Last week's Demo 09 conference in Palm Desert, Calif., reminded me of my high-school reunions. The people were familiar but the energy level wasn't quite what it used to be. And like those reunions, there were lots of people who didn't show up.
Demo, which has been around since 1991, is a place for companies large and small--but mostly small--to announce new products. While some products this year were from established companies like Qualcomm and Symantec, most came from start-ups or very small companies that have been laboring in obscurity.
They come to Demo hoping to be noticed by the press and the venture capitalists. Some of the demonstrators at the show look like they're only a few years out of high school.
This year, 39 companies paid to demonstrate at the show, a little more than half the number in some recent years. The basic reason is obvious--the economy. But according to Demo Executive Producer Chris Shipley, it's not just about being able to afford the fees and travel expenses. Some companies had to lay off engineers and delay their product launches for lack of development resources. There's no point in coming to Demo if you have nothing to demonstrate.
Attendance at the event overall was a bit lower than usual. I didn't do a head count but Shipley said there were 500 attendees, down from 700 last year.
Still, just because a party is small doesn't mean that it's not fun. For example, there was a lot of energy in the room when Skout took the stage. Skout is an online dating service with products for the iPhone and other mobile platforms that takes advantage of global positioning to help people find and flirt with people nearby. At Demo they announced Skout Out, a large interactive plasma display for bars where you can see pictures of people nearby and dedicate a song to them or send them electronic virtual flowers. Skout can't end the recession, but it can help some of its users avoid depression.
There were also some oohs and aahs when Always Innovating showed off its Touch Book with a detachable screen dubbed a tablet PC. The device, which is expected to cost under $300 when it ships later this year, is one of the most innovative computer products I've seen lately and it comes from a company very few people have even heard of.
Then there was a simple little program with the ridiculous but memorable name "gwabbit" that, for $19.95, solves the mundane yet time-consuming problem of having to copy information from an e-mail into the Outlook address book. With one click, it gathers information such as phone number and street address and puts it in the right place without copying and pasting. It won't change the world but it could save Outlook users a little bit of time.
The company that won over people's hearts is Silverstone Solutions, which showed off a program that can help the 83,000 Americans waiting for kidney transplants by sorting through potential donors to find matches. This company may never make the Fortune 500, but it could help save thousands of lives.
What all of these companies have in common are entrepreneurs who are enthusiastic about what they're doing and--from all appearances--motivated by something other than just money. They're creative people with good ideas they want to share with the world. Speaking of money, I attended a Demo panel made up of venture capitalists who agreed on one thing. Raising money in today's economic climate is difficult but not impossible.
Eric Tilenius of Tilenius Investments saw a silver lining. "Now we can go back to the basics in terms of how companies are formed," he said, pointing out that some of the most successful Silicon Valley companies, including Apple and Intuit, started out with very little venture capital.
David Hornik of August Capital thinks that "what is happening now is good for overall technology and venture communities--but only those who survive." It's not clear how many of the 39 companies at Demo will survive, but I'm quite sure that some will. And for those that don't, the world won't come to an end. Like those aging former high schoolers who keep showing up at reunions, entrepreneurs have a way of coming back. Only instead of reliving the past, they come back with new ideas, new products, and new companies. Times may be tough, but hope springs eternal.
While we're not yet about to see Facebook let people log on to its site with their MySpace ID, or vice versa, we are starting to see more cooperation among sites. MySpace ID product lead Max Engel speaks with Larry Magid about MySpace's efforts, including collaboration with AOL.
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The company claims it will get up to 15 hours of battery life.
Listen now: Download today's podcastPALM DESERT, Calif.--On the day that the Dow sank below 7,000 for the first time since 1997, a panel of venture capitalists told attendees at Demo 2009 what most people already know. This is an extremely challenging environment for raising money.
But challenging doesn't mean impossible. There are still some opportunities for both entrepreneurs and investors.
The panel, which was moderated by Matt Marshall of VentureBeat consisted of Christine Herron of First Round Capital, David Hornik of August Capital, Bryce T. Roberts of O'Reilly AlphaTech Ventures, and Eric Tilenius of Tilenius Investments.
Tilenius said that "this is the worst fund-raising environment we've ever seen. It's incredibly hard to raise money." His company is doing about half as many deals as last year, with a 67 percent drop in funds invested. But even that figure, he said, doesn't tell the whole story. Much of the funds spent were on companies that had already received one or more rounds of financing. Financing of new companies, he said, "has dropped precipitously."
Christine Herron, whose firm invests seed money fairly early on in a company's development, says that, for her, the biggest difference in today's climate is "taking a look at how long someone's runway is." Seed investors used to be able to assume that someone would be ready to provide "just in time" financing when a funded company needed additional capital, but that's typically no longer the case. "Now people are looking for more evidence, which means more runway and larger seed rounds." In other words, investors at the early stages have to come in with more--not less--money to give start-up companies more time to get their businesses humming. She said that seed rounds used to be in the range of $300,000 to $500,000 and now are usually more than a million dollars.
Ironically, the stock market drop makes Tilenius optimistic. "Now we can go back to the basics in terms of how companies are formed." He pointed out that some of the best companies, including Apple and Intuit, are ones that received very small amounts of initial financing. When asked whether he had invested lately, he said he hadn't because he "hasn't seen entrepreneurs make the mindset shift." He's looking for start-ups that have a realistic picture of how they can build a real business on the money they are able to raise.
To a certain extent, said David Hornik of August Capital, "what is happening now is good for overall technology and venture communities but only those who survive." The efficiency required by investors that have less money to put into companies "is going to be good for the economy, but there will be casualties along the way." And it will take a lot less time, he said, for weak companies to fail. "Lemons ripen early" and companies that aren't destined to succeed "will fail more quickly in this economy," he said.
And speaking of lemons, Bryce Roberts of O'Reilly AlphaTech Ventures is trying to make lemonade. He thinks this is "an exciting opportunity" and that "the current time will show how adventuresome, crazy, and off your rocker you have to be" to be an investor today.
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For more of CcBetty.com, see Rafe Needleman's blog post.
Skout's chief marketing officer, Patrick McGovern, explains the system to Larry Magid who wants his wife Patti to know that his interest in the subject is purely professional.
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GoView doesn't just capture still shots but entire screen sessions with optional voice narration and lets you quickly share the video with others via the web.
It can be used to create video documentation for software or, presumably, to make a video of a PowerPoint presentation or anything else that is displayed on a PC screen.
You start the process by clicking "record screen" from a small menu that appears in the task bar. Then you do whatever you need to do, such as navigating a spreadsheet or entering information in an expense report. While you're working you can narrate the process through a PC microphone and everything is recorded. When you're done, you click an icon to stop the recording.
The video is then automatically uploaded to a Citrix Online server. You can then do editing such as trimming off the beginning or end and adding titles throughout the video using tools that are very similar to what you'll find in standard video editing programs.
When you're done, the video remains on the server and lets you share it with others by clicking the share icon or pasting the video's URL into an email message.
Because there are other programs on the market that accomplish the same tasks this is not a game changing product but it does appear to make the process easier and, combined with Citrix Online's reputation for its other services, could help this company gain market share in this small but important niche market.
CBS News and CNET technology analyst Larry Magid speaks with Chris Carvalho, general manager of SmartyCard, a site debuting at this week's Demo conference that provides children with merchandise (paid for by their parents) as a reward for doing well on the site's educational activities.
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SmartyCard, which launches at Demo 09 on Tuesday, is both compelling and disturbing. The well-crafted site, which is aimed mainly at third- to sixth-graders, is compelling because it not only engages children in fun and interesting learning activities, but it adds an element of incentive by rewarding success with points that they can use to purchase virtual or real merchandise.
That very incentive is what also makes SmartyCard disturbing.
(Credit:
SmartyCard)
I'm not saying that the carrot approach--giving kids rewards for doing well--can't be appropriate and effective. But I'm somehow bothered by the idea of an automated system that puts kids through their paces, however enjoyable and educational they may be, and then dishes out rewards with Mom and Dad's money.
When my kids were that age, my wife and I spent lots of time interacting with them at the kitchen table, through reading books and doing homework, and--yes--sometimes in front of a computer. But the rewards our children received for doing well were more emotional than financial.
Sure, there was the occasional trip to the ice cream parlor to celebrate a good test score or a bit of extra effort and, yes, we occasionally bought our kids gifts as a way of congratulating them for a job well done, but there was a decidedly human touch to it, and it wasn't a quid pro quo.
Like most parents, we strived to instill a sense of pride and work ethic in our children without teaching them that every good accomplishment necessarily translates into acquiring more stuff.
That's not to say that there might not be situations in which a service like SmartyCard makes sense. If a parent feels that a bit of extra help from a Web site might be all that a kid needs to put in some extra effort, than I'm glad that SmartyCard is there to serve that family. But I'm not 100 percent comfortable with the idea of a mechanized system for rewarding achievement. At least at younger ages, it would be best if parents played the activities with their children.
Parents buy SmartyCard points that kids unlock by doing well on activities. Ten bucks buys you 5,000 points, but it takes 10,000 points for a kid to buy $10 worth of credit on iTunes. Some deals are better than others. 5,000 points will buy a month's membership on Club Penguin, but the cost of those points is still quite a bit more than the $5.95 fee a parent would pay to buy a month directly from that site.
I wish that SmartyCard could offer parents something closer to a one-to-one value, and make its money from commissions from the vendors that provide the service or sell the merchandise. General Manager Chris Carvalho said the company hopes to negotiate such deals over time. Of course, an argument can be made that the extra money parents are paying is well worth it, if the lure of SmartyCard points gets their kids to study harder
. I like the fact that kids can use SmartyCard for free with access to the educational games, but not the merchandise rewards. That opens up the activities to kids whose parents can't afford to buy points or simply prefer not to. And if the games are compelling enough, that might be all the incentive some kids need.
Besides, if they do well, you can always take them out for ice cream.
Larry talks with SmartyCard General Manager Chris Carvalho.
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