Isaac Barchas, director of the Austin Technology Incubator, penned a blog post titled “This Sucks” in response to news of the closing of Calxeda this week.
“Recent ATI graduate and rock star, Calxeda, will be shutting its doors,” Barchas wrote. “Investors unexpectedly pulled the plug on the company, which developed a novel architecture to allow low-power ARM chips to drive servers.”
Calxeda, founded in 2008 by Barry Evans, started out at ATI as a dream. Evan’s project also received investment from the Texas Emerging Technology Fund, which allowed him to go from concept to prototype.
Calxeda’s technology garnered widespread praise. In 2012, Massachusetts Institute of Technology named Calxeda one of the 50 most innovative companies in the world. (Google, IBM and Facebook also made the list.) Calxeda also partnered with Hewlett-Packard to test its chips in its servers.
Calxeda graduated from ATI in 2012 and it grew quickly.
At the ATI graduation ceremony in January of 2012, Evans gave the keynote speech.
“I thought Calxeda would be big, but I didn’t know what that would look like,” Evans said at that time.
He talked about the company going big.
“Big, when you find it, is awesome,” Evans said. But he also mentioned that the company didn’t focus on its success, but instead its mantra was “TSBW – This Shit Better Work.”
“When you are running a marathon and you finish two miles, you don’t say wow this is great, you think I’ve still got 24 miles to go,” Evans said at the time. He said his company was in “corporate puberty.”
ATI plugged Evans into Austin’s startup ecosystem and other successful entrepreneurs, Evans said at that time.
The company employed 120 people and raised more than $100 million in investment capital.
“Those people just got pink slips,” Barchas wrote. “That’s awful. So is the fact that Calxeda won’t be the company that exploits the beachhead that they made in the ultra-low power server market.
But Calxeda burned bright. It brought a lot of really talented people (and a lot of money) to Austin,” Barchas wrote. “I don’t know what’s going to happen to the core IP or to the core team, both of which are massively valuable assets. I’m pretty sure, though, that this won’t be the last really interesting chip architecture company that’s made in Austin.
To Barry and his team, we raise a glass in sorrow, but also in deep appreciation.”
Tag: Calxeda
BY L.A. LOREK
Founder of Silicon Hills News
Justin Jensen with Cinetics, Matt Cohen with Onespot, Barry Evans with Calxeda and Claire England, executive director of RISE Austin
Barry Evans, co-founder and CEO of Calxeda, bootstrapped and eventually landed Venture Capital funding after seeking investment from California and Boston for his microchip company.
Justin Jensen, founder and CEO of Cinetics launched two successful Kickstarter campaigns to fund products for his company.
And Matt Cohen, a former partner with G-51 Capital, an early stage investment company in Austin, received angel money to launch OneSpot, an online advertising company.
They all detailed how they got money to back their ventures during a “Funded in Austin” panel in the Greater Austin Chamber of Commerce’s Office at South by Southwest on Sunday afternoon.
“We really wanted to explore the entrepreneur’s perspective on fundraising in Austin,” said Claire England, executive director of RISE Global, an entrepreneurial conference in Austin. She moderated the panel.
People packed the room to hear the stories about how to get investors to back an early-stage startup. About a third of them were entrepreneurs, some investors and others interested in the subject, according to an informal survey England took of the room.
At first, England quizzed the panelists about their experiences and then the audience members asked the founders questions about their ventures.
Calxeda, founded in 2008, spent a year bootstrapped, got some strategic investment, Texas Emerging Technology Fund money and angel money and in 2010 closed on a $48 million Venture Capital round, Evans said. Calxeda makes ultra-low power server microchips that use ARM-based processors, which are the same ones used in iPhones and iPads.
Austin in 2008 through 2010 would not invest in early-stage hardware companies, Evans said.
He said he “burned a lot of time double checking that fact” and then went to Silicon Valley, Boston and even the Middle East for investors. The company’s first round of funding came from ARM Holdings, Abu Dhabi-based Advanced Technology Investment Co., Texas Instruments, Battery Ventures, Flybridge Capital Partners and Highland Capital Partners.
Eventually, Austin investors did back the company, Evans said. Last year, the company closed on a $55 million round adding Austin Ventures and Vulcan Capital as investors.
“The breakthrough for us was the help of the ATI (Austin Technology Incubator) we were able to figure out the VCs in the Bay that had investments in Austin,” he said.
Evans made sure to get on their schedule when they were visiting Austin. He also learned Battery Ventures was an early investor in Bazaarvoice, Solarwinds and others in town.
In the beginning, Evans spent 50 percent of his time looking for funding and now it’s about 10 percent to 15 percent, he said.
“You never stop fundraising as a CEO,” he said.
It’s Evans first startup and he learned a lot from the early days of fundraising. He said he developed a tactic early on where he would reach out to a potential investor to meet for coffee to just talk about his big idea. If they said yes, then he would pitch them. If they weren’t a fit, it was OK, because it really wasn’t a formal pitch, he said.
His biggest mistake was trying to raise too little money.
“I was asking for $5 million and ended up getting $48 million,” he said.
It was easier and faster to raise a larger amount and spread out the risk among several VC firms.
“It spoke to the risk that everyone was feeling about this crazy idea,” he said.
Onespot, an advertising company that created a platform to turn online content into ads, raised $1.5 million in angel funding last year.
“Angels invest for slightly different reasons than VCs,” said Cohen, the company’s president and founder. “Typically the main reason why angel investors are investing is that they really want to help out companies.”
Onespot sought out investors that could help the company make connections and give it advice, Cohen said.
“Angel investors have a lot more availability and time to give us than VCs,” Cohen said. “We will almost certainly raise a venture capital round later on.”
He advised the entrepreneurs in the room to continue to develop their minimal viable product and gain traction in their marketplace while seeking funding.
“If you’re not making a lot of progress fundraising, make progress on the product or service and then the actual fundraising processes will go a lot easier,” Cohen said.
It’s also important to find the right investors, he said. The most important thing is to do research on which angel investor is the best fit for your company, he said.
“Angel investors are investing in an individual,” he said. “They are putting their bet on you.”
Angel investing is about cultivating relationships, building a network and getting warm introductions anywhere you can, Cohen said.
At G-51 Capital, Cohen often took recommendations from lawyers that work with startups. Many of the lawyers will defer fees until a company gets funded.
Angel investors have their own vetting processes but they like referrals from lawyers and other trusted sources, he said.
“Angel investment is one of the areas where Austin really shines,” Cohen said.
Most angel investors write checks between $25,000 and $200,000, Cohen said. To be successful angel investors, they need to make between a dozen and three-dozen investments, he said.
“I wound up getting a number of angel investors in Austin and also in New York and California,” he said.
Cohen said he’s looking forward to seeing successful entrepreneurs in Austin giving back.
“The thing that brings capital and resources to a town is success,” he said.
In October of 2011, Cinetics completed a successful fundraising campaign on Kickstarter. The Austin-based startup originally sought to raise $20,000 and ended up with $486,518 from 2,019 backers.
“We were bootstrapped,” said Jensen. “We went to Kickstarter for presales.”
Cinetics created CineSkates “a portable tripod slider system that enables fluid, rolling video without the hassle of bulky camera gear.”
It’s a camera dolly that fits into a backpack for independent filmmakers and hobbyists so they “can get shots without breaking their bank or their back,” Jensen said.
“It was really a product that didn’t require a lot of prototyping and funding,” he said. “We built the first product for under $10,000. We really didn’t need any significant capital.”
Jensen advised entrepreneurs to put as much information as possible on the Kickstarter campaign so that potential funders don’t have to ask a lot of questions.
In January, Cinetics launched a second successful Kickstarter campaign for “CineMoco, a compact motor controlled dolly and slider for video and time-lapse photography.”
The CineMoco campaign more than doubled its goal of raising $50,000. The company ended up raising $113,913 from 283 backers.
When Cinetics started crowdfunding, it was one of the first Austin hardware companies to do so, Jensen said. But now many resources exist for companies seeking crowdfunding. He recommended the Austin Hardware Startup Meetup Group to learn about projects and funding.
Stacy Zoern, CEO of Community Cars, Inc., runs a car manufacturing business out of Pflugerville.
But that’s not the most remarkable part. Zoern, who uses a wheelchair to get around, wanted to find a car that would provide independence to wheelchair users.
Online, she found the Kenguru, an electric smart car. Only problem was the company ran out of money and shut down operations. So she raised $1.4 million and partnered with the company and they moved the defunct car operations from Hungary to Texas and began manufacturing the bright yellow smart cars in 2010.
That innovative and entrepreneurial spirit earned Zoern’s Community Cars Inc. a spot on the Greater Austin Chamber of Commerce’s A-List, which recognized this week 28 innovative technology startups.
Zoern’s is the only car company to make the list.
The list is meant to shine a spotlight on some of the region’s most innovative technology startups that are seeking funding. To compile the list, the chamber’s tech partnership sought input from investors.
“Austin is rich with innovative startups that are primed for growth and simply need exposure and, most importantly, capital, to transform potential into reality,” Susan Davenport, senior vice president of Global Technology Strategies for the Austin Chamber, said in a news release.
Silicon Hills News has done profiles of several companies on the list including InfoChimps, BlackLocus, Calxeda, MapMyFitness, MassRelevance and Gazzang.
This slideshare contains screen grabs of the homepages of the 28 companies that made the Austin Chamber’s list for 2012.
Calxeda, which makes energy-saving chips for servers that power data centers, has raised $20 million of a $30 million offering, according to a statement filed with the Securities and Exchange Commission.
The Austin-based company, founded in 2008 as Smooth Stone, announced $48 million in funding in November of 2010.
Calxeda’s funders include Advanced Technology Investment Co., ARM, Battery Ventures, Flybridge Capital Partners and Highland Capital Partners.
For more on the company, read the profile Susan Lahey wrote last year.
The Austin Technology Incubator, a non-profit organization affiliated with the IC2 Institute of the University of Texas, will host a graduation ceremony tonight for 21 of its member companies.
The event also celebrates the 23 years ATI has helped incubate central Texas companies. Founded by Dr. George Kozmetsky and first directed by Laura Kilcrease, ATI has worked with more than 200 status companies and helped them raise more than $1 billion in capital, according to this news release. Silicon Hills News will be there tonight to cover the event. So stay tuned for more information.
ATI graduates
View more presentations from Laura Lorek
Startupstowatch
View more presentations from Laura Lorek
By SUSAN LAHEY
Special contributor to Silicon Hills News
Left: Larry Wikelius, cofounder, vp software engineering Right: David Borland, cofounder vp hardware engineering
Existing data centers–often giant buildings filled with servers that store, analyze and process information for individual companies, the internet and cloud computing systems–pump out tremendous amounts of heat but require cooling to protect the data. Globally they consumed 31 gigawatts of energy last year—roughly the same amount as New York City consumed on its highest peak day back in 2006. Evans’ idea is to switch from giant, sweaty workhorse servers to small, efficient servers on tiny batteries.
At first people tell him he’s crazy. Not only that, but the recession causes all venture capital funds to dry up for early startups and it looks like Evans has a much longer row to hoe than he anticipated. But he and his partners continue to experiment with the idea and two years later, recession or not, his company raises $48 million in venture financing—a huge sum for a startup that doesn’t intend to manufacture its own product. A year after that Calxeda announces who will be handling the server side of its venture: server giant Hewlett Packard.
“Companies were building data centers by rivers, in Finland…everybody was working to solve the issues around the problem but nobody was working to solve the problem,” said Larry Wikelius, Calxeda cofounder and vice president of software engineering . “This is the first time somebody said, ‘We can take power out of the equation.’”
Evans is a 20-year veteran of the semiconductor industry who started Calxeda after leaving his position as vice president and general manager of Marvell’s Application Processing Business Unit in the Cellular and Handheld Group (acquired from Intel). He spent a year talking to end users about using a mobile-type power source for servers, one that would only require a tenth the energy of existing servers and would work better with servers fluctuating energy needs.
His first partners were his cofounders, Wikelius and David Borland, vice president of hardware engineering. The company planned to model the chip somewhat after those being produced by British mobile chip manufacturer, ARM, and made several attempts before figuring out how to do it. It was crucial to the founders to create a solution that could be plugged into existing data centers without major overhauls, Wikelius said.
“Too many companies say ‘If you just remove your software and change all your infrastructure we have a great product for you,’” he said. “We support standards so it’s easy to plug in to the existing infrastructure.”
But it’s not exactly plug and play, according to Fichera.
“ If you mean recompile, reload and it works fine, with some applications it works that way,” he said. “Others will have to be completely recoded.”
Still, Borland said, finding the simplest solution is part of Calxeda culture. “Calxeda is a loose Latin translation of the name we started with—Smooth Stone. “ In the David and Goliath story, he points out, when everybody else despaired in the face of a big problem, David applied the simplest answer, a smooth stone.
“We’re not interested in science projects, ideas that make you say ‘That’s really cool, but how do you apply it” Wikelius said.
Finding the simplest solution, however, has required building a complex network of partners who can speak to all the development issues. And that, too, has become part of Calxeda’s culture. The company has a dozen or so partners it talks about in its Trailblazer initiative. But it has many more it doesn’t talk about. One it has connected with is Pervasive Data Rush, a big data solution of Pervasive Software.
“Calxeda and Pervasive have a shared interest in providing solutions for one of the key challenges of IT today – the economics and energy consumption of data centers,” said David Inbar, senior director of sales and marketing of Pervasive Big Data Products and Solutions. “The problem is, typically only 15 to 30 percent of processor capacity is being utilized at any given time. The rest of the capacity is idle, but still burning energy. Pervasive DataRush technology gives people the ability to build programs that run in parallel, taking full advantage of processors to get lower costs and better energy efficiency.”
That’s the kind of problem Calxeda’s been hashing over with its partners to make sure its solutions work. The founders were deliberate about the order in which they moved forward, building the company for three years before announcing its server partner. They kept their options open as long as they could, Wikelius said, because things change fast in this industry and you may have knowledge and information next year that’s missing this year.
When it did finally announce its server manufacturing partner November first, it put the little Austin startup in a whole new class. To come out of the gate with the most prominent dance partner on the floor sets the company well ahead of competitors.
And it does have competitors. Other companies in the game include Applied Micro which has an intermediate level ARM based chip for servers. But, said Fichera, Calxeda’s offering a lot of different pieces of the architecture on one server which sets them ahead in reducing the footprint and the need for power. Calxeda has other advantages. One was Evan’s experience in the mobile space. Another, Wikelius said, was the company’s intense focus on producing this product for internet and cloud server industries. Big companies couldn’t afford such focus. And finally, Evans said: “You just have to go faster than everybody else.”
Teaming up with HP puts Calxeda on a new playing field. HPs new servers will be called Redstone. They’ll take up a fraction of the space a rack of servers formerly required and will share resources. As a Wall Street Journal story put it they will “sip energy lightly.” HP announced that a typical server project of 400 servers in 10 racks would cost $3.3 million to purchase, install and operate. Redstone runs four times as many servers in half of one rack and draws a tenth the energy, dropping the price to $1.2 million.
In the near future, Fichera said, the impact of Calxeda’s work will be seen more in the transformation of the way the industry thinks about data centers, rather than in big profits. After a few years, however, it’s likely to be lucrative niche.
In the meantime, Calxeda and its partners are thoroughly enjoying themselves. The variety of working with all these partners makes Calxeda a fascinating ecosystem.
“There are a bunch of people who would never work for the same company in our partnerships, it makes a whole ecosystem,” Borland said. “It makes us much more than a chip provider.”
From the partner perspective, Inbar said, “it’s fun (working with Calxeda). We share a lot of culture.”
The partnerships work for a couple reasons. For one, Wikelius said, Calxeda is very transparent with partners and employees. For another, they’ve created a culture that invites people to rethink everything. Just because a server has always been a giant box and a small chip runs mobile phones doesn’t mean it has to stay that way.
Working in that environment, with these people is Evans’ favorite part.
“I love it,” he said. “I’m enjoying the ride.”
Calxeda introduced its high-performance low power semiconductors Tuesday to power Hewlett Packard’s servers.
The Austin-based start-up held an event in Palo Alto to introduce its new products along with its partner HP.
But in its hometown, employees, customers, analysts and others gathered to watch a live stream broadcast of the event and to celebrate. They met up at the Alamo Drafthouse on South Lamar in downtown Austin at 2 p.m.
Calxeda, formerly Smooth Stone, closed on $48 million in funding a little more than a year ago.
HP’s new server platform, called Project Moonshot, is designed to reduce costs and energy use for data center customers.
The HP Redstone Server Development Platform uses Calxeda EnergyCore ARM Cortex processors. HP plans for future versions to include Intel’s Atom-based processors among others. The platform is expected to be available by June of next year.