Startups

Austin’s “Secret Sauce” for SmartCities Startups: The Stories of Bractlet, EverlyWell and Plum

Austinites lead the country in the rate at which they become new entrepreneurs but Austin’s startup ecosystem is also heavily influenced by the many startups that decide to move here.  Today, we want to take a closer look at the “secret sauce” that helps attract these new migrants, and then helps them gain traction and grow.

To learn more, we spoke with three SmartCities startups who initially started somewhere else and then decided to transplant their company to Austin.  As we delved into the special role the Austin scene played in these startup stories, we were quite also impressed to learn about the tenacity of the founders we interviewed and the innovativeness and intricacy of the solutions they’re developing.  

We hope that you'll equally enjoy the journey as we take you through the stories of Bractlet, a ‘smart building’ solution; EverlyWell, an at-home health testing solution; and Plum, an IoT light pad dimmer that implements an innovative technical approach.

The company story and Austin’s role

Alec Manfre is one of three co-founders of Bractlet, a ‘smart building’ solution that ‘uses automated software solution to improve building performance and decrease energy spend.”
Alec and his two co-founders met during their first year at Georgia Tech.  They saw a need for building IoT solutions to collect more granular data and to use this data to create highly-actionable recommendations for energy savings.

The three co-founders are mechanical engineers, as well as programmers: Alec was the original hardware engineer, Brian Smith (the CTO)  brought software expertise and also supported hardware development, and Matthew Lynch (the Chief Product Officer) brought expertise in energy systems.  More recently, the team has brought in energy systems modelers, energy engineering veterans, data scientists, and software engineers.

The founders joined Startup Chile and lived for six months in a 500 square foot apartment in downtown Santiago.  At that point, they made their own hardware, including etching copper to make the requisite circuit boards.  They were ready to come back to the US, and were accepted into SURGE Ventures, a Houston accelerator for energy startups.  The team was able to set itself up in Houston only after maxing out two of the trio’s three credit cards.

Bractlet knew that, in order to find the additional angel investment and start-up savvy engineering talent they required, they would have to move to Austin.  And that decision has borne fruit for the team: since arriving in town, they’ve organized seed-stage funding through ATX Seed Ventures, St. Louis’ iSelect Fund, Chicago’s Energy Foundry.  The team has grown from three to fifteen people and found market traction as well (more on that below).

And Bractlet remains very keen on Austin: “The central location, amidst the other Texas metropolises, complements Austin’s more manageable size and talent-rich environment, extremely well.”

The solution

The solution itself is a combined hardware-software-analytics solution.  The team’s custom Bractlet Gateway collects wireless meter data at the equipment-level and is designed to integrate easily with existing systems.  Data is uploaded to the cloud.  It’s from there that Bractlet moves beyond being an IoT dashboard and into something much more cutting-edge.

The company does this by:

  • Designing and producing their own wireless metering technology
  • Maintaining a data base of potential savings measures
  • Building an energy simulation model—essentially a virtualized building—and creating this build at a speed that the team claims is 90% faster than the status quo
  • Incorporating data about occupancy (monitored through CO2 detectors), scheduling, and equipment degradation, etc., in the model
  • Delivering a claimed 98% predictive accuracy for changes in building performance based on changed environmental or usage patterns

Impressively, Bractlet offers a full guarantee on the financial returns from their systems and usage recommendations.

Traction

Bractlet’s primary market focus was, until recently, on channel partners, such as Johnson Controls and Trane Heating and Coolling.  More recently, they’ve launched a direct program, through which they’ve found substantial traction, including developing contracts with three commercial portfolio owners in Austin.  Customers have universities, K-12 schools, commercial offices, health care systems, manufacturing, and government buildings, with a claimed energy cost savings of 33%.

 

The company story and Austin’s role

Founder Julia Taylor Cheek began her dynamic career as a consultant at Deloitte and later held leadership roles at the George W. Bush Presidential Center and Moneygram, attending Harvard Business School in the process.  Julia “highly valued” these initial career experiences, of course, but her “continuing interest in generating a social impact and in entrepreneurship” ultimately led to her heading out on her own.

Julia was living in Dallas at the time that she made that decision.  Her specific business concept crystallized for her after the trying personal health care experience of shuttling between specialists who did not take insurance, paying high amounts for service and, in the end, receiving hard-to-decipher black and white reports.  Julia developed a “personal passion that I felt could drive me for the next decade of my life.”

EverlyWell began developing its series of at-home medical tests during this time. However, after nine months of work and multiple meetings with VC’s who provided ample advice about company location and more, Julia determined that she would have to move the company to Austin if she wished to take it to the next level: “Dallas is a great city but Austin is just especially conducive to the type of network I needed.  A lot of my connections, and a lot of key investors, are based on the East and West coasts.  To them, Austin is a known destination for locating interesting startups.”  Cheek continues: “I also found Austin to be a superb place for recruiting.  Before we moved, I spent a lot of time on AngelList, Indeed, and Stack Overflow, and was repeatedly impressed with how much talent was located in Austin.  To succeed, as a first-time entrepreneur, you don’t just need engineers and marketers, you need engineers and marketers with end-to-end scaling experience.  Austin has that.”

The Austin health care start-up ecosystem, in particular, is becoming more attractive, as well: “The opening of the Dell Medical School and the plans for the Dell Seton Medical Center, as well as, probably most importantly, the opening of the AthenaHealth Accelerator, where we work, are all very encouraging.  Highly-regulated industries, such as health care, really demand an extra degree of counsel and support, so these developments really make us feel like we have the wind at our backs in Austin.”

Julia does note on challenge the Austin startup ecosystem is facing: the decline in true early-stage funders.  “The departure of Austin Ventures left an important hole and having a full pipeline for investors, and for startups, should, of course be the goal.”

EverlyWell has five core employees in addition to Julia, the CEO: two coders, a Chief Medical Officer, a Head of Product, and a Head of Operations.  Four are Austin-based (As an interesting aside, the Chief Medical Officer was located at Drop Out Club, which helps doctors and scientists in traditional employment situations to segue into the startup world).

Julia believes that, in addition to the positive impact the company can create for any customer, the company contributes to a broader, positive social impact: for instance, it helps those with chronic illnesses to access regular testing through much-needed convenience, and it helps expand the scope of care in rural communities where, say, a phlebotomist may not be accessible.

Traction

The company closed its seed round of $2.5mm in April, and is planning on a Series A raise sometime in 2017. They have about 1,000 paying beta customers and are working on adding more tests and scaling operations.

The service is offered in 46 states, with a few large states leading the way, for now. As the company expected, the customers are about 75% women, who also refer the service to friends and family.

The company story and Austin’s role

Plum caught our attention for its interesting ‘connected home’ solution and its sleek marketing materials.  We became even more intrigued when we learned about the imaginative technical approach of the product (more below) and the deep expertise of the founder, Utz Baldwin.

“Our decision to start Plum was quite considered, as I’ve had many years to think about the space,” Utz explained.  “I began my career as an integrator of sophisticated control systems to automate estate homes.  Later, I was the CEO of a global trade organization, CEDIA, that was heavily involved in home systems integration.  During that time, we commissioned a number of studies about sub-systems in the home.  Companies like Sonos and Nest were clearly beginning to democratize and disrupt their respective product categories, it became apparent to me that the lighting sub-system was being overlooked, and the light switch just so happens to be the most used device in the home.”

Utz launched the company in 2012, and with his own money: “I’m a Native Texan and lived in Houston at the time but knew that I would eventually have to make a move; Houston is not really the right place for starting a consumer technology product.  If you want to stay in Texas and have access to the right engineering talent and startup community, Austin is the only real choice.  We did seriously consider moving to the Bay Area to launch the company, but decided that we wanted to build a big Texas company, and Austin was one of the few non-major cities where we could make this happen.”

Utz acknowledges that “it may be harder to recruit pedigreed executive level talent in Austin today, but that is clearly changing. The influx of talent from around the country will definitely help propel Austin forward as a leading innovation and economic city.  We have been fortunate to build a great team through our involvement with TechStars and Capital Factory.  Also, of course, due to the quality of life and cost of living, Austin is attracting a lot of attention from major technology companies who help bring talent to our city.”

Utz, who describes himself as “quite opinionated,” argues that “We are in the midst of a hardware renaissance for connected devices, largely due to disruption in product development. With enabling devices such as Raspberry Pi and Arduino, 3D printing, new design and prototyping software, and, of course, new crowdfunding opportunities, development time and cost have come down considerably.  The challenge, though, lies in commercializing a product. Moving from prototype to production still requires an immense amount of engineering time and capital.  Austin is certainly starting to attract the type of talent and investment capital that can address this opportunity and challenge.”

The solution

“The Plum light pad is, in fact, an enabler for a new IoT approach to the home,” Utz explains.  “When we first launched at DEMO in October 2012, we rolled out a mobile app and dimmer.  We eventually realized, though, two things.  First, there was no existing light switch that could be integrated into that control system and second, the premise that the mobile phone should be central to Smart Home solutions should be questioned--people don’t necessarily want to take out their phones every time they want to manage their home.”

What does this all boil down to?  The light pad acts as a “distributed, shared, fault-tolerant computing system.”  Each pad includes five microprocessors and control features can be accessed either via a mobile device or via specific tap/swipe combinations on the pad itself.  “For instance,” Utz explains, “every night, before heading upstairs, I use a two-finger touch on a light pad at the bottom of my stairs to turn off all of the lights in my house at once.  The sequence completes just after I get to the top of the stairs.  I don’t have to reach for my phone or, of course, for multiple switches, to get this done.  There are many, many potential extensions to this distributed computing principle that we believe will make the Smart Home all the more attractive and accessible.”

Baldwin is also proud of the fact that “the light pad is the first dimmer to have submetering built in.”  The technology, further, can infer if it’s LED or incandescent and make suggestions for power management and/or changing the light source; is Bluetooth-enabled; and can triangulate its position.

Traction

We’ve been shipping for about seven months and about 8,000 units are out in field.  We’ve received 4.5 of 5 stars on Amazon.  Our average initial order is four units but, even better, the average re-order rate is eight additional light pads.  We knew we needed to create fanatical early customers and that’s why every business and design decision was UX-driven.  We think it’s paying off.”
 
Plum is currently working on closing its Series A round of funding.

 

Conclusion

As ever, the best way to get excited about an ecosystem that is supporting some of the nation’s most exciting technologies for making urban life more convenient, more efficient, and healthier, is to speak to the founders of the new businesses leading the way.  We hope that you’ll help us spread the word about Austin’s leading role in nurturing these important ventures.

 

Why Austin is the Place for SmartCities Startups

Austin’s popularity as a leading place to live is conventional wisdom these days.  People move here for the great food and music scene, but the talent and entrepreneurial ecosystem of the city compels startup companies to pick-up and move here as well.  Expectations for our mid-sized city have accordingly gotten so high that some folks start to feel sore when our easy, upward story gets a little more complicated.  Some alarm bells went off for Austin’s startup techies and entrepreneurs this past spring when we drove Uber and Lyft out of the city and, shortly thereafter, lost in the final round of the Department of Transportation’s Smart Cities Challenge.

The lesson for our tech startup community, though, is not to lick our wounds, panic or blame our local government.  In fact, we need to redouble our efforts to build our own, unique startup identity.  Just like Silicon Valley is known for "Search" (among a myriad of other things) and New York is known for “FinTech” expertise, Austin needs to become known as a center of innovation in a specific domain. We believe that that domain is “SmartCities”--which is about using technology to make urban living friendlier, easier, and more sustainable.  Austin’s next wave of entrepreneurial growth will come when we cultivate and grow a critical mass of startups, investors and media professionals that participate in, and buzz about, what will become known as “SmartAustin.”

There are three main reasons why we believe Austin will be at the center of SmartCities:

(1)  Austin's demographics make it the perfect laboratory: With over a hundred people moving into Austin every day, the city is feeling the stress of doubling its population during the past few years.  A population of over 2 million people with a median age of 31 (more than 6 years younger than the national average), means that Austin’s demographics and culture are perfect for SmartCities startups to solve real problems and gain rapid adoption.

(2) Austin has a history of success with SmartCities startups: It is a little known fact that over half (56%) of venture capital investment in Austin between 2000 and 2014 was in “Smart Cities” segments (cleantech, travel, semiconductors, biotech, analytics, and web/social).  Instead of looking at these companies as individual startups, we need to rally around the success and momentum that Austin startups have already achieved in this segment; drawing more awareness, attention and investors to our city.

(3)  The City of Austin is a SmartCities enabler:  With initiatives like the Open Data Portal, hosting the 2016 SmartCities Innovation Summit and a City Council approved resolution to achieve a net zero greenhouse gas emissions goal by 2050, the City of Austin is making the ground fertile to spark innovation, promote public collaboration, increase government transparency, and inform decision making.

We recently set out to test this theory with startups, investors, and city officials.  The following are just a sample of the stories we heard that show how SmartAustin is already real, and already happening.

AUSTIN STORY #1: THE STARTUP THAT HAD TO BE IN AUSTIN

We caught up with Anya Babbitt, the CEO of SPLT, at the Smart Cities Innovation Summit a few weeks ago.  Frankly, it’s hard to find a more “Austin” story this spring.  SPLT contracts with corporations to provide their employees with a ridesharing platform that leverages the built-in trust of the work environment.  The business model is original and thoughtful, in that it targets a standardized and high-volume transportation use-case.  And SPLT has some initial traction in partnerships and funding, as well as in the startup competition circuit.

The Austin part of the SPLT story starts with the founders coincidentally meeting in a hotel room in Austin as both Anya (from New York) and Yale Zhang (from Atlanta) were independently attending a bachelor and bachelorette getaway weekend.  They got to know each other, learned they had similar interests and passions in startups and mobility, and eventually decided to start SPLT together in 2014.  They agreed at the time that Austin had an exciting entrepreneurial environment, but ended up taking advantages of some early opportunities in the Detroit area as that city, of course, “has an enormous amount of cultural inertia around the car”.  But as SPLT started gaining traction and national recognition,  Anya and Yale ultimately decided to move the company to Austin.  Our city offered “an active entrepreneurial ecosystem, a growing population and, and strong culture of people who are willing to experiment with new lifestyles for positive social impact.”  What’s more, they were amazed by “the intersection of government and corporate experimentalism and the engagement in Austin by thought-leading institutions such as the Rocky Mountain Institute.”

Amazingly, on the day that SPLT arrived in Austin... Uber and Lyft left.  Although  Anya and team are not entirely celebrating that event (Lyft is actually a partner of SPLT’s), they do acknowledge the opportunity to play an active role in addressing Austin’s traffic and congestion challenges.  Whether it’s getting connected with the City of Austin, engaging with the Texas Transportation Institute, pitching to the Central Texas Angel Network or receiving introductions to potential customers and partners, they’ve been amazingly pleased by the support of the entrepreneurial ecosystem: “The investment and startup community here is incredibly hands-on, it is willing to make introductions, and it is willing to dream with you.”  

“The money in Austin is smart money,” Anya continues, but she does acknowledge some limitations.  “The angel community is fervent and engaged but, as you know, the VC community is lacking.”

AUSTIN STORY #2: THE NATIVE AUSTINITE HELPING TO FOCUS HER NATIONAL INVESTMENT FIRM ON ATX OPPORTUNITIES

We weren’t surprised by Anya’s observations about the investment ecosystem in ATX, but it’s still no fun to be reminded. We connected with Christine Primmer of SJF Ventures, a venture capital and private equity fund with offices in NY, the Bay Area, and Durham, to dig deeper into the investor perspective on our city.  SJF focuses on renewable energy, sustainable technologies, transportation, and mobility, and finds the “Smart Cities” category to be a very useful one in defining one of their spheres of interest.  To our delight, Christine, an Austin native herself, saw major opportunity in the city for her firm:

“We did an analysis that showed that 60% of VC investment goes through Tier I Cities, such as SV, NYC, and Boston.  We balance our portfolio a bit differently and only invest 20% in those cities.  Silicon Valley valuations can be outside our strategy and there’s just as much talent in Tier II and III cities and perhaps not as much available capital to support the ecosystem.  In Austin, for instance, while there are some great earlier stage investment firms, there’s not as much growth capital available, especially since Austin Ventures broke up.  The city represents a great opportunity for SJF to come in.”

SJF has made investments, thus far, in education and sustainable food companies in Austin, which “speaks to the richness and variety of startups in the local scene.”  Austin, Christine continues, “has the the attitude that ‘We want to be a center of innovation, and focal point for smart cities.’  We love that.”

We are proud of Austin but asked Christine if Austin is really that different from other aspiring tech hubs: “A key aspect of a good entrepreneurial scene is a place where recruiting talent is easy.  An interesting advantage Austin has,” she said, “is that people want to live in Austin and are moving here even without jobs!  For startups, this makes recruitment relatively easy.  Also, interestingly, there are fewer Fortune 500 companies here than in some of the other mid-sized cities we visit.  In those cities, universities focus on placing their grads in big companies, and the startup ecosystem suffers as a result.”  

Christine further argued that many technologies being developed in Austin (in energy, transportation, recycling/reuse, and health and wellness) fit the ‘Smart City’ label Austin would like to advertise.  She continued, “But it's really important that people see Austin’s own transportation challenges, for instance, as the source of innovation that they are: while it’s true that Austin will have to find new solutions to keep its lifestyle so attractive, as more and more people come here, the city is so lucky to have a focused and talented pool of startups working on solving those problems.”

AUSTIN STORY #3: THE EMPOWERED AND INNOVATIVE TECHNOCRAT WITHIN THE CITY OF AUSTIN

The city is also lucky to have a government that gets the challenge: It was thrilling for us to connect with Ted Lehr, the City’s IT Data Architect, and a key adviser for the Smart Cities Challenge.  Ted has been empowered by his colleagues and City management to think big and to leverage his many years of business and tech experience to help bring Austin into the Digital Age.

Earlier this year, Ted worked with Austin’s Smart City team to bring together business and tech leaders in a conference that was critical to Austin’s strong performance.  We were excited to learn that the lost grant has in no way deterred Ted or the Smart City team’s enthusiasm: “What we have now is a series of excellent ideas that are begging for implementation.  The question is, ‘What will the mechanism be to get these done?’  When we look around the country and the world, it’s clear that we need to find new funding models and that we need to be inventive about how we leverage our award-winning Open Data Portal to attract partnerships.”

Ted cited the partnership between Copenhagen and Hitachi as one that demands a closer look and believes that government and business will have to get together to help take recent planning to the next stage.  We signed up to support that new challenge and will be inviting startups and investors to join together with us to engage, in the coming months.

FINAL THOUGHTS

We began our interviews with a hypothesis, but we left with something more akin to a sense of wonder: the special openness, engineering-savvy, and civic pride of Austin really are attracting the varied brew of characters we need to demonstrate to the world how digital business can yield human results in an urban setting.  That is what Smart Cities are all about, and we can think of no better hotbed for a Smart Cities Center of Excellence.  We are excited to be on the ride and hope that you’ll join us.