We have co-opted seed funds. You know, Y Combinator, that was completely our money. We have secret handshakes with a whole bunch of people. Very dangerous, because word gets out that so-and-so’s money is Sequoia’s money, that would not be a good thing.

This is complete warfare. You have to have the Green Berets in the back line, you have to take the frontal approach, you have to do seeds, you have to do investments. You have to be willing to risk things, otherwise somebody else will put you out of business.

[Instagram] sold completely prematurely. A billion dollars sounded great to the founders. Imagine what Instagram could be. It could be the next Facebook on the mobile phone.”

Doug Leone of Sequoia Capital shares his thoughts on the VC business.

If you are wondering why these retail chains are sleeping with the enemy, the answer is foot traffic. If people are coming to stores to pick up their packages, there is some likelihood that they might pick up other goods. Groceries or Big Gulps, sure, but paper goods and electronics, too. Isn’t that what Amazon is for?

This local-locker move by Amazon is one of the reasons Silicon Valley has been abuzz about a Canadian startup, BufferBox, based in Waterloo, Ontario. It is a simple idea: There will a locker at a certain retail location, which will become your address and you can ship your packages there. Once you get your package, you get an email with a PIN number and that is what you need to open the locker and get your package. BufferBox take a cut of the delivery costs. It is targeting the growing number of people who typically are unable to receive their packages at home during the day when the postal delivery person or the UPS dude calls.

It was started by University of Waterloo, Ontario, students Aditya Bali, Jay Shah and Mike McCauley in 2011, and it was part of the recent graduate class of YCombinator. It has a few lockers in and around the Toronto area. The company has raised nearly $3 million in angel funding. Paul Graham has been high on this company and rumors are that even Jeff Bezos was pretty enamored with them. Mike Issac in a post mentioned that BufferBox lives in a crowded market – ShopRunner and Kiala (in Europe) are two competitors to the upstart. Then there is MissNev, a company we recently wrote about. However, it is Amazon, the 800-pound gorilla, that BufferBox has to worry about.

However, fear of Amazon is enough to get Google or some other giant galvanized into snapping up this startup. I have heard rumors that Google is interested in buying the company for an amount that should get the angel investors singing in the rain.  Google, which is pushing hard to get traction for its Google Checkout service, could use something like BufferBox as a way to get more businesses to use its service. For retailers, the lure of foot traffic is pretty strong.

“Amazon created a whole new opportunity for us,” McCauley told Wall Street Journal. If Google (or someone else) ends up buying the company, he (and his co-founders) can say that again!

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Vidyard, which has been called “a YouTube for business,” has created a platform for enterprise clients that is designed to make it easier to manage, measure and monetize videos that they’ve distributed. It’s not dissimilar from existing online video platforms like Brightcove or Ooyala, and has a lot of the same features — including real-time analytics and customizable video players — but it also has a few key differentiators.

For companies that already have videos hosted on YouTube, Vidyard can hook into their accounts and import videos, or serve them up with custom thumbnails and a customizable player. The platform also has the ability to add specific calls to action within the video, useful for marketers looking to boost sales within the player. And its platform has tools that allow content creators to review videos before they’re published and provide approval for distribution. That kind of feature is useful in creative agencies who send videos to clients for review.

The main difference between Vidyard and other companies in the space might be its pricing: The startup’s monthly plans start as low as $34 a month, although introductory plans are limited in the number of videos that can be served up.

The low pricing underscores a commoditization of the enterprise video market that forced consolidation and shutdown of a number of online video distribution platforms founded and funded three to five years ago. Despite that shakeout, Vidyard joins a number of new entrants into the space, which includes Vidcaster and a Pro offering introduced by Vimeo earlier this year.

Vidyard was part of the Summer 2011 class at YCombinator, and since its launch in August, has been ramping up personnel hiring and working on bringing in new clients. The startup has nine full-time employees, most of whom are focused on engineering, though Co-Founder Michael Litt told us in a phone interview that the company is also adding to its sales and business development team.

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Marshall Stokes, CTO at StoryMixMedia

Austin, Texas’ answer to TechStars or YCombinator shows off its graduating class of startups today (plus 15 other companies) as the third year of the Capital Factory accelerator program comes to a close. While you can view the live stream starting at 7 a.m. PDT/10 a.m. EDT, I went out last week to interview the startups at the Capital Factory office in downtown Austin to give readers the scoop before the event.

I was struck by how product-oriented these startups were, and how all of them had paying customers. I also thought these companies didn’t really spend a lot of time on their “big vision” as some Bay Area startups tend to do. Maybe it’s Austin’s general orientation toward the enterprise market, where products talk, and big vision may get you financing but few customers, or perhaps it’s just the way these startups think. Josh Baer, managing director at Capital Factory and CEO of OtherInbox, told me that each year the startups invited to participate seem to have a theme and this year’s startups were all about traction. “They all had products and paying customers,” he said. As for traction, about half of the previous two Capital Factory graduating classes have gained some with follow-on investors. Five out of 10 received funding, and one is profitable and won’t seek funding.

Now, onto the startups:

SwimTopia. Mason Hale, the former CTO over at Frog Design, went from iconic products to delivering swim team software as a service over the web. SwimTopia is the first product of TeamTopia, which basically aims to become the Google Apps for swim teams, then later, other amateur sports leagues. Hale, who describes his search for a business co-founder in the video, is looking for about $300,000 in seed money.

StoryMixMedia. If I were Shutterfly or Kodak, I’d buy this company in a heartbeat. StoryMix Media was founded in 2011 and is seeking $500,000 for its service which sends out Flip cameras to weddings and then helps brides and grooms piece together the videos their guests take into a video of the event. As Marshall Stokes, CTO of the service, says in the video, it’s also planning an iPhone app so hardware won’t limit the amount of video guests can take.

GroupCharger. GroupCharger may sound like a social networking veneer laid over your alma mater’s request for cash, but co-founder Kirtus Dixon is after something bigger. GroupCharger, which was founded in 2010, helps universities connect to their alumni and find them on social networks. After that point it’s not just a request for donations, but also a way for alumni to create a social network based on their old school ties. Dixon says that churches, high schools and other big life milestones might be right for GroupCharger’s software. GroupCharger is hoping to raise about $200,000 in seed money.

SpeakerMix. This is a startup for your inner Tim Ferris or Steven Covey. SpeakerMix was created last year by two guys who caught the startup bug after high school and happened to have worked in an agency that helped line up event speakers. They decided the old way of trying to book speakers was too cumbersome, lacked a feedback mechanism and was out of date. So they created SpeakerMix where speakers can sign up, others can rate them and event planners can search for folks that range from Lance Armstrong to some-guy-you-never-heard-of-but-is-big-in-his-profession.

HelpJuice. This is the only company without a video, but it too has paying customers. It was formally created as part of Capital Factory after founder Emil Hajric was asked by a friend to build the app (the friend even got his company to pay for the service!). HelpJuice is a service that provides a better customer help page for companies. When a customer encounters a problem they typically try the search page but find a forum-like feature that’s confusing or outdated, so for a fee, Helpjuice turns customer queries into searchable articles that future customers can search more easily. Hajric says the search uses a Google Instant-like feature where articles will appear as the consumer types in his query, which helps the consumer find the right response (80 percent of the time) and hone their question as they search. Hajric is seeking $150,000 in seed funding.

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Many assumed the Toronto native had cracked under the pressure of a rigorous Ph.D. program and was now experiencing a complete mental breakdown. They weren’t buying the ex-computer hacker’s improbable explanation — he’d dropped out the world’s most famous technical university because he was bored. As for the new waiter gig? It was “research” for a new startup that would revolutionize the restaurant industry. Suuure.

Fast forward two years and Suri’s classmates have little choice but to buy his story. Celebrating its official launch today — E la Carte (a graduate of the Y Combinator summer 2010 program) is supplying partner restaurants with handheld, touchscreen tablets that let customers view pictures and read descriptions of food, order meals and pay at their tables without having to wait for the human waiter.

The product operates on the premise that restaurants are “chaotic environments” that haven’t been improved upon much since the first tavern opened in the middle ages.  Orders are constantly mixed up, cooks can’t decipher custom orders written on greasy order slips, waiters spend too much time chasing lost orders — and heaven forbid a party of seven wants to split their bill at the end of a meal. Forget about it.

In fact, Suri says he came up with the E la Carte concept after dining out with a big group of MIT engineering buddies. The check came. Some people wanted to pay with credit card, some people with cash. Everyone wanted to pay for their meal alone. No one could figure out how to split the check.

“This felt like it went on for hours,” Suri says. “I thought if a bunch of MIT engineers were having this much trouble, others must be having the same problems.” (Cue smug wisecrack from the boys at Cal Tech in five, four, three..)

As a result, the E la Carte software comes with an especially nifty feature that allows friends to easily split the bill — either evenly or by menu item — and pay with a combination of cash and credit card.

It has other useful bells and whistles as well, including a timer feature that counts down until an item’s estimated time of delivery (which can be customized to account for restaurant conditions). And to fill those painfully agonizing minutes between ordering spinach artichoke dip appetizer and waiting for it to arrive, the tablet includes entertainment and social media features. Customers can play an array of solo and team games, partake in a little trivia, doodle in a paint brush application and upload the artistic masterpieces — along with their menu choices — to Facebook.

While the Presto tablet uses touch screen technology, it doesn’t exactly look like a sleek iPad, which would likely be broken in five minutes in a family-friendly restaurant environment. Instead E la Carte is supplying restaurants with heavier, more durable hardware that happens to be coated in rubber. Much of the product’s heft is devoted to a heavy-duty battery that can last a day without a charge, as well as a credit card reader so customers can pay at their tables.

E la Carte has 15 employees (14 are engineers and most are from MIT) and Suri requires those without restaurant experience to apprentice in the service industry before signing on to the project. He believes this strategy gives his tech-heavy crew insight into the trenches.

The team is definitely taking a risk. Hardware-driven startups have had a shaky history of finding success in Silicon Valley. For a grim reminder, look no further than the recent news that e-learning startup Kno scrapped plans for its much hyped tablet and will focus exclusively on software serves as a grim reminder.

But prominent members of the tech world appear to be banking on its success. So far, E la Carte says it has secured more than $1 million in funding from Y Combinator, SV Angel, and prominent tech investors that include founders of Reddit, Gmail and Dropbox, along with restaurant executives from Applebee’s and other major national chains.

After beta testing in Boston, the service is launching in about 20 locations in the Bay Area and beyond. The company has also made a deal with a major American restaurant chain, which it plans to announce later. (A hint might be in the press kit, which lists Applebee’s executives among the initial founders).

Suri says he has received calls from about 100 restaurants that want to get the tablets on their tables. And it’s not difficult to see why some restaurateurs would be interested.  According to company figures based on six months of data from pilot roll-outs in a half dozen locations, restaurants using the system are seeing an increase of 10-12 percent higher sales through “impulse” orders, and 84 percent of guests are making more regular visits.

There are other promising applications for restaurants in data collection. The machines save consumer information and the E La Carte team gets detailed reports on what food customers are ordering, and what menu items they think about ordering based on the amount of time spent lingering over it. As for how customers will feel about their dining preferences being stored for posterity and mined for every nugget, that’s another story.

Suri pitches the tablet by saying it clearly makes a waiter’s job much easier, freeing him or her up to take care of customer-service tasks like quick refills and interacting with guests. And with higher total bills and an automated feature that allows the customer to choose a tip between 15 and 25 percent (or write in a custom amount), he says he isn’t worried about waitstaff getting stiffed on tips.

But with technology that allows customers to realize they can order their Quesada explosion salad with substitutions before a waiter even says, “How are we doing today,” how long is it before customers start to ask whether they even need a waiter at all?

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NewsTilt, a Y Combinator-funded media startup that launched in April to much fanfare, shut down just two months later. How did things go off the rails so quickly? Co-founder Paul Biggar has written a long and thoughtful blog post about how and why the venture collapsed, and there are some useful lessons in it — not just for anyone thinking about a journalism-related web startup, but for startups of all kinds. It quickly becomes clear that virtually everything about NewsTilt was either wrong from the beginning or quickly went wrong, including Biggar’s relationship with his co-founder, and the company’s relationship with its customers or users:

Following the launch, everything started going to s***, and a huge number of challenges to the success of the company had arisen. The biggest of these were the lack of traction from launch, that we had lost the faith of our journalists, and because there were communication issues between Nathan (my co-founder) and I. This combination also killed our motivation. As a result, I made a carefully thought out decision to shut down the company, and return as much money as we had left (about 40%) to the investors.

One of the more glaringly obvious flaws in the company’s makeup is what appears to be a lack of interest in the problem NewsTilt was trying to solve. While the company had an idea of what it wanted to do for journalists — namely, to provide a platform for them to find an audience and theoretically build some kind of business around their content, similar to what True/Slant tried to do before being acquired by Forbes — neither of the founders had any background in journalism. Worse than that, Biggar admits that neither had much passion for the idea either; the startup evolved out of a plan to develop a better commenting system for newspapers.

The NewsTilt co-founder describes plenty of other problems: he and his co-founder didn’t communicate well, they didn’t have enough funding to develop many of the features they had promised to the journalists they signed up, they pitched the company the wrong way to users, they made some bad hires, and so on. But for me, the lack of passion for the problem is the biggest red flag in Biggar’s post-mortem. If the founders of a startup aren’t passionate about what they are doing — so much so that it keeps them up all hours of the day thinking about it — then success seems unlikely, if not impossible. According to his co-founder, Biggar was on his honeymoon for most of the month of May.

NewsTilt’s founders seem to have taken on the challenge of helping journalists find an online audience because they thought it was technically interesting, or because there was a potential market for it. But as David Cohn — who has built his own journalism-related startup called Spot.us — noted when NewsTilt’s closure was first reported earlier this year, technology won’t necessarily solve what is essentially a social problem in the media industry. As he puts it: “I think… the folks at NewsTilt put too much emphasis on their tech-wizardry and the idea that they would build tools for journalist and all of a sudden POOF – journalism would be solved.”

Unfortunately, as Cohn points out, there is no magic bullet that will suddenly save the media industry, or transform ordinary journalists into independent-thinking online media businesses. And as NewsTilt discovered, there is also no amount of funding or technical wizardry that can replace a passion for the problem you are trying to solve. The most positive thing to come from Biggar’s analysis is that at least he failed quickly.

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Post and thumbnail photos courtesy of Flickr user Alex Proimos

Lars Hinrichs, who founded the European social network Xing and sold his stake in the company to German media giant Hubert Burda Media last year for $57 million, has launched a new startup fund/incubator called HackFwd in partnership with several members of the European startup community. The fund describes itself as a “pre-seed investment company,” which Hinrichs says has the ability to give startups the connections and resources they need to get to the next level. But doing so comes with a hefty price: In return for its initial investment, HackFwd asks for 27 percent of a startup’s equity.

This sparked some critical reaction on startup-focused discussion forums such as Hacker News, which is associated with Paul Graham’s Y Combinator — a startup incubator similar to HackFwd. Y Combinator takes anywhere from 2 to 10 percent of a startup’s equity, although companies are only in the program for three months. TechStars, another pre-seed startup fund, takes between 6 and 10 percent. Hinrichs said in email that the 27 percent stake was justified for a number of reasons, including:

• We give much more money than ycombinator. It’s a commitment for one year instead of 3 month. If you do [the] math it’s the same as ycombinator.
• We have highly specialized human resources available for the startups… together with the board, we offer knowledge you can’t buy to get you faster to success.
• Since we are also marketing the companies through our plattform we assume for those companies who actually need more funding, that we can [offer] better and more lucrative terms for round 2.
• We are looking for companies who just make good revenues and will be shortly cashflow positive and who actually don’t want another round.

Hinrichs said the fund markets itself as paying the salary of a founder because that’s what keeps many European entrepreneurs from starting new companies. “We bring people into entrepreneurship [those] who wouldn’t do it if this offer doesn’t exist,” he said, adding that he and his partners “tested this with over 40 geeks from around the world and got positive feedback.” He added that the European startup community is different than that of the U.S., where there is a lot more competition for funding. “We are benefiting from market inefficiencies and the growing funding gap” in Europe, he said.

The partners behind the fund include the former head of European recruiting for Google, a former global business analyst with UBS Wealth Management in Zurich, the former CEO of Burda Digital and the creator of OpenOffice. HackFwd’s site has a PDF that outlines what founders get in return for an investment from the fund, a prototype of a contract called “the Geek Agreement” with explanatory notes, as well as a “dilution calculator” founders can use. There is also an amusing diagram of the average startup’s decision tree and a humorous video introduction with a voiceover by British actor and comedian — and celebrity Twitter user — Stephen Fry (embedded below).

The document describing what HackFwd offers says that the fund promises to move quickly when a startup gets referred to the group (startups can’t apply, but must be contacted by someone associated with the fund). HackFwd says that after filling out a “business model framework” documents, a startup may be asked for a formal interview; if so, the fund commits to “give you a clear answer within 72 hours of that meeting.” It also promises to handle all the legal and administrative duties required, and to help market the startup through its network.

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These redesign is part of a network-wide overhaul — NewTeeVee will soon get a facelift as well — meant to surface content from our various blogs for your reading pleasure. Speaking of reading recommendations, here are some of the best pieces worth your attention.

Cody Willard: Cars, PCs and transistors– how to trade off a repetitive history of industry cycles. Willard, one of my favorite stock gurus, makes an interesting link between the ever-shrinking number of car makers and PC companies.

Di-Ann Eisnor: Why the Future of Location-Based Advertising Looks Like Twitter. If you want to understand the challenges of the mobile advertising marketplace, look no further than this in-depth essay by the CEO of recently shuttered Platial.

Startup Company Lawyer: A comparison of various different series of seed financing documents, including those from popular startup schools such as Y Combinator and TechStars.

Social Media Kills the Database: A new web startup guy laments the relational database and how companies of his generation are looking to open source software such as Hbase and Hadoop to break the tyranny of the relational database. It is a remarkably coherent and easy-to-understand essay and worth reading.

Paul Kedrosky: Hitchhiker’s Guide to Financial Regulation.

The panel, which featured Paul Graham from Y Combinator, David Cohen from TechStars, Naval Ravikant co-founder of Venture Hacks and Josh Baer from Austin’s Capital Factory, offered much of the expected commentary on how the ability to build cheap startups has changed the funding and entrepreneurial landscape. We at GigaOM have covered that, even the debate on whether you need to found your startup in the Valley (answer: if you want venture capital you have to go to the Valley), so what was most interesting was how narrow the definition of entrepreneur was for these programs.

Someone on the panel tried to make a point about how not all startup entrepreneurs are young, but then backed off of that when Cohen said the median age of a TechStars participant was 27 — ditto for those in Y Combinator. When an audience member asked why the programs didn’t accept older entrepreneurs, the consensus onstage was that it’s much more difficult to find two founders who are older, ready to pull up stakes and move to a new place to risk it all on building a company. And no one wanted to back an entrepreneur without a co-founder.

This makes sense in some ways. Investing in startups is risky, and all investors look for ways to mitigate those risks. Forcing folks to have a founder is simply part of that risk-mitigation formula, although it tends to force out older entrepreneurs. It’s also a reason why Valley companies tend to do better — they can find capital because they’re closer to their investors, eliminating travel and risk for their backers. So this brings me to the other elephant in the room, or rather the one that wasn’t in the room.

There were very few women — one in 10 would be a stretch. One actually asked about the lack of women in the programs, prompting Baer to note that of the 15 startups that Capital Factory has worked with, five of them had women as co-founders. And TechStars tweeted that a mere 11 percent of its founders are women (I have yet to hear from anyone from Y Combinator). But instead of wondering where the women are, or say you wish they were more (as a few panelists did), why not ask what is it about these programs that either make it difficult for them to accept women or make women not even bother to apply (or show up for panels on the topic?)?

I’ve put forth some ideas as to why there are so few women tech entrepreneurs, as have others. Do female entrepreneurs not get into these programs because they don’t fit the formula? Then we need to be talking about the risks to a startup’s success that women pose — we need to bring that into the open. If that’s not it, then we need to figure out why women aren’t in these programs. Are they not applying in equal numbers? My hunch is they don’t.

Doesn’t that mean we need to figure out why? Are there not enough of them? What opportunities are being denied to women, and more importantly, what are the ideas and businesses that venture firms lose out on? I welcome your thoughts and comments.

For the GigaOM network’s complete SXSW coverage, check out this round-up.