Two years ago, Robert Kester and I founded Rebellion Photonics around technology he and his colleagues at Rice University created with support from a federal grant for basic bioengineering research. Since then, we have created seven jobs, raised $1.1 million in venture funding, become cash flow positive, and created products that truly make the world a safer place.

At Rebellion Photonics, we produce video cameras that can identify and quantify chemicals — essentially our video cameras “see” chemicals, not just colors. While this type of technology, called hyperspectral imaging, has been around since the 1980s, researchers were forced to wait minutes, even hours to see results.  Our cameras take milliseconds, allowing the first true real-time chemical imaging video.

The technology was initially invented to see live chemical reactions within cells for medical research.  We do sell cameras for researchers, but with the help of additional grant funding for basic R&D we have been able to expand our product range.

Rebellion Photonics CTO Robert Kester at work on the company’s the medical imaging device, which uses hyperspectral imaging to identify and quantify chemicals.

Critically, our company won $1.6 million in competitive federal grants through the Small Business Innovation Research (SBIR) program, which provides $2.5 billion in annual seed-stage funding for small businesses meeting national research needs. As part of the White House Startup America initiative, the U.S. Small Business Administration has reinvented the SBIR.gov website so that innovative companies like Rebellion Photonics can navigate these opportunities across all federal agencies. And thanks to recent bipartisan legislation, annual SBIR funding will increase significantly over the next several years, allowing thousands of other innovative companies to start up and grow.

Grant funding has allowed our company to do high-risk R&D to create high-impact products such as our Gas Cloud Imaging camera for the oil and gas market.  Instead of using traditional point detectors that are notorious for false alarms, rig and refinery workers will actually be able to see the leaks on their site.

I always wanted to start my own business and I’ve always loved physics and technology. I received a B.Sc. in Engineering Physics and a M.Sc. in Nanoscale Physics, then went to business school so I could learn how to bring cutting-edge technology from the lab to the marketplace. I named the company Rebellion Photonics because I believe that every startup is a rebellion. Entrepreneurs aren’t in it just for the money — we put our hearts and souls into the business because we believe in our products and we believe that individuals can change the world.

On June 20th, the Houston Technology Center is presenting their second Energy Technology Investor Forum. The upcoming forum will focus on renewable, efficiency, and cleantech technologies. This event provides an opportunity for start-up technology companies to showcase their product or service to an audience of investors, potential customers and industry representatives. Investors, including VCs, private equity, angels and other accredited investors, will be introduced to these opportunities through short presentations followed by ample time to network and discuss during the evening reception. The audience is limited in size and restricted by invitation, in order to provide a more intimate setting for entrepreneurs to interact with potential investors.

The Forum is from 1:30pm – 4:30pm, followed by a networking reception until 6:30pm. After a short introduction from HTC and partnering company Gas Technology Institute, the entrepreneurs will give a clear and concise business overview. The focus of the event appeals to presenters, investors and industry representatives by matching expectations from both into a simple, no-frills format.

All ventures should be based on proprietary technology serving the energy industry. The scope of presenting companies includes: advanced materials for sustainable technologies, alternative energy technologies & materials, bio sources for materials and fuels, clean water technologies, energy conservation & efficiency, energy storage, recycling and energy waste management, smart grid, and other applicable technologies. In addition to making contacts with investors and potential clients, presenters in past events have also found value in conversations with other entrepreneurs including advice from peers and partnership opportunities.

Presenting companies will be selected based on the viability of their business model and the attractiveness of the business from an investor perspective. To be considered to present at the forum, companies must submit a company profile by May 29th.

To apply contact: msmith@houstontech.org or call 713.658.1750

This is because when we make an object smart we are able to gain a multitude of benefits, including the ability to:
• Remotely identify it as a unique object
• Remotely monitor its status and condition
• Understand the conditions of its surrounding environment (remote sensing)
• Give it commands (remote control)
• Link it with specific applications to enable additional functionality
• Have it trigger information and actions
• Aggregate data from a multitude of objects
• …and many more

The interesting feature of these benefits is that they follow the economics of virtual, not physical, goods – like software. These are very different, because while producing the first copy of a virtual good is very expensive, subsequent copies are essentially free. This means that as you scale up, very significant value can be created with little cost – a clear improvement to the company’s bottom line.

To understand this effect, consider WebKinz. These plush animals are not objects I would call ‘smart’, because the only capability added to them is a ‘special ID code’ written on a cardboard slip. However, this ‘special code’ can be redeemed in the WebKinz website, transforming the plush toy into the ‘physical representation of a virtual pet’, which is extremely engaging for children as they can play with it. Of course, this makes us parents pay $20.00 US instead of $10.00 US for it!

As we deal with intelligent, connected objects and go up the scale of capabilities described above, more and more of the value of the individual object becomes virtual, and therefore linked to the same economics. With constant pressure to differentiate and improve profitability, companies are compelled to add these ‘virtual benefits’ to their products.

I believe that in the next few years we will see an explosion of smart objects, because four key elements are falling into place:

The cost of making an object ‘smart’ continues to drop
The cost of adding ‘smarts’ has reached ‘impulse buy’ levels. Objects can now be ‘passively connected’ for less than $1.00 US or ‘actively connected’ for less than $5.00 US. ‘Passively connected’ objects are objects that need to be polled, or queried, externally – they cannot initiate an action on their own (an example is an RFID tag). ‘Actively connected’ objects, on the other hand, are able to trigger events on their own and send them through a network.

The Cloud provides back-end support
The rise of the Cloud is the perfect complement to smart objects, because it allows a model where objects do very simple things (like sending and receiving basic signals), while all the sophisticated analytics, storage and user interaction is driven via capabilities in the Cloud.

Mobile smartphones with apps are the front-end
As people interact with objects, they will not want to do so exclusively through their computers – and it is too costly to add user interfaces directly to every smart object. This makes mobile smartphones with purpose-written apps perfect interaction devices.

Wireless connectivity and new edge technologies are pervasive
In developed countries, the Internet reach is everywhere – either through WiFi or cellular data. Traditionally, though, the ‘smarts’ required for an object to connect directly to the Internet have been expensive and require end-user configuration (cellular activation, SSID configuration for WiFi, etc). For devices to connect massively, a new type of network is needed – one that is simple enough to be deployed at a very low cost and at the same time allows ‘plug and play’ functionality with zero configuration.

Promising candidates are appearing on the scene, many by extending the IEEE 802.15.4 standard (ZigBee, ISA100.11a, WirelessHART, and MiWi are examples) and defining standards to allow connectivity between devices. If past history is a predictor of the future, though, the final standard will be in all likelihood established by a few companies with killer applications that will achieve critical mass in the market – and not by consensus.

The creation of this “edge network” layer is a key element to watch, because it can follow two very different paths: it can follow an open path, like the Internet or the Web which became public spaces; or it can follow a closed path, where it becomes owned mostly by one company, which will then wield tremendous power (think Facebook and social networking).

These four elements have reached the point where solutions are technically possible and economically feasible, so the competitive race is on. Soon you will have thousands of companies selling you the advantages of their new ‘smart’ objects.

There is no question that this mega-trend will change the world as we know it. The only question is, how will you take advantage of it?

One way to know if this is in the cards for you, is by reviewing your priorities.

I was having breakfast with the CEO of a startup a few days ago – he was puzzled because his startup wasn’t growing as fast as his competitors. “I see my competitors being acquired by large sums of money, even when they have no revenue!”, he said, “Why can’t that be me?”. He continued, “I have revenue, real customers, and a good product… does that not matter anymore?”

The core difference between his company and these other startups was in his priorities, which in turn defined how he looked at the world. Consider for a moment which of these two priority lists is closer to your set of values:

Priority List A:

1. Personal income
2. Company Profitability
3. Revenue growth
4. Customer growth

Priority List B:

1. Customer growth
2. Revenue growth
3. Company Profitability
4. Personal income

If you selected “A”, you probably have what investors derisively call “a lifestyle business” – a company whose primary purpose is to provide for you and your family. There is nothing wrong with this, but do not expect to have venture capitalists and investors knocking down your door to invest in your company – they will steer clear away from it – and most probably you will not end up in that TechCrunch article.

If, on the other hand, you selected “B”, you have the right value system to create a high-flying startup that will be acquired for a lot of money… or fail within a few months.

The reason is that there are deep implications that stem from these priorities – here are a few:

Resource allocation

In a lifestyle business, an inordinate amount of money is paid out to the CEO/founding team, which puts a burden in the amount of money left for marketing, R&D and sales expansion.

For example: let’s assume you have a startup that sells $1M a year. If the startup is profitable and the CEO takes a salary of $150k/year, that is 15% of revenue! Compare that with a similar business where the CEO is working mostly on “sweat equity” for a future payoff and takes home only $50k/year… that leaves an extra $100k/year in the company, which makes a tremendous difference because it can be used to hire additional employees, develop the product further, buy advertising and otherwise drive growth for the company.

Attitude towards risk

If you see your business as a source of current income, and depend on it for your livelihood, you will probably not take large risks, pivot strategies quickly, or go for riskier, aggressive approaches to large markets because they will make you uncomfortable. Although you might see opportunities go by, you will not make the investments needed and take the risks required to really go after them. Growth efforts will probably become tentative steps, small projects and controlled tests – far safer but with a dramatically lower probability of ‘hitting it big’.

On the other hand, if you have only a few months to either grow substantially or run out of cash, you will probably evolve quickly, take bigger risks and do your utmost to achieve that elusive product-market fit so you can get additional funds and survive.

Strength of the management team

When the CEO or founder has a high current income, it becomes difficult to attract a first-class management team that wants to throw in a lot of sweat equity in exchange for a future return because of the lack of alignment with the CEO (“how come I am not taking home almost any salary, we can’t afford more marketing and she is taking home six figures?”). Of course, typically the startup normally can’t afford to pay regular salaries at market rates for such a management team.

Time-to-exit

One key tenet of investing is making sure the company has a reasonable exit strategy. When a CEO is in a relatively comfortable position and derives significant income as salary, a risk exists that she is not motivated enough to drive the company to the exit that will enable you to capture the return on your investment.

This is why investors prefer to invest in companies that exhibit Priority List B.

The thinking goes something like this: “I am looking for a high return (20x) on my investment, so I am willing to invest in this company only if the CEO is willing to invest his time with little salary. This will align both of us to recruit a strong management team of like-minded people and make a substantial effort over the next few months to look for a big payoff. If we can adjust our strategy and product to the point where we see successful results and demonstrable growth, then we will be able to get additional funding to go to the next stage. Otherwise, I’ll just write the investment off and move on.”

So – do a bit of introspection and clarify your priorities. There is nothing wrong with a lifestyle business, it can be a great source of satisfaction and provide for you so you can live comfortably. However, in all likelihood you should not spend your nights wondering why you are not attracting investors. Yes, if you are lucky enough to get it just right with very limited resources you might become the exception and have that article after all… but in the words of M. Henos: ”Hope is not a strategy”.

While at SXSW, Distil was one of fifteen start-ups invited to participate in the 2012 HATCH Pitch competition. Each start-up was given a chance to present their business plans to a panel of corporate, angel, and investor judges.   So we prepared, we practiced, and we pitched.  To be more specific, Rami our frontman CEO delivered a killer pitch about Distil’s Content Protection Network. And after much deliberating, the panel of judges announced their decision and crown Distil the winner of the 2012 HATCH contest.

Outside of Silicon Valley, Austin has emerged as “the other” tech heartland, and has been given the tongue-in-cheek nickname “Silicon Hills.” SXSW is not a suit and tie event – as hipsters, geek-punks, and everything alternative abounds. Participants attend Panel presentations in the morning, and there are plenty of parties every evening. You shouldn’t ever have to pay for food or drink – Google, AT&T, and even Chevy provide ample accommodations.

What did I learn at SXSW? Senior Internet statesman Tim O’Reilly was most inspiring. His conversation with MIT’s Andrew Mcafee on “Creating more value than you capture” reminded me of why over 15 years ago I made myself a home on the open standards based, sometimes subversive Internet. O’Reilly cited the good news of how Internet innovators like Google, Amazon, Facebook, and Twitter have created a rich ecosystem of opportunity.  But then he pointed out that like Microsoft before them, they consume more and more of the opportunity for themselves and leave less and less on the table for others – not good for new innovation, not good for the economy.

The best part of SXSW is the community.  I made friends who won hack-a-thons writing new apps that made health fun for kids, and had morning coffee each day with a grad student who wore a body monitor in a sleep deprivation competition for a wellness company.  I admired AARP’s “social media maven of cool” Beth Carpenter as she surfed the Twitter stream, met new tech friends, and then cross-pollinated the whole mess of people in gatherings at places like Google Village.

Technology is transforming the quality of lives, our wellness, and our experience as a community, yet at SXSW there was an absence of innovation reported for those who are 50 plus.  As members of largest and fastest growing demographic in the United States, I quickly realized that senior adults need to share tech success stories with the world and have more engagement with the vast talent pool of innovators and entrepreneurs found at places like SXSW.  Perhaps at next year’s SXSW we can share senior adult tech innovations at our own Meet-ups, hack-a-thons, and after hours parties.  Subversive, even disruptive innovation should be encouraged – and at South By Southwest it’s expected.

Exploring new technologies, applications and ideas requires collaboration, partnership, risk taking and investment. Each day, the staff and partners of the Houston Technology Center work closely with entrepreneurs and start-up companies to provide them with in-depth strategic and tactical business guidance, fundraising advice and connections to opportunities, allies and capital. As a catalyst for change, economic growth and development, the focus of HTC is to assist in the acceleration and commercialization of emerging technology companies.

As a 501(c)(3) nonprofit organization, HTC assists Houston-based entrepreneurs within several key sectors: energy, information technology, life sciences, nanotechnology, and NASA/aerospace.

Our Impact:

Total HTC Graduates (1999 – 2011): 70
Number of Companies Assisted (1999- 2011): 250
Capital Raised by HTC Clients and Graduates (1999 – 2010) $1 Billion
Revenue generated by HTC Clients and Graduates (2010): $145.8 Million
Jobs created by HTC Clients and Graduates (2010): 2,960

In 2011 over 230 Professional Advisors and Mentors provided thousands of volunteer hours to foster the growth of our clients. 

Collectively, the Houston Technology Center’s Clients and Graduates contributed $515.5 million to the Houston economy in 2010.

The Energy Technology Investor Forum: Upstream Oil & Gas, is an invitation-only event presented by the Houston Technology Center in conjunction with the Oiltech Investment Network. This exclusive event provides an opportunity for oil and gas related technology companies to showcase their product or service to an audience of investors.

Oiltech is managed by OTM Consulting and members include: Altira Group, Chevron Technology Ventures, Energy Capital Management, Energy Ventures, Epi-V, Investinor, Lime Rock Partners, SEP, Shoaibi Group, Statoil Technology Invest, and Viking Ventures. These energy focused investors have invested more than $1 billion in oil and gas technologies over the past 5 years.

Presenting Companies: Companies will be selected to provide a 5-minute presentation to attendees. These companies will also have the opportunity to have a one-on-one meeting with members of the Oiltech network.

Application Process: To be considered to present at the forum, companies must submit a company profile, as detailed in attachment. Company profiles should be emailed to: msmith@houstontech.org

Company profiles must be submitted no later than: Thursday, February 23rd, 2012.

Event Presented by
Sponsored by
	King & Spalding Patron Sponsor
	Rice Alliance for Technology and Entrepreneurship Supporting Organization
Energy Acceleration Sponsors

Here are some other things to know about mobile communication:

•  The average teen texts 3,339 texts per month.
• The number of smart phones shipped globally in Q1 of 2011 was 77 million.
• In 2010, 5 billion apps were downloaded.
• US smart phone users now number over 73.3 million.
• Advertisers have spent more than 1 billion on mobile media spend in 2011 so far.

So what does all this mean to you and me?

Personal is the word that comes to mind. We use our mobile devices for nearly everything we do – e-mail, social networking, and texting. As a result, we have made ourselves available 24/7. Our mobile devices are at our disposal at all times – and we don’t ignore them. Statistics show that we respond to 95 percent of text messages we receive and we read 30 percent of our emails on a mobile device. According to a Deloitte survey, this holiday season, more than one quarter (27 percent) of smart phone owners plan to use their devices for holiday shopping, with 59 percent using mobile apps to compare prices and 46 percent using their devices to check product availability while on the go. Mobility has become, for all intents and purposes, an integrated part of who we are.

Wired phones offered us choices. We had the choice to pick up or not to pick up. But now, our wireless devices compel us to answer all the time via e-mail, text, or phone. Our mobile devices have allowed contact with us to become personal, and that is the key to what is next. We are available 24/7 and so we have become living and breathing marketing targets.

The mobile revolution is here. Digital strategies are leading the way to even more revolutionizing as companies review their marketing plans for 2012 and beyond. Short message service (SMS), quick response codes (QR codes), e-mail and mobile websites are replacing traditional methods of advertising at rates much faster than expected.

This new mobility trend is quickly gaining momentum and will soon become the norm. Take a minute to measure your own reactions to what you are receiving via a mobile device. This is a major opportunity for marketers around the world – accept it and be a part of the mobile revolution!

The Houston Technology Center, a founding partner of SURGE, is proud to support this program that includes $30,000 in cash, mentorship by industry experts, connection to the world’s energy ecosystem, and resources from leading service providers including:

• Free banking from Silicon Valley Bank
• Free cloud hosting and coaching from Rackspace
• Legal setup Andrews Kurth
• Free financial modeling and recruiting by vCFO
• Free office space and amenities by Red House Associates, the legendary home of a few of Houston’s greatest success stories
• Free software from Microsoft BizSpark
• Entry into the Houston Technology Center, one of the nation’s leading incubators for long-term and ongoing support

Learn more about this exciting program at www.surgeaccelerator.com.  Then help spread the word to others in your network that may be interested in helping to find the best candidates for SURGE’s  first program.  If you know of someone who may be a candidate, please encourage them to apply online at www.surgeaccelerator.com. For more details on the program check out this presentation.