Monday, June 6, 2011
Interview Dan Dato and Bruce Brown, Upstart.LA
Story by Benjamin F. Kuo
Although Los Angeles has become a hub for the high tech startup world, Surprisingly, one of the things which hasn't happened in the Los Angeles area is any huge, successful venture acceleration programs. Those programs--epitomized by YCombinator in the Bay Area, and TechStars in Boulder, Colorado--attract newly minted entrepreneurs with a mixture of cash and mentoring, and a program which rapidly takes ideas and turns them into viable, executing businesses. To try to change that, two entrepreneurs, Dan Dato and Bruce Brown, are launching a new effort called Upstart LA (www.upstart.la), which aims to bring that venture accelerator model into this market. (Photo: Bruce Brown on the left, Dan Dato on the right).
What is Upstart.la?
Dan Dato: The quickest way to describe it is it's a Techstars-like, YCombinator-like startup accelerator. We've modeled our program after TechStars. Our mentors as we've built up this effort in LA are TechStars, Tech Wildcatters in Dallas, and Accelerator Labs in Chicago. We're looking to launch our first class in the fall, with five to ten companies, with the TechStars model of a small capital investment, and a seed investment of $6000 per founder. Typically, there would be two to four member founder teams, for a maximum cash investment of $18,000, and a mentorship driven program that runs over three months. Those mentors are not just Bruce and I, although we are full time on this. We're not just VCs who are doing this on the side.
What's your background and how did you get into this?
Dan Dato: My background is I've spent just about my entire career in the startup ecosystem, in one way or another. Typically, venture backed companies, always entrepreneur led. These were companies like Autobytel when it was Pete Ellis and three other people, a company called Interactive Marketing Inc., which became Softbank Marketing, selling ads for Yahoo before Yahoo had its own salesforce. So I got started in the tech and internet world very early stage. Then I started working for these companies as well. One of the most notable was Motley Fool, where I was an early employee. I worked with the founders as a consultant for about a year, before I joined then in 1998. I helped them raise a few rounds of funding, ran their European operations. I've also worked with startups in Southern California, including TouchCommerce, and I was with them when they were on their first round of funding.
Then, Bruce and I met about four years ago, at a company called Evryx Technology/SnapNow, which was a mobile marketing/mobile search firm using visual recognition. Bruce was an investor in the Series A round there. So I've been in this environment either as a manager, service provider, consultant, mentor, and founder. Over the last two or three years, I had been effectively doing this on a one-off basis. Bruce and I had been talking about this concept since we met each other four years ago. Since we left the company we were out, we have been talking about the incredible amount of energy going on now in startups. Startup accelerators, whether that's TechStars, Tech Wildcatters, or what have you, are really great at providing the glue into the ecosystem and infrastructure. They're really great at turning things into businesses, having it become than just energy, to give it some momentum. So, six months ago, Bruce and I started to talk about creating a startup accelerator here in LA.
Bruce, what's your background?
Bruce Brown: I was working in 1985 writing keyboard and mouse drivers for Windows version 1. Digital Equipment Corporation had a computer called the Rainbow Computer, and I was writing 80x86 assembler for the hardware adaptation layer of Windows for the Rainbow. I moved to Southern California in 1992, when Microsoft transferred me to here. I moved to the Santa Monica office of Microsoft Consulting Service. My big clients were Disney, Nestle, Toyota, all the big Southern California companies. And then, in 2003 I retired, and I became an angel investor. I've invested in Thermark Technologies, I've invested in Evryx, where we worked together. I've also been involved in ValueLogic software. So, I just view this whole TechStars model as something unique, which doesn't exist here. There are lots of incubators here-- practically every school or municipality has some kind of incubator--but they don't have an accelerator. We like the focus on an accelerator program, the mentorship.
LA is a big town, why hasn't an accelerator take off here yet?
Bruce Brown: Exactly. That's our question -- why not here, let's bring it here.
Dan Dato: I don't think there's any reason there hasn't been an accelerator success yet here. TechStars and YCombinator really have pioneered the model. If you talk about Paul Graham and David Cohen, they've pivoted to the model there are at now. That was five or six years ago, 2005 or so. So, it's still a relatively recent phenomenon. What we've seen here, and around the country, in the last 18 months we've just started to see this pop up everywhere. TechStars has expanded their model to Seattle, Washington and New York, we've seen some very successful accelerators launch in Chicago, Philadephia, Dallas, Austin. But, it's still a very recent phenomenon, so there's not really any reason it hasn't yet happened here in LA, other than it's a relatively new phenomenon. We really love the model, because it's so hard to start a business, and the focus the accelerator model provides helps. The incubator isn't really as focused, and sometime might be more focused on low cost space. We think this model really is one that kind of is right for the times. Now, you're starting to see not just local movements, but national movements. You're seeing Steve Case with StartupAmerica. We're looking at it not as why hasn't it happened, but that now is the right time to put the pieces in place here in Southern California. We're seeing a lot of second generation entrepreneurs coming in--the people at MySpace, the Josh Bermans going off to do things with Fox, but now is at BeachMint. We're starting to see that second and third generation behavior, now the mentor community is out there to take the next generation of entrepreneurs forward.
How far along are you in terms of launch?
Dan Dato: We are relatively new. April 1st we basically started. And, in many respects, we're eating our own dog food. We're going off on our own three month accelerator program with accelerator. April was really focused on locking down the business strategy an idea. This last month was really building out the detail of the product, and launching our web site. We're now building out all the aspects of the program out, have about a dozen mentors, and now we're starting to put all the infrastructural pieces behind the scenes in place. We’re now in month three, and the focus now is shifting towards selling. Now we're starting to recruit applicants to the program. We've also opened up our applications in a soft way a few weeks ago. The target is that during the fall we'll launch the beginning of the class. We've also been working on a location, and we have some places identified in west LA, Santa Monica. We're thinking September or October to launch the program.
Do you have mentors lined up?
Dan Dato: We have about a dozen. Some examples of those who we have worked very closely with are Ron Garrett, who was the lead engineer on Google AdWords. He's got a background at JPL, one of their most published computer scientists. About 2000 he went to lead their efforts at AdWords. He was a seed investor in the companies we met at. He was one of the founders of Virgin Charter. He's also been an investor in companies coming out of YCombinator, so he's got some hints and experience in that model and what the interactions are that go along there. Another example is Mark Hoebich, a bootstrap founder of a company called TV Tracker, which is a B2B provider in the entertainment market. He bootstrapped it for 10-12 years, sold it, reacquired it, and has grown it into a multimillion dollar business, with all those typical technology experiences. Those are two examples, we have about a dozen. Our idea of our mentor group is to put together a mix of good, technical entrepreneurs, who have gone through the business of founding a business, growing it, and ultimately having some exit. That group will be augmented with people with domain expertise.
How have you handled the investment aspect of this -- we've talked to people who want to start similar programs, but don't have any money.
Dan Dato: Just like any other startup, you're always fundraising. We have some funds committed now, but we're continuing to raise funds.
What's the next step for startups who want to work with you?
Dan Dato: There are a few different ways people can get involved. We have an online application form they can go through, they can always update their application, but that's just the first phase, a hello. Over the next few months, they can continue to update it, show progress, and that's probably the most piece for an applicant, is to show their progress over the next few months, to see that they are do-ers, that they are going to follow through on their commitments and promises.
There are also a few other ways to get involved. Southern California, because it's a little bit of a younger startup culture, compared to Northern California, there are less folks with a pre-formed team. We've found a number of single founders, and it's very difficult for us to invest in a single founder without a team. We are seeing applications from single founders. If you are a single founder, go ahead and submit an application, but also become part of our find-a-founder program. We'll be gathering resumes from mixer events and working with others in the startup ecosystem--whether coworking facilities like Nextspace or Coloft, or recruiters, or people in the current ecosystem--to try to build some teams. If they are individuals, they shouldn't feel like they can't participate.
We're typically at one to two events a week in the LA community. If someone wants to get involved, is meet us, get to know us, and let get to know you, and we'll go from there.