Kevin Warnock

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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