Washington Innovation Summit in Tacoma Reveals State's Strengths, Weaknesses

 
 

The annual innovation summit organized by the Washington Technology Center was recently held in Tacoma. It covered a range of industries from aerospace and materials to renewable energy and education.

If you missed this great meeting, you can still catch up by watching videos and presentations here: 

http://www.watechcenter.org/index.php?p=Program&s=1687

One of the key areas of focus was energy: Several speakers discussed the importance of improving the quality of our electric grid to make it less vulnerable to attack and also enable utilties to manage the load on the system.

"If we ever get into a conflict with China, they will bring down our power grid," said Scott Hamilton,  a consultant with Leeham Company, underscoring the importance of smart grid work being done at PNNL and elsewhere in the state.There is a growing cluster of research efforts in Washington State around this technology, including work on a self-aware electronic grid that uses a sophisticated sensor network to make the grid "self-healing."  Already being tested are systems that  allow utilities to charge consumers based on the load on the power grid. Consumers would be encouraged to run their dishwashers, for example, late at night when demand for electricity is low. Also in the works,

Several speakers noted that while low energy prices make it difficult to sell energy savings technology in this state, Washington can still be a testbed for energy-saving technology.

·         There was some concern about whether our region could remain a leader in innovation. While we lead the world in developing technology, too often the technology is deployed somewhere else in the world. That makes it difficult for us to stay in the lead. We need to encourage companies to develop and manufacture products locally. We also need to accelerate the rate of innovation. One way would be to strengthen the innovation ecosystem. A weak link in that ecosystem is the small size of the UW department of engineering, which compares unfavorably with departments at similarly sized universities in the rest of the country.

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Three Investors Who Believe in the Innovative Capabilities of Local Entrepreneurs

Three Investors Who Believe in the Innovative Capabilities of Local Entrepreneurs

Meet Matt McIlwain, Nick Hanauer and Dan Levitan.
FROM THE PRINT EDITION |
 
 

As much as we’d like to think otherwise, Seattle is not yet a hotbed of venture capital activity. Zillow CEO Spencer Rascoff said as much in an interview earlier this year with The Seattle Times. While discussing the healthy state of the region’s tech business, Rascoff observed, “From a technology landscape standpoint, I’m pleased with the vibrancy of the startup community, [but] I still think … Seattle needs more institutional venture capital. The fact that we have really only a handful of venture-capital firms based here is going to hold the region back from fulfilling its potential.”

Still, without capital from local investors, many of the companies that now form the backbone of the Puget Sound economy — from Amazon to Zulily, from Julep to Juno Therapeutics — might not exist, or might exist elsewhere.

So here’s to the venture capitalists who call Seattle home and who find promise and potential profit in betting on companies like Apptio and Avvo. Dato and Drugstore.com (acquired by Walgreen’s). Front Desk and FanNation.com (acquired by Sports Illustrated). Isilon Systems (acquired by EMC) and Insitu (acquired by Boeing). Moz and Modumetal. Redfin and Rover.com. Shippable and Spaceflight Services. Trupanion and Talyst. And plenty more.

On the pages that follow, we feature three prominent members of Seattle’s venture capital community who believe in the region’s ability to create viable, sustainable businesses here. Two have made Forbes magazine’s annual Midas List of the top 100 venture capitalists in the world. The other has become a civic activist dedicated to addressing — and solving — economic inequality.

DAN LEVITAN
Dan Levitan cofounded Maveron with Howard Schultz in 1998. Since then, he has been the key player on many of Maveron’s home runs, including Zulily. In 2014, Forbes magazine named him to its Midas List of the top 100 VCs in the world. Levitan is a graduate of Duke University and has an M.B.A. from the Harvard Business School.

Investment you’d characterize as your biggest success.  Zulily and eBay 

Company you passed on and now wish you had invested in. Blue Nile

Most important things to look for in a startup. The entrepreneur and his/her team; the size of the market; and a differentiated product/service

Best location for closing a deal. The CEO’s office

Kinds of companies you’re looking for and why. We specialize in identifying, financing and mentoring highly disruptive and immersive, consumer-facing companies. We love — and invest in — companies that integrate into the lives of consumers and make the world a better place.

The most effective entrepreneur you’ve encountered. Howard Schultz [of Starbucks], because he built one of the most respected brands in the world. 

Top two deal makers. Awesome entrepreneur, insanely driven to succeed

Top two deal breakers. Anything outside of consumer or anything too small

What do you do for fun? I go to Duke basketball games.

What kind of car do you drive? Tesla Model S 

You might not know. Levitan has climbed Mount Kilimanjaro and Mount Rainier. He found a mentor in Duke basketball coach Mike Krzyzewski, who taught Levitan the central lesson of Maveron’s consumer-focused success: Always ask, “Do you love your team?” 

NICK HANAUER
Nick Hanauer is an entrepreneur with a broad range of experience across manufacturing, retailing, e-commerce, digital media, advertising, software, aerospace, health care and finance. In 2015, he also founded Civic Ventures, a small group of political “troublemakers” devoted to ideas, policies and actions centering on significant social change. He holds a degree in philosophy from the University of Washington.

Investment you’d characterize as your biggest success. For sure, aQuantive. I founded it and funded a big part of it and sold it [to Microsoft] for $6.4 billion. Also, Amazon as a first-round investor.

Company you passed on and now wish you had invested in. Rich Barton asked me to invest in Glassdoor, but I was too lazy to do anything. That was a screw-up.

Most important things to look for in a startup. My first screen is “Nick’s rule of transformational value.” Every great business is predicated on a product or service that creates what I call transformational value — that is, it is either 10 times better or 10 times cheaper or, ideally, both. Second, of course, the quality of the people. Bad people can kill a great idea but great people can evolve a mediocre idea.

Best location for closing a deal. My office.

Kinds of companies you’re looking for and why. My partners and I look for very early-stage-ideas companies. We try to be hard core about them being headquartered locally, but have made exceptions for entrepreneurs we already knew and trusted. We are somewhat agnostic to industry, reasoning that it’s the stuff you have not considered before that may be the biggest opportunity. For example, one of our best and most exciting investments was Insitu [acquired by Boeing for $400 million], and they made drones before anyone knew what drones were. 

The most effective entrepreneur you’ve encountered. It’s hard to beat [Amazon’s] Jeff Bezos. My pal Rich Barton [of Zillow] comes close.  

Top two deal makers. Simplicity and focus

Top two deal breakers. Complexity and confusion

What do you do for fun? What don’t I do for fun? I believe that one of my finest and rarest qualities is my ability to efficiently convert money into fun.

What kind of car do you drive? Tesla Model S P90D

You might not know. Hanauer is a co-author (with Eric Liu) of two best-selling books in the political genre, The True Patriot and The Gardens of Democracy. He has been featured in two documentary films on economic inequality — American Winter and Inequality for All.

MATT MCILWAIN 

Matt McIlwain joined Madrona Venture Group in 2000 and focuses on a broad range of software-driven firms. Current investments include Apptio, Envelop VR and Smartsheet. A graduate of Dartmouth College, he holds an M.B.A. from the Harvard Business School and a master’s degree in public policy from Harvard’s Kennedy School of Government.  He was named to the Forbes Midas List in 2008, 2009 and 2011.

Investment you’d characterize as your biggest success. Isilon Systems [acquired by EMC for $2.25 billion]

Company you passed on and now wish you had invested in. Airbnb

Most important things to look for in a startup. Customer-driven problem/need; differentiated and technology-driven solution; compelling founding team that can build a great company

Best location for closing a deal. Coffee shop or a great restaurant

Kinds of companies you’re looking for and why. Virtual reality/augmented reality companies and “application intelligence” companies that leverage machine learning to make apps smarter

The most effective entrepreneur you’ve encountered. Sunny Gupta [of Apptio] is world class at customer focus, attracting great people and product-market fit.

Top two deal makers. Great judgment, passion for the opportunity

Top two deal breakers. Not focusing on the customer’s problem, lack of transparency

What do you do for fun? Travel, play (and watch) sports, discuss policy issues

What kind of car do you drive? 2011 BMW 535i

You might not know. McIlwain came to venture capital investing from an unlikely place: the Genuine Auto Parts Company in Atlanta, Georgia, which owns NAPA Auto Parts. He ended up spending a lot of time with venture capitalists and venture-backed companies that were interested in investing in the sector. He worked with Madrona on some projects and joined the firm in 1999.