Airware CEO Jonathan Downey

Founded in 2011, the Newport Beach, Calif. startup builds the autopilot or the “brains” that drive drones. One current Airware customer, Deltadrone in France already has drones conducting skier search-and-rescue and for open-air mining operations, said Airware CEO Jonathan Downey.

Downey, an MIT grad who knows about aircraft having spent a few years at Boeing, sees upcoming commercial applications including prevention of wildlife poaching and agriculture although to date, commercial use is limited until the FAA comes up with regulations on and requirements for their use. Congress has mandated that this be done by 2015.

Airware clearly thinks demand will be huge once the regs are in place. A survey by  the Association for Unmanned Vehicle Systems International (AUVSI) — admittedly a non-partial observer — projects that the manufacture and use of drones built in the U.S. could create 70,000 jobs in the first three years, adding $13.6 billion to the economy.

Potential competition for Airware could come from the big aerospace companies but so far, drones have had “only one customer and are only used for one purpose — military surveillance, ” Downey said in an interview. “We started this company because we think  there will be a wide variety of applications on the commercial side and those drones will probably be flown by people who will not be as trained or skilled so the hardware and software have to be customized for various users.”

The company will furnish APIs to allow that customization of the autopilot which is an integrated bundle of sensors, computer and communications gear and software — thus also be adaptable for specific uses and power fixed-wing, helicopter or multi-rotor drones. “We provide the APIs to allow companies to customize the autopilot for their needs,” he said.

The initial applications will probably require that the person with responsibility of the drone stays within sight and in low-population areas, he said. Agriculture could be big. “We could provide imaging to determine which areas are over- or under-watered, what is the ideal time for harvesting, and what areas need pesticide,” he said. By letting farmers pinpoint where water or pesticides should be applied, drones could cut the use of both.

Airware osFlexQuad inserted into Delta Drone.

Downey said that the drones to be built will cost between $20,000 and $40,000.

Other applications could include the inspection of large buildings or power lines; mapping; and perhaps even sports or event photography. Hey, if a blimp can do it … Other companies propose the use of drones for news gathering. And, as GigaOM’s Amanda Alvarez reported recently, David Lester at U.C. Berkeley helped create a hack group to investigate the use of small drones for commercial purposes.

Prior to this round of funding, Airware which is a Y Combinator and Lemnos Labs graduate, netted about $3 million in seed money from First Round Capital, Firelake Capital, RRE Ventures, Shasta Ventures and Promus Ventures, brings total funding to date to $13.7 million

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• GigaOM Research highs and lows from CES 2013
• How HR can make the case for workforce analytics
• The 2013 task management tools market

New York-based Shapeways sells 3D printing services to designers and makers and also has an Etsy-like marketplace for creators. The startup, a transplant from the Netherlands, was printing more than 100,000 products a month and had over 150,000 users inside its community last year, so has no doubt grown that audience and volume since then.

Last month Shapeways debuted their new API which enables developers to create consumer facing applications that can tap into the Shapeways printing network and marketplace. That’s important because, as GigaOM Pro analyst Mike Wolf explained it, the API gives Shapeways greater access to the bigger, non-maker audience who want access to 3D printed objects but don’t want to learn how to use sophisticated 3D design software.

Shapeways has been planning to expand through its new New York factory, which is supposed to occupy up to 30,000 feet in Long Island City. Previously, much of the printing work was being done in Europe at its Eindhoven factory in the Netherlands or through partners.

Check out our Field Guide to 3D Printing on GigaOM Pro (subscription required), which defines 3D printing as:

[A] process that produces physical 3D objects by adding layer upon layer of material. Direct from a computer model, objects are “grown.” These objects can be almost anything: engineering prototypes of automotive components, tooling for manufacturing, medical implants, architectural models and sellable goods for end users.

We’ll be digging into 3D printing more at our RoadMap conference on connected design in November in San Francisco. To be the first to register for this event sign up here.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• GigaOM Research highs and lows from CES 2013
• The fourth quarter of 2012 in cleantech
• Cleantech and investment in 2013

What went wrong? Apart from being a bubble (albeit a bubble of a kind we’ve never quite seen before), it looks like Bitcoin fell victim to a single point of failure. But wait, you say, it’s a decentralized currency – how can that happen?

That single point of failure is the most popular Bitcoin currency exchange, MtGox. There are other exchanges, but the bulk of Bitcoin trading happens there. MtGox claims to have been hit over the last couple weeks’ mania by the twin ills of denial-of-service attacks and sudden, excessive popularity, both of which amount to the same thing: MtGox’s systems falling over. The operation (which is based in Japan) has also shut down its own service at least once in an attempt to “cool down” the market.

And every time that has happened, a panic sell-off has been the result. That’s not surprising: MtGox’s status as the best-known exchange has led it to become the main data source for most of the Bitcoin rate visualizations out there, so when Mt.Gox goes down it affects visibility for a lot of people. And when people can’t see what’s going on, they panic, find another exchange and sell, sell, sell. Same goes for the biggest exchange unilaterally deciding to cool down the market – hardly a sign of viability.

(Some people have theorized about more sinister motives, too.)

As I write, MtGox is conducting an AMA session on Reddit, in which it is explaining what it’s doing to stem the problems:

“Upgrading computer systems means ordering more servers (two weeks timeframe), setting up (one day), load testing (two weeks) and deployment (one day). It’s a process that can take up to one month in total… We are now enforcing new rules for people placing large amounts of trades in order to reduce risks of lag.”

Hardly ideal. But what – apart from boring old state-issued currency – is the alternative?

Introducing Ripple

The ideal alternative for Bitcoin as an ecosystem is to try to even the load between different exchanges, or at least settle on one that doesn’t fall over when people get keen on the currency. However, there is also an emerging rival of sorts called Ripple (not to be confused with the charitable donation tool of the same name).

Although its use is also pseudonymous, Ripple isn’t quite the grassroots effort that Bitcoin is: on Thursday its sponsor, OpenCoin, picked up a round of funding from Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures and Bitcoin Opportunity Fund, “an investment vehicle for Bitcoins and Bitcoin-related companies.” OpenCoin’s development chief is Jed McCaleb, the guy who founded MtGox in 2010.

However, while it doesn’t have the same Stick-It-To-The-Man vibe as Bitcoin does, Ripple does have a few advantages over its better-known rival. Chief among those is the fact that it doesn’t need currency exchanges: in fact, it is its own distributed currency exchange.

Ripple can be used to convert dollars into rupees, or for that matter Bitcoins, and send them across the world for the nominal fee of one “ripple” – this fee is only charged to stop people from swamping the system with millions of transactions. OpenCoin says a ripple is worth around a thousandth of a cent, and the company will put 100 billion of them into circulation — three quarters of which it will give away and a quarter of which it will keep for itself, in the hope that the value goes up. No more ripples will ever be created.

So, ripples are both in-service tokens for the mechanism of sending and exchanging real money, and a virtual currency in their own right. Of course, Ripple users will need to get their hard cash into the system somehow, so the system employs what it calls “gateways.” Anyone will be able to act as a gateway, even individuals and convenience stores – although online services will probably be the most convenient.

A faster self-regulating network

Ripple is a bit like Bitcoin, in that the network verifies transactions – this is essential if you’re removing the “trusted third party” role that banks usually fill, because someone needs to ensure that people aren’t double-spending their virtual money. However, there’s a big difference in how this happens.

With Bitcoin, nodes on the network called “miners” compete with each other to verify each block of transactions every 10 minutes. To verify a block, the miner has to complete a complex computational puzzle faster than its rivals do. In return for the electricity spent in doing so, the miner gets a certain number of freshly minted Bitcoins – this is how the system keeps working, and how new Bitcoins get brought into the system.

With Ripple, the nodes on the network also maintain a shared ledger – the equivalent of Bitcoin’s blockchain – but they don’t compete with each other to do so. Instead, the system uses a complex consensus mechanism to make sure transactions get verified and added to the ledger.

As this process has nothing to do with mining the virtual currency, there is no need to control the timing of the verification, meaning transactions can happen within seconds rather than in 10 minutes or more it takes with Bitcoin. This is clearly a big advantage, and there are others, such as the ability to create a chain of IOUs, either through people they personally know and trust, or by using ripples.

But…

Thus Ripple solves some of Bitcoin’s problems: transactions can take place more quickly, there’s no need for shaky third-party exchanges, and the whole shebang doesn’t need to waste a bunch of electricity on solving computational problems. However, I suspect Ripple will have its own problems.

The first is to do with money-laundering. This is also a big potential problem for Bitcoin – although good luck to anyone who tried that this week – but I’m a bit confused about how well-controlled these “gateways” will be. Ripple’s own explainer states that “your neighbor or corner grocery could be a gateway,” but OpenCoin told me that “we believe these gateways should be properly licensed and regulated in the same way as other financial institutions,” Does. Not. Compute.

The second problem is OpenCoin’s role in Ripple. The company maintains that it’s “just here to pay to develop and promote the network,” and doesn’t control Ripple, but at the same time it’s a for-profit company (hence this week’s investment) that has a vested interest in seeing the value of ripples increase. At the very least, there may be an inherent problem of perception here, particularly for those subscribing to Bitcoin’s core ethos.

Ripple will also need to find enough “validating nodes” to ensure an above-board network consensus process. Unlike Bitcoin’s miners, these nodes don’t get anything for their efforts other than seeing the system stay up and running. Granted, they also don’t need to expend as much electricity in doing their job, but their participation is still not a sure thing.

Finally – and perhaps most importantly – Ripple is really hard to understand, compared with traditional “fiat” currency. A lot of pieces need to be in place for it to work, and a lot of education needs to take place too. I would even go so far as to say that Ripple is more complex (even on a conceptual level) than Bitcoin, and that’s saying something.

Still, Ripple is interesting, and perhaps having an official sponsor will make it more viable than Bitcoin. Whatever happens, it’s another step towards the post-experimental use of digital currencies.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The evolution of the virtual goods market
• Facebook Credits: a shaky media platform
• GigaOM Research highs and lows from CES 2013

Google debuted Google Glasses to developers back in June 2012 at its Google I/O conference, and companies have already started thinking about how they could build a more connected internet of things and roll out specific apps for the technology. And on Wednesday, some of Silicon Valley’s most prominent investors declared their financial support.

Bill Maris, managing partner at Google Ventures, Marc Andreessen of Andreessen Horowitz, and John Doerr of Kleiner Perkins announced Wednesday that they’re together launching The Glass Collective, an effort to provide seed funding for people who are developing interesting uses for the technology.

Maris explained in a blog post why the investors think it’s important to support the idea:

“So what will the future be with Glass? Well, the truth is, no one can honestly predict where this new technology will take us. Not yet. And that’s exactly what’s exciting. We do know that smart entrepreneurs and engineers are going to develop amazing experiences through Glass. Glass will evolve quickly, just as the cell phone grew from this to this.”

However, with Google Glass not even in stores, it’s hard to imagine how normal people would use the technology every day, let alone what types of companies might emerge from a Glass-like ecosystem or how venture capitalists could profit from those companies. It’s a long-term bet on a very uncertain product, but if Glass does take off, it could be a profitable one, similar to Kleiner Perkin’s early investment in people building for the iPhone that was called the iFund.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The 2013 task management tools market
• How consumer media will change in 2013
• Social 2013: The enterprise strikes back

Srivistava was GM of Flickr, Yahoo’s photo sharing service. Her co-founder Sol Lipman was VP of mobile for AOL and founder of Rally Up, 12seconds tv and Sticky Inc. Now their venture has $1.7 million in seed funding from former Yahoo’ers Jerry Yang and Brad Garlinghouse, as well as Ash Patel of Morado Venture Partners, Sam Pullara of Sutter Hill Ventures, David Tisch of Tech Stars NY and Andreessen Horowitz.

Mobile first

The company has a mobile-first plan because most people now pretty much live in and through their small devices, she said. “You can do video conferences, chat, text all on your mobile,” she said. The first app, for iOS, is due in the first quarter. The company will add Android support later.

“There’s growing pain and frustration at the gap between the great tools we have at home and those at work — email and IM — which are 30 years old,” she said.  ”We want lightweight interactions within the culture of the team … IBM and Microsoft are still the leaders in enterprise applications and they’re not who you think about when you think about innovative, social experiences– there’s room for improvement.”

Taking on the dinosaurs

Of course pundits have long predicted the demise of email which, despite complaints, is still going strong. “No one will replace email but it’s an incomplete tool because it’s so prevalent although people use it in a way it’ s not designed for.”

Tomfoolery co-founder and CEO Kakul Srivistava

Of course, the incumbents are not waiting for startups to pass them by. Microsoft bought Yammer, to bring Twitter-like functionality into the office. Salesforce.com’s Chatter attacks the same problem and this week IBM talked up  Connections which draws on the social networking meme.  I agree with Srivistava, however, that many workers, especially the younger smartphone-wielding generation, have little to no patience for the monolithic desktop applications their predecessors used. Mobile first is a valid strategy for that audience.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• Cloud computing infrastructure: 2012 and beyond
• Infrastructure Q4: Big data gets bigger and SaaS startups shine

Andreessen partner John O’Farrell, who will be joining the board of IFTTT, wrote in a blog post Thursday why the need for a service like IFTT exists:

“As the Web has evolved, more and more of that online time is spent in specialized venues such as Facebook, Instagram, Twitter, Pinterest, LinkedIn and Foursquare. While these are fantastic applications, they have a downside, in that they largely exist as parallel, unconnected containers for our personal data. Trapped in their respective silos, our posts, photos, tweets, pins and checkins are largely inaccessible to us from outside. Moreover, creating useful connections between one application and another is far beyond the average user. Sure, most of the most popular web applications now have APIs, but they’re written for the benefit of developers, not people.”

IFTTT, (which is pronounced like “gift” without the “g”), stands for “if this, then that,” and allows users to set actions to occur automatically on the web. For instance, you could set up an IFTTT connection that automatically posts an image to Tumblr when you take an Instagram photo. Or if a particular stock drops to a new level, IFTTT can send the user a text message. Users can create the connections, called “recipes,” with any of IFTTT’s enabled sites, which includes more than 50 companies such as Dropbox, Etsy, Facebook, Foursquare, Instagram, and YouTube.

Users have created more than 2 million different recipes, and more than 3 million are executed every day, O’Farrell wrote. The company is looking to hire new talent to grow the service going forward with the new addition of funding.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• Dissecting the data: 5 issues for our digital future
• Connected world: the consumer technology revolution

VCs at firms like Sequoia Capital or Andreessen Horowitz might scoff at the call for attention to a positive fund value, but in the cleantech ecosystem a significant positive growth in value is pretty rare. In fact, I’ve heard discussions of cleantech portfolios being waaay, way (way) down in valuation for many VCs’ funds.

Chrysalix put money into 18 follow-on rounds and one new investment in 2012, and the company’s overall portfolio includes startups like nuclear company General Fusion, micro fuel cell maker Angstrom Power, electric scooter company Brammo, solar steam generator maker GlassPoint, and GaN Systems, which makes power conversion chips. Chrysalix’s new investment in 2012 was Axine Water Technologies, which makes clean water technology.

Now that some of the generalist VCs are exiting making cleantech investments, investors that are sticking to their green guns are coming out of the woodwork to throw down their gauntlets. Vinod Khosla says his cleantech portfolio is doing just fine, thank you very much, and he will continue to invest in the space. Others like DBL Investors, which backed both Tesla and SolarCity — two of the most successful cleantech IPOs — clearly have done well (see my profile The Most Successful and Positive Greentech VC You Haven’t Heard of).

Still others that are investing in CleanWeb, or clean IT, continue to be excited about investing in companies that are using IT to manage resources, like energy, food and water. As Mitch Lowe of Greenstart, a digital green accelerator, said on a panel I moderated last month: “Cleantech is dead, like the Internet was dead in 2000.”

Images of Bridgelux and Brammo technologies. Courtesy of Bridgelux and GigaOM.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Cleantech and investment in 2013
• Connected world: the consumer technology revolution
• Defining success for cleantech companies

Okta is part of the cohort of companies that have seen the shift to the cloud as an opportunity to rethink the way legacy enterprise software is built. Other players include Boundary, Aryaka and Workday. Each of these firms has seen the way that cloud computing and software as a service can disrupt the enterprise IT market and have made bold bets building out new services that take advantage of the decentralized nature of the cloud, cheaper compute or new business models. The real question as the startups gain customers and credibility is which of the IT giants will buy them and for how much of a premium?

Okta, for example, offers a centralized identity management platform that competes with services such as Microsoft’s Active Directory and Oracle’s Identity Management suite. Okta’s software works to establish user identity on both cloud applications but also for legacy and on-premise programs. This saves Okta’s customers from having to use two different identity management products for employees. Todd McKinnon, CEO, Okta told me in an interview ahead of the announcement that it has seen a lot of success recently stealing customers from the established vendors, and that the funding will help it continue to invest in connecting its platform to older, legacy applications that its customers want integrated into the Okta software.

Otka says it has added more than 140 enterprise customers and 300,000 users to its service in 2012, including Allergan, BMC Software, Clorox, Groupon and National Geographic. Okta has developed relationships with more than 2,000 cloud applications, all of which come pre-integrated in the Okta Application Network, and counts leading enterprise SaaS companies such as Jive, Lithium and SuccessFactors as customers.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Social 2013: The enterprise strikes back
• Cloud and data third-quarter 2012
• A near-term outlook for big data

Dixon said in his personal blog that he’ll be specializing in consumer internet startups, but will be open to any interesting technologies. And while he’ll be based in California, he’ll still be investing in a lot of New York startups. AllThingsD first reported this past weekend that Dixon was in talks to join Andreessen.

Dixon framed his decision as less of a departure and more of a chance to help bring Andreessen Horowitz to New York. He told Pando Daily he will keep his apartment in New York. “You can think of it as I’m abandoning New York or I’m beginning the process of bringing the best venture firm in the country back to New York. I like to think of it as the latter,” he said.

While Dixon has been an active investor in New York startups, his portfolio was already leaning toward California, with about 2/3 of his companies located there. He’s had a pretty good eye on investment opportunities, backing companies like Skype, Foursquare, Kickstarter, Stripe and Pinterest. Founder Collective also just raised $70 million in September. 

I’m sure we’ll see Chris in New York all the time. As is increasingly the case, the lines are blurring a little between New York and Silicon Valley with people jetting back and forth often and setting up offices in both places. Chris will give Andreessen another smart founder, who knows how to spot and nurture talent. And he has plenty of contacts on the East Coast, which will help Andreessen Horowitz get in on even more big deals.

Here’s some video interviews we did with Chris in 2010, the same year he was named top Angel Investor by Businessweek.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• GigaOM Research highs and lows from CES 2013
• How HR can make the case for workforce analytics
• The 2013 task management tools market

Meteor Development, the hot startup that aims to remake enterprise software development, picked up some pretty impressive coin in a $11.2 million Series A funding round led by Andreessen Horowitz, with contributions from Matrix Partners.

The company’s goal is to help developers write enterprise applications for the webscale era. Meteor’s real-time JavaScript framework – which has generated considerable buzz — lets developers use the JavaScript skill set they already have to build these applications on their local PCs without having to learn and knit together non-JavaScript code (Python, PERL, etc.)  that typically runs on the server.

“We give you a consistent programming environment for both the client and server code. You need to know JavaScript and you will learn some APIs but you no longer have to think two different ways,” he said

GigaOM first reported on this funding round before it closed, in late May.

Meteor will use the money to build the open source community around its offerings. “That means writing software, hiring engineers to help us do that faster and working with developers who are using it,” said company co-founder Matt DeBergalis in an interview. The company now has 7 employees. The long-term revenue opportunity is for Meteor to build commercial add-ons for the existing products, DeBergalis said.

Along with the money, Meteor gets a ton of enterprise software expertise from its new backers. Rod Johnson, founder of SpringSource, now part of VMware, is joining Meteor’s board.  Both Matrix General Partner David Skok , who helped build the JBoss sales strategy and brought JBoss to Red Hat and Andreessen Horowitz General Partner Peter Levine, former CEO of XenSource, will advise the Meteor board.

What Meteor hopes to give enterprise developers is the ability to build the fast, interactive applications they’ve come to appreciate from their experience with Google and Facebook although precious few companies have the resources of those tech giants.

To be sure, Meteor is not alone in this quest. Parse does some of the same things but for mobile app developers. Yahoo’s open-source Mojito framework attacks some of the same problems and got good early reviews, but does not seem to have gotten much traction.

But given this funding and the amount of interest in making enterprise applications as dynamic and interactive as web apps, Meteor is facing a pretty healthy opportunity.

 Photo courtesy of Flickr user tonynetone

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Infrastructure Q2: Big data and PaaS gain more momentum
• Social third-quarter 2012: analysis and outlook
• The promise of software-defined networking