Pioneer Square Labs – Investing More In Seattle

Pioneer Square Labs (PSL) launched today. We led the round and I’m joining the board. PSL, based in Seattle, is a not a VC firm, accelerator, or incubator, but instead is a startup studio, which is a company that creates companies.

The co-founders are Greg Gottesman, Geoff Entress, Mike Galgon, and Ben Gilbert. Greg is a co-founder of Madrona and long-time VC. Geoff worked with Greg at Madrona for a decade and is one of the most prolific and successful angel investors in the Pacific Northwest. Mike was the co-founder of aQuantive which was acquired by Microsoft for $6.2 billion. Ben was a co-founder of Madrona Labs with Greg.

PSL was announced today at GeekWire’s conference and there’s an extremely comprehensive post explaining how it works at Top Seattle investors raise $12.5M for new ‘startup studio’ Pioneer Square LabsMarcelo Calbucci, who is part of PSL, explains in his post Next Chapter: Pioneer Square Labswhy he joined and what’s unique about the approach.

At Foundry Group, we’ve experimented with lots of different things around company creation and early stage investment. In addition to our direct investing, we co-founded Techstars which has had a profound impact on company creation around the world. Techstars now owns Startup Weekend and Startup Week, which extend Techstars impact on and support of the Entrepreneurs Journey. We’ve made over 60 investments through FG Angels – our AngelList syndicate – and are one of the most prolific investors on that platform. We’ve invested in over 30 VC seed funds and emerging managers, supporting even more investors and founders at the early stages.

We have a lot of investments in Seattle. Currently active ones include, Spare5, Moz, Glowforge, Cheezburger, and Impinj (via our Mobius funds). Previous investments include Gist (acquired by RIM) and BigDoor (which failed). Mattermark, which is based in San Francisco, just opened an office in Seattle. Techstars has a big presence there, including much of the team from Startup Weekend. And we have another new investment based in Seattle that should close mid-October.

We’ve known and worked with Greg Gottesman for over a decade. We consider him one of our closest friends and most trusted partners in the VC world. We’ve had ups and downs together, which is critical to building a real relationship in this business (if everything is good, it’s bullshit, and if everything is bad, it’s no fun.)

When Greg started talking to us about the idea for Pioneer Square Labs, we were immediately interested. Two of our Seattle investments – and Spare5 – came out of the Labs effort that Greg created at Madrona. While preceded Labs (and was actually a Startup Weekend project that Greg led the team for), it was the prototype for Labs so we understood the concept well. Both and Spare5 are doing great and validated the premise of the Labs concept for us.

The last piece of the puzzle was how to fund something like this. I encouraged Greg to have an extensive syndicate of VCs and angels as the goal was to build an engaged, invested community around PSL. The result is a magnificent group of 13 VCs and over 50 angel investors.

When we saw the opportunity to invest even more in Seattle, working with three of the strongest leaders we know in the early stage market with an amazing collection of VCs and angel investors, jumping in with both feet was a no-brainer.

100 Dancing Robots

I saw this video earlier today and it delighted me.

I love Sphero.

Price of Admission Is An Amazing Product

As I read about the unveiling of the Tesla Model X, I have two thoughts. The first one is “I want” (hint: Amy – you need to replace your red Range Rover.) The second is that price of admission is an amazing product.

Indulge me while I go on an amazing product rant from our portfolio.

  • Glowforge is turning 3D printing inside out by using a laser to cut and engrave, instead of an extruder to, well, extrude. They just crossed the $4 million mark in day five of their thirty day pre-order campaign.
  • Sphero has sold more BB-8’s in the month since they launched than even I thought possible. I have one on my desk and it gives me joy every day I’m in the office.
  • Accenture just launched their Connected Analytics Experience’s immersive environment which is enabled by Mezzanine. As a daily user of Mezzanine, it actually makes video conference and collaboration tolerable.
  • The demand for the 3D Robotics Solo drone is off the charts.
  • Rock Band 4 comes out next week. Yesterday two new U2 songs were added as exclusives. Enough said.
  • We closed an investment yesterday in a company that will announce next week. I’ve been using the product for sixty days along with their competitor’s product. Their competitor has raised 10x the amount of money so far (prior to our investment), and the product from the company we invested in, from my own head to head comparison, is amazing, compared to the “meh” product from its competitor.
  • We are issuing a term sheet today to another company that I hope accepts our offer. Your mind simply explodes when you use this particular product.

I could keep going but you get the idea. When I reflect on our successful investments, regardless of the form factor (software or hardware or both) that they take, they all are amazing products. And the founders come from a product first mindset – their goal is to unambiguously create the best product that delight users every time they come in contact with it.

I’ve heard the discussion about how important product is for over 20 years of being an investor. But it’s not important anymore. Instead, an amazing product is simply price of admission. If you don’t have an amazing product, you don’t get to play, at least in my little corner of the world.

Encountering Depression and What It Means To Be Well

A few weeks ago I did an interview about mental health, depression, and entrepreneurship with Samara Linton and Michelle Pamisa. They wrote it up and posted it on the Dream Nation site in an article titled Be Well – It’s Work. I thought they did an excellent job capturing what I said and they game me permission to repost the interview here.

Could you tell us a bit about when you first started noticing that you weren’t feeling right?

I was in my mid-twenties. I had a company that was doing well but at the same time I was in a PhD program that I ended up getting kicked out of, because I wasn’t a particularly effective PhD student. I was also married and ended up getting divorced. I had a series of stressors combined with my own self-identity issues. I was feeling a lot of external stress from different places [with] the normal stress of building my business on top of that. It took me a while to realise I was actually depressed. I started doing therapy and got a much better understanding of what was going on. Two years in that stage of working through it, I had moments where I was like ‘I don’t want the rest of my life to feel this way, this feels awful’.  As I came out of being depressed and felt normal again, I realised this wasn’t necessarily how I was going to feel my whole life.

I was a very functional person. Even though I was depressed, I got up each morning, I worked hard and did my thing. My business continued to do well but there was no joy in anything. I’d get home and not be interested in doing all the things I enjoyed because I had no mental or emotional energy for it. A big lesson in that first depression was the actual feeling of being depressed, this notion of a complete and total absence of joy, versus stress and anxiety.

Did being a “functional depressive” affect your ability to seek help?

It was extremely hard for me to get help. I had a very hard time even going to therapy because of the stigma associated with it. I was lucky to get into a relationship with a woman, now my wife, who is comfortable with the notion of therapy. She would encourage me to go and take it seriously; that helped a lot.

It wasn’t easy to get out of bed in the morning. There were many mornings where, even as a functional person, it took a huge amount of energy to get out of bed, in the shower, out of the house, to my office to actually work.

When I finished doing the shift, I went home and got in my bed again or lay on the couch and did nothing. It wasn’t that the functional method was easier, it was just that where I had very specific work to do, I could do the work. But all the time around it, I felt a range on a spectrum from excess of joy to helpless to completely uninterested in anything else. In the best cases, I’d describe myself as feeling flat and every now and then I’d go for a run or something like that. I could force myself to do stuff but then I would still not feel very good about anything around it.

You mentioned how therapy and the support of your wife helped you. Would you say those are the two main things you found most helpful during the time of your depression, or even now?

Yeah I think those kinds of things that are helpful. I had several other people that first time. My PhD advisor was incredibly helpful. He was a very paternalistic factor for me at that moment in time, identifying the struggle with depression, being supportive and encouraging me to explore things via therapy. I had a business partner who was very accommodating of me. Even though there were burdens on him having to deal with a business partner sometimes, he was very patient with it. I had a mental depression episode for six months a couple years ago, and this was the one that I was public about. Dave is still a friend of mine thirty years later and he was incredible this time around because he knew me so well. He was able to engage with me about being a burden and he was able to be helpful without putting additional stress. He knew what would be helpful to me based on the experience he had thirty years ago.

Knowing the warning signs is tricky because a lot of people are just exhausted and there’s this incredible stigma about depression and mental health in general. If you’re a CEO and have diabetes, you manage your diabetes and nobody cares. If you have anxiety and depression and you’re trying to manage that, there’s no signal associated with that. For a lot of people, when they find themselves in that situation, it’s difficult to even acknowledge to yourself so you encourage this shield because of this external pressure, a lot of which is just uninformed stigma.

I think that one of the things that’s hopefully not so bad is a more open conversation that’s going on to destigmatise it.  You can be a strong and powerful leader or a successful entrepreneur and struggle with mental health issues and not let it become the thing that inhibits you as an individual, but continue to explore and learn yourself.  Understand what’s going on and figure out how to take care of yourself in those situations. What kinds of things renew you? What kinds of things allow the depression to pass? I understand when I’m feeling depressed that it will pass, and there are very specific things I can do. I sleep more, I stop drinking alcohol, I cut back on my eating deliberately, I spend more time alone, I travel a lot. These are specific things that I’ve learned over the years create a renewal for me which then allows the depression to eventually pass.

I’ve been writing on my blog for around a decade and I’m very public about a lot of personal things. When I started to feel depressed, I went through a thought process of not being open about it. I very quickly realised that was bullshitting myself, because I’ve been so open about so many other things. The reason I blog is because I like to write about things.

I didn’t know whether it would be helpful to me or not while I was depressed but I knew there would be internal inconsistency if I didn’t and as somebody with an engineer’s brain that likes a very logical way of putting things together, that inconsistency is very jarring to me. I decided it was probably better for the universe if I talk about this issue, and try to destigmatise it. Along the way, several amazing people, not friends of mine directly, but people whose work I have immense respect for, have committed suicide, clearly as a result of being depressed. I thought ‘let’s put this out there and see if it can be helpful to the conversation’, to try to make more people comfortable with the idea that this is a natural part of one’s existence.

What has the response been like?

Generally very supportive and positive. I have had many extremely well known and successful people reach out, people who have struggled with depression and are afraid, unable or unwilling to talk to others about it. I think it’s been a great relief to be able to talk to me about it, because they view me as somebody they can relate to. I’ve had many people who are struggling with depression ask questions, where I can be helpful to them. Several people have attacked me because of it. I’ve had people who told me I was stupid for putting myself out there. Some people say they disagree that somebody who’s depressed should be a leader.  On a whole, I feel like it’s a very powerful thing and that’s what I want it to be, because that’s what I try to do in terms of my world and the universe.

Brad Feld on what it means to be well

To be well means to wake up each day and be interested in what you’re going to spend your time on. At the end of the day when you reflect back and even though not everything that you’ve done was fun, interesting or stimulating, you feel like it was a good day on this planet, recognising that we have a finite number of them.

The Neurotech Era

The 2015 Defrag Conference is happening on November 11-12. Early bird pricing ends tomorrow.

For a taste of what you’ll get if you attend, following is a guest post by Ramez Naam,  the author of 5 books including the award-winning Nexus trilogy of sci-fi novels. I’m a huge fan of Ramez and his books – they are in my must read near term sci-fi category. 

A shorter version of this article first appeared at TechCrunch. The tech has advanced, even since then.

The final frontier of the digital technology is integrating into your own brain. DARPA wants to go there. Scientists want to go there. Entrepreneurs want to go there. And increasingly, it looks like it’s possible.

You’ve probably read bits and pieces about brain implants and prosthesis. Let me give you the big picture.

Neural implants could accomplish things no external interface could: Virtual and augmented reality with all five senses; Augmentation of human memory, attention, and learning speed; Even multi-sense telepathy – sharing what we see, hear, touch, and even perhaps what we think and feel with others.

Arkady flicked the virtual layer back on. Lightning sparkled around the dancers on stage again, electricity flashed from the DJ booth, silver waves crashed onto the beach. A wind that wasn’t real blew against his neck. And up there, he could see the dragon flapping its wings, turning, coming around for another pass. He could feel the air move, just like he’d felt the heat of the dragon’s breath before.

Sound crazy? It is… and it’s not.

Start with motion. In clinical trials today there are brain implants that have given men and women control of robot hands and fingers. DARPA has now used the same technology to put a paralyzed woman in direct mental control of an F-35 simulator. And in animals, the technology has been used in the opposite direction, directly inputting touch into the brain.

Or consider vision. For more than a year now, we’ve had FDA-approved bionic eyes that restore vision via a chip implanted on the retina. More radical technologies have sent vision straight into the brain. And recently, brain scanners have succeeded in deciphering what we’re looking at. (They’d do even better with implants in the brain.)

Sound, we’ve been dealing with for decades, sending it into the nervous system through cochlear implants. Recently, children born deaf and without an auditory nerve have had sound sent electronically straight into their brains.

Nor are our senses or motion the limit.

In rats, we’ve restored damaged memories via a ‘hippocampus chip’ implanted in the brain. Human trials are starting this year. Now, you say your memory is just fine? Well, in rats, this chip can actually improve memory. And researchers can capture the neural trace of an experience, record it, and play it back any time they want later on. Sounds useful.

In monkeys, we’ve done better, using a brain implant to “boost monkey IQ” in pattern matching tests.

Now, let me be clear. All of these systems, for lack of a better word, suck. They’re crude. They’re clunky. They’re low resolution. That is, most fundamentally, because they have such low-bandwidth connections to the human brain. Your brain has roughly 100 billion neurons and 100 trillion neural connections, or synapses. An iPhone 6’s A8 chip has 2 billion transistors. (Though, let’s be clear, a transistor is not anywhere near the complexity of a single synapse in the brain.)

The highest bandwidth neural interface ever placed into a human brain, on the other hand, had just 256 electrodes. Most don’t even have that.

The second barrier to brain interfaces is that getting even 256 channels in generally require invasive brain surgery, with its costs, healing time, and the very real risk that something will go wrong. That’s a huge impediment, making neural interfaces only viable for people who have a huge amount to gain, such as those who’ve been paralyzed or suffered brain damage.

This is not yet the iPhone era of brain implants. We’re in the DOS era, if not even further back.

But what if? What if, at some point, technology gives us high-bandwidth neural interfaces that can be easily implanted? Imagine the scope of software that could interface directly with your senses and all the functions of your mind:

They gave Rangan a pointer to their catalog of thousands of brain-loaded Nexus apps. Network games, augmented reality systems, photo and video and audio tools that tweaked data acquired from your eyes and ears, face recognizers, memory supplementers that gave you little bits of extra info when you looked at something or someone, sex apps (a huge library of those alone), virtual drugs that simulated just about everything he’d ever tried, sober-up apps, focus apps, multi-tasking apps, sleep apps, stim apps, even digital currencies that people had adapted to run exclusively inside the brain.

The implications of mature neurotechnology are sweeping. Neural interfaces could help tremendously with mental health and neurological disease. Pharmaceuticals enter the brain and then spread out randomly, hitting whatever receptor they work on all across your brain. Neural interfaces, by contrast, can stimulate just one area at a time, can be tuned in real-time, and can carry information out about what’s happening.

We’ve already seen that deep brain stimulators can do amazing things for patients with Parkinson’s. The same technology is on trial for untreatable depression, OCD, and anorexia. And we know that stimulating the right centers in the brain can induce sleep or alertness, hunger or satiation, ease or stimulation, as quick as the flip of a switch. Or, if you’re running code, on a schedule. (Siri: Put me to sleep until 7:30, high priority interruptions only. And let’s get hungry for lunch around noon. Turn down the sugar cravings, though.)

Implants that help repair brain damage are also a gateway to devices that improve brain function. Think about the “hippocampus chip” that repairs the ability of rats to learn. Building such a chip for humans is going to teach us an incredible amount about how human memory functions. And in doing so, we’re likely to gain the ability to improve human memory, to speed the rate at which people can learn things, even to save memories offline and relive them – just as we have for the rat.

That has huge societal implications. Boosting how fast people can learn would accelerate innovation and economic growth around the world. It’d also give humans a new tool to keep up with the job-destroying features of ever-smarter algorithms.

The impact goes deeper than the personal, though. Computing technology started out as number crunching. These days the biggest impact it has on society is through communication. If neural interfaces mature, we may well see the same. What if you could directly beam an image in your thoughts onto a computer screen? What if you could directly beam that to another human being? Or, across the internet, to any of the billions of human beings who might choose to tune into your mind-stream online? What if you could transmit not just images, sounds, and the like, but emotions? Intellectual concepts? All of that is likely to eventually be possible, given a high enough bandwidth connection to the brain. Very crude versions of it have been demonstrated. We’ve already emailed verbal thoughts back and forth from person to person. And the field is moving fast. Just this month (after Apex came out) Duke researchers showed that one rat can learn from another, directly via implants in their brains.

That type of communication would have a huge impact on the pace of innovation, as scientists and engineers could work more fluidly together. The same Duke research I just mentioned also showed that multiple rats or multiple monkeys working together via brain implants could sometimes achieve results better than a single animal. The mind meld is here.

Neural communication just as likely to have a transformative effect on the public sphere, in the same way that email, blogs, and twitter have successively changed public discourse.

Digitizing our thoughts may have some negative consequences, of course.

With our brains online, every concern about privacy, about hacking, about surveillance from the NSA or others, would all be magnified. If thoughts are truly digital, could the right hacker spy on your thoughts? Could law enforcement get a warrant to read your thoughts? Heck, in the current environment, would law enforcement (or the NSA) even need a warrant? Could the right malicious actor even change your thoughts?

“Focus,” Ilya snapped. “Can you erase her memories of tonight? Fuzz them out?”

“Nothing subtle,” he replied. “Probably nothing very effective. And it might do some other damage along the way.”

The ultimate interface would bring the ultimate new set of vulnerabilities. (Even if those scary scenarios don’t come true, could you imagine what spammers and advertisers would do an interface to your neurons, if it were the least bit non-secure?)

Everything good and bad about technology would be magnified by implanting it deep in brains. In Nexus I crash the good and bad views against each other, in a violent argument about whether such a technology should be legal. Is the risk of brain-hacking outweighed by the societal benefits of faster, deeper communication, and the ability to augment our own intelligence?

For now, we’re a long way from facing such a choice. In fiction I can turn the neural implant into a silvery vial of nano-particles that you swallow, in and which then self-assemble into circuits in your brain. In the real world, clunky electrodes implanted by brain surgery dominate, for now.

That’s changing, though. Researchers across the world, many funded by DARPA, are working to radically improve the interface hardware, boosting the number of neurons it can connect to (and thus making it smoother, higher resolution, and more precise), and making it far easier to implant. They’ve shown recently that carbon nanotubes, a thousand times thinner than current electrodes, have huge advantages for brain interfaces. They’re working on silk-substrate interfaces that melt into the brain. Researchers at Berkeley have a proposal for neural dust that would be sprinkled across your brain (which sounds rather close to the technology I describe in Nexus). And the former editor of the journal Neuron has pointed out that carbon nanotubes are so slender that a bundle of a million of them could be inserted into the blood stream and steered into the brain, giving us a nearly 10,000 fold increase in neural bandwidth, without any brain surgery at all.

The pace of change is so fast, that every few months brings a new cutting edge technology. The latest is a ‘neural mesh’ that’s been implanted into mouse brains via a single injection through the skull.

Even so, we’re a long way from having such a device that that’s proven to work – safely, for long periods of time – in humans. We don’t actually know how long it’ll take to make the breakthroughs in the hardware to boost precision and remove the need for highly invasive surgery. Maybe it’ll take decades. Maybe it’ll take more than a century, and in that time, direct neural implants will be something that only those with a handicap or brain damage find worth the risk to reward. Or maybe the breakthroughs will come in the next ten or twenty years, and the world will change faster. DARPA is certainly pushing fast and hard.

Will we be ready? I, for one, am enthusiastic. There’ll be problems. Lots of them. There’ll be policy and privacy and security and civil rights challenges. But just as we see today’s digital technology of twitter and Facebook and camera-equipped mobile phones boosting freedom around the world, and boosting the ability of people to connect to one another, I think we’ll see much more positive than negative if we ever get to direct neural interfaces.

In the mean time, I’ll keep writing novels about them. Just to get us ready.