Kevin Warnock

Yesterday afternoon, Wednesday, October 3, 2012, I attended the Dean’s Speaker Series at the Haas School of Business at the University of California Berkeley, in Berkeley, California USA.

Dean Richard Lyons interviewed Paul Otellini, the Chief Executive Officer of Intel Corporation. The question and answer session was held in the Anderson Auditorium, a venue I am very familiar with because it’s the same hall where the Berkeley Entrepreneurs Forum is usually held. I have attended the Forums for 20 years.

The interview was captured by a professional videographer, and the video will be soon made public on the Haas website page for the Speaker Series.

I have highlighted my favorite parts of Otellini’s remarks in my comments that follow.

Otellini completed his undergraduate studies at University of San Francisco, and received his Master of Business Administration from the Haas School of Business, though at the time it was named the Berkeley Business School. Otellini got a job at Intel in 1974 with his freshly minted MBA degree. Even though Otellini was a finance specialist, his first job at Intel was to program a Digital Equipment Corporation PDP-10 minicomputer to perform cost analysis. This must have been an intense introduction to Intel for an MBA because mini-computers were not easy to program. I programmed a Digital Equipment Corporation VAX minicomputer in 1990, and it was difficult then, so I can only imagine how much more pesky and complicated it was to work 16 years earlier on the ancestor to the VAX.

When Otellini became CEO in 2005 he assessed that Intel was not organized correctly for where he saw the market heading. At the time, Intel had 105,000 employees. Otellini eliminated 25,000 jobs. The company is today back up to 103,000 employees. His advisers in 2005 were asking why he wanted to go into ‘the phone business’ when Intel was making money hand over fist at the time. Otelllini said he had many sleepless nights when he was contemplating letting 25,000 people go. He said he will never feel good about that, but he is grateful that he made the change well before the world financial collapse of 2008, so all the people let go were able to find jobs quickly.

I was surprised to learn that Intel is the world’s 4th largest software company in the world based on the number of computer programmers that it employs.

Otellini advised to get work experience in different geographic locations prior to starting a family.

Otellini said its chips are manufactured in three dimensions, which was forced upon it by the laws of physics, which prevented circuits from being made much smaller. To keep making more capable chips, transistors had to be stacked as well as placed side by side. This technology took Intel 10 years to perfect, with thousands of PhD holders working on the effort.

I wonder if they considered adding a ‘Now in 3D!’ tagline to their famous ‘Intel Inside’ stickers.

Otellini emphasized the high risks inherent in running Intel.

To illustrate, when Intel breaks ground on a new chip fabricating factory:

• the technology hasn’t been developed yet
• the products haven’t been designed yet
• the markets for the products don’t exist yet

These factories take 3 1/2 years to build and cost USD $5,500,000,000 each, and Intel starts construction on two or three of these per year.

That sounds like a great definition of high risk to me.

Intel makes hardware reference designs that it provides to its customers so that they can get products to market more rapidly. Otellini said personal computer makers don’t spend that much on industrial design, so they like and need Intel to provide these turn key designs they can modify to make them unique.

Otellini had a mentor at Berkeley while he was a student in the early 1970s. That mentor worked at Bank of America, and tried to get Otellini to join that bank. Several years after Otellini had joined Intel, his mentor confided that Otellini had chosen the right company.

Intel has put in place a system where they can identify the source of so-called conflict minerals. They can also track them, and Otellini said that Intel is likely to be able to say by January 2013 that Intel has built the world’s first ‘conflict mineral free microprocessor’.

Otellini said he had spoken in the morning with Robert Hormats, Under Secretary for Economic, Energy and Agricultural Affairs at the Department of State, who he said is very interested in [removing] conflict minerals from products. The Department of State, according to Otellini, wants to make Intel’s conflict mineral tracking system a so-called ‘best known method’ for the [semiconductor] industry.

Otellini said it recycles the chemicals used in its plants, and plans to recycle the water it uses to such a complete degree that its factories will be able to reuse the water they consume over and over, without needing to return it to the underground aquifers, like they do today.

Otellini spoke about manufacturing competitiveness generally in the United States, something he is qualified to speak about because he advises United States President Barack Obama about competitiveness.

He said many of the motivating factors that have led to outsourcing are disappearing. He said that it costs more for Intel to hire 1st and 2nd level technical managers in China now than it does in Santa Clara, California USA. For engineers with 3 or 4 years of experience, the costs to hire them are now the same in the US as they are in China and India.

Otellini said that the United States could improve its position by lowering its corporate tax rate [to a level consistent with the rate in competitive economies]. He suggested the US streamline its permitting procedures for building new factories. He suggested that job training be improved to provide a skilled workforce to work in the new factories. He pointed out that currency and political risks are low in the US, and stated there is no risk of a company’s factory being expropriated by the US government. In other countries, governments sometimes do take over privately owned factories.

There were some famous guests in the audience.

Perhaps the most famous attendee was Arthur Gensler, the founder of M. Arthur Gensler Jr. & Associates, Inc. but commonly referred to as simply Gensler. I have been aware of this global architecture, planning, design and consulting firm since I was 23 years old at my first job out of college, at Newell Color Laboratory at 630 Third Street in San Francisco, California USA, since closed. Gensler was an important client. I suspect Gensler may be helping to design the new building Dean Lyons is being planned for the Haas School of Business campus.

After the interview, Lyons pointed out Mr. Gensler to me — without his helpful comment, I would not have been able to write this acknowledgment of his visit. Gensler is a big deal — they employ 3,500 people in 42 locations. They count all 10 of the Fortune 500 top 10 companies as clients.

Perhaps the second most famous attendee was Oliver Williamson. Williamson is Professor Emeritus at the Haas School of Business. In 2009 Williamson won the Nobel Prize for Economics. I saw Williamson speak in 2009 at the Haas Gala, the annual party the school throws each November. I blogged about that gala and wrote about Williamson, who spoke at the event. I took a picture of Williamson shaking hands with Otellini, shown here.

This last photograph of Mr. Otellini with Berkeley undergrad student Tammie Chen has an interesting story behind it.

I met Chen when she was an organizer for the 2011 Made for China Startup Pitch Competition. I was a judge for that competition. After that event, we became friends on Facebook, and she posted that she was going to be attending the Dean’s Speaker Series that is the subject of this blog post. I commented that I would be there as well, blogging. She asked me if I could take a picture of her with Otellini. I said I would. I walked up to him and asked him if I could introduce Chen to him and take a picture of him with her, and he readily agreed. They had a nice chat for a minute, and then they posed for this picture. Chen is a huge fan of Intel, and has visited their headquarters. She has a lot of friends that work at Intel.

I was surprised that no students approached Otellini to introduce themselves. This is the same behavior I saw at my first Dean’s Speaker Series event, in September 2012, when Lyons interviewed Randall Stephenson, the CEO of AT&T. There were students standing about 10 feet away from Otellini, in a large circle, but not a single student walked into the empty space to say hello. That made it easy for me to say hello to Mr. Otellini, who I have met and spoken with before, in 2008, at the Intel Capital CEO Summit [renamed the Intel Capital Global Summit] in San Francisco.

I like Intel. Their venture capital division Intel Capital was very nice to my company Silveroffice, Inc. by making it an Intel Capital Portfolio Company. Intel Capital invites me as their guest to Intel’s annual Intel Developer Forum, at which I get a new Intel Developer Forum branded laptop bag or backpack, which I use every time I leave my home with my Intel powered laptop. I hope to be appointed a judge for the Intel Global Challenge, a role I would be great at since I was a judge for the Berkeley Startup Competition for eight years through 2011. My application is pending, so please wish me luck! I love judging startup competitions, and so far I have judged four different competitions at University of California Berkeley.

I took all the photographs in this post. I used a Canon 5D Mark II camera with a Canon 80-200mm f:2.8 L zoom lens. Click on the images twice in delayed succession to see the images at full size. I uploaded the images at their full 21 megapixel resolution, at a JPG quality of 12. The light level was comparatively low, so I shot at ISO 2,500, without flash.

Thank you to Meg Fellner of the Dean’s Office for getting me a ticket to this sold out event.

On Thursday, September 6, 2012, I attended the Dean’s Speaker Series at the Haas School of Business at the University of California at Berkeley, in Berkeley, California USA.

This was the first Dean’s Speaker Series I have attended.

I have been aware of this series for years, but I assumed attendance was restricted to friends of the Dean, Rich Lyons, because of the name of the event.

I’ve met and spoken with the Dean about ten times over the years, I estimate, including when he was the Acting Dean when Dean Tom Campbell took a leave of absence to help then Governor Arnold Schwarzenegger manage the finances of the State of California.

A couple of weeks ago I was looking over the Haas website and marveled at the outstanding list of upcoming individuals the Dean will be interviewing on stage. There in front of me were the magic words — the events are open to members of the Haas ‘community.’ I was pretty sure I qualified, since I am a sponsor of one of the school’s premier events, the Berkeley Startup Competition, and have been every year since 2000. I inquired and I got a seat — I was and am thrilled.

The Dean’s guest for this event was Randall Stephenson, the Chief Executive Officer of AT&T, the largest telecommunications company in the United States.

I am an AT&T customer, both for my home’s broadband Internet connection and for my wireless Apple iPhone 3GS, which I bought soon after launch. I no longer have a wired phone. I like AT&T’s service — I get great reception and few dropped calls.

My regard for AT&T went up after listening to Stephenson speak for an hour. Stephenson was Chief Financial Officer and Chief Operating Officer prior to becoming Chair and CEO, among many roles.

He started at a job he called a ‘tape monkey’ at Southwest Bell Telephone in 1982 loading 19 inch diameter magnetic tapes of billing data onto tape drives. He did this work 12 hours a day — reading a video screen for instruction on which tape to load, finding the tape in storage, loading the tape and then pressing ‘Run.’

I did this same job, though not full time and not for 12 hours a day, when I worked at Cooley LLP. Thankfully I only had to do this role about two weeks a year, when the regular tape technician, Bill Calhoun, went on vacation.

Stephenson said he figured a way to rework his tape loading job to make it much more efficient and enjoyable, though he didn’t tell us the details of what he changed.

During his introductory remarks, Rich Lyons said Stephenson worked in Mexico City as SBC’s Director of Finance.

At some point, Stephenson worked in Mexico for Carlos Slim, the iconic leader of Telmex. Stephenson did not explain how he came to work for Carlos Slim, who presumably was not an SBC employee at any point in his life.

Stephenson said Carlos Slim is ‘the most inherently brilliant individual that I’ve ever worked with.’

Stephenson was in Mexico working for Slim in 1994 when there was an economic crisis that began December 19, 1994, when the Mexican government lifted all restraints on the Mexican Peso and let its value float. The Mexican currency lost 40% of its value in one day, Stephenson recalled.

Slim had 20,000 wireless subscribers in 1994, and thanks in part to the aggressive investments Slim made in the aftermath of the economic crisis of 1994, TelMex now has over 200 million wireless subscribers and Slim has made himself reportedly the wealthiest man in the world.

Stephenson took his job as CEO in June 2007 when ATT was a $100B annual revenue company with 300,000 employees, the same month that Apple launched its first iPhone. Stephenson invested heavily when the 2008 financial crisis came.

Stephenson said that 170,000 of AT&T’s employees actively participate in its TIP — The Innovation Pipeline — system conceived by the company’s CTO, a guy so tough to hire that it took ten years for Stephenson to do so. This system allows employees to propose ideas for the company to work on developing. People vote on the ideas and the best ones that float to the top are funded and pursued. In response to a question from a student in the audience, Stephenson said that apart from advertising the program to employees the company does little to promote participation. He said participation is quite good.

Stephenson and and his public relations person Larry (last name not mentioned) said they were so excited about a couple of their ‘tattooed up’ technologists in their Palo Alto, California research lab named the ‘Foundry’ that they put photographs of them in AT&T’s Annual Report. Stephenson divulged that competitors now are ‘coming after’ these programmers trying to hire them away from AT&T.

A student from the audience asked Stephenson to discuss wireless handset subsidies. Stephenson answered at length and concluded that the current system in the United States is overwhelmingly what customers want. He said AT&T performed studies where customers were asked if they would like to finance a phone via a separate finance contract, in exchange for markedly lower rates for service. Stephenson said customers did not like this proposal.

I think the survey respondents that answered this way are short sighted.

The way things operate in the United States, where one can buy a USD $700 iPhone for $200 because of the carrier subsidies, there is a perverse incentive to upgrade your phone exactly every two years. That is because contracts generally run for two years. If you keep a phone for three years, that final year you are paying much more than is warranted for service.

People should be encouraged to save money, not spend, so I admire the relatively new system reported by Stephenson to be the norm in Europe — phones are not subsidized and rates for service are [I hope] commensurately lower. Stephenson said phone sales dropped dramatically when this policy was implemented, but I say that is just what the world needs. People keep a home phone for decades. People keep televisions, stereos and other household appliances for years. Stephenson told me one-on-one after the event that fully 90% of his company’s customers upgrade their wireless phone every 14 months. Since contracts are two years long, 90% of its customers are paying early termination fees, which decline over time. That is a waste of the world’s resources, even in this day of a vibrant resale market for used mobile phones. I’m pretty sure a lot of people just throw their old mobile phones in a drawer, to benefit nobody. I understand mobile phones improve rapidly, and I do plan to get the latest iPhone when it’s available, having skipped the iPhone 4 and iPhone 4s. I just don’t approve of upgrading exceptionally frequently, which I consider 14 months to be.

I encourage AT&T and all carriers to offer unbundled rates for mobile service, as an option.

Rich Lyons is a good interviewer. The setting was photogenic — two handsome cushioned arm chairs on an elevated stage, with a small end table between the chairs. Lyons and Stephenson wore wireless lapel microphones. There was a backdrop behind the men that repeated the logos for UC Berkeley and the Haas School of Business, so the logos made it into every photograph of the people on stage. As a photographer, I applaud the Dean for creating such an inviting, warm and photogenic environment for his interviews. I look forward with enthusiasm to the next Dean’s Speaker Series interview, which I hope to be able to attend.

Former Haas Dean Dr. Laura D’Andrea Tyson is on the Board of Directors of AT&T, and presumably she helped Lyons recruit Stephenson to visit the Haas School. Tyson was Dean when I was a finalist in the Berkeley Business Plan Competition in 1999 with my company Hotpaper.

I took the photographs that accompany this blog post.

I used a Canon 5D Mark II camera with the following lenses: Canon 135mm soft-focus lens set to sharp, Canon 16-35mm L zoom lens. I upload pictures to this blog at maximum camera resolution at maximum image quality. Click on the photographs twice in delayed succession to see the full size images. If you would like to use these pictures, please send me a message. If the purpose is reasonable, I will allow usage. I enjoy having my pictures displayed elsewhere. I pursue photography only as a hobby, not as a profession.

Finally, I have some advice for Berkeley students reading this post — introduce yourself to the speaker.

I don’t recall seeing any students introduce themselves to Stephenson. I did see a professor and a president of a good sized company say hello, but that’s it. Stephenson spent several minutes talking with me because there was nobody waiting after me to speak with him. The room had rapidly cleared out. The interview was during the lunch hour, so perhaps the students had to be in class immediately after. It’s rare for so prominent a CEO to speak to such a small group — there were about 140 students in the room by my quick count. I’m sure Stephenson won’t be back this academic year. Make a point of meeting all such prominent speakers. In my mind, Stephenson should have been surrounded by dozens of students trying to shake his hand. Stephenson didn’t appear to be in a rush to depart, and I left before he did.

I enjoy blogging.

I am enjoying it more all the time for it affords me the opportunity to sit down and talk with interesting people.

When I covered the Berkeley Startup Competition (prior to 2012 known as The Berkeley Business Plan Competition) on April 26, 2012, I introduced myself to John Matthesen. Matthesen was assigned this year to mentor HARBO Technologies, which won the Energy and Clean Tech (archived version for use if previous link breaks in the future — 2012 Berkeley Startup Competition winners list) track of the competition with its innovative system to greatly reduce the environmental impact of oil spills in bodies of water.

I met Matthesen while I was waiting in line to introduce myself to HARBO’s CEO Boaz Ur.

I told both Ur and Metthesen that I’d like to interview HARBO for my blog. Since HARBO has invented new technology, they’re not yet ready for press coverage, as they’re still working on the legal issues, Matthesen explained by email. But he said I could interview him individually so long as we didn’t discuss HARBO. Matthesen struck me as an interesting guy I should meet in any event, so I took him up on his offer.

I met John Matthesen for coffee at the trendy ZEB Cafe at the University of California Berkeley Law School at 2745 Bancroft Way, Berkeley, California USA. According to Matthesen’s website for his company Related Concepts, he helps companies with interim management, qualitative customer research, business process development, team building and coaching, and finally, board of directors / advisory boards. I confined my questions to his background and his work as a mentor.

We jumped around to a lot of topics, never really finding a theme for this post — it didn’t seem right to talk about the past companies he’s mentored for the Berkeley Startup Competition without getting the permission from those teams.

I do feel comfortable saying that two years ago Matthesen was mentor to the winner of the 2010 Products & Services Track, BrightSense, which, according the Berkeley competition’s website:

“… uses a novel patent-pending drug delivery technology to design customized whitening strips with peroxide dosages optimized for each user’s teeth.”

There is more information about BrightSense in the University of California 2010 Berkeley Business Plan Competition booklet.

Matthesen has been fortunate to advise two winning teams.

I asked Matthesen how he got to be asked to be a mentor in the Berkeley Startup Competition. He wasn’t sure, but speculated it had to do with his background at Sybase and Commerce One.

Matthesen was an early employee at Sybase, one of the early pioneers in the database market. Microsoft licensed Sybase to form the basis of Microsoft SQL Server, still Microsoft’s sole enterprise database product. Matthesen had worked in Information Technology role at a hotel in Hawaii, and the hours were brutal. The hours Sybase told its new hires they would be expected to work were long as well, but less intense that what he endured in Hawaii. Matthesen intended to stay at Sybase just 6 months, but instead stayed for 7 years, through their initial public offering of stock. Sybase today is owned by SAP.

After Sybase, Matthesen went to Commerce One, early enough to ride the first dot com boom up to its height, and for long enough to witness the carnage of the boom’s aftermath — another seven years.

After 14 years of intensity at Sybase and Commerce One, Matthesen was ready for a break, so he turned down an early job at Google, which sadly presumably cost him millions of dollars. Ouch!

I asked Mattesen if he knew David Henderson, but he didn’t. I hired Henderson to work with me for a little over a year at my first Internet company, Hotpaper.com, Inc., and his next job was at Commerce One.

While researching this post, I discovered that Commerce One is still in business, though it’s an invisible shadow of its former self. Congratulations to the team for staying in business given the turmoil along the way.

Matthesen entertained me with crazy stories of the stock price of Commerce One shooting past USD $1,000 per share and then collapsing to zero. Matthesen advised the Commerce One CEO to ‘buy something big’ of real value, but his advice was rebuffed. The companies Commerce One could have bought at the peak of its power as a public company are still large household names deeply embedded into the daily fabric of the planet.

Matthesen told me he managed his personal finances during that crazy boom time such that he could pay his Alternative Minimum Tax bill, when his colleagues and friends were going bankrupt over their huge AMT bills in the many millions of dollars.

Young entrepreneurs in today’s boom may not be familiar with how unfair United States tax policy was during the first boom. If one exercised stock options but didn’t sell the stock right away, there was a big risk that the stock would go down by the time you sold the stock. The AMT tax was applied to the paper gain you made when you exercised the stock, and if the stock collapsed before you could sell it, you still owed tax on the paper gain. Think of the devastation if you had a USD $100,000,000 paper gain and the stock dropped to zero before you sold it. You would owe AMT tax on the $100,000,000 even though you never touched the cash.

I haven’t paid much attention recently to this AMT trap, and I never got caught in it when I sold Hotpaper, as I never held options, just common stock.

I learned from Matthesen that the AMT trap in 2009 was partly fixed, retroactively. People who were ensnared in the early 2000s were able to apply for relief and get huge sums back from the United States Treasury.

I don’t want to take on the responsibility to accurately summarize the tax relief, so I direct you to this article on the subject.

I spoke with Matthesen for less than an hour, and mostly we shared war stories. After I interview Boaz Ur of HARBO, I’ll likely have more to say. Until then, have a look at the pictures I took of Matthesen at the conclusion of our conversation, above.

On Thursday, April 26, 2012, I attended the Berkeley Startup Competition Final Awards Ceremony at the Anderson Auditorium on the campus of The Haas School of Business at the University of California at Berkeley. Here is the PDF format file of the 2012 Berkeley Startup Competition Final Awards Ceremony program booklet that was handed out at the final awards ceremony.

There are many people mentioned in the booklet, like the Co-Chairs for the 2012 competition, Nick Nascioli, Adam Sterling and Tom VanLangen, as well as Lester Center Executive Director Andre Marquis and Haas School of Business Dean Richard Lyons.

I most recently wrote about the announcement of the finalists for this competition, which happened two days earlier, on April 24, 2012.

Calcula Technologies won the Grand Prize and the Life Sciences Track for their clever system that vacuums kidney stones out of a patient’s urethra in just ten seconds. According to the team’s presentation, doctors today let stones pass from the body naturally and often quite painfully unless they are larger than 10mm in diameter. Patients today are often in such agony that they visit the emergency room, which racks up hundreds of millions of dollars in charges per year. For the sub 10mm stones, doctors just write prescriptions for narcotic pain killers and send the patients home with the stones still on their excruciating slow path out.

In the future, when and if Calcula gets their system approved by regulators, patients could have a catheter inserted into their urethra and the stone could be sucked out in seconds, presumably at great relief to the patient. This work could be done at the office of a urologist, without surgery, and the Calcula team said there is already a prized and lucrative reimbursement code in existence in the insurance industry, so if they build this system, they will be able to get paid and make a profit. I can understand why Calcula Technologies won the grand prize. Kidney stones are no fun, I’ve heard, and this system seems very appealing. The team showed a video of a fake kidney stone being sucked out of a pig’s urethra in just 10 seconds. It was very impressive and very memorable.

Kloudless, Inc. won first place in the Information Technologies and Web Track. I am going to be interviewing Kloudless, so I’ll save my remarks for another blog post.

Like Calcula, Back to the Roots (2935 Adeline Street, Oakland California 94608 USA) won two awards. First, they won the Products and Services Track, and then, thanks to real time votes from the audience and viewers of a live stream on the Internet, they won the Peoples’ Choice Award.

I have written about Back to the Roots twice before.

I have one of their products at my house right now. It works.

Back to the Roots collects used coffee grounds from coffee houses like Peet’s Coffee and mixes it with a ‘secret sauce.’ The combination is boxed up and sold at over 1,000 stores in the United States, including at Home Depot and Whole Foods Market. A consumer buys the cardboard box and partly opens it, exposing the insides. The consumer then mists the contents of the box with water using an included spray bottle. After ten days of twice daily misting, the consumer harvests a bountiful crop of oyster mushrooms that have grown directly out of the side of the box. Once one side has been used up, the consumer opens the other side to repeat the growing cycle for a second harvest.

That story has been told thousands of times, including on the CBS Evening News, an influential national newscast in the United States.

During their public presentation, the Back to the Roots team disclosed future plans that I find fascinating. Since this event was public and was streamed live to the Internet, I feel that it’s OK to write about what I learned, as there were no statements that anything said was to be considered secret.

The box contents will soon include vegetable plant seeds, and the rest of the box and liner will be biodegradable. Currently, the box is lined with what looks like conventional plastic. My box is from November, 2011, so things today may be different. In the future, or perhaps even already, the box will be lined with either nothing or something else that’s biodegradable. Perhaps what looks like conventional plastic to me is really biodegradable plastic, like some plastic trash bags are made of.

Why do this?

Once the box is biodegradable and contains vegetable seeds, that means that after the two mushroom harvests the box can be planted in dirt for ’round three’ of production — vegetables. The mushrooms came from the waste stream from coffee houses. The round three vegetable garden will come from the waste stream of the mushroom garden.

This is beautiful.

What’s coming down the road from Back to the Roots?

I am overjoyed to report the answer may be affordable aquaponics kits.

I have written before about my love for aquaponics.

Aquaponics is food production gardening enhanced by growing edible fish in symbiosis with vegetable plants. Both parts of the system are made more productive by the presence of the other half. Fish poop gets converted by bacteria into rich fertilizer. The fish grow faster because the plants keep the fish tank cleaner. It’s a great growing system that I feel should take over the world on such a scale that every person has their own system at home.

I am too busy in life to advance this dream, but the team at Back to the Roots has time and energy and market traction, so I think they would be ideal to push aquaponics to a large audience. I am so excited about this that I have already offered to tell the company everything I know about aquaponics free of charge to encourage them to get this to market.

I suspect they plan to start with small, under USD $100 demonstration kits. This in my mind is the way to start.

I bought my startup supplies for my aquaponics system from The Aquaponics Source. This online retailer sells complete systems, but the price is too high for people to buy casually, at over USD $1,000. I believe a profitable sub $100 kit could be sold, as what’s required is similar to what’s inside a Mr. Coffee brand coffee maker — two water containers, a pump, a heater and some electronics to coordinate the steps. I can get a nice computerized Mr. Coffee coffee maker for about USD $25 from Amazon, so even in the smaller quantities a demonstration aquaponics system would sell in initially, I think it can be done.

I love advising startup companies, and I would particularly like to advise about aquaponics, even though I know relatively little about the subject, since I’ve only built one demonstration system so far. My system was a modest success for I grew the largest and sweetest tomatoes I have ever eaten.

HARBO Technologies won First Place in the Energy and Cleantech track. I introduced myself to co-founder Boaz Ur and mentor John Matthesen after the conclusion of the event. The company is working on something I find impressive and interesting. I have made arrangements to interview the team, so I will hold my remarks until after that interview.

My friends at Modify Industries took home a USD $1,000 prize for coming in second place in the Products and Services Track. This outcome was inevitable, and I predicted it accurately the moment I saw Modify was competing with Back to the Roots. Back to the Roots simply has had much more commercial success so far. While Modify has sold between 10,000 and 100,000 watches to such companies as Google and Hewlett Packard, they haven’t yet cracked the retail store market, and they haven’t been on the evening television news. It’s rare for a company to be so far along like Back to the Roots, but still be eligible to compete in the Berkeley Startup Competition. In all other years where there was a Products and Services Track, Modify probably would have won that track. I pay attention to these things because I was a judge for this competition for the eight years through 2011. This year I mentored the team University Gateway, which did not make it to the finals since Modify and Back to the Roots filled up the Products and Services Track.

Modify gave an impressive and bold presentation, where they outlined a dream for their enterprise far bigger than time pieces. They probably adjusted their pitch to compete with Back to the Roots. But they forgot to show their product in action amid all the grand dream spinning. How so? They forgot to personally show the audience how to change a watch element from one silicone strap to another. This is worth showing at every pitch for it’s compelling and like nothing I’ve seen in the watch business. No tools, no training — 10 seconds and you have an all new look.

Finally, I want to give some space to my friend and fellow photographer Bruce Cook. I’ve known Cook since nearly the inception of The Lester Center for Entrepreneurship & Innovation. He’s a fixture at all sizable Lester Center events. He has his own photography business, Bruce Cook Photography, and is not a University of California employee. I can’t recall there ever being a different photographer for a Lester Center event. The picture above is of Cook standing under the video light in Anderson Auditorium. The picture below is of Cook taking a picture during the networking hour in the Bank of America Forum, the large gathering area just outside of the Anderson Auditorium. Cook took the picture above of Dean Lyons speaking to the audience. Thank you Bruce!

If The Lester Center is reading this, may I suggest that you contact Cook and work out a deal where his vast library of photographs of Lester Center events over the last twenty years can find a permanent home on the Lester Center website and in the University library system. Cook has photographed some of the most important figures of our time, and the tremendous majority, over 99%, of his photographs have not been published. I think these photographs should also be published on Facebook so that it’s easy to crowd source the identification of the people in the pictures, via the Facebook tagging system. Once the faces are tagged, then the captions on the Lester Center website can be updated to reflect the identities of those pictured.

Why do this?

The Lester Center and its events are documenting history. It’s that simple. Bruce Cook has a treasure trove of historic pictures that few have ever seen.

As an added bonus, publishing and captioning Cook’s 100,000+ pictures will boost traffic to The Lester Center’s website, as people search on Google and similar sites for the many luminaries Cook has photographed. The search engine optimization benefits to posting these pictures will probably overshadow every other single project you could undertake.

This is my idea alone.

Cook did not plant this, suggest this or hint at this.

I’ve been thinking about this for years now, and here seems like a fine place to promote the idea.

I believe I have shared this suggestion with Jerry Engel when he was Executive Director of The Lester Center, but that was only in passing at a hectic Berkeley Entrepreneurs Forum, not a written proposal such as this one.

Please consider this official advice, and let me know when I can blog about the happy news. Thank you.

I introduced myself to all the finalist teams except AdrenaRX. I believe the members from that team departed before I had a chance to find them.

I offered each of the eight finalist teams except for Modify and Back to the Roots the opportunity to be interviewed by me for a future blog entry. Two of the teams have contacted me to schedule an interview. Four teams have not yet contacted me.

I know the Modify and Back to the Roots founders, so I did not offer to interview them. This was not meant as a snub — I simply forgot to offer in my excitement of congratulating them. Both teams are doing so well they don’t need my blog coverage, but if they would like more in depth stories, I am happy to meet with them. Just send me a message. I am on Facebook and easy to reach. I have turned on the ‘subscribe’ feature, so everyone reading this is invited to subscribe to me on Facebook. You may also sign up with your email address to receive updates to this blog, in the upper right corner of this page.

All the pictures I presented above except for the one by Bruce Cook are also on my Facebook page in this album. If you know these people, particularly the people in the shots with the giant checks, please tag them on Facebook so I can update the captions here with the names. All my pictures on Facebook are public, so if you tag someone there, I consider those names to be public, and on that basis I will update the captions here.

The sponsors for the 2012 Berkeley Startup Competition include:

Gold level:

Claremont Creek Ventures
DCM
UM

Silver level:

Javelin Venture Partners
Lowenstein Sandler
Mintz Levin
Mohr Davidow
Morgan Stanley
Morgenthaler Ventures
Morrison & Foerster LLP
Wilson Sonsini Goodrich & Rosati PC

Individual level:

Kevin Warnock

There were possibly other individual sponsors. No individual level sponsors were listed in official materials this year, a departure from past years.

The  Executive Committee for the 2012 Berkeley Startup Competition:

Co-Chairs

Nick Mascioli
Adam Sterling
Tom VanLangen

Judging & Sponsorship

Robbie Allan
Jane Buescher
Vivien Leong
Larry Pier

Marketing & Events

Stephanie Knoch
Krishna Shah

Mentorship & Events

Amara Aigbedion
Hrishikesh Desai

Program Manager

Kirsten Berzon

One of my highlights each month is serving as a mentor for the Haas Founders group.

Haas Founders is a group for Haas School of Business graduates from the University of California at Berkeley. It’s an invitation only group, but if you graduated from Haas you are quite likely to receive an invitation if you are a founder or co-founder of a startup company.

Another way in is to have a meaningful connection to the Haas School. That’s how I became a member. I have been a judge for the Berkeley Startup Competition from about 2004 through 2011.

Finally, all Haas graduates can buy their way in by agreeing to pay for the food and drinks. This allows service providers like bankers, investors and accountants to attend. Such service providers can meet ambitious startup founders that sometimes turn into clients.

I write the above to introduce you to the Haas Founders meeting. There is a Facebook page and a Twitter account for Haas Founders. Michael Berolzheimer moderates and organizes the Haas Founders meetings. Berolzheimer runs the genesis-stage venture firm Bee Partners which, according to his firm’s web site, pollinates visionary entrepreneurs with financial, human and social capital. Kishore Lakshminarayanan helps Berolzheimer set up the meetings, which take place at different venues each month, in the East Bay, South Bay and San Francisco, California USA. I met Berolzheimer in 2007, before he took on the responsibility for Haas Founders from the previous organizer, Mat Fogarty, CEO of Crowdcast.

Haas Founders has established a group on the professional social networking site Linked In. As of this morning there are 86 members. I believe the group is seeking new members, so if you fit the requirements, please introduce yourself to Michael Berolzheimer.

Haas Founders can be thought of as a board of directors like support group for startup founders, where no issues are off limits for discussion. That makes Haas Founders one of the most compelling meetings I’ve had the good fortune to attend.

I have attended the Haas Founders meetings since about 2005. Individual meetings are limited to 20 attendees.

This open forum for frank talk is made possible because attendees are asked to keep the the conversations confidential. To my knowledge, there has never been a meaningful breach of this rule. I think that’s a reflection of the trustworthiness and integrity of Haas students and graduates.

Given this secrecy, how can I write a blog post about Haas Founders?

Well, I am not going to discuss confidential information. The advice I am going to give is my own. I gave this advice to a participant at the most recent meeting March 6, 2012 in San Francisco.

I am not breaking confidentiality by repeating what I said that day because I have given this same advice many times without any restriction of confidentiality. It’s already public information. Problem averted. I ran this post by Berolzheimer before publishing it, as I want to be extra careful so as to not be uninvited to future meetings.

I decided to write this post because the issue I am going to talk about comes up so frequently that I have spent hours and hours answering this question over the years.

The question and answer are as follows:

Q: I am a non-technical founder and I have thought of a business idea that requires something technical be built. How do I find a talented technical co-founder to join my company for equity only to build my vision for me?

A: Forget it!

You can’t find a talented technical co-founder to join your unfunded idea stage company for equity only.

There are rare exceptions, but you can not count on them and should not consider counting on them.

One solution is to think of and pursue a business idea that you can implement with only the skills you have already. Here are three companies that I suspect began with little computer programming, for example:

1. Become a mushroom farmer.
2. Start a fair trade import company.
3. Start a men’s fashion manufacturing company.

The smart people I suggest this answer to don’t quickly embrace my advice. That’s understandable. They are in love with their vision and they want to pursue that vision right now. They don’t want to hunt for a technically simpler business idea. They don’t want to learn the technical skills necessary to develop their original idea. They want a savior, a Steve Wozniak, to fall from the sky to do the real work of making a viable product. Usually such non-technical founders also want to reserve more of the company equity for themselves than for this savior, because they thought of the idea. If there is to be an equity disparity, I suggest it be weighted toward the technical contributors who make the product happen, not the non-technical people who think up the idea.

What non technical founders fail to appreciate is that talented technical individuals with the grit to want to start a company are in high demand. They are like supermodels in their desireability. A lot of people are asking them for dates. A lot of these suitors have lots of money to woo them with.

Why would a supermodel date a founder with no money when there is a line of suitors with six, seven or eight figure stacks of money at their side ready to spend?

The answer is supermodels don’t date broke founders.

Supermodels don’t hook up with unfunded MBAs that have a cool idea.

The perhaps sad truth is that MBAs are not held in high regard by many technical experts. This is not a comment on Berkeley MBAs, but on all MBAs. Of course, technical experts desperately need business experts at some point, as exits are rare for companies filled with only technical experts. I am not taking a stand on which type of person is more valuable because they are both vital. What I am saying is the technical people generally perceive that MBAs are not that important. If that’s the perception, then how can an MBA recruit a technical person without money?

There are millions of cool ideas to pursue at any moment. That’s always been the case and that will always be the case.

Talented technical people know they are in demand. They have recruiters calling them telling them so all the time. They read TechCrunch, VentureBeat and GigaOm. They know the technology world is in the middle of a full fledged boom right now. So only 2nd, 3rd, 4th and 5th rate technical people will agree to an equity only founder position with a non-technical sole co-founder.

The only practical exception is if you’ve already been friends with the person for years and they know your work and respect it. So classmates graduating together can get together and start a company, with some founders being non technical and some being technical.

But if you’re looking for a stranger to drop out of the sky to build your vision, you should forget it and focus on finding a simpler idea or on learning the technical skills yourself so you can build the first version of the product by yourself.

Yes, the product won’t likely have to polish of one created by a more seasoned expert, but it can be good enough. You only need it to be good enough to raise money that you can then use to pay a more skilled technical person to make an improved version.

I am not spouting off advice I read somewhere or heard somewhere — I know what I am talking about. Pardon me while I now go into extreme detail to convince you that I do know what I am talking about. What follows may seem like too much, but I have spent dozens and dozens of hours trying to beat this lesson into the heads of very smart non-technical company founders. I feel I need to pull out all the stops here to convince the skeptical that I am right.

I know it’s smart to learn to program because this is what I did to take my startup Hotpaper.com, Inc. from a USD $10,000 investment when I had almost no applicable skills through to a USD $10,000,000+ sale to a public company just six years later.

This is news I’ve written about more than once. But I haven’t described the grueling early work I put in that made this ‘quick success’ possible.

When I started Hotpaper, I was a minicomputer programmer. A Digital Equipment Coporation VAX minicomputer running Open VMS. There was nothing miniature about this computer. It filled an entire raised-floor water-cooled computer room and served 1,000 users in five offices in two US states. I believe it cost more than USD $12,000,000. Back then a 9 gigabyte disk drive cost USD $250,000. I saw the invoices and recall calculating the price per gigabyte.

When I started Hotpaper my only experience programming a PC was writing rudimentary DOS batch files. One can still write these for Windows, to run at a command window prompt. You can do amazing things with batch files, but you can’t write serious client-server or web applications with them. I had to learn to program graphical Microsoft Windows applications, and I had only used DOS on a PC up until that point. I had played for a few hours with a copy of Windows 3.1, but that was the extent of my experience with Windows. The one machine my employer had that ran Windows was so slow (Intel 386 with perhaps 1 megabyte of memory) that when you pressed a letter in a word processor (Ami Pro), there was a lag of about 1 full second before the character would show up on screen. It was pathetic.

I immediately bought a Hewlett Packard Pentium 60 Mhz computer with 4 megabytes of RAM and Windows 3.1 for Workgroups. I added Microsoft Office, which came on 30+ 3 1/2″ floppy disks, not a CD-ROM. This was a Pentium, not a Pentium II, III or IV. In fact, it was the slowest Pentium chip ever sold. But this was the fastest computer I had ever used. I still have it, in storage.

I all but shut myself off from the world for two years with hundreds of dollars of technical books, a 28.8K modem and a telephone. I taught myself to be an event driven computer programmer. Event driven programming is much different from the procedural programming I had done to program the huge VAX system run by my employer at the time, Cooley LLP. Yes, I knew how to program a little bit on a VAX, but Windows is so different that it’s almost as if I was learning to program from scratch.

Thankfully, Microsoft was not yet the market leader in word processing in 1994 since WordPerfect for DOS still dominated, so Microsoft tried very hard to persuade developers to embrace their Word word processing software. They offered free telephone technical support for programming problems, provided you paid for the phone call. There were no unlimited business phone lines back then, so my office phone bill was perhaps USD $100 a month due to all my calls to Microsoft — hours and hours of calls per month. I owe Microsoft so much for those calls, as they helped me to solve every problem I ever encountered. Thank you Microsoft.

Eventually Microsoft overnight switched from free technical support calls to USD $55.00 per incident technical support calls, and I had to stop calling them. But that was a couple of years later, and I had already gotten to be proficient by then, and I could get my questions answered for free on their well run newsgroups. By that point, Word and Office were the market leaders, and they didn’t need to try so hard to make developers embrace their tools.

I worked hard — really, really hard. I worked from about 10am to 10pm Monday through Saturday. On Sunday I wouldn’t come into the office until the mid afternoon, but I would still stay until 10pm or so. I did this from January 1995 through the end of 1996 or so, I believe. It took me that long to learn Windows programming reasonably well.

I didn’t know other software developers. There were no popular coworking spaces. Meetup didn’t exist. I was shy. But I was driven… really, powerfully and passionately driven. I had so little money I was living in a tiny studio apartment on Mason Street near Bush Street in San Francisco, California USA. My rent was USD $625 a month including utilities. I only owned one computer, so I could not work at home. I was at the office a lot, and it was just a seven minute walk to get there. I became really good friends with my office mates the late Stan Pasternak and patent attorney Robert Hill. I have such fond memories of that time.

Was the code I produced great? No. Was it awful? No. Was it reliable? Yes. Was it understandable to others? Yes. Did it get used by others for meaningful projects? Yes. Did I raise money with it? Yes. Did I sell the company successfully by following this model? Yes. Can you do the same? I think so.

At Hotpaper, I had a customer from the day I bought a computer. I told them I could build what they asked for. I actually had never done so on Windows. I had to figure out how to program Windows because I had a paying customer that demanded a Windows client-server based solution. They were paying me thousands so I had to deliver. I didn’t study for two years and then start to look for a client. I got the client based on my past reputation as a VAX programmer and then faked it until I made it.

It turns out that first project failed and the client never used my work or the work of any custom software developer.

They just bought an off the shelf application and conformed to its way of doing things.

But that’s irrelevant in the end. I got paid USD $30,000. I worked hard. The client made the best decision, for they should never have hired me or any developer when an off the shelf package was available for much less than having custom software written. I learned a lot, kept the rights to what I had built but did not get used, and I used that for the basis for what I then turned around and sold to Coca-Cola and the United States Department of Commerce, where it did get used on an enterprise scale.

Today it’s easier than ever to become a programmer. There are so many online tutorials like those from Codecademy. There are so many hacker co-working spaces like Hacker Dojo where you can base your new venture. You can work there as many hours as you can keep your eyes open, and there are smart people around much of the time to get help from.

Today all the software you need to do almost any project is free. That wasn’t the case in 1995, when now standard building blocks like MySQL hadn’t been popularized yet.

I have seen smart graduates spin their wheels for months or years trying to recruit a magical co-founder to build their product. How much better it would be for these people to sit down at Hacker Dojo and focus their considerable brain power on learning to program software directly. Even if the entire result is eventually rewritten later by someone more skilled, they would be better off than if they somehow found the mythical co-founder.

For once you know how to program in any language, you will be able to talk about and think about technical problems far more effectively than you can as a non programmer. It will be far more difficult for people to confuse, mislead or bamboozle you. You will be able to hire better programmers who will respect you more. You will be able to tell programmers what to attempt with more clarity and conviction because you know at least something about their world.

You will have insight into a world that’s richly diverse and totally fascinating. Your life will improve even if you never make a penny from your venture.

Programming is not easy. It can be absurdly complicated and exasperating at times. That’s why new college graduates who know little about the real world of programming can still command pay approaching USD $100,000 to start.

I am just one modestly successful entrepreneur.

Before you become a programmer, ask some technical startup founders you trust and see if they agree with what I’ve written here. Remember, Steve Jobs got lucky with Steve Wozniak. Silicon Valley was a sleepy place back then compared to today. Go make your own luck by developing your technical skills. If you have an MBA, you presumably spent four years to get an undergraduate degree and two years to get a business degree. Spend two more years to become a programmer. Doctors spend more time studying before they complete their education, so view eight years of study as normal, not crazy or silly.

I love programming, and I am extremely grateful I spent those grueling early years just powering through the books and road blocks to learn to program.

I feel I can do nearly anything I can dream up.

That’s a powerful feeling I wouldn’t give up for anything.

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