Friday, March 09, 2001

The Cyber Scene in Denver ~ by Suzanne Lainson

On February 28, I attended the kickoff reception for the 18th annual Venture Capital in the Rockies conference, an event where twenty-seven handpicked companies had the opportunity to make six -minute presentations to a crowd of VCs and other investors. This year the event was hosted by the Venture Capital Association for Colorado (VCAC), KPMG, and Red Herring. The reception was held at the Top of the Rockies in downtown Denver and was attended by several hundred people: mostly male, mostly well-dressed, mostly entrepreneurs doing some serious networking. It was a clubby atmosphere and while the complementary bar and buffet presented the opportunity to party hard, everyone was on his/her best behavior.
The lighting was low which made name tags hard to read, so I tended to gravitate toward people I already knew. I hung out with the Holme Roberts & Owen crowd, which included Mark Weakley, Suzy Thevenet, Charlie Bruce, and Liza Gonzalez. Mark introduced me to James Cotton, managing director of Icebear Capital Partners. James recently relocated from the United Kingdom and had gotten to know people at HRO's London office. Then Mark introduced me to James Williams, an attorney at Boulder law firm Chrisman Bynum & Johnson. (Both law firms were sponsors of the event.)

Mark also introduced me to David DuPont, VP of marketing and business development for LeftHand Networks, a network storage start-up. Sara Gutterman, an associate with Boulder Ventures and a board member of the VCAC, was similarly engaged in conversation with David. He told me that he lived in Grenoble, France, and then in Austin, before moving to Boulder and that quality of life was one of the reasons LeftHand Networks chose to locate in Boulder. (Presumably the fact that Boulder is a data storage stronghold also played a role.) Dave is a cyclist, another good reason to locate in Boulder, which Outside Magazine has called "the best place to become an überjock."

I spotted Robert Anastasi, president/CEO of Zenodata. We've met at several Internet networking events and I see his wife Debbie every month at the Boulder Marcom group that she heads up. I also saw Dick Pankoski, president/CEO of COSA Technologies. He introduced me to Gretchen Jahn, president/CEO of Aegis Analytical, who was there to present her company, which produces software to access, analyze, and understand manufacturing data. I met another presenter, George Schad, president/CEO of Authentor. His company provides infrastructure security solutions. And I talked to David Hieb, CEO of NameWise, who wasn't presenting but was happy to explain his company to me. It facilitates brand name creation.

The next day I arrived late to the Marriott City Center where the main event was being held. I got there just in time for lunch and sat between two iSherpa folks, Vipanj Patel, managing partner/cofounder of the venture capital firm, and Bradley Fehn, director of finance. Brad and I talked about TiE-Rockies (iSherpa is a sponsor). His goal is to use TiE-Rockies' great lineup of speakers to encourage drop-ins from the larger Colorado tech community, some of whom are potential entrepreneurs. Vipanj and I talked about mountain climbing in the Himalayas, the importance of Sherpas toward that effort, and how their many admirable qualities were the inspiration for the iSherpa name.

After lunch I spent part of my time listening to six-minute pitches, part mingling, and part in the exhibit room where entrepreneurs were available for more in-depth discussions. Among the many VCs I spotted were Brad Feld, of SOFTBANK Venture Capital, and Andre Pettigrew, of FastIdeas/iBelay.

That was on Thursday. Friday through Sunday The Venture Capital in the Rockies conference continued on with a snow weekend at Beaver Creek. Over one hundred people decided that combining business with skiing and snowboarding at one of Colorado's ritziest resorts sounded like a plan. (I was there last Christmas and can report that the mink-and-sable-per-capita quotient has got to be one of the highest in the country. Must be all those European visitors because Coloradoans with furs keep a low profile.) I debated whether or not to venture up there myself (I had a tempting offer to go snowboarding with Steve Swoboda, CFO of Ereo), but decided I had to pass.

Of the companies making their pitches, I decided to profile two of them:
Ereo caught my attention last summer when it was the subject of a massive article in the Denver Post. It continues to hold my attention because of its ambitious goal: to develop a search engine based on graphics rather than text. The complexity of the task is mindboggling. To be useful, such a search engine either has to be able to find the right image based solely on what you initially request (in other words, matching your text-based request with just the right graphic) or it has to help you quickly narrow down your search based on options it provides you (a technique Ereo employs).

To get a bit more info about the company, I met with CEO Mike Shehan at Turley's, a local Boulder restaurant which is a favorite place for VCs and entrepreneurs to meet over breakfast. He mentioned to me that last year Pete Estler, who founded Ereo and whose investment firm iBelay has funded Ereo, flew a group of them on a chartered plane to the Indy 500. Invited to come along was Furman, the guy who parks cars at Turley's. It's a good Boulder story: VC bonding with parking attendant. Of course, Furman is no ordinary attendant; he also races cars himself and is currently looking for sponsors. So if you are interested, pay him a visit.

Mike and I talked about the technology behind Ereo. Searches are based on shape, color, texture, and other attributes. While other graphics search engines may employ two or three algorithms, Ereo is currently using at least ten and always adding more of them. Four hundred thousand images a day are being added to Ereo's database, which is powered by a bank of supercomputers. While the company has applied for several patents, it plans to be competitive based on its ability to be faster and cheaper than its current or potential competition.

We also talked about the fact that Ereo has been operating on a shoestring budget, $3.25 million invested by iBelay. Mike said that had they had more money available to them, they would have gone through it, making it harder to raise additional funds now. Ereo is scheduled to go live in a few weeks. They have a deal with Excite@Home and in the future anticipate working with at least five of the top twenty portals. And then expanding into video and audio searches as well. One significant advantage in using a search engine not based on text is its ability to operate across language barriers.

The other company, LeftHand Networks, intrigues me because it promises a new spin on Network Attached Storage (NAS) and Storage Area Networks (SANs), both growing fields. Data storage has been a part of the Colorado scene since the days of IBM and StorageTek (started in 1969). In addition, Exabyte, McData, and Compaq, plus many smaller companies are all here. LeftHand was founded in November, so it is very new. The company offers a solution, Network Bonded Storage (NBS), which is both scaleable and fully compatible with the millions of routers/switches already installed and can use both the Internet and Ethernet networks to facilitate data transfer. Scaleability and compatibility are factors which all data storage companies have been challenged by, so any company that can resolve those problems should be able to capture a large segment of the market.

The management team includes president/CEO Bill Chambers (who is also the former president/CEO of Tango Technologies) and founder/CTO John Spiers. Seeing the need for a simple, networked storage solution, John started working on the concept awhile ago. The concept got a big boost when LeftHand was picked up by the portfolio. Since then there has been much interest from both the local and international investment communities and LeftHand is pulling together a syndicate which should be in place by the end of the month.