Looking out for its own self-interest, IBM rolled out the red carpet for its favorite Silicon Valley startups today at its IBM SmartCamp event in Palo Alto, Calif.
On Wednesday, the startups were treated to an all-day session with IBM executives and other experts who trained them how to speak in public. Then on Thursday, five startup CEOs got in front of a crowd of venture capitalists at the Quadrus Capital Center, where they gave their pitches in a contest for prizes.
It was interesting to watch this event to see how IBM gives entrepreneurs Big Blue bear hugs at a time of economic uncertainty. It was the sixth such event since November, 2009, and the winners of this event will move on to finals in Dublin, Ireland, in November. One participant joked that IBM got lots of the VCs to show up because it's an investor in their funds. That wasn't true, as IBM wasn't an investor in any of the funds, but it suggests that there are always interlocking self-interests among various parties.
The five competitors were CitySourced, which provides an iPhone app that allows you to report pot holes and other problems to your city maintenance staff and receive notification when the problem has been fixed; iFind Systems, which tracks livestock in real time through low-power ear tags; Streetline Networks, which monitors parking spots in real time so that meter enforcers can put tickets on car windows efficiently; Aquacue, which turns a standard water meter into a smart meter that can detect leaks, conserve water and reduce bills; and CareCloud, a web-based service company that modernizes workflow in a doctor's office.
IBM executives Claudia Fan Munce, Gerald Mooney, and Deborah Magid spoke at the event about how Big Blue tries to foster relationships with startups, even if it isn't investing directly in them. They said it's good business to create relationships with companies in their early stages so that they can start business relationships as those companies become more mature.
Mooney, head of the IBM public sector business, said startups should pay attention to specific trends if they want to get on IBM's radar. Big Blue has systematically shifted its focus to growth markets in developing countries. It has also focused on cloud computing to expand capabilities and reduce costs. Going green is another big topic at IBM under a program known as Smarter Planet. And it is helping businesses become hip to the requirements of on-demand computing, or providing computing services in real time, instrumenting and analyzing businesses, and connecting people more efficiently. In each of these areas, IBM is looking for both partners and customers.
Magid, who is a director in the IBM venture capital group, said the entrants were all variations on the theme of a Smarter Planet, or using technology to make the world a better place. Venture capitalist Ann Winblad, managing director of Hummer Winblad, told the startups that intellectual capital trumps venture capital anytime, and that networking in groups like the IBM SmartCamp will pay off for startups in the long run. Interestingly, she said that startups shouldn't worry so much about big, known competitors such as Microsoft and whether they will move into the startup's realm. Those companies have transparent marketing roadmaps that they have to disclose to their customers, so their intentions are often clear. Less obvious are what other startups will do, she said. That's also why partnerships with large companies can work for small startups.
The joint winners of IBM's startup contest were Streetline Networks and CareCloud. Streetline is relatively well known as the company that puts "smart dust" sensors in the ground near parking meters in California cities such as San Francisco, Los Angeles, Sausalito and Culver City. Those meters detect whether a car is present and if the meter is fed. If it isn't, parking authorities can send a meter enforcer to the spot and issue a ticket. San Francisco has 9,000 sensors. When a parking meter is full of coins, Streetline can dispatch someone to empty it.
Zia Yusuf (pictured, left), chief executive of Streetline Networks, said research shows that 30 - 35 percent of traffic is due to people driving around looking for parking. That's why Streetline will use its data, which for now fills the coffers of city governments, to inform consumers as well. The company is working on iPhone and other mobile apps that can tell you where the open parking spots are near you. It will, for instance, give you turn-by-turn voice instructions to show you the nearest available spot. Eventually, other applications will sit on top of Streetline's platform.
"Our goal is to make guided parking as prevalent as a traffic light," Yusuf said.
The co-winner of the SmartCamp competition was CareCloud, headed by chief executive Albert Santalo (pictured, middle right). The company is bringing medical offices into the modern age by converting them to cloud computing, where much of the processing, applications, and storage for computing tasks take place in web-connected data centers. The company's clients are medical practices, which have typically been isolated in their work patterns with little shared infrastructure and lots of paperwork.
CareCloud turns that into a more efficient digital business, leveraging the internet. A typical practice makes about $1 million a year and doesn't have a lot of money to invest in technology. But the cloud can benefit not only the medical practice in terms of digitizing computer records. It can also benefit patients, who can use the web to connect to doctors, and doctors, who can use the web to refer patients to other doctors. The doctors can transfer records via online methods. It has digital charts and can send text messages to confirm appointments.
Doctors and patients can use their own devices to access CareCloud via computers or mobile phones. CareCloud uses open source technologies and has enterprise-class security. CareCloud says it can increase a practice's revenue by 5 - 20 percent and lower its costs significantly. CareCloud's goal is to hit $55 million in revenues in 2014. It has bookings for $2 million this year. The company is starting direct sales efforts at the beginning of the year, but it will also rely on word of mouth. The market size is $60 billion by 2015. The company was founded in January, 2009 and has $5 million in angel funding.
[top photo credit: critical layouts]