis there is going to be a lot of focus on thinking creatively about how the tech industry in New York can collaborate with the applied research activities of students and faculty. There is definitely creative work ahead of us but the goal is to drive much more value from that collaboration than we would typically see.

X: How important is it to team higher education with the technology and entrepreneurship community to keep the current momentum going?

GP: It remains a vital part of cultivating creative and innovative engineers. There is a great deal of untapped value there. In academia we have the latest research, which is often very applicable to industry, but there hasn’t been a honed interface between academic programs and tech right now, especially in New York. That’s definitely a great area of opportunity. We’ll see a ton of entrepreneurial value produced from those creative collaborations.

X: Are there new types of collaborations you would like to see happen at CornellNYC Tech that have not been tried elsewhere?

GP: There are certainly a lot of great engineering programs across the country and the world that are producing successful graduates. That’s not the issue per se. What we’d like to do is tailor our program specifically to students who are interested in having an impact through technological innovation. That could mean through entrepreneurialism and starting a company on their own or participating in a startup or an innovative company. To that end, in the program we’ll be exposing students to entrepreneurial experiences. Think of the program being somewhere between a masters program, so that students can achieve mastery in their topics, and something like Y Combinator, where students are getting actual entrepreneurial experiences, perhaps with New York tech companies.

X: Were there lessons that you wished you had learned in college to help you prepare for the technology and entrepreneurship world?

GP: When I first became an entrepreneur, twenty or so years ago, I wasn’t aware of programs to help me along the way. I’m certain there were some but they didn’t have the prominence and opportunity of things like Y Combinator. Things are moving in the right direction. In order to grow the size of the talent pool, additional resources like schools, community activities, and greater investment in incubators will really help increase the number of entrepreneurial engineers.

X: Will your position at CornellNYC Tech be full-time?

GP: It’s essentially full-time with time carved out to pursue entrepreneurial activities myself. Mostly things like advisories. I’m on the board of advisors of Obvious, which is Evan [Williams], Biz [Stone], and Jason [Goldman]’s new company. Certainly I want to keep engaged as an entrepreneur in the minority of my time.

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Why pay for produce to be trucked up from California when you’ve got rooftops that could be converted to greenhouses? That’s the question posed by UrbanHarvest, a startup company founded by two University of Washington students. And as of today, they’ve got a few thousand more bucks in their pockets to help make the dream a reality.

UrbanHarvest won the $25,000 first prize at last night’s UW Foster Business Plan Competition, an annual showcase for the best new ideas from business students in Washington state. UrbanHarvest also padded their winnings by picking up the $2,500 award for the best clean technology idea.

It takes a little more than that to get the concept off the ground—UrbanHarvest says a one-acre rooftop greenhouse can cost $3 million to build, including money to pay for the first year of operations. But it expects to revenues of more than $1.5 million annually from such an installation. The startup has been in talks with other local companies, including Microsoft, for greenhouses that could grow lettuces and other fresh produce.

UrbanHarvest’s blueprint is to install hydroponic growing systems, which use water and nutrient baths rather than soil, on the tops of flat-roofed buildings. The company says those hydroponic greenhouses cut the need for pesticides and herbicides, and use 25 percent of the fertilizer, 10 percent of the water, and 5 percent of the land needed to produce the same amount of produce.

Among the benefits to business customers are the ability to grow food for their employees nearby, cutting the expense and pollution inherent in ordering food to be shipped from longer distances.

The other finalists at last night’s competition were:

—Xylemed, a software startup that aims to replace the whiteboards used to track hospital patients. Yes, what you’ve seen on TV dramas is still sometimes true: Nursing supervisors use a hand-written markerboard to keep track of the current roster of patient names, doctors treating them, procedures they’re undergoing, and even critical contact information. Xylemed hopes to bring this into the 21st century with a software application that can replace all that scribbling and erasing. It’s already being used at several locations, including Harborview Medical Center and the Seattle Cancer Care Alliance.

—JoeyBra, a stylish undergarment that has a thin pocket sewn into its side to stash cash, ID, or even a cell phone. This one definitely gets the crowd’s attention, but there’s apparently substance behind that fun pitch—JoeyBra has already made some pretty impressive sales just based on initial press coverage of its idea. The target was initially deemed to be college women, who need a place to stash a few small items while out dancing but don’t want to lug around a bag. The startup is also working on a sports-bra version.

—Biking Billboards, a marketing startup that does just what it sounds like: attaches billboards to little trailers that can be pulled behind bicycles. The pitch is that this gives advertisers a way to reach potential customers in places where regular billboards either can’t reach or would be ignored. Biking Billboards says its success depends just as much on its riders as it does the message they’re towing—the bicyclists are trained to be “friendly brand ambassadors” while they ride. The startup has already won some business from T-Mobile, which paid the group to ride its message around Bellevue and the UW.

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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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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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Two Boston-area companies that don’t do a lot of talking in the media are making some noise today.

They don’t have much in common, except that each is working on a really big technological problem in society with a pretty novel approach (and they’re getting some funding news out before the holiday weekend). As usual, there’s much more to these companies than just their funding news, so stay tuned.

—Liquid Metal Battery, an MIT spinout working on grid-scale energy storage, has raised $15 million more to complete its Series B financing. Khosla Ventures led the round, joined by Bill Gates and energy firm Total. I have no idea what a liquid metal battery is, but presumably it could be a more cost-effective way of storing energy from sustainable sources like wind and solar, as compared to existing alternatives.

—Recorded Future, a data analytics startup based in Cambridge, MA, has raised a $12 million Series C round led by new investor Balderton Capital. Previous investors Google Ventures, Atlas Venture, IA Ventures, and In-Q-Tel also participated in the round. Recorded Future is developing analysis and visualization tools to help government agencies and financial institutions make predictions based on data across the Web.

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It’s been a busy week for startup funding, with Obalon Therapeutics, Aperio Technologies, Topera, and Ivera Medical closing on financing deals. We’ve also got drug development news from Ocera Therapeutics and MediciNova.

—Japan’s Takeda Pharmaceutical said it’s closing its center of excellence in South San Francisco, which has been focused on developing early stage antibody drugs, and consolidating its operations, now known as Takeda California, in San Diego. The company’s San Diego center of excellence, which is focused on structure-based drug discovery, has about 170 employees, according to a report by Gary Robbins of U-T San Diego. Keith Wilson, president and chief science officer of Takeda California, told the U-T that Takeda plans to add about 30 positions in San Diego by the end of the year.

—San Diego-based Qualcomm’s wireless health subsidiary, Qualcomm Life, named 25 members to an advisory council to help the business address key industry issues. The list includes Kleiner Perkins partner Brook Byers, X Prize founder Peter Diamandis, inventor Dean Kamen, Diego Miralles of Janssen Healthcare Innovation, Eric Topol of the Scripps Translational Science Institute, Psilos Ventures partner Lisa Suennen, and Larry Smarr, founding director of the California Institute for Telecommunications & Information Technology (Calit2).

—San Diego’s MediciNova (NASDAQ: MNOV) said its experimental asthma drug failed to meet the main goal of a second mid-stage trial. The drug developer said patients treated with its leading drug candidate, bedoradrine sulfate, showed significant improvement in other ways, but a sell off on Wall Street sent shares of MediciNova down by … Next Page »

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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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A bunch of small-ish deals (and some not so small) to catch up on from the past week…

—Hopkinton, MA-based EMC (NYSE: EMC) has acquired Syncplicity for an undisclosed price. The cloud-based file management startup, based in Silicon Valley, will be integrated into EMC’s Information Intelligence Group. The move is viewed as helping EMC compete with Dropbox for big enterprise customers.

—Boston-based TurningArt has raised $1.5 million more from NextView Ventures and other investors. The Web startup lets you browse for independent artwork and click to order prints.

—Cambridge, MA-based Spindle (fka Biff Labs) has raised $775,000 from investors including Polaris Ventures, Atlas Venture, Greylock Partners, SV Angel, and Ray Ozzie. The company is trying to build a “discovery engine for the social Web.”

—Boston wireless-networking firm Ember is being acquired by Texas-based Silicon Laboratories (NASDAQ: SLAB) for $72 million plus earnouts. It’s been a long, fun ride for Ember, which started in 2001. CEO Bob LeFort, co-founder Rob Poor, and investor Bob Metcalfe shed some light on the deal and what it means.

—Boston startup Yottaa announced a $9 million Series B financing from General Catalyst Partners, Stata Venture Partners, Cambridge West Ventures, and other investors. Yottaa is building Web infrastructure technology with the goal of helping businesses make their websites run faster on browsers and mobile devices.

—Cambridge, MA-based Ra Pharmaceuticals closed an $8.6 million tranche of its $27 million Series A. The company’s tech platform is designed to generate protein-like molecules that can combat a range of diseases.

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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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A team developing analytic software that scores patients for the risk they pose to being readmitted within 30 days after being discharged from a hospital is the winner of the inaugural Janssen Connected Care Challenge. The prize is sponsored by Janssen, a unit of New Brunswick, NJ-based Johnson & Johnson (NYSE: JNJ) .

Kim Park, a founding partner with Janssen Healthcare Innovation, declared the Discharge Decision Support System (D2S2) as the winner this morning at the 6th Annual Wireless-Life Sciences Alliance (WLSA) Convergence Summit in downtown San Diego. The D2S2 team also was awarded $100,000 to advance the technology, which is under development by RightCare Solutions, a Philadelphia-based startup founded last year by Eric Heil of Domain Associates and Kathryn Bowles, a professor of nursing at the University of Pennsylvania.

The company describes the D2S2 system as a decision-support tool that uses key data from a patient’s admission to analyze the risk that the patient could be readmitted within 30 days after discharge. The software algorithm also “learns” by tracking patient outcomes and adjusting the way it scores a patient’s risk for readmission.

Because the D2S2 risk assessment is done upon admission, RightCare says hospital officials can better plan the discharge and follow-up care for at-risk patients. The company says a second-generation system will be able to recommend whether a patient at-risk for 30-day readmission should be referred to a skilled nursing facility, home care, rehab, or nursing home.

The D2S2 system was … Next Page »

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Taking another crack at building a company, Duy Huynh thinks MakeDirect, his latest New York-based startup, can scale up quickly by breaking old traditions in manufacturing. The company’s e-commerce site lets consumers buy furniture direct from the factory, but moreover, Huynh is shaking up his own strategy to exploit opportunities for growth. MakeDirect’s site launched earlier this month with a $2 million Series A round of funding from DFJ VinaCapital, part of the Draper Fisher Jurvetson investing network.

The website offers deals on furniture such as $199 for a rocking chaise lounge chair originally priced at $398. MakeDirect currently offers 10 to 20 items on its website that rotate about every two weeks. Huynh says he plans to pick up the pace with items changing every week. Rather than offer a broader mix of products, he says the company for now is focused on building up sales volume on targeted items. MakeDirect works largely with manufacturers from overseas because of the higher costs charged by many domestic producers.

In a short time, Huynh has adapted his company to address some unexpected challenges. Originally founded in January under the name Shared Production, the company focused on attracting small retailers to use the platform to buy products, furniture in particular, directly from manufacturers. Removing distributors, exporters, and other middlemen from the equation can cut down prices. However Huynh ran into resistance when he tried to change the traditional ways of some retailers. “You’re pitching to a different generation,” Huynh says. “We feel there is a lot of room for technology to improve the supply chain and production.”

Seeing more prospects in the consumer market, Huynh shifted his company’s focus … Next Page »

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Here’s a potpourri of San Diego tech news, large and small, fresh from the local fields of innovation.

—San Diego’s Qualcomm (NASDAQ: QCOM), the world’s biggest manufacturer of wireless chipsets, said it has renewed its global QPrize venture investment competition for the third time. The $1 million pool is almost double the total pool Qualcomm offered when it created the QPrize in 2009 to accelerate wireless technologies in key business sectors. Qualcomm plans to hold regional competitions in China, India, Israel, Korea, North America, Brazil, Western Europe, and Eastern Europe, and award $100,000 in convertible note financing to a finalist in each region. The company plans to award another $150,000 in financing to a grand prize-winner chosen from the eight finalists.

—Newbury Park-based Sauer Energy, a wind power technology developer, said it has acquired 100 percent of the assets of San Diego-based Helix Wind, a San Diego maker of small vertical axis wind turbine systems that ceased business operations at the end of 2010. Helix, which was trying to commercialize its iconic design for helical-shaped turbines, had an accumulated deficit of nearly $42 million. In a statement, Sauer Energy CEO Dieter Sauer says, “We purchased only the assets, therefore there are no liabilities, no obligations or debt whatsoever to Sauer Energy.”

—San Diego-based Pelfunc, founded by Sanjay Nichani and Ray Fix, launched their mobile app “Skqueak” for the iPhone in Apple’s iTunes App Store. Skqueak lets users record audio while simultaneously sketching or animating a design over a photo, map, or other image. The result is a kind of multimedia postcard that can be shared through social media and embedded in blogs.

—Qualcomm’s top European executive, Andrew Gilbert, met with reporters to talk about the wireless giant’s technology licensing strategy for wireless charging systems that can be used to charge electric vehicles (EVs) as well as smartphones and other devices. Gilbert also showed off an all-electric Le Mans prototype racer, and said Qualcomm remains on schedule with its plans to install its wireless charging technology for as many as 50 EV taxis in London.

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Qualcomm (NASDAQ: QCOM), the San Diego wireless technology giant, says today it is joining forces with EvoNexus, the free tech incubator operated by the nonprofit industry group CommNexus.

The move adds a new dimension of business and technical expertise to EvoNexus, which relies heavily on volunteer tech executives and others to help mentor entrepreneurs enrolled in the program. EvoNexus operates two incubators in San Diego, one is downtown and the other in the University City neighborhood, and provides fully furnished office space, utilities, and other services to startups at no charge.

“A big differentiator for EvoNexus—from an investor’s or entrepreneur’s point of view—is that we are the best deal in the country because we’re completely free, except you have to pay for your parking,” says Kevin Hell, the former DivX CEO who has been overseeing EvoNexus for the past year.

Now EvoNexus will collaborate with Qualcomm Labs to develop a track within EvoNexus called QualcommLabs@EvoNexus.

Qualcomm Labs is expected to serve a role at EvoNexus that is similar to its function within Qualcomm, where it helps to identify and assess new products and market opportunities developed internally through Qualcomm R&D. For example, Qualcomm housed its wireless health initiative in the Qualcomm Labs business unit (known at the time as Qualcomm Labs Services) before moving it into its new Qualcomm Life subsidiary.

Qualcomm Labs also wants to guide startups developing innovative technology in certain areas, such as machine-to-machine communications, into the EvoNexus program. Qualcomm and EvoNexus did not disclose the financial terms of Qualcomm’s participation in the program, if there are any. But startups admitted into the QualcommLabs program will get separate seed funding from Qualcomm Labs as well as free space in an EvoNexus incubator.

Qualcomm did not disclose how much seed funding it plans to … Next Page »

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Here at Xconomy we are coming down the home stretch of preparations for our biggest annual event: XSITE 2012, on June 14 at Babson College. That’s (gasp) just over three weeks away.

XSITE 2012 is our fourth annual full-day conference and celebration of innovation and entrepreneurship—involving not just startups, but also big companies, universities, and other organizations. You can check out the updated speaker list here.

But today I want to talk about just startups. Specifically, seed-stage, pre-Series A tech companies, the kind that are under the mainstream radar, but which we have gotten to know in the course of reporting on the innovation community.

At XSITE, we traditionally feature a small group of these companies—potentially transformative ones—in an afternoon session called the “Startup Xpo,” where 10-12 companies give short pitches to our audience. It’s one of the big highlights of the day. And this year will be no exception, though we are focusing more specifically on tech/IT/software companies (no health-tech or cleantech tracks this time).

I’m pleased to announce the following speakers/companies that are confirmed for this year’s Xpo:

—Varun Chirravuri, co-founder and CEO, Laveem
—Paul Harkins, founder and CEO, NeighborPower
—Ben Jabbawy, founder and CEO, Privy
—Jonathan Kay, founder, Apptopia
—Dave McLaughlin, founder and CEO, Vsnap
—Fatma Yalcin, co-founder and CEO, Curisma
—Yifan Zhang, co-founder and CEO, Pact

The unusually perceptive among you might notice that only seven companies are listed. That’s because, well, a couple of others are pending. But it also means we’re looking for at least one more startup to round out the list. If you’d like to be considered—again, your company should be seed-stage, or early-stage bootstrapped—please drop me a note to the address below. (Don’t call me or I’ll be very unhappy. Unless you have a scoop for me. Or some Facebook stock you’re looking to dump (not).)

As for the rest of you, we are expecting quite a crowd, including plenty of out-of-town speakers and guests. You can register for XSITE here. Hope to see you there on June 14.

And this just in: Gus Weber from Polaris Ventures and Dogpatch Labs has agreed to emcee the Xpo. So we’re ready to rock and roll.

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Coach Wei has been busy lately. The founder and CEO of Boston-based Yottaa is busy running a tech company on two continents. Not only that, but he’s trying to pioneer a new approach to building an enterprise software and Web infrastructure company—one that can iterate and release products almost as fast as a consumer Web startup.

Oh yeah, his company also revealed today that it has raised a $9 million Series B financing round from its existing investors, General Catalyst Partners, Stata Venture Partners, and Cambridge West Ventures, as well as other undisclosed investors. (The round closed a while ago.) Yottaa previously raised a $4 million Series A in 2010.

Yottaa—which has almost 50 employees, most of them in Beijing—has been on a quiet tear lately. The company released its core software for speeding up websites last year and has built up a customer base of e-commerce sites, retail shops, marketing agencies, and other businesses. In February, Yottaa rolled out a content delivery network that includes Internet routing and Web optimization technologies. (You might have wondered how a startup with only $4 million over a couple years could run a content delivery network with data centers around the world; well, it had more money than it was letting on.) And just last week, the company released its “mobile acceleration” software, in partnership with another Boston company, MocoSpace, which calls itself the largest mobile social gaming platform.

These moves increasingly put Yottaa in the same discussion as Cambridge, MA-based Akamai (NASDAQ: AKAM), the 13-year-old Web infrastructure firm, except that Yottaa is going after smaller customers than Akamai is, and their technologies are different. But their big goals overlap. For those of you keeping track, Akamai now bills itself as a cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere (with emphasis on Web and mobile). Akamai recently bought Blaze Software and, before that, Cotendo in Web and mobile optimization.

Another thing to watch about Yottaa is its “anti-lean startup” approach—invest in a big team upfront, put in a fair bit of engineering time, and then try to roll out big products. That’s as opposed to the lean startup model, popular in consumer and social Web circles, whereby you have a small team and roll out new iterations continuously.

Yottaa’s approach is geared toward solving the big infrastructure problems of the modern Web. “Because of the scope of the problem and the required complexity of the solution to solve these problems, such offerings typically require a much longer development process,” says Wei. (A year of engineering to get to bare minimum quality, say.) “It took lots of work to get here,” he says. “However, we are here now and we are able to move really quickly and roll out products faster than anyone else.”

That’s a big claim, but if Yottaa is successful with those products, it could have a big impact on how lots of tech firms operate. “I think this will be inspirational for U.S. startups to think about a different way to build a company,” he says.

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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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It seems like it takes most tech companies about 10 years to run their course—if they survive the first few years, that is. Boston-based Ember is no exception.

The wireless-networking firm said today it is being acquired by Silicon Laboratories (NASDAQ: SLAB) of Austin, TX, for an initial price of $72 million plus earnouts. Silicon Labs makes chips for consumer devices like TVs and cell phones, as well as applications in telecom, industrial, and automotive markets. The acquisition appears to be a good fit, as Ember’s technology—particularly its wireless networking software—will strengthen and broaden Silicon Labs’ offerings across industries.

The deal seems to be an OK, but not great, outcome for Ember’s investors. Over the years, the firm raised some $89 million from venture capitalists and strategic partners including Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, STMicroelectronics, Hitachi, and MIT.

Ember CEO Bob LeFort defends the acquisition on three counts. One, “This was more than a fair deal financially,” he says, in terms of the multiple of the company’s revenue. Two, he says, “This is also about the employees and the potential, and it’s the right thing for the company.” And three, he says, the firm’s investors saw Silicon Labs as the right acquirer at the right time, because Ember needed more investment to reach a bigger market. While everyone loves a $15 billion IPO, he says, “It just made sense. This is not a reluctant deal for them.”

Indeed, Bob Metcalfe of Polaris—an Ember board member and a professor at UT Austin—calls Silicon Labs “the perfect partner going forward,” in terms of its product line (more on that below).

The deal is pretty significant for those of us who’ve followed Ember since its early days. The company started in 2001, the brainchild of MIT grads Rob Poor and Andy Wheeler. Their vision was to build software for wirelessly networked sensors and systems for supply-chain management, factories, and other applications.

Poor and Wheeler eventually moved on to other companies, but Ember evolved to become a maker of software, chips, and tools for secure wireless networking. Its main market is smart energy—working with utility companies and selling its technology to smart-meter makers like Itron and Landis+Gyr, so the meters can talk to the utilities and help make the power grid more efficient and reliable.

Reached by e-mail, Poor says, “From what I can tell it’s a great thing.” Citing Ember’s talent, technology, and reputation in the wireless industry, the firm’s co-founder elaborates: “The Silicon Labs acquisition means that Ember will have the financial and marketing resources to do even more. Also—as someone who cares deeply about the people that make up a company—I’m really glad about the acquisition since it will give everyone at Ember a little more room to breathe and innovate.”

The vast majority of Ember’s 60-odd employees are staying through the merger, LeFort says, and the company is keeping … Next Page »

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