Kevin Warnock

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