On the GigaOM Chrome Show, Chris Albrecht and I chatted with special guest, Joe Marini. As a Google Developer Advocate, Joe is an expert on the Chrome app experience along with the technology behind it such as Packaged Apps and Native Client apps.

Stacey Higginbotham also had a special guest interview this week on the Internet of Things podcast. Adam Dunkels explains how his early IoT coding efforts helped form the basis for LEGO Mindstorms robots and gave him the knowledge to start his latest company, Thingsquare.

Lastly, on the GigaOM Weekly Wrapup show, Tom Krazit, Eliza Kern, Janko Roettgers and I team up to dissect all of the developments at this year’s Google I/O event, ranging from new APIs for Chrome and Android to the new Google Play Music All Access subscription service.

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PayPal co-founder and HFV CEO Max Levchin at DLD 2013 Conference in Munich Photo by Om Malik

It is not the first time Levchin has turned to such a structure. In early part of the 21st century, he started MRL Ventures, with backing from Peter Thiel, who was chief financial officer of PayPal. MRL resulted in ten startups; two became successful — Slide and Yelp — while one, AdRoll, briefly flirted with bright lights. Others withered away. Levchin is betting that lightning will strike twice. “It is the same approach, but this time it is around data,” said Levchin.

The Kiev, Ukraine-born entrepreneur made his big pitch at the DLD conference in Munich in a speech that needed parsing. So we ended up having a chat about his plans.

When Sensors Meet Data

The focus at a very basic level is “data” and how it will influence our daily lives. Max believes — and I most certainly agree — that we are going to see digitization or penetration of technology into parts of our lives which have been hitherto untouched by it. Whether it is sensors or smartphones, we will have data emanate from different sources, and using that data to shape experiences is a big opportunity.

The word he used in our conversation often was “friction” or how sensors, embedded computing and the data that will result will reduce friction and inefficiency in many of our daily tasks. He pointed to Uber, the on-demand transportation service based in San Francisco as an example.

“The world of real things is very inefficient: slack resources are abundant, so are the companies trying to rationalize their use. Über, AirBnB, Exec, GetAround, PostMates, ZipCar, Cherry, Housefed, Skyara, ToolSpinner, Snapgoods, Vayable, Swifto…it’s an explosion! What enabled this? Why now? It’s not like we suddenly have a larger surplus of black cars than ever before.

Examine the DNA of these businesses: resource availability and demand requests — highly analog, as this is about cars, drivers, and passengers — is captured at the edge, automatically where possible, then transmitted and stored, then processed centrally. Requests are queued at the smart center, and a marketplace/auction is used to allocate them, matches are made and feedback is given in real time.

A key revolutionary insight here is not that the market-based distribution of resources is a great idea — it is the digitalization of analog data, and its management in a centralized queue to create amazing new efficiencies.”

“As we become more connected, we can make things a lot more efficient around us,” he said. “There is a lot of change that is going to happen.” Levchin pointed to a future where sensors in our clothing communicate with our in-home systems and adjust the temperature of our environment based on our body conditions.

Say No To The Four-Year Startup Cycle

As we talked about his plans, I couldn’t help but notice a certain level of maturity. Whether it is age or the fact that he is a family man, the older Levchin is in less of a hurry and is taking a more nuanced and longer view of the world. When asked, he said that it is time to get off the four-year-cycle of the Silicon Valley startup.

However, to solve bigger problems, sometimes you need a longer horizon: a ten-year schedule for example, Levchin said. “At PayPal, we viewed the world in a four year horizon,” he said, “Because that is how the valley worked. Had we thought it as a 20-year old company, the whole thing would be different.” He believes that for some odd reason being a 10-to-15 year old technology company isn’t cool, but that thinking has to change in order to get bigger breakthroughs.

The four year-cycle implies a certain pacing and if you don’t show returns in that time, people start quitting — whether it is your investors or employees, he added. Sure, some break out — Google and Facebook for example — but “we need more of those breakouts,” Levchin said.

It is a common refrain within the group of folks popularly known as the PayPal Mafia. Thiel, a controversial investor, has been most vocal of the lot. There is Elon Musk, the real life Tony Stark, who is probably the most successful. Levchin, too wants to make big impact with his new efforts.

The story of HVF

Levchin started HVF in 2011 with the notion of “going for bigger and longer term projects.” HVF, he said, will essentially be a vessel for working on his ideas and he will have a team, but some of those ideas will become mature enough and will be spun out as separate companies.

So far, he has about a dozen engineers working with him and he is close to announcing at least two projects later this year. But he is not willing to put down any dates, because again, he feels that it makes the efforts part of a rat-race. “Launch time frame is tied to value creation,” he added. It is one of the primary reasons why he is funding HFV himself.

Flush from the sale of Slide to Google, and thanks to his other investments in different PayPal Mafia companies, he has enough to self fund this new quest. However, that doesn’t preclude companies coming out of HVF from raising money from outside investors, Levchin said.

From the archives: A video chat with Max Levchin

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Still that’s what happened. As of 5:00 p.m. EST Jan. 2, some 3,548 people had pledged $497,939, with 20 hours to go before the deadline.

That money will make it possible for Supermechanical to bring its Internet of Things-related project to fruition by paying for the manufacture of the small modules needed connect everyday objects to the web. Technologists depict IoT as a world of connected appliances, rooms, cars, medical devices, even clothing. That connectivity will enable devices to share information so that they can be monitored and controlled remotely.

Supermechanical’s 2.5-square-inch Twine modules come with Wi-Fi, on-board temperature and vibration sensors, an expansion port to connect to other devices, and a small micro USB port. Once installed, those modules communicate wirelessly over the Internet to Spool, a web application that collects incoming data and alerts the user as needed to emergency events. A Twine-equipped basement, for example, will ping you if it detects flooding.

According to the company’s Kickstarter pitch:

Twine is the simplest possible way to get the objects in your life texting, tweeting or emailing. A durable 2.5″ square provides WiFi connectivity, internal and external sensors, and two AAA batteries that keep it running for months. A simple web app allows to you quickly set up your Twine with human-friendly rules — no programming needed. And if you’re more adventurous, you can connect your own sensors and use HTTP to have Twine send data to your own app.

Supermechanical was founded by David Carr and John Kestner, both alums of MIT’s Media Lab.

The Kickstarter funding model is innovative because it spreads the risk around and lets people make small investments in projects they believe in. The minimum pledge is $1, but people can give as much as they want and those ponying up more than $99 will get a Twine module. Higher rollers will get more than one device. The Twine modules will be available in March, according to the Kickstarter site. As GigaOM’s Ryan Kim reported early this year, Kickstarter backs all sorts of projects in return for 5 percent of funds raised.

The whole IoT scenario will not come about as advertised unless there is a way to affordably make heretofore dumb and disconnected devices smarter and connected. That’s the problem Supermechanical is attacking here with Twine and Spool.

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But what got my attention was the fact that this Terrarium was controlled by an iPad or a smartphone. It was a sensor-based micro world, connected to the network. An artful marriage of physical living and digital worlds, the terrarium could be a precursor for what home and gardens could become in the age of connectedness.

Tony Fadell with his thermostat and his startup Nest have already kicked off the ultimate home makeover. It is only a matter of time before we start to see a rush of devices that marry the physical and the digital worlds and thus bring about a whole new level of interactivity.

What is Biome and how does it work?

Biome is a flora terrarium that works a little like a live tamagotchi, and it is the brain child of product designer Samuel Wilkinson. It has low-energy lighting built into the terrarium, which also has sensors that are in turn connected to a smartphone or iPad that is used to control its climate, water level and nutrients. “It is designed to incorporate different types of environment — tropical, desert, even herb garden — and can be easily controlled by even the least green-fingered of users,” a press release notes.

As I wrote in my recap of last week’s GigaOM RoadMap conference, to me connectedness is a transformative force, and this terrarium is an embodiment of that force. This marriage of the analog and digital worlds shows that in the future everything will be connected. Terrarium’s creator Wilkinson (follow him on Twitter) is one of the world’s foremost product designers. The London-based designer has worked for companies such as LG, Samsung and Virgin Airways and has his own design studio.

He has come up with some astonishing designs, such as Plumen, an energy-saving light bulb, that has been drawing praise from around the world. I emailed Wilkinson to find out how he came up with the idea of this iPad-controlled terrarium. Wilkinson says that the idea for Biome came when he got an invitation to participate in an exhibition called Slow Tech.

New Slow Tech

The concept of the Slow Tech exhibition was that with increasing connectivity, we were going to need digital downtime, which in essence is the need to have a break from being connected. There is a school of thought that believes that being connected inhibits creativity and thus our brains need some downtime away from screens to become generally more efficient and rested.

“I wanted to design something that did not force you to put down your device, but encourages a less immediate response, something that over time will be gratifying and rewarding,” says Wilkinson. “The main thought was that if the terrarium became a charger that when you connect, it disables the device from other connections and only allows the terrarium connection (plus a re-charge) so that over time you get a therapeutic reward for un-connecting for one or two hours a day.”

“New devices have become purely ‘personal assistants’ that fit into our lives rather than the other way around. Future of technology is to become far more immersed and subtle, even hidden. Something that is so intuitive that when used it is so natural we don’t even register the use,” says Wilkinson.

The Biome is a perfect example of it. Unless you know that an iPad is being used to control the terrarium, it looks like any other micro-scape: cool, serene and utterly charming.

PS: I just posted a shareable version of this on my blog here.

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This “Internet of Things” is already here in such items as the WIMM Labs’ WIMM wearable platform or Vitality’s intelligent pill bottle cap and Meta Watch’s products.

But the design of the notifications — in addition to that of the devices themselves — has to be considered very carefully from the start, according to speakers at Mobilize 2011 on Tuesday.

“There will be a proliferation of smart objects, just like there is a proliferation of apps in the app store,” said Bo Begole, principal scientist at the Palo Alto Research Center (PARC) which does a lot of work in this area.  Some of these apps will deal with important healthcare matters and some with less urgent consumer-oriented tasks. That means that the alerts and alarms have to scale accordingly to avoid potentially perilous alarm fatigue.

“We have to unify the feeds into one channel and then prioritize them,” Bogole said.

These companies have already given this problem considerable thought. For example, the alarm on the pill bottle starts out being quiet and ignorable, then adds arpeggios and gets louder and less ignorable as time goes by (and urgency increases), said David Rose, CEO of Vitality.

Absolute ease of use is also critical when addressing a population that may not be very technology savvy.

Some of these devices should be as easy to plug in and use as a nightlight, said Tim Twerdahl, VP of products for WIMM labs.

“It’s easy to make things very complex, it’s hard to make them easy,” said Rose.

Cost, as always, is a factor. But if a person’s prescription costs $10 per pill, then a $10 smart pill bottle  may not be beyond the pale. Another limiting factor is the current state of the art of battery and display technology which has not come a long way since the first digital watches came on the scene, said Bill Geiser, CEO of Meta Watch.

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But while the New York-based start-up has yet to become a well known brand, the company believes its back-end technology, not its current end products, can position it for a break-out year. Peek is expanding to low-cost smartphones and potentially other connected consumer electronics devices. Rather than be swallowed up by smartphones, Peek is betting it could actually ride the same wave of mobility and connectivity to success with a product strategy change. It’s a hefty-sized wager, perhaps even a last ditch effort, but one that CEO Amol Sarva believes can pay off.

In a meeting I had with Sarva this week, he told me that in a year from now, the Peek devices and service plans, which currently make up a great majority of the company’s revenue, will become just 20 percent of the business as Peek’s software eventually powers dozens of devices around the world. Sarva said Peek has built its software to work on Qualcomm’s BREW platform and is also outfitted it to work on chips from MediaTek, a fabless semiconductor company. He also said manufacturers in Asia are now poised to use those components and build very low-end smartphones that leverage Peek’s messaging software and cloud service, which will sell in emerging markets such as India, Africa and Latin America. Sarva expects five Peek-powered phones to launch in the next month and 30 phones by this time next year.

While emerging markets are slowly embracing smartphones, Sarva said there will be a distinct need for ultra-cheap and simple devices that will sip power and be efficient with network resources, especially in areas that have yet to see 3G networks. He said Peek’s software, which is designed to work on very simple and inexpensive 100 MHz processors, allows manufacturers to build affordable smartphones that could retail for as little as $50 unsubsidized.

As we’ve written prior, many manufacturers are looking to the free Google Android operating system to build cheap smartphones. But the hardware requirements of Android are still more rigorous than commodity feature phones, so Sarva says there’s an opportunity to ship cheap, but competent, hardware using simpler processors and less expensive components. These could undercut prices of Android devices, while still providing more robust messaging and applications through Peek’s platform. The latest version of the Peek software can handle push e-mail, works in areas with poor or marginal cellular coverage, offers Facebook and Twitter integration, includes location support and has the ability to run light-weight Peektop apps.

“This is a huge opportunity for us,” Sarva said. “We’ve built technology that no one cared about but now we’re suddenly being approached by guys who have the hardware that want to make it smart.”

Even with Sarva’s optimism, the cards are still stacked against Peek in the long run. With more and more cheap Android phones on the way, Peek will be have to prove itself against an army of Google devices. And it’s a question if carriers will embrace Peek when they’re likely looking to sell more profitable smartphones and bigger data plans.

Sarva believes there’s also another big opportunity brewing in helping connect consumer electronics devices. He said Peek is talking to major CE brands about including Peek software in everything from photo frames and cameras to tablets, clock radios and MP3 players. He said companies are looking to leverage Peek’s work in connecting to cellular networks as a way to connect their devices.

He said by leveraging Peek’s simple software, electronics manufacturers can strike a blow against the increasing threat of smartphones by building in connectivity. “If you’re a camera maker, you can put in 3G and move in the direction of a phone,” he said.

The opportunity in what some call the Internet of Things will take longer to materialize, said Sarva, because CE manufacturers take more time to act. But he said that could also be a major part of Peek’s business in the years to come.

That doesn’t mean Peek is giving up on its small messaging device, the latest of which the Peek 9 rolled out in September. Sarva said the company has shifted its business away from consumers to corporate customers, who are looking to Peek to equip manual and remote workers with messaging tools. He said dozens of hotels are handing them out to the housekeeping staff to help them report their work progress while trucking companies are giving them to drivers. Some fast food chains like Panda Express and Sonic are also trying out the use of Peeks to track incoming orders.

He said even as the smartphone grows in importance, consumers are still holding on to existing devices like laptops and are adopting new ones like tablets. That, Sarva said, shows that people will be carrying multiple devices well into the future. And many service oriented-companies, in particular, may be inclined to rely on cheap messaging devices as essential tools for low-end workers.

Peek, which has raised $20 million to date, has always went against the grain, favoring simplicity (sometimes to an extreme) in an increasingly complicated world. This next phase, however, will be very telling for the company. If he’s right, Sarva will prove that the company can find a profitable niche for his software in a connected world. But the pressure will be on as Peek bids to become less of a simpler messaging service and more like the smartphones he’s been competing against.

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Some of the macro trends include an overall increased usage of smartphones and growing consumption of mobile content driving demand for applications and network bandwidth. The emergence of the “Internet of Things” — the connection of machines to the mobile Internet — is meanwhile creating new growth opportunities for carriers and efficiencies for enterprises.

As detailed in the chart below, venture capital investment in the mobile and wireless industry grew to $312 million in the second quarter of 2010, a 2-percent increase over the previous quarter. This capital was committed to 37 deals and represents five percent of all venture capital invested in the quarter. An important factor driving investment is increasing M&A activity and exit opportunities which is providing new capital to VC’s for new deals and improved fund returns.

Segments within the mobile and wireless industry that received that most capital were wireless telecom services, mobile payments, VoIP & IMS, application development and social networking. The largest five deals in the mobile and wireless industry represented 31 percent of capital invested in the quarter, though deal size in the mobile and wireless industry, while trending higher over the past four quarters, is still smaller than the average VC deal across all industries. The majority of startups funded are headquartered in Massachusetts, New York and California, with the California attracting the greatest amount of capital.

I expect the pace of investing to continue to grow and accelerate as the M&A activity increases and firms put cash reserves to work to improve their competitive position. The insatiable appetite for wireless data anywhere anytime will continue to provide plenty of opportunities for startups in the mobile and wireless segment.

Read the full report here

Image Source: flickr user Yutaka Tsutano