Gluecon and Alcatel-Lucent team – changing the game at Gluecon 2011
Our goal for Gluecon has always been to make it *the* gathering place for developers working on the connective technologies that hold the web and IT infrastructure together – from web services to SOA to APIs and cloud computing. Eric Norlin – our partner in Gluecon, Defrag and now Blur – has helped bring together technology leaders for an in depth (and proudly geeky) conversation around the changing landscape of these technologies and the applications they support.
As we move towards our third year running Gluecon we’re extremely pleased to announce a hugely important sponsorship with Alcatel-Lucent. ALU will become the Community Underwriter for the conference. This partnership will really change the face of Glue and open up even more opportunities for companies to participate. For starters, ALU is underwriting the ability for 15 companies to demo at Glue. These companies will be selected completely on merit by a selection committee that includes:
Eric Norlin Chris Shipley (Guidewire Group) Mathew Ingram (MESH and GigaOm) John Musser (Programmable Web) Laura Merling (Alcatel-Lucent) Alex Williams (ReadWriteWeb) Jeff Lawson (Twillio) Jeff Hammond (Forrester) Ian Gl;azer (Gartner) Ben Kepes (Diversity.net) Krish Subramanian (CloudAve) Vinod Kurpad (Best Buy) Seth Levine (Foundry Group)
I’m excited because I feel like we have the ability to really change the game with this one. If you take away the company specific conference (Google i/o, Twitter, F8), there really just aren’t that many national-level gathering spots for developers in the cloud/API space. There are a lot of “business level” and “workshop” conferences that happen around cloud computing, but we’re talking DEVELOPERS.
And even where there are developer gatherings in the cloud/API space, the ability to pay has always been a limiting factor for startups and companies wanting tho show their wares and exhibit.
That ends with Gluecon 2011. With Gluecon 2011 developers in the cloud/API space have the ability to participate in a pure meritocracy. Wow the selection committee and you’re in.
At the end of the day, what I want to see is 500+ developers coming to Gluecon to build apps, figure out cloud infrastructure, scaling, security, and solve the tough problems around API construction, usage and maintenance.
If you’re a company interested in participating, click here for more details.
See you at Gluecon 2011!
Foundry Group Invests in Urban Airship
We recently led the $5.4 million Series B funding round of Urban Airship. Besides our normal excitement of finding another great company to partner with, we are especially pleased to announce this as our first investment in our second fund.
Launched in June 2009, Urban Airship has found early success providing mobile developers with tools to optimize their applications, including easy-to-implement products for mobile messaging and content delivery and authorization. To date, Urban Airship has delivered more than 1 billion mobile messages across the Apple iOS, Android and Blackberry platforms. Many of the top brands in entertainment, media, publishing and gaming depend on Urban Airship to ensure their mobile marketing initiatives are profitable and scalable.
Urban Airship’s line of real-time messaging products, AirMail, helps businesses significantly increase user engagement with their brand and deliver more value to users by delivering push notifications. AirMail has been big business for Urban Airship since it gained early market traction by powering push notifications for Tapulous’ runaway hit app, Tap Tap Revenge, the first app in Apple’s App Store to be enabled with push. Since then, the company has helped popular mobile app publishers such as Universal Entertainment Group, Dictionary.com, LivingSocial, and Gowalla find success — and increase revenue — from their mobile apps. Most recently, Verizon Wireless named Urban Airship its preferred provider of push notifications across the entire Verizon developer network.
Urban Airship’s in-app purchase product, StoreFront, provides users with easy one-click purchases through Apple’s iTunes, thus opening up a new mobile channel for selling existing content. StoreFront also includes functionality to enable subscriptions through the iTunes interface, a much-needed solution to publisher challenges in managing and authenticating user devices for ongoing content access.
The company is located in Portland, OR which is a new geography for us, but with familiar and well-respected partner True Ventures, whom we’ve had the pleasure of working with on several other companies.
Fox Business Reports on California Companies Headed to Boulder
Today, Fox Business reporter Adam Shapiro spent some time in Boulder talking to folks about what is special about creating a company here.
He began the day at the Boulder Open Coffee Club, an informal twice-monthly gathering for those to talk tech, startups, geek and anything else of interest. Stay tuned for our personal blogs to see what we individually had to say on the subject.
Atoms Are the New Bits
During our careers, we’ve invested in a number of companies that sell consumer-electronics devices. In the past several years, we’ve invested in companies like Sling Media, Pogoplug, Smith & Tinker, Pie Digital, Sifteo, and most recently, FitBit and Orbotix.
In recent years it has become dramatically less expensive to design, build, and bring a consumer electronics device to market. The emergence of low-cost and low-power processors, DSPs and SOCs (systems-on-a-chip), the declining cost of all forms of memory, and Asian-based outsourced manufacturing (primarily in Taiwan, China and increasingly, Indonesia) has made investments in companies offering a consumer-electronics device a much more compelling opportunity from a VC perspective.
These cost-savings have enabled the companies we’ve invested in to maintain 40% – 60% gross margins on their products (while selling at sub $300 price points) sold into the retail channel, even at wholesale pricing levels. When these companies sell direct-to-consumer via their websites, the margins can be even higher. Contrast this with earlier venture-backed consumer-electronics companies like TiVo (whose DVR we essentially a PC in different packaging), which initially had to sell its product at negative margins and hope to make up the difference with service/subscription revenues.
Most venture capitalists would not agree with our view that gadget companies can present compelling investment opportunities, and there are certainly challenges associated with a business model that involves building widgets overseas and shipping them around the world to third-party logistics companies, distributors, and retailers. To name but a few: there is more operational complexity around manufacturing, distribution and sales, there are increased working capital requirements, the margins are lower relative to software or SaaS models, the cost of product defects is much higher, and there can be less real-time visibility into sales and the customer base, given that a retailer sits between the company and its users, at least up until the point of purchase.
There are some special things that we look for in a consumer electronics investment. First and foremost, we focus on the software element of the consumer electronics product. When we were on the road raising our fund, we’d often be asked by potential investors what it was the made the Slingbox special, and why we had decided to invest in a device play. We’d reply that the magic behind the Slingbox was the software and that Sling Media was a software company that just happened to package its software in a cheap plastic box.
Second, for any consumer electronics device to be successful, it must be dead simple to use and to set up. The out-of-the-box experience has to be seamless and just work, hiding all configuration complexity from the user. Not to pick on TiVo again, but rumors are that in the early days of TiVo, the return rate was well over 50%, primarily because of the great complexity of setup. Customers gave up in frustration before they were able to experience the magic of TiVo. Even today, upwards of a third of wireless routers are returned to the store because of difficult setup procedures.
We think the Slingbox set a new standard of usability and ease-of-installation in its day, while the setup process of the Pogoplug currently sets the gold standard for an install – it can be done in under two minutes, requires zero knowledge of network configurations or firewalls, and is literally as easy as typing in a URL and signing up for an account. Naturally, most any modern device should be network-aware and work closely with web-based services to provide an integrated experience. A software-powered consumer electronics device should also evolve – regular software updates mean that a good gadget gets better over time.
Finally, we also believe that for a consumer electronics company to be interesting to us as an investment opportunity, it should be establishing a new category of device. Sifteo’s Siftables, Cloud Engines’ Pogoplug. and Sling Media’s Slingbox are a few examples from our portfolio that illustrate this point. A startup has very little to offer in an established category – the world doesn’t need another audio player, smartphone or router. Leave those categories to established players who have the manufacturing, marketing and distribution muscle to compete. As a startup, rising above the noise in an existing category is difficult and expensive. Granted, establishing a new category of device has its own set of challenges, but innovation and disruption are the core mission of startups.
If you’re making a product out of atoms (powered by software magic) that fits the above description we’d love to hear from you. Atoms are the new bits.
Foundry Group Version 2.0
We are very happy to announce today the closing of our second fund, Foundry Venture Capital 2010, L.P. The fund is the same size as our last one: $225,000,000 in limited partner commitments. We are pleased to be working with a great group of investors.
We will continue to do exactly what we have always done: invest in seed and early-stage investment opportunities in the software and IT space that are located across the United States. We’ll also continue to pursue a strategy of Thematic Investing that has served us well over our investing careers.
We very much look forward to working with another group of great entrepreneurs and portfolio companies.
