Five Austin CEOs, founders and executives generously gave us their thoughts on the future of Austin tech. Overall they were quite optimistic on the future of Austin tech, seeing the industry overcoming even its biggest challenges in 2015. Their thoughts range from venture capital flow to networking to healthcare tech, and everything in between.
Predictions below from:
Joshua Baer, executive director and founder of Capital Factory
Julie Huls, CEO & president of the Austin Technology Council
Eric Simone, CEO and founder of Clearblade
Jason Seats, managing director of Techstars in Austin
Jeremy Bencken, co-founder & chief product officer of Written
Joshua Baer, executive director & founder of Capital Factory
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Will we see the type of growth we saw in 2014, in 2015?
We’re not stopping yet! I think 2015 will be similar to 2014 in terms of fundings and acquisitions, with a slight increase over last year. There are a lot of great companies that did seed rounds in 2014 and will be doing Series A rounds in 2015, and ones who did Series A, B or C rounds and will be doing follow-up rounds to fund continued growth.
We’ll continue to see great entrepreneurs moving here and big companies from Silicon Valley and around the world opening up Austin offices. There will be even more density downtown with the renovated 5th floor at Capital Factory, General Assembly and WeWork launching, Google Fiber’s downtown showcase, ATT’s downtown innovation center, and Atlassian’s new office.
Is there one particular sector you think is set to boom?
Mobile phones and tablets are still the megatrend driving everything in technology and most other industries. More people now access the Internet through smartphones and tablets than a computer and that will create opportunities to disrupt almost every type of business. If you can’t easily articulate how mobile fits into your strategy, you might need a new one.
I think the next megatrend will be consumer 3D printing. What we have now is the beginning of commercial 3D printing — it’s primarily used for prototyping and low-volume production. When there is a 3D printer in every home and office that can print materials like metal and glass it will disrupt the entire manufacturing supply chain. 90% of the costs of getting a product to the consumer will go away - no inventory, no packaging, no transportation or delivery. There is also a huge opportunity to simplify the design and creation of the 3D models so that anyone can do it. I don’t think 2015 is the breakout year for this, but it’s the area I’m most interested in right now.
Two of the market segments that are most exciting are education and digital health. Both are the cusp of major changes driven by mobile, big data, and wearables. We’re seeing a clear surge in the number of entrepreneurs focused on these problems. The new Dell Medical School will bring additional talent, resources and funding for digital health initiatives.
Are there any tech startups in Austin our readers should keep an eye out for?
Two companies I would keep my eye on are Sparefoot.com and WPEngine.com — both have raised tens of millions in venture capital from outside Austin, have about 200 employees and strong business models with massive growth. And they are run by some of the most amazing entrepreneurs I have ever met. There is one more I’m really excited about but it’s still in stealth mode.
Another really interesting company that hits all of the trends I’m interested in is Tevido Biodevices. They are 3D-printing human tissue to help with cancer treatments. How awesome is that! I think 2015 will be a big year for them.
Julie Huls, CEO & president of the Austin Technology Council
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Will we see the type of growth we saw in 2014, in 2015?
I am not an economist, nor a forecaster but everything we're hearing from executives is that barring any major world catastrophe, they are optimistic and planning on steady growth and expansion in 2014. The next two years for Austin, I also believe, will see an unprecedented number of acquisitions, IPOs and funding events. Our market's model will continue to prove not just enviable around the country but effective in terms of setting the pace for innovation-based economies. We have a very unique leadership opportunity.
Is there one particular sector you think is set to boom?
Austin has a very, very unique opportunity with the new Dell Medical School. Our 30-year history in semi-conductors and software and our burgeoning life sciences sector will have an impact in one of the most promising arenas in the industry. For us, our depth and strength in software will continue to evolve and support what's happening in medical technology and that includes everything from connected fitness to health IT to bio and body tech, digital health, etc. As consumers take more responsibility for their health, as our population ages and as technology becomes more accessible and affordable, I think there will be continued convergence between what we know as traditional tech and science-based technologies (biotech, pharmaceuticals, medical devices, etc.). The healthcare industry has also been an obvious technology laggard, but I think we're seeing a change there, too as consumers have the option to choose providers.
Are there any tech startups in Austin our readers should keep an eye out for?
You know we have lots and lots of favorites, but generally, the early-stage companies we're watching (outside of med-tech and life sciences) are those disrupting in real estate and financial services (banking, not payment). I also think anything related to integrating technology into government is a special area of promise¬– infant-stage but very promising. Consumers are desperate for more transparency, as are elected and bureaucratic government approaches to managing information are ridiculously out of date and costing taxpayers too, too much. I think there will be a tipping point– albeit one that will be painfully slow in the making-- in the next year or two. I would love to see Austin and Texas take the lead here, too. We have nothing to be afraid of and nothing to lose.
Any big problems that Austin tech needs to tackle?
We need to not focus on developing new specialties but instead deepen our commitment to making what we're already good at enviably successful. Markets around the country already covet our lifestyle, cost of living, tax advantages, history and depth in technology, our industry's engagement within the community, not to mention our "hard" assets like our incredible educational institutions and dedicated entrepreneurs who love living and creating here. Now, our job is to pick up our pace at being more competitive and for us that means reducing redundancy and overlap in terms of services (take STEM education services as one example) and getting super aggressive about integrating our tech leaders into our regional schools, colleges, universities. The 30-year disconnect between education and technology has caught our tail in the door but unlike other markets, Austin actually has a chance of fixing that because of our industry's engagement and commitment to Austin. It's also time to put the pedal to the metal. I've watched and listened to other markets like San Diego, Raleigh-Durham and Portland for years talk about creating an ecosystem like ours but the pace of moblization of resources seems to be increasing as cities focus on creating Innovation Economy jobs.
How do you think the Austin startup community will be different in 2015?
I think startups will get more engaged in helping to address some of our regional issues like integrating tech into what's happening within our region's educational institutions. We laid important ground work for it in 2014 and saw/engaged a much higher number of early-stage entrepreneurs than in previous years. I think the "next generation" tech leader might even have more passion for getting involved in issues that impact the community-- which impacts their company's bottom line.
Any other thoughts, observations, or reflections?
Go Broncos!
Eric Simone, CEO and founder of Clearblade
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Will we see the type of growth we saw in 2014, in 2015?
The growth will continue at its current pace but lack of venture capital will keep it from accelerating. I predict companies will continue to have a hard time raising seed and Series A capital. Start-ups will have to get more efficient with their cash and temper their expectations on the size of their Series A round. This is actually good for the marketplace; it reflects a maturing process in how investments are vetted by investors – more scrutiny on real fundamentals.
Is there one particular sector you think is set to boom?
Enterprise Mobile and Internet of Things. We are just beginning to scratch the surface on Enterprise Mobile. Most businesses have yet to launch their first enterprise mobile app. In addition, the big companies have spent a significant amount of time and money to launch their first enterprise mobile apps. We are seeing our customers reevaluating their methodologies and tooling to address the ever-changing mobile market. I also see momentum growing in services businesses that enable business portability – in healthcare for remote patient interactions, wearable devices, retail with PoS and payment, the list is long.
Are there any tech startups in Austin our readers should keep an eye out for?
Here are several exciting start-ups that I am following and invested (or investing) in:
• Toopher
• Thread
• Umbel
Any big problems that Austin tech needs to tackle?
The real problem in my opinion is seasoned leadership and sales talent. There are dozens of exciting start-ups here in Austin, many of whom are in search of experienced C-level leadership and sales people. Those folks are in high demand and typically need to be searched for nationally as the pool for this type of talent is shallower here in Austin that in other areas.
How do you think the Austin startup community will be different in 2015?
More. More incubators, more start-ups, and more money will be put to work in 2015. Unfortunately I also think more start-ups will fail to raise the funding they need because the demand for funding will outpace the availability of capital. I believe we will see more angel investors putting money to work in 2015 but it will be hard for these start-ups to raise the series A capital they need to progress their businesses.
Any other thoughts, observations, or reflections?
I believe we will see start-ups adjust their expectations on fund raising and focus on achieving profitability earlier. The companies that are able to keep their monthly expenses at a minimum and achieve cash flow positive status will have much more staying power for the long term.
Jason Seats, Managing Director of Techstars in Austin
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Will we see the type of growth we saw in 2014, in 2015?
Who knows! 2014 was a year that saw a lot of peaks in the venture market. Is this a bubble? Are we at a market top? If there is one thing that history has taught us well it's that it's foolish to try and make such predictions. As an investor, I do get uneasy as the prices of equity steadily rise, but as I've learned from great investors like Brad Feld and David Cohen, the key to venture investing (or maybe more correctly 'a' key to venture investing) is consistency. Putting capital to work at a steady pace means that you are taking advantage of down markets and not over extending in up markets.
For entrepreneurs, the best advice I could give is 'this too shall pass'. You should envision many different paths that the future can take, and think ahead of time about how you'd operate your business in those environments. When money is cheap, many things get expensive (retaining talent and real estate as a prime example). When the economy and capital markets get weak, things you thought you could count on (debt capacity, customer contracts) tend to start to disappear on you. If you get caught by surprise at either end, you are at a disadvantage.
Is there one particular sector you think is set to boom?
Again, who the heck knows?
There are certainly sectors that I'm rooting for. Anyone who knows me well, knows that I can't wait for the days that autonomous cars are commonplace. Pretty doubtful that'll be 2015, but wouldn't it be sweet! It'll happen sooner than most people think though.
Other gigantic sectors that are just desperate for the next wave of innovation are healthcare and education. These could happen at any point because the barriers are not technological, they are political and structural. On the tech front, I'm hopeful about energy tech, disease research, genetics, 3d printing/distributed fabrication, and generally any problem space where we are making the world more programmable.
Are there any tech startups in Austin our readers should keep an eye out for?
I think everyone in Austin can feel ownership of the amazing companies being built here, I certainly do. I'm a proud supporter of all startups in Austin.
Some recent companies I've had the pleasure to come across that didn't go through the TS program that I'm excited about are - RealSavvy, Chiron Health, and Togga.
Any big problems that Austin tech needs to tackle?
Austin as a city is still working hard at building resource depth. What I mean by that is while we have all of the ingredients to make great companies here, there is just enough scarcity still that it can be challenging to get those resources aligned. The things I'm talking about here are talent, capital, real estate, etc. I've only been in Austin for a year and a half and the change over even that short interval of time is easy to see, so I'm extremely optimistic at the direction we are headed, but compared to other more mature markets, we've still got work to do. In 2015, you'll see new funds launching, new co-working spaces open, and another 20k or so people move to town. On all resource fronts we should have a more fertile landscape a year from now than we did a year ago.
How do you think the Austin startup community will be different in 2015?
I don't think it'll look all that much different in 2015 other than just being richer. You've got accelerators, VCs, universities, founders, big companies and support infrastructure like the Austin Chamber and ATC all pushing hard at building Austin to be bigger and better. Even though all of these efforts are independent and to some extent uncoordinated there is still structure unfolding. Harmony of purpose but diversity of approach is a great recipe for a robust system.
Any other thoughts, observations, or reflections?
I'm just happy to be here. As I mentioned, I'm a relative newcomer to Austin (along with a lot of other people) and I'm still learning what it means to be an Austinite. There are decades of history in tech here and I'm grateful to have an opportunity to participate in the future of this great city.
Jeremy Bencken, co-founder & chief product officer of Written
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Will we see the type of growth we saw in 2014, in 2015?
The startup scene in Austin will get a lot more active in 2015. Companies like TrustRadius, Cratejoy, Pivot Freight, Nuve, and Equipboard (to name just a few) raised Series A funding and will be scaling up and create a lot of excitement. Spredfast, WPEngine, Sparefoot, uShip, Bigcommerce, Volusion, and Spiceworks all have the potential to have monster exits. It's a great time to be here.
How do you think the Austin startup community will be different in 2015?
I expect 2 trends in 2015:
1. Consumer Internet/mobile will begin to rival Austin's historical systems management and enterprise stronghold. This will lead to more funding and beget more talent. Just as an example, a team of very seasoned consumer web execs just started deily.org, a kind of Rapgenius for religious text. In the past, a startup like that would have needed to move to Silicon Valley to get funding or recruit. Now, we have the talent and capital to build ventures like that.
A handful of consumer web 'unicorns' (HomeAway, RetailMeNot, Indeed) are to thank for attracting so much consumer talent to Austin. They're doing for Austin what Tivoli and Trilogy did for Austin in the late 90's.
2. The companies that exit this year will distribute more wealth to more employees than in the past. Many of the companies in the on-deck circle for exits are relatively capital efficient and run by their original founders. As a result, when they do exit, I expect more of the proceeds to end up in the hands of the teams based here. HomeAway and RetailMeNot acquired successful, existing businesses using vast pools of venture capital. Naturally, that left less room on their cap tables for management and employees. So if we see some capital efficient, founder-run companies exit in 2015, look for more new millionaires than we've ever seen before. And unlike Silicon Valley, since it doesn't cost 1-2 million to buy a decent home here, that capital will be free for better uses, like angel investing.
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