VMware CEO Pat Gelsinger

Both execs, Javier Soltero and Kevin Henrickson  joined VC company Redpoint Ventures as entrepreneurs in residence.

Soltero joined VMware by virtue of its acquisition of SpringSource  in  2009 — after having joined SpringSource by virtue of that company’s acquisition of Hyperic. At VMware he was the CTO of SaaS and application services.

Henrickson was senior director of R&D for Zimbra, the open-source email product VMware acquired from Yahoo also in 2009. The dual departures were first reported by TechCrunch.

It was clear last year that VMware was scaling back on applications  – which had been a key part of former CEO Paul Maritz’s strategy. It subsequently spun off the Java-based Spring framework along with Cloud Foundry and other assets to Pivotal where they will be part of that company’s universal PaaS push.

Selling off the non-essentials

It’s fairly clear that VMware would like to divest itself of Zimbra, which doesn’t fit into its new IaaS worldview, just as it sold off SlideRocket to Clearslide and Wavemaker Java technology to Pramati, both in March. (Pramati just announced Cloudjee a new company pushing a cloud development platform incorporating Wavemaker technology.)

Early this month, Patrick Chanezon, who led developer relationships for both Spring and Cloud Foundry efforts at VMware, joined Microsoft as director of enterprise evangelism.

We can’t say that VMware didn’t warn us. In January, CEO Pat Gelsinger  clearly stated the company’s need to focus and eliminate distractions. At about that same time CTO Stephen Herrod left the company for General Catalyst.

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Path CEO Dave Morin. Photo by Om Malik

Path, the San Francisco-based startup that offers private social networking services, has reached a settlement with the Federal Trade Commission (pending judicial approval) on alleged violations of the Children’s Online Privacy Protections Act (COPPA). As part of the settlement, the company will pay a fine of $800,000 and has purged about 3,000 accounts from the network. The settlement requires Path to establish a comprehensive privacy program and to obtain independent privacy assessments every other year for the next 20 years, the FTC said in a statement.

The discovery of the underage members came as a byproduct of the FTC investigation into the privacy fiasco over the uploading of iPhone address books to Path’s servers without the permission of the individuals. That privacy breach became a major headache for the company, including stoking  the ire of a very irate Apple. The company later changed its policies.

In a statement, the FTC said:

“Over the years the FTC has been vigilant in responding to a long list of threats to consumer privacy, whether it’s mortgage applications thrown into open trash dumpsters, kids information culled by music fan websites, or unencrypted credit card information left vulnerable to hackers,” said FTC Chairman Jon Leibowitz.  “This settlement with Path shows that no matter what new technologies emerge, the agency will continue to safeguard the privacy of Americans.”

In addition to the $800,000 civil penalty, Path is prohibited from making any misrepresentations about the extent to which it maintains the privacy and confidentiality of consumers’ personal information.  The proposed settlement also requires Path to delete information collected from children under age 13 and bars future violations of COPPA.  Path has already deleted the address book information that it collected during the time period its deceptive practices were in place.

Dave Morin, Path’s founder and chief executive officer, said that the company had identified the accounts in February 2012 and by May 2012 had implemented changes to its sign-up process that automatically caught the underage sign-ups. Path discovered the issue on its own and addressed it (that is, they removed and blocked minors under the age of 13 from the service) before the FTC approached the company, Morin said. Path is currently compliant with COPPA rules. Morin said that the typical Path user is about 25 years old. The company, which has about 6 million registered users, is targeting families for using Path to share personal moments, so this particular settlement offers up a new and unique set of challenges to the company.

Morin said that the big reason the underage children were able to get into the network is because the company didn’t have requisite checks and balances in the system. In a blog post that the company shared with us, Morin explained:

Today the United States Federal Trade Commission (FTC) announced that it reached a settlement pending court approval with Path regarding alleged violations of the Children’s Online Privacy Protections Act (COPPA). The gist of the FTC’s complaint is this: early in Path’s history, children under the age of 13 were able to sign up for accounts. A very small number of affected accounts have since been closed by Path.

As you may know, we ask users’ their birthdays during the process of creating an account. However, there was a period of time where our system was not automatically rejecting people who indicated that they were under 13. Before the FTC reached out to us, we discovered and fixed this sign-up process qualification, and took further action by suspending any under age accounts that had mistakenly been allowed to be created.

We want to share our experience and learnings in the hope that others in our industry are reminded of the importance of making sure services are in full compliance with rules like COPPA. From a developer’s perspective, we understand the tendency to focus all attention on the process of building amazing new things. It wasn’t until we gave our account verification system a second look that we realized there was a problem. We hope our experience can help others as a reminder to be cautious and diligent.

Throughout this experience and now, we stand by our number one commitment to serve our users first.

Path has raised a total of $41.2 million from investors such as Index Ventures, Kleiner Perkins Caufield & Byers and Redpoint Ventures. It was rumored that Google offered a couple hundred million dollars for the company.

Updated at 2.22 Pm: Jeffrey Paul, a researcher discovered another privacy bug in Path’s software. The company says it has fixed the problem and the update has been sent to Apple.

Path’s iOS app (yes, that same Path that was caught stealing users’ entire address books last February) will use the embedded EXIF tag location information from photos in the iOS Camera Roll to geotag your posts, even when you’ve explicitly disabledLocation Services for the Path application. (The app knows, of course, that it’s not getting location data via normal means from Location Services, yet behaves this wayeven in that case.)

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The firm explained specifically where it will focus its investments:

“Redpoint V will focus investments in several evolving areas: new platforms being developed in mobile, cloud and social; next generation entertainment technologies and delivery systems; big data infrastructure and applications, and enterprise class cloud, and mobile infrastructure companies and applications.”

Venture capital firms are investing heavily in mobile and cloud technology, and Redpoint’s focus fits with this trend. Since 1999, the company has invested in more than 350 tech companies so far including HomeAway, Heroku, Path, Stripe, ThredUP, Zendesk, Netflix, and Qihoo, with 44 of its investments reaching an IPO.

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That’s why we wanted to take the opportunity to highlight some of the rare next-generation battery startups out there that are using nanotechnology, new printing technologies, high-powered computing, and other innovations to produce the future’s batteries. With a little luck, strong leadership, and maybe some government support, these battery startups could change the way the world stores energy. Also make sure to check out an advanced battery report (subscription required) recently published by our research service GigaOM Pro.

1). Ambri: Ambri is one of the most well known battery startups out there. Formerly called Liquid Metal Battery, the company was founded by MIT Professor Don Sadoway, who is probably the only battery startup founder ever to score an interview on The Colbert Report. It’s also got investors Bill Gates, Vinod Khosla, and oil giant Total. Ambri is developing a battery for the power grid using molten salt sandwiched between two layers of liquid metal. The battery is still at least a year and a half from commercialization.

2). Imprint Energy: Using zinc, instead of lithium, and screen printing technology, Imprint Energy has developed a battery that is ultra-thin, energy-dense, flexible, and low cost. Because the battery can be made thin and pliable, the company hopes to target companies making wearables. Imprint Energy is already making small volumes of its batteries for pilot customers, and plans to ramp up to commercial scale manufacturing in a couple years.

3). Alveo Energy: Half-year-old startup Alveo Energy is looking to develop and commercialize a battery made out of water, Prussian blue dye — which is used to color things like blue jeans, crayons and paint — iron and copper. The battery is meant to be ultra low cost and long lasting, and if successful, could help deliver breakthrough energy storage technology for the power grid. The research behind the battery was done by Stanford PhD student turned entrepreneur Colin Wessells, and Stanford Professor Professor Robert Huggins, and the company managed to snag a $4 million grant from the Department of Energy’s high risk early stage program called ARPA-E.

4). Pellion: Pellion went about finding the perfect battery chemistry in a totally disruptive way: the researchers created advanced algorithms and computer models that enabled them to test out 10,000 potential cathode materials to fit with its magnesium anode for its battery. Pellion co-founder, MIT Professor Gerbrand Ceder, also helped develop The Materials Genome Project at MIT, which is a program based on using computer modelling and virtual simulations to deliver innovation in materials. Pellion says its magnesium batteries could have very high energy density — higher than current lithium ion batteries. The startup is backed by the ARPA-E program as well as Khosla Ventures.

5). QuantumScape: QuantumScape is an early stage stealth battery startup that is truly a product of Silicon Valley. The company is commercializing technology from Stanford University, it was founded by Infinera co-founder and CEO Jagdeep Singh, and it’s backed by Kleiner Perkins Caufield & Byers and Khosla Ventures. The company is trying to create a battery — called the all-electron battery — that has the density of fossil fuels. The technology being used is a new method for stacking trace amounts of materials together.

6). Envia: A year ago battery startup Envia unveiled that its lithium ion battery technology could deliver an electric car with a 300-mile range for a cost of around $25,000 to $30,000. Founded in 2007, Envia developed a low-cost cathode and then paired that with a silicon carbon anode, and a high-voltage electroloyte. The company is backed by General Motors, Japanese giant Asahi Kasei, Pangaea Ventures, Redpoint Ventures and the DOE’s ARPA-E program.

7). GELI: Startup GELI isn’t making new types of batteries, but it’s developing an operating system and software for grid batteries. Companies, building owners and utilities can buy GELI-enabled batteries and use the batteries for services like providing energy storage for solar systems, or for storing and discharging energy when the demand for energy becomes out of balance with supply.

8). Sila Nanotechnologies: Sila Nanotechnologies was founded in 2011 by Valley entrepreneurs working with the Georgia Institute of Technology. The company is building a lighter lithium ion battery that has double the capacity of current lithium ion batteries. The company received a $1.73 million grant from the DOE.

9). Boulder Ionics: Boulder Ionics is working on breakthroughs for the electrolyte part of the battery, which is the guts of the battery, where the ions flow across between the anode and the cathode. The company is developing an electrolyte made of ionic liquids that can function at high temperatures and voltages and is lower cost to make than the more standard way to make ionic liquids.

10). Prieto Battery: The brainchild of Colorado State chemistry professor Amy Prieto, Prieto Battery is making a lithium ion battery that it says can charge in five minutes and last for five times longer than the standard lithium ion batteries. The company is leveraging nanotechnology to develop tiny copper nanowires that make up the anode of the battery, and the electrolyte is made of a solid polymer.

11). Sakti3: Sakti3 is a startup in Michigan that is building a lithium ion battery that is entirely solid state, and has a high energy density. Making it from solid polymers means it won’t have those flammable liquids and could be a lot safer for electric cars. The company is backed by Khosla Ventures, GM Ventures and Itochu.

12). Xilectric: Xilectric is re-making the “Edison Battery,” which traditionally has been a rechargeable nickel iron battery. But Xilectric is making it out of aluminum and magnesium, which it says will make it more low cost and with higher performance. The company was awarded a $1.73 million grant from the DOE.

13). Amprius: Based on research from Stanford’s Yi Cui, Amprius is working on lithium ion batteries that use a nanostructured silicon material for the anode. The nanostructured material could shrink the anode fourfold and allow a fourfold increase in energy density. The company has raised at least $25 million from Trident Capital, VantagePoint Venture Partners, IPV Capital, Kleiner Perkins Caufield & Byers, and Eric Schmidt.

Updated: This article was updated on January 14th at 10:30AM to correct the name of the show that Ambri’s founder did an interview on, from The Daily Show to The Colbert Report.

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Founded two years ago by Appenzeller and Kyle Forster, Big Switch’s big bet is that companies want to be able to add nifty new features — even applications — to their network infrastructure without buying expensive, often proprietary hardware. In that arena, it is seen as a rival to Nicira, the SDN company that VMware bought for nearly $1.3 billion in July.

Given the huge Nicira valuation, Big Switch’s $25 million round (which brings its total venture funding to about $39 million) seems small, but Appenzeller said he is thrilled with the funding and with the opportunity to work with Redpoint General Partner Satish Dharmaraj, who will advise the company. Existing backers Index Ventures and Khosla Ventures also participated in this round.

There were rumors a few months ago that EMC Ventures wanted to make a large investment in Big Switch. And given that EMC owns 80 percent of VMware — which now controls Nicira — that would have given EMC considerable sway in the SDN market. No one at Big Switch would comment on EMC but they did say there was considerable interest by many parties who wanted to participate in this round. The company still considers itself in stealth mode with several unnamed companies using an early version of its SDN controller.

Appenzeller, who started Big Switch after an academic career at Stanford, is bullish about the prospects for this technology and the ability for small, lean startups to compete with even big companies. (Perhaps big companies like VMware?)

“We have a good head start. When we initially launched we had to apologize for starting a networking company. That’s definitely changed — networking is a vibrant sector,” he said. “This is completely different from the past. Big Switch is a very deceptive name — we build controllers for SDN but we don’t build or ship any hardware,” he said.

Dharmaraj concurred. Big Switch “could have raised a lot more money if they wanted … but this is not a traditional networking play like a Juniper or a Cisco, which required $50 million to $100 million. They’re building software! They don’t need to build special ASICs or other hardware,” he said.

After the Nicira deal, the conventional wisdom was that Big Switch – or maybe Embrane — would be the next SDN company on the block. That may or not be case but in the short term, it looks like Big Switch will forge ahead on its own, with a little help from its new VCs.

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The new round, led by Redpoint Ventures, boasts some big names: Goldman Sachs, Silicon Valley Bank, Index Ventures and GGV Capital, with existing investors Benchmark Capital, Matrix Partners and Charles River Ventures all taking part as well. It’s by far the biggest injection Zendesk has received, taking the firm’s total funding to date up to $86m.

As for the UI revamp, Zendesk EMEA chief Matt Price told me it was very much a reflection of the consumerization trend – it’s around 18 months since the company rolled out its iPad app, and the positive feedback from that apparently stimulated the browser interface refresh.

“For us that meant we really had to make it beautifully simple,” Price said. “We needed to make sure that when an agent logs in, they see everything they need in one place, and when an enquiry comes in from a customer, everything related to that is in one place.”

That related data can come from a variety of sources, from social media to live chat sessions. Zendesk has had these features for a while, as customers these days tend to have their own communications channel preferences, but older versions required the agent to keep switching tools.

And there’s more on the unification front too: another key feature of the new product is the Zendesk Apps application framework, which provides 75 prebuilt integration points for the likes of Salesforce.com and JIRA.

“We found many people integrate Zendesk into other systems to gather information,” Price said. “They might want to get information out of a CRM system, or on a particular technical issue from an internal system.”

Apart from all the talk of big bucks and sleek UIs, one of the quieter parts of Zendesk’s announcement was the expansion of the platform’s number of supported languages to 12.

That’s very much geared towards a revitalised push into the European market, Price suggested. And to back that up, he added that Zendesk will shortly be opening a Berlin office.

It’s not like Zendesk was lacking a European base before – it was after all founded in Denmark and also has a London office – but it’s clearly targeting an expansion of its existing user base on the continent.

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The secret sauce

Energy density is how much energy a battery can store and provide for the car with a given battery size — the more energy dense the battery, the less volume and weight is needed. For electric cars it is particularly important to have a high energy dense battery because electric cars need to be as light weight as possible (any extra weight just drains the battery faster), and batteries that are smaller and use less materials can also be lower in cost.

Kapadia tells me that current lithium ion batteries deliver an energy density of around 100 to 150 watt-hours per kilogram, while Envia’s battery can deliver 2.5 times that energy with about the same weight as the current electric cars that have hit the market. To build a 300-mile range electric car with standard lithium ion batteries, it would cost around $40,000 just for the batteries alone, says Kapadia.

Envia says with an energy density of 400 watt-hours per kilogram, its battery cell costs could be at $125 per kWh. Tesla CEO Elon Musk has said recently that he sees battery cells dropping in price to below $200 per kWh in the coming years. Current electric cars like the Volt have been reported to be closer to $500 to $600 per kWh, and the Nissan LEAF at $375 per kWh.

Envia, founded in 2007 in the Palo Alto public library, began its business by developing technology for a low-cost cathode. A battery is made up of an anode on one side and a cathode on the other, with an electrolyte in between. For a lithium ion battery, lithium ions travel from the anode to the cathode through the electrolyte, creating a chemical reaction that allows electrons to be harvested along the way. After Envia developed its cathode technology, it started working on a silicon carbon anode, and then paired these two innovations together, with a high-voltage electroloyte.

Kapadia says the innovation is also important because many scientists have thought that the lithium ion battery had certain limits on how efficient and cheap it could get: “The rumors of the demise of lithium ion batteries are greatly exaggerated.”

Kapadia also says: “Gone are the days of relying on ancient consumer batteries for automobiles and stifling this revolution by making expensive electric cars.” And in case you didn’t get this reference, Tesla Motors uses small format standard lithium ion batteries like the ones found in laptops for its cars.

Getting the battery into cars

Charging up the Volt

Envia is announcing at the ARPA-E conference that it has reached this 400 watt-hours per kilogram milestone in tests, but the company is still in the prototype stage, and an Envia battery will probably take about three years to move into the commercial auto market. Envia plans to work with battery and auto partners, potentially licensing or creating joint ventures to get the batteries manufactured. Kapadia tells me that Envia plans to avoid the capital intensive model of trying to be a startup that does all its own manufacturing.

General Motors is one of Envia’s high profile investors, and invested $7 million into Envia about a year ago. GM has said that Envia will provide battery technology for future generations of GM’s Volt electric car. Other investors in Envia include Japanese giant Asahi Kasei, Pangaea Ventures, and Redpoint Ventures.

Envia received a $4 million grant from the DOE’s ARPA-E program to attempt to hit the 400 watt-hour per kilogram milestone. Expect Envia to be touted throughout the ARPA-E event, as proof that its program is working to develop green innovation in the U.S.

Images courtesy of Envia Systems.

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The idea is that you can find and add notes on physical places, anywhere around the world. The initial implementation is browser-based, although Fake said in the blog post that an iOS version is in the works. That can be anything — including stories, memories, found objects, information or even ads.

To kick things off, Pinwheel has raised a $7.5 million Series A round led by Redpoint Ventures. That’s in addition to about $2 million in angel funding raised last year from investors such as True Ventures (see disclosure), Betaworks, Founder Collective, SV Angel, Obvious Corp and other angels. Along with the most recent funding, Redpoint founding partner Geoff Yang has joined the Pinwheel board.

For those investors, putting money on Fake seems a pretty sure bet: Flickr sold to Yahoo in 2005 for a reported $35 million and eBay bought Hunch (after Fake left) for a reported $80 million. Of course, it’s too early to guess what Pinwheel will eventually turn into, but the open nature of the site raises some interesting possibilities.

Disclosure: True Ventures is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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As VentureWire puts it in this article, there’s a new term out there called “the Solyndra Effect,” which describes the sickly feeling that the limited partners of the venture funds that backed Solyndra are feeling right now. The reality is that losses that large can make fund raising really difficult for VCs, particularly in an environment when some funds have struggled to raise money.

Solyndra’s VC and private capital investors include Madrone Capital, RockPort Capital, the George Kaiser Family Foundation, CMEA Capital, Redpoint Ventures, U.S. Venture Partners and Virgin Green Fund. The involvement of the George Kaiser Family Foundation, Solyndra’s biggest backer, is the reason why Republicans are calling foul, as Kaiser has supported the Obama administration.

While Solyndra could still sell its assets for some amount of money, not many solar execs and VCs I’ve talked to think the assets are worth all that much. For the case of solar manufacturer Evergreen Solar, which also filed for bankruptcy recently, its secured debtors are trying to recoup $165 million in notes from an asset fire sale and its unsecured debtors are praying that Evergreen’s assets might exceed that figure, leaving something for them. But as our GigaOM Pro Green IT curator Adam Lesser put it for Evergreen: “Good luck,” getting more than that out.

Another huge loss for VCs was when fiber optic network company Western Integrated Networks (WINfirst) raised $889 million in the broadband build-out era of the late 90′s, and then fell into bankruptcy. WINfirst was able to sell its assets for $12 million.

Solyndra's factory full of panels in April

Solyndra also has reportedly drawn down $527 million of the $535 million loan guaranteed by the Department of Energy. Loan guarantees essentially serve as a promise by the government to make good on a loan if the company can’t, and typically enable better interest rates and lower costs than would otherwise be available to a company for project financing. But Solyndra actually borrowed the loan from the Federal Financing Bank, part of the Treasury Department, so basically the government was acting as a lender to the company directly. So there’s that $527 million to pay back, too, (on top of the $1.1 billion in private funds) if there are any assets out of the Solyndra bankruptcy.

Perhaps you’re wondering how investors could keep funding a company that couldn’t draw enough interest from investors to fulfill its IPO plans back in the Summer of 2010. Beyond the somewhat unexpected change in the economics of the solar industry (panel prices dropped dramatically while Solyndra grew), once investors put money into a company, it can be a difficult decision of when to pull out and when to put in more money.

Say, a fund puts in $50 million in a round, and then Solyndra later says it needs another $50 million to be able to expand production and deliver an economy of scale to reduce manufacturing costs, and some day recoup the fund’s initial investment. Does the fund double down and try to save the initial investment or pull out early on and cut its losses? As recently as March of this year, VentureWire reports that at least three of Solyndra’s backers — Madrone Capital, RockPort Capital and the George Kaiser Family Foundation — put more money into Solyndra in a recapitalization round. When you’re stuck in a hole, sometimes its hard to know if digging is going to help get you out, or send you deeper.

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