San Diego Xconomist Evan Snyder has been called a “stem cell revolutionary” and is regarded as a father in the field of stem cell research. When we talked in his office at San Diego’s Sanford-Burnham Medical Research Institute, he told me he isolated the first neural stem cell in the mid-1980s, as well as the first human neural stem cell in 1998. Snyder’s team demonstrated the concept of stem cell pathotropism (the ability of stem cells to home in on injured or diseased regions of the brain) and helped to establish the concept that stem cells can be used to regenerate and repair diseased and damaged tissue.

He arrived in San Diego in 2003 to serve as a professor and director of the Stem Cells and Regenerative Biology Program at the Sanford-Burnham. He also is a scientific leader and researcher at San Diego’s new $127 million Sanford Consortium for Regenerative Medicine. While Snyder is focused primarily on basic research, he talked with me about the prospects for commercial development of stem cell technology—and how the much-publicized regenerative properties of stem cells, while holding tremendous long-term promise, will likely not be the focus of the first market successes. Our conversation, which I’ve condensed and edited, follows here.

Xconomy: My general impression is that much of the early promise and enthusiasm over stem cells has been dissipating.

Evan Snyder: I don’t think I would agree with that. I think there’s an enormous amount of promise.

X: I mean in terms of using stem cells in commercial applications.

ES: What the companies and the public thought was that it wouldn’t take any work, that you’d have a cell and you would sprinkle it with pixie dust and everything would get better. That was certainly unrealistic. It might have been fomented by scientists in the early days who were just totally enamored of the fact that you had cells that could read environmental cues and go down different pathways, and they seemed to do this based on their own intrinsic programming.

But the fine-tuning in the use of stem cells still comes down to really understanding the biology of the cell. That also entails understanding the biology of development, because … Next Page »

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On the iPhone, the first page of the home screen—the one you see when you wake up the device—has room for only 20 apps, counting those in the dock. The iPad home screen holds 26. For me, that means the home screen is prime real estate, reserved only for the apps I use most often. So it was a big deal when I decided earlier this month to demote Instapaper to a folder on page two and give its spot to Pocket.

This reborn reading app—which was known until April 17 as Read It Later—earned its coveted position by doing just about everything Instapaper does, but with some extra visual pizazz. And what is that, exactly? Once you’ve installed the Pocket plugin or bookmarklet in your desktop or mobile Web browser, you can save anything you find on the Web—an article, a video, a photo, a recipe, or even a cool pair of glasses at Warby Parker—to your Pocket account. Then later you can peruse it, sans ads and other clutter, using the Pocket app on your mobile device.

Along with Instapaper, Readability, Longform, Zite, Flipboard, and others apps, Pocket is part of a new generation of services that treat the desktop Web as a place to discover content, but let you shift your actual consumption of that content to a more comfortable time and place—i.e., when you’re vegging on the couch with your iPad, or standing in line at the grocery store with your smartphone.

Pocket founder and CEO Nate Weiner

I wasn’t a big fan of Read It Later. Its design was dark and ponderous, which meant its only big selling point was the fact that it worked on more devices than the other reading apps (there were Read It Later apps for iOS, Android, and the Kindle Fire). So I was all the more intrigued by the app’s remarkable transformation into Pocket, which has a far friendlier design and a clearer value proposition. (One problem with the old app was that it wasn’t obvious that it could be used to save videos and other non-textual items.) I wanted to get the behind-the-scenes story of the relaunch from Pocket’s founder and CEO, Nate Weiner, and I finally got a chance to visit him at the startup’s downtown San Francisco office this week. Our edited conversation is reproduced below.

What’s clear from our talk is that Weiner pays close attention to the changing habits of consumers on the Web, and that he hopes to position Pocket to leapfrog over the other time-shifting apps by making the “save for later” experience on Pocket as simple and compelling as possible. Up to now, explaining what the app does and how it relates to the desktop Web has been tricky. So even with a user base of 4.5 million people, the app is reaching “maybe only 1 percent of the entire available market,” Weiner says.

But the battle for the other 99 percent is being fought right now. As more people buy smartphones and tablets, the contrast between the noise, clutter, and commercialism of the desktop Web and the ease, comfort, and cleanliness of mobile app experiences will only grow more acute. So it’s really only a matter of time before time-shifting one’s consumption of Web content using apps like Pocket becomes as common as time-shifting one’s television viewing using a DVR. The question is who will be the new TiVo—the company that makes saving Web content so easy it’s no longer considered a geeky chore.

All of this is scary stuff for publishers, of course. They were just starting to figure out how to monetize content on the desktop Web when the advent of the iPhone in June 2007 changed everything about digital content consumption. (Weiner, now 28, built the first version of Read It Later that same summer, while holding down a day job at a Minneapolis Web design firm.) At Pocket, Weiner says, the goal is to find ways to turn the time-shifting habit into a plus for publishers, perhaps by offering them an inside look at the data the startup gathers about how people use and share content once they’ve “Pocketed” it. In the future, Weiner says, Pocket might even provide ways for publishers to sell content or advertising through the app. (Pocket doesn’t currently show ads, and wouldn’t until there’s a fair way to share the revenue with publishers, Weiner says.)

Pocket has hired Mark Armstrong, the founder and head curator at Longreads, as its editorial director, and part of his job, according to Weiner, is to reach out to publishers and explore the various options for cooperation. “Right now there is no silver bullet, and the most important thing for us to be doing is to experiment and see what works and what doesn’t,” Weiner says. He says he’s acutely aware that the fortunes of Pocket, which is now eight employees strong, ultimately rest on the health of the content industry: “If [we] don’t figure it out, there will be no content to save, because nobody will be writing it.”

Here’s the full interview.

Wade Roush: From what I’ve read, you’d been planning the rebranding for a long time—actually, ever since you closed Read It Later’s $2.5 million Series A round back in early 2011. What was the thinking behind the change?

Nate Weiner: Yeah, I knew that we needed to rebrand by that time. For one thing, we had launched this feature on Read It Later called Digest. With Pocket, we have killed it off, but it was a magazine-type view that would auto-categorize things. I learned pretty quickly from that that people didn’t care about the categorization, but the thing they liked was the view. So I knew that the visual piece had to be brought forward a lot more. But more important, … Next Page »

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Two Boston-area companies that don’t do a lot of talking in the media are making some noise today.

They don’t have much in common, except that each is working on a really big technological problem in society with a pretty novel approach (and they’re getting some funding news out before the holiday weekend). As usual, there’s much more to these companies than just their funding news, so stay tuned.

—Liquid Metal Battery, an MIT spinout working on grid-scale energy storage, has raised $15 million more to complete its Series B financing. Khosla Ventures led the round, joined by Bill Gates and energy firm Total. I have no idea what a liquid metal battery is, but presumably it could be a more cost-effective way of storing energy from sustainable sources like wind and solar, as compared to existing alternatives.

—Recorded Future, a data analytics startup based in Cambridge, MA, has raised a $12 million Series C round led by new investor Balderton Capital. Previous investors Google Ventures, Atlas Venture, IA Ventures, and In-Q-Tel also participated in the round. Recorded Future is developing analysis and visualization tools to help government agencies and financial institutions make predictions based on data across the Web.

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Very few people in the mobile industry will disagree that mobile payments are today’s biggest challenge for developers. In the Apple universe, there is a strong solution to the problem: Apple simply requires users to register their credit cards before they can use any services. But this approach only works for a very small segment of high end users in the developed world. For ecosystems outside of Apple’s, mobile payments simply do not work. Inconvenient credit card forms that are impossible to complete on the mobile device, fragmented carrier billing solutions, and tons of other methods have been tried without any real success. As a result, developers on platforms like Android are able to make much less money per user than they are making in Apple’s ecosystem.

As a lot of app makers gravitate towards freemium business models driven by in-app transactions, the lack of payment mechanisms becomes even more of a problem. There is, however, one emerging solution. If you look at the average revenue per user (ARPU) for social games powered by in-app transactions, such as OMGPOP’s Draw Something, it’s clear that the most powerful way to make big money is through what I call nanotransactions. Microtransactions in the range of $1-$5, usually implemented via carrier billing services such as premium SMS, provided the monetization basis for the Mobile 1.0 era of ringtones, wallpapers and Java/Brew games. In nanotransactions, the values exchanged are a few pennies only, but the high number of these small in-app transactions makes up for the size, often leading to much higher revenues overall per user of $10 and higher.

The only big problem with nanotransactions is that the value of the transaction is way less than the effort of actually doing it (completing credit card authorization, sending a premium SMS or even typing a PIN code to access your wallet). Unfortunately, given the very nature of money (which requires security, fraud, data protection, and proper regulatory compliance), it is just physically impossible to improve the user experience much.

But I think this problem can be solved with the help of virtual currencies that are not directly linked to real money. Bear with me as I explain.

As money theory suggests, a currency can successfully function if it satisfies two criteria: It must be backed by real value (just as old currencies were backed by gold) and it must be liquid (meaning it could at any time be freely exchanged into that value). Now, in the global mobile ecosystem, there are a lot of valuables that could be used to back virtual currencies, the most notable of which is consumer attention and engagement.

Already, billions of dollars per year are being spent on mobile marketing, which means that mobile users are generating value for advertisers simply by doing things on mobile, like using social networks, browsing websites, or downloading apps. In fact, if an advertiser pays an ad network or another promotional channel $1 per promoted app download, the assumption is that the user installing that app will generate at least that much value just by choosing to download the app, or in other words just for his or her own willingness to try it out. From that perspective, every aspect of user engagement has value to it—from checking the weather on a website to browsing an app store and downloading apps.

Now, if a portion of that value were passed back to the user (just like all traditional loyalty programs do with points, airline miles, etc.), and if it were stored and made available for the user to freely spend, it would create a currency solution that is not linked to real money at all. From the example above, even if 50 percent of the $1 value were passed on to the user himself, downloading just one promoted app would top up the balance by $0.50. In the nanotransactions economy, where individual items are priced at a few pennies each, that’s real money.

The best part is that the virtual nature of the currency would solve all the problems of the traditional money, like regulatory security requirements, high carrier taxes, inconvenient payment data collection forms, and so on. Transactions would be as simple as pressing one “buy” button, without any registrations and PIN codes—even simpler than on iTunes, where you still have to type your password.

My company, GetJar, launched just this kind of consumer loyalty based virtual currency platform, GetJar Gold, earlier in the year. The program rewards GetJar users with Gold “coins” for app downloads. We also provided developers with a software development kit that they can use to incorporate GetJar Gold into their apps and accept Gold coins as a way of payment for in-application items. Across the board, developers using the solution have seen 100 percent increases in conversions when augmenting the traditional payment options with the virtual currency.

I believe all the conveniences of virtual currencies are forcing a major shift in the near future and that this mechanism will account for as much as half or more of all in-app transactions. I will be very curious to see the dynamics between “local” (i.e. supported in one app only) and “global” (supported across a range of apps and developers) virtual currencies evolve. While each type does have specific advantages to an individual developer, I personally believe that ultimately, a few global currencies will become dominant. In any case, the mobile industry will benefit massively from much improved monetization for the developer and better user experiences with a greater choice for the consumer.

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A bunch of small-ish deals (and some not so small) to catch up on from the past week…

—Hopkinton, MA-based EMC (NYSE: EMC) has acquired Syncplicity for an undisclosed price. The cloud-based file management startup, based in Silicon Valley, will be integrated into EMC’s Information Intelligence Group. The move is viewed as helping EMC compete with Dropbox for big enterprise customers.

—Boston-based TurningArt has raised $1.5 million more from NextView Ventures and other investors. The Web startup lets you browse for independent artwork and click to order prints.

—Cambridge, MA-based Spindle (fka Biff Labs) has raised $775,000 from investors including Polaris Ventures, Atlas Venture, Greylock Partners, SV Angel, and Ray Ozzie. The company is trying to build a “discovery engine for the social Web.”

—Boston wireless-networking firm Ember is being acquired by Texas-based Silicon Laboratories (NASDAQ: SLAB) for $72 million plus earnouts. It’s been a long, fun ride for Ember, which started in 2001. CEO Bob LeFort, co-founder Rob Poor, and investor Bob Metcalfe shed some light on the deal and what it means.

—Boston startup Yottaa announced a $9 million Series B financing from General Catalyst Partners, Stata Venture Partners, Cambridge West Ventures, and other investors. Yottaa is building Web infrastructure technology with the goal of helping businesses make their websites run faster on browsers and mobile devices.

—Cambridge, MA-based Ra Pharmaceuticals closed an $8.6 million tranche of its $27 million Series A. The company’s tech platform is designed to generate protein-like molecules that can combat a range of diseases.

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At first glance, the $1.1 million financing announced by Halo Therapeutics on Tuesday looked like your average case of a biotech startup scraping together enough money to get its early-stage compound into pivotal human trials. But this funding was anything but average. That’s because the money came from 12 nonprofit foundations pursuing a common goal: They all want to find new treatments for Duchenne Muscular Dystrophy (DMD), a rare but debilitating muscle disease that leads to early death in young boys. And they all believe Halo might have a promising drug candidate—an experimental pill whose main ingredient was derived from an herb that’s been used in Chinese medicine since 4730 B.C.

Before we review this unusual story of drug development, let’s take a closer look at this week’s news. Halo’s new round of financing consists of traditional grants, plus notes that offer a fixed return to the nonprofits based on specific milestones that Halo achieves while developing the drug, called HT-100. The company expects to begin mid-stage human trials in the second half of this year. “If Halo adds value and we can repay that money, we want to offer [the groups] the opportunity to use it to develop other therapeutics,” says CEO Marc Blaustein. “We want to put the value back into the patient community.”

Halo itself originated from that patient community. It was founded by Minneapolis-based Nash Avery Foundation and Stockbridge, MA-based Charley’s Fund, two groups dedicated to accelerating research and drug development in DMD. Benjamin Seckler, a physician and president of Charley’s Fund, was scouring the medical literature a few years back looking for remedies that might help his son, Charley, age 11. He came across halofuginone, a drug being developed by an Israeli company called Collgard Biopharmaceuticals.

The drug’s active ingredient, made from the Chinese herb dichroa febrifuga, had been tested by the U.S. military as an anti-malaria compound in the 1940s and later was synthesized by the pharmaceutical industry. Blaustein, who is the company’s sole full-time employee, says that experiments in mouse models of DMD suggested that Collgard’s compound has three key attributes: It fights … Next Page »

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The votes have been tallied, and the winner of the Republican primary in Kentucky’s 4th congressional district is…Thomas Massie.

With 45 percent of the popular vote, Massie, a Tea Party constitutional conservative, fended off a couple of establishment-backed competitors in the race. That means he will be the heavy favorite (in the red state) to win the general election for a seat in the U.S. House of Representatives. (More national political context here.)

Why should we care? Because Massie is the founder of SensAble Technologies, the venerable Boston-area firm that was recently acquired by Geomagic. He’s a well-known MIT grad in these parts. And he’s a prolific inventor in the field of touch-based computer interfaces. You can read about his fascinating story here.

Massie is leading a charge to encourage more engineers and problem solvers to get into politics. We will be watching to see how he fares amongst all the pols—and whether more engineers end up following his lead.

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Today Ra Pharmaceuticals CEO Doug Treco will make a presentation at a conference in Las Vegas that will cap off the Cambridge, MA-based company’s weeklong unveiling. On May 16, Ra announced it had closed an $8.6 million tranche of its $27 million Series A round. And today Treco will be describing the four-year-old company’s technology platform, which is designed to generate protein-like molecules that can attack a range of diseases.

Ra is developing a class of drugs called Cyclomimetics, which are protein fragments that have been modified to improve characteristics such as stability, safety, and affinity to disease-causing targets. The company licensed the technology from Anthony Forster, a professor at Uppsala University in Sweden. Ra is funded by New Enterprise Associates, Morgenthaler Ventures, Novartis Venture Funds, and Amgen Ventures.

Ra is generating Cyclomimetics via a drug-discovery platform it dubs Extreme Diversity. It works, Treco says, by tricking ribosomes—the protein-making machinery of the cell—into assembling protein fragments that contain non-natural components. “That typically allows you to make libraries with more than 10 trillion molecules,” which can then be screened against disease targets to generate new ideas for drugs, he says.

Treco says Ra has zeroed in on four therapeutic targets and made headway on its lead program: a drug to treat hereditary angioedema (HAE), a rare disease that causes painful swelling of the face, airways, and stomach. Ra’s drug is designed to prevent acute attacks of HAE by inhibiting an enzyme that mediates the swelling. The company plans to start animal trials soon.

HAE has proven to be a hot target for drug developers of late. There are already four drugs on the market, including the recently approved icatibant (Firazyr), marketed by Irish drug giant Shire (NASDAQ: SHPGY). But Treco points out that only one product—a drug made by Exton, PA-based ViroPharma—is approved to prevent attacks, and it’s one that patients has to be given by infusion. “Our idea is to provide a daily oral formulation,” Treco says.

Cyclomimetic molecules are quite large, which can be an advantage in that they can bind to disease targets at several different contact points, Treco says. But unlike typical biotech drugs, they can be made into pills—an attribute Ra is counting on to be able to offer a convenience advantage for patients. “We want to come in with easy-to-deliver treatments,” Treco says. “We’re building all of the things that are necessary to make orally available drugs into the backbone of this.”

Other companies are trying different methods for assembling new protein-based drugs. Cambridge, MA-based Ensemble Therapeutics has been building a library of synthetic, protein-like molecules based on a technology platform developed at Harvard, and it has signed on big-named partners Pfizer and Bristol-Myers Squibb. Another Boston area firm, Adnexus, developed a protein-design system for generating oncology drugs that was so attractive to Bristol-Myers it bought the company outright in 2007.

Treco says Ra’s technology platform is so productive the company is already getting ready to line up its next four drug targets. And the company has started talking to potential drug-development partners. “We’re really going to focus on targets that Big Pharma has had difficulty addressing,” he says.

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TripAdvisor has been thinking about social technologies for a while now. Back in 2006, the Newton, MA-based Web company (NASDAQ: TRIP) rolled out a new social network, called Traveler Network, to help its users connect and share travel reviews with each other. The firm’s CEO and co-founder, Steve Kaufer, helped lead the project from beginning to end, even as it proved difficult to get consumers to sign up.

“It was a colossal failure,” says Adam Medros, TripAdvisor’s vice president of global product. And Kaufer owned up to it, saying the experience taught his team “a lot of things not to do.”

At least it failed quickly. In 2007, Facebook opened its platform for app developers, and TripAdvisor took advantage with its “Cities I’ve Visited” app, which lets users put pins in a map to show where they’ve gone, as well as share travel experiences with their Facebook friends. It was the start of a fruitful partnership between the companies; TripAdvisor has one of the most popular travel apps on the social network’s platform, and more recently it has built on that popularity to show users travel reviews from their Facebook friends (and friends of friends).

Now Facebook has just gone public, of course, and people are wondering what the ripple effects will be for social technologies and business models across various industries. Online travel is a sector we care about, especially in the Boston area where, besides TripAdvisor, we have companies like ITA Software (now part of Google), Kayak (reportedly getting ready for its own IPO), and Goby (now part of TeleNav), as well as upstarts like Hopper and WaySavvy. And seeing as TripAdvisor is one of the East Coast’s biggest consumer Web companies, period, it makes sense to check in with the 12-year-old company in our back yard.

While the Facebook IPO doesn’t directly affect TripAdvisor, it’s a watershed moment for the social Web and, as such, is a good excuse to ask questions about the future of social and online travel. “It’s been a very fun and exciting and transformative ride,” says Medros, who has worked at TripAdvisor since 2004, after getting his MBA at Harvard Business School.

Here are some highlights from my recent chat with Medros (see photo), edited for length and clarity:

Xconomy: What does Facebook’s IPO—and social tech more broadly—mean to TripAdvisor?

Adam Medros: It’s a huge validation of Facebook as a platform and the vision they have of making the Web more social. Travel is a big expense. It continues to be something where people are nervous about, is this hotel going to be great? We want to make it easier to plan that trip. What social does is it layers on top a wonderful amount of, not quite serendipity, but discovery of the hidden gems.

X: I’m glad you mention discovery, because I feel like a lot of websites are moving away from travel “search” and trying to do “discovery” instead—because a lot of times you don’t necessarily know what you’re searching for.

AM: We wrestle with this a little. People come to TripAdvisor with an idea of where they want to go, but within that city they want to know where to stay, where to eat, what to do. The next level above that is the inspiration level—where should they go? Social has potential to play a part in solving that, … Next Page »

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Here at Xconomy we are coming down the home stretch of preparations for our biggest annual event: XSITE 2012, on June 14 at Babson College. That’s (gasp) just over three weeks away.

XSITE 2012 is our fourth annual full-day conference and celebration of innovation and entrepreneurship—involving not just startups, but also big companies, universities, and other organizations. You can check out the updated speaker list here.

But today I want to talk about just startups. Specifically, seed-stage, pre-Series A tech companies, the kind that are under the mainstream radar, but which we have gotten to know in the course of reporting on the innovation community.

At XSITE, we traditionally feature a small group of these companies—potentially transformative ones—in an afternoon session called the “Startup Xpo,” where 10-12 companies give short pitches to our audience. It’s one of the big highlights of the day. And this year will be no exception, though we are focusing more specifically on tech/IT/software companies (no health-tech or cleantech tracks this time).

I’m pleased to announce the following speakers/companies that are confirmed for this year’s Xpo:

—Varun Chirravuri, co-founder and CEO, Laveem
—Paul Harkins, founder and CEO, NeighborPower
—Ben Jabbawy, founder and CEO, Privy
—Jonathan Kay, founder, Apptopia
—Dave McLaughlin, founder and CEO, Vsnap
—Fatma Yalcin, co-founder and CEO, Curisma
—Yifan Zhang, co-founder and CEO, Pact

The unusually perceptive among you might notice that only seven companies are listed. That’s because, well, a couple of others are pending. But it also means we’re looking for at least one more startup to round out the list. If you’d like to be considered—again, your company should be seed-stage, or early-stage bootstrapped—please drop me a note to the address below. (Don’t call me or I’ll be very unhappy. Unless you have a scoop for me. Or some Facebook stock you’re looking to dump (not).)

As for the rest of you, we are expecting quite a crowd, including plenty of out-of-town speakers and guests. You can register for XSITE here. Hope to see you there on June 14.

And this just in: Gus Weber from Polaris Ventures and Dogpatch Labs has agreed to emcee the Xpo. So we’re ready to rock and roll.

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Coach Wei has been busy lately. The founder and CEO of Boston-based Yottaa is busy running a tech company on two continents. Not only that, but he’s trying to pioneer a new approach to building an enterprise software and Web infrastructure company—one that can iterate and release products almost as fast as a consumer Web startup.

Oh yeah, his company also revealed today that it has raised a $9 million Series B financing round from its existing investors, General Catalyst Partners, Stata Venture Partners, and Cambridge West Ventures, as well as other undisclosed investors. (The round closed a while ago.) Yottaa previously raised a $4 million Series A in 2010.

Yottaa—which has almost 50 employees, most of them in Beijing—has been on a quiet tear lately. The company released its core software for speeding up websites last year and has built up a customer base of e-commerce sites, retail shops, marketing agencies, and other businesses. In February, Yottaa rolled out a content delivery network that includes Internet routing and Web optimization technologies. (You might have wondered how a startup with only $4 million over a couple years could run a content delivery network with data centers around the world; well, it had more money than it was letting on.) And just last week, the company released its “mobile acceleration” software, in partnership with another Boston company, MocoSpace, which calls itself the largest mobile social gaming platform.

These moves increasingly put Yottaa in the same discussion as Cambridge, MA-based Akamai (NASDAQ: AKAM), the 13-year-old Web infrastructure firm, except that Yottaa is going after smaller customers than Akamai is, and their technologies are different. But their big goals overlap. For those of you keeping track, Akamai now bills itself as a cloud platform for helping enterprises provide secure, high-performing user experiences on any device, anywhere (with emphasis on Web and mobile). Akamai recently bought Blaze Software and, before that, Cotendo in Web and mobile optimization.

Another thing to watch about Yottaa is its “anti-lean startup” approach—invest in a big team upfront, put in a fair bit of engineering time, and then try to roll out big products. That’s as opposed to the lean startup model, popular in consumer and social Web circles, whereby you have a small team and roll out new iterations continuously.

Yottaa’s approach is geared toward solving the big infrastructure problems of the modern Web. “Because of the scope of the problem and the required complexity of the solution to solve these problems, such offerings typically require a much longer development process,” says Wei. (A year of engineering to get to bare minimum quality, say.) “It took lots of work to get here,” he says. “However, we are here now and we are able to move really quickly and roll out products faster than anyone else.”

That’s a big claim, but if Yottaa is successful with those products, it could have a big impact on how lots of tech firms operate. “I think this will be inspirational for U.S. startups to think about a different way to build a company,” he says.

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It seems like it takes most tech companies about 10 years to run their course—if they survive the first few years, that is. Boston-based Ember is no exception.

The wireless-networking firm said today it is being acquired by Silicon Laboratories (NASDAQ: SLAB) of Austin, TX, for an initial price of $72 million plus earnouts. Silicon Labs makes chips for consumer devices like TVs and cell phones, as well as applications in telecom, industrial, and automotive markets. The acquisition appears to be a good fit, as Ember’s technology—particularly its wireless networking software—will strengthen and broaden Silicon Labs’ offerings across industries.

The deal seems to be an OK, but not great, outcome for Ember’s investors. Over the years, the firm raised some $89 million from venture capitalists and strategic partners including Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, STMicroelectronics, Hitachi, and MIT.

Ember CEO Bob LeFort defends the acquisition on three counts. One, “This was more than a fair deal financially,” he says, in terms of the multiple of the company’s revenue. Two, he says, “This is also about the employees and the potential, and it’s the right thing for the company.” And three, he says, the firm’s investors saw Silicon Labs as the right acquirer at the right time, because Ember needed more investment to reach a bigger market. While everyone loves a $15 billion IPO, he says, “It just made sense. This is not a reluctant deal for them.”

Indeed, Bob Metcalfe of Polaris—an Ember board member and a professor at UT Austin—calls Silicon Labs “the perfect partner going forward,” in terms of its product line (more on that below).

The deal is pretty significant for those of us who’ve followed Ember since its early days. The company started in 2001, the brainchild of MIT grads Rob Poor and Andy Wheeler. Their vision was to build software for wirelessly networked sensors and systems for supply-chain management, factories, and other applications.

Poor and Wheeler eventually moved on to other companies, but Ember evolved to become a maker of software, chips, and tools for secure wireless networking. Its main market is smart energy—working with utility companies and selling its technology to smart-meter makers like Itron and Landis+Gyr, so the meters can talk to the utilities and help make the power grid more efficient and reliable.

Reached by e-mail, Poor says, “From what I can tell it’s a great thing.” Citing Ember’s talent, technology, and reputation in the wireless industry, the firm’s co-founder elaborates: “The Silicon Labs acquisition means that Ember will have the financial and marketing resources to do even more. Also—as someone who cares deeply about the people that make up a company—I’m really glad about the acquisition since it will give everyone at Ember a little more room to breathe and innovate.”

The vast majority of Ember’s 60-odd employees are staying through the merger, LeFort says, and the company is keeping … Next Page »

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[Updated: 9:20 pm PT] Only a few companies have ever been successful enough to call themselves Big Biotechs. If boards and shareholders lack vision and guts, we’ll look back in a few years and wonder why the Big Biotechs went extinct.

The group of Big Biotechs includes companies like Amgen, Gilead Sciences, Biogen Idec, and Celgene. They grew from scrappy venture-backed startups with a dream into big, independent, profitable, diversified enterprises. They have enduring ability to create new jobs and new medicines. They are like ballasts in a stormy industry.

There are several challenges in the market today that make it harder than ever to create companies like these. The biotech venture community can’t afford to build startups anymore that have Big Biotech aspirations; there’s only a lukewarm biotech IPO market; and Big Pharma companies have an endless appetite for acquisitions to replace their aging drugs with expiring patents. Wall Street values the short-term payday over long-term potential.

All of these factors are conspiring to put a lot of pressure on biotech companies to sell to Big Pharma companies. You’ve seen it with GlaxoSmithKline’s $2.6 billion hostile bid to acquire Rockville, MD-based Human Genome Sciences (NASDAQ: HGSI). San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) is reportedly another object of Big Pharma desire. If these deals get done, they could end up tipping over a set of M&A dominos that would significantly change the biotech industry—and not necessarily for the better.

Richard Pops

“We’re at a unique moment in the history of the industry,” says Alkermes CEO Richard Pops. “When you look at the companies in the $2-plus billion market valuation tier, it is an incredibly important time and an incredibly vulnerable time. These companies are big enough to help to solve big problems in Big Pharma.

“If you are a Big Pharma company facing a patent cliff, you really have a huge revenue gap to fill, and small companies don’t really help you. They aren’t scaled to solve your problem. And this is precisely why companies in this valuation tier are so vulnerable. When you have a $2 billion valuation, it’s usually because something made your company an economic enterprise rather than a big science project.”

Pops runs one of the Big Biotechs. Rather than being acquired by a Big Pharma company that might want its technology that makes drugs last longer in the blood, Alkermes decided to do the acquiring. It bought Elan Drug Technologies, in a move that turned it into a trans-Atlantic 1,200-employee enterprise with revenue streams from multiple products—and a good shot at profitability for the long haul.

[Updated to add Ariad and Pharmacyclics.] A fair number of companies out there have some realistic chance to be members of the Big Biotech class. I count 23 companies in the NASDAQ Biotech Index with market valuations of more than $2 billion. Will they remain independent, like Alkermes, or go extinct? You can size up the list here yourself.

When I look at this list, a few things jump out. Amgen, Gilead, and others at the top have gotten so big and rich that someone would really have to move mountains to buy them. At the bottom of the list are a few little companies, like Vivus, that are surely built for quick and easy takeover. What concerns me more are the companies in the middle. They are the ones with compelling technologies, strong management teams, and at least … Next Page »

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Former Massachusetts secretary of energy and environmental affairs Ian Bowles thinks energy efficiency isn’t all that engaging for consumers.

But he’s betting that rewards points are one way to get them excited about it.

Bowles is co-founder of the Andover, MA-based startup NeighborPower, which has built a platform allowing consumers to pay their home utility bills with points they’ve racked up from shopping. He believes that the system could ultimately be used to encourage customers to reduce their energy consumption,

NeighborPower founder and CEO Paul Harkins, who previously worked in advertising and incentives for OfferIQ and InStream Media, says he was always interested in understanding what motivates people to take advantage of incentives. “If the benefit of that incentive is to pay a bill they have to pay, would that make a difference to customers?”

NeighborPower was founded last March and in July introduced its platform allowing consumer to pay their oil bills with rewards points. “Oil is the most fractured utility out there,” with no one vendor owning more than 3.5 percent of the market and phone ordering as the only means of purchasing, says Harkins. NeighborPower developed the first electronic payment system for oil, where consumers order online and NeighborPower immediately purchases the oil from over 100 different oil vendors, he says.

Users sign up with a NeighborPower account, and then download a browser toolbar that indicates which e-commerce sites offer rewards points and how many dollars spent on that site equal a point. Those accrued points are directly applied to a user’s next oil bill (at about 10 cents per point) when he goes to pay it online. Points in participating brick and mortar stores are linked through credit or debit cards or existing store loyalty cards.

Harkins touts the fact that consumers don’t have to take extra steps with each purchase to get the points and don’t have to wait until a certain number of points have accrued in order to use the discount. “The biggest problem with rewards is redemption,” he says. “We make redemption completely seamless and completely easy.”

NeighborPower has raised under $500,000 from friends and family, and has “generated revenue from day one,” now pulling in between $120,000 and $130,000 per month, says Harkins. Brands—such as Groupon, Travelocity, Gap, and Best Buy—pay NeighborPower as consumers shop through the rewards system, and NeighborPower distributes the rewards points. The company buys oil on behalf of its consumers, at no additional charge to the oil vendors. NeighborPower now has 10,000 active users and on June 1 will release its rewards platform for paying electricity bills.

But of course reducing an energy bill through rewards points is a different proposition than reducing it by cutting energy usage. Both Bowles and Harkins see the rewards site as a way to get consumer excited about and more engaged with their energy spend. Ultimately, they hope consumers can use the rewards platform to pay for energy retrofits to their homes, like new boilers.

“It may be that people just love to earn points and save money and that’s that,” acknowledges Bowles. “That’s also a big service for the customer. I think the larger good is served by trying to make energy efficiency more engaging and more appealing. Energy one of the few remaining pieces in the economy that doesn’t have a loyalty program—it’s one of least innovative parts of the economy. If you can change that then you can open up other possibilities.”

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OK, listening to Morphine’s “Cure for Pain” on Julie Kramer’s very last Leftover Lunch show on WFNX pushed me over the edge. In case you missed the news amid all the Facebook hoopla, Boston alternative music station WFNX is being bought by Clear Channel, and most of the staff is being laid off. The old WFNX will be missed. I think I first heard Nirvana on that station in 1991, or maybe it was in HMV (not).

Here’s more bad news from around our region:

—38 Studios, the Curt Schilling-led video game company that moved from Massachusetts to Rhode Island in 2010, is in as-yet-unspecified trouble as it tries to repay loans to the state. The company received $75 million in loan guarantees from Rhode Island, in a deal that is now being scrutinized.

—Advanced Electron Beams of Wilmington, MA, is shutting down, as first reported by Dan Primack (more details and context here). The industrial tech company, which started in 1999, raised more than $50 million since 2005 from the likes of Atlas Venture, General Catalyst, and Flagship Ventures. My colleague Erin wrote about the firm in the summer of 2010.

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To whom much is given, much shall be required.

Regular readers know that I’m not in the habit of quoting scripture. But this line found in the gospels of Matthew, Mark, and Luke has a bit of new relevance this morning, as Facebook’s initial public offering—valuing the company at $106 billion at the opening bell on the NASDAQ Exchange—begins a process that will turn hundreds of Facebook shareholders, including current and former employees, into millionaires.

The real windfall won’t come until later this year: lock-up rules mean insiders and other major shareholders can’t start selling their shares until three to six months after the IPO. But that’s actually sort of convenient, because it leaves these soon-to-be-tycoons some time to think about what they’ll do with their new resources.

Of course, there will be the inevitable, entirely reasonable burst of materialism. Silicon Valley’s realtors, travel agents, and Tesla dealers will experience a welcome bump in business. A lot of old Ikea furniture and Sony stereo equipment will end up on the curbs of Palo Alto, displaced by Ligne Roset and Bang & Olufsen.

But if Facebookers are anything like their predecessors at PayPal and Google, their new toys won’t distract them for long. They’ll eventually fan out across Silicon Valley and found their own startups, or start investing in their friends’ companies, or both.

“You are going to make hundreds of millionaires and see a lot of new startup activity, because these kids are going to start companies on their own,” says Vivek Wadhwa, a scholar of entrepreneurship with appointments at Stanford, Duke, Emory, and Singularity University. “It’s going to be a big boom for Silicon Valley.”

Now, if you only looked at the record to date, you wouldn’t get the impression that Facebook’s alumni are especially prolific—and you’d be forgiven for wondering if they have any interests outside of social networking, collaboration tools, and Web infrastructure technologies. With help from CB Insights, which has been preparing its own study of the “Facebook Mafia,” I did a search for companies founded by Facebook alumni, and turned up fewer than a dozen examples:

Asana (Web-based task management) – Dustin Moskovitz, Justin Rosenstein
Cloudera (Apache Hadoop distributions) – Jeff Hammerbacher
Cove (collaboration, acquired by Dropbox) – Aditya Agarwal, Ruchi Sanghvi
Daily Strength (online support groups) – Doug Hirsch
Jumo (social networking for non-profits, merged with GOOD) – Chris Hughes
MemSQL (database management software) – Eric Frenkiel
Path (social networking and media sharing) – Dave Morin
Peixe Urbano (Brazilian local commerce site) – Julio Vasconcellos
Quora (question answering) – Adam D’Angelo, Charlie Cheever
Storm8 (mobile games) – Perry Tam, William Siu
Trialpay (targeted advertising) – Eddie Lim

This isn’t a terribly long list, at least compared to the number of companies created by ex-PayPal people or ex-Googlers. But the real Facebook diaspora may only get underway six to 18 months from now, as the lock-up period expires and Facebook employees realize that working for a public company isn’t nearly as fun as working for a startup. An IPO is “like getting married,” Wadhwa points out. “The engagement is fun but after that you have all these responsibilities. Every quarter you are accountable to the public markets, and if anything goes the slightest bit wrong things get very nasty. The Silicon Valley kids won’t like it.”

So let’s say it’s early 2013 and antsy young engineers and product managers are leaving Facebook in droves and setting up their own companies. What big problems should they tackle? Or, as venture capitalist Michael Greeley put it yesterday, “What is to become of all this liquidity?”

It would be understandable, but disappointing, if ex-Facebookers only pursued the things we already know they’re good at. It’s clear that when you gather a team of star Stanford- and MIT-trained engineers, lock them in a room with a case of Red Bull, and give them some big-data problem—say, how to store and retrieve camera-phone photos from 800 million people—they can devise diabolically efficient algorithms to solve it. But how many more mobile social apps, enterprise collaboration tools, and infinitely scalable databases does the world really need?

The sad truth is that today’s startup founders swarm around a small thicket of opportunities in the cloud, mobile, and Web spaces. Even one of the valley’s leading iconoclasts, Y Combinator founder Paul Graham, occasionally seems to have trouble thinking outside the Internet box. As a sort of dare to rising entrepreneurs, Graham recently published a list of “frighteningly ambitious” startup ideas. But at least three of the ideas on the seven-item list—a new search engine, a replacement for e-mail, and a better delivery mechanism for digital entertainment—are just more of the same.

To make the most of their skills—and the long careers they have ahead of them—the coming crowd of Facebook alumni would do well to look outside Silicon Valley for problems to solve. Here are just a few of the ways they could profitably direct their brainpower:

Build untraceable communications tools for activists and dissidents. Twitter, Facebook, and text messaging worked great for organizers of the Arab Spring uprisings—until their governments caught on and started using the same tools to hunt them down. The assignment here: build a system that protects the user’s identity absolutely. Of course, any tool that helps dissidents could also be used by terrorists. Or could it? Figuring out how to favor the white hats over the black would be part of the challenge here.

Create a truly great, cross-platform customer service and support system. Part of being civilized means dealing with the bureaucracies in our lives, whether they’re our governments, our employers, our healthcare providers, or our ISPs. We need technologies that … Next Page »

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Drugs, devices, and nonprofits showed up in this week’s New England life sciences news.

—Promedior, a maker of treatments for tissue damage known as fibrosis, is moving its headquarters from Pennsylvania to Boston and has hired Suzanne Bruhn, a veteran of the Irish drug giant Shire’s Human Genetic Therapies division, as its new CEO.

—Cambridge, MA-based Aveo Pharmaceuticals (NASDAQ: AVEO) and its Japan-based partner Astellas Pharma announced their experimental kidney cancer drug tivozanib reached the main goal in a pivotal of 517 patients. Aveo said tivozanib prevented tumors from spreading for a longer period than sorafenib (Nexavar), a rival drug from Bayer and Onyx Pharmaceuticals, and also showed an edge in safety and ease of use.

—Cambridge-based Ra Pharmaceuticals emerged from stealth mode to reveal it would be focusing on the rara immune system disorder hereditary angioedema as its lead drug program.

—Mitralign, a Tewksbury, MA-based maker of cardiac devices, announced it had closed on $35 million in Series D financing, led by Forbion Capital Partners. The deal also included previous venture investors, such as Oxford Bioscience Partners, Triathlon Medical Ventures, Medtronic Corporation, and Johnson & Johnson Development Corporation.

—My colleague Arlene Weintraub wrote about Xconomist Tom Maniatis’ involvement in a non-profit known as Prize4Life. The Cambridge-based organization offers a $1 million prize to scientists making strides in research for amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.

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So here is my obligatory post on Facebook…which will be the most spectacular IPO of a venture-backed company in the history of mankind…and it just priced tonight.

The shares priced at $38 giving the company a market cap of $104 billion fully diluted, raising $16 billion in proceeds. Of the 421 million shares being sold, 57 percent (or 241 million shares) are being sold by insiders; in the past few years only LinkedIn and Pandora had a higher percentage of shares coming from insiders. Assuming the “green shoe” over-allotment option is exercised, the total amount of proceeds will exceed $18.4 billion. And this is where I want to focus.

Putting aside the potential negative signaling of all this insider selling—and General Motor’s voting with their feet (or tires) this week—what is the impact on the VC industry with all this liquidity? First—according to Fortune—some of the numbers:

—Individual shareholders (mostly Zuckerberg) are selling $3.2 billion of stock and will retain stock worth $27.7 billion

—Institutional shareholders are selling $8.3BN of stock and will still hold $15.8 billion

—This does not include the existing institutional investors (T. Rowe Price, Andreessen Horowitz) which hold about $1 billion of stock and are not selling, nor does it include all the other employees who are now fabulously wealthy

—Of the institutional investors, $5.1 billion of stock being sold is held by institutions which have traditional LPs and/or are themselves LPs. This same group of investors will still have $10.6 billion of Facebook stock yet to be sold.

For me what is most interesting is to speculate about what is to become of all this liquidity. The venture industry has struggled mightily to raise capital; in the past few years the VC industry has raised between $12 to $15 billion annually. As these proceeds are realized and distributed, do much of these dollars get recycled—that is, will underlying LPs begin to increase their allocations to VC as they start to see Facebook distributions? The math suggests that one year’s worth of VC fundraising is now in around half a dozen VC firms fortunate enough to have invested in Facebook!

Additionally, we are watching a very deep and wealthy pool of new angel investors get created and collectively they will play a powerful role in the next wave of great company formation. Much like the “PayPal Mafia” from the last decade which sponsored many of this cycle’s great companies, the Facebook Mafia should do the same over the course of the next decade. These individual investors themselves could become significant LP’s in many venture funds which, if that were to be the case, would further drive VC industry expansion.

Or is this just all wishful dreaming?

This essay originally appeared today on Michael Greeley’s blog, On the Flying Bridge.

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Buried in the news of the past month, which was admittedly a busy one, was a press release headlined: “Geomagic Acquires Sensable 3D Design and Haptics Businesses.” As far as I can tell, no media outlets besides Xconomy picked up on this deal or its historical—and now, political—significance. Woe is them.

That’s because “Sensable” would be SensAble Technologies, the Woburn, MA-based maker of touch-based computer modeling and design systems. The venerable New England firm started back in 1993 and went on to pioneer all sorts of applications in 3-D modeling and haptics technology—a field of human-computer interfaces that involves touch feedback, sort of like the kind you feel in modern video-game controllers and smartphones.

After nearly 20 years, SensAble’s acquisition by North Carolina-based Geomagic—the price wasn’t disclosed, but was rumored to be just a few million dollars—is an unceremonious ending to one of the most intriguing companies of its era. [Disclosure: Xconomy CEO and Editor-in-chief Bob Buderi was an early investor in SensAble.]

Yet even more compelling than the company is its founder, a young engineering whiz from MIT named Thomas Massie. Over the years, that whiz kid developed many other passions besides building computer interfaces and running a tech company. Things like energy independence. The pursuit of individual liberty. Faith and family. And guns—lots of guns.

After leaving SensAble in 2003 (read on for what he says about that), Massie moved back to the heartland of his home state of Kentucky and spent a few years running a farm and building a solar-powered, off-the-grid house for his family. Then he got into politics. In 2010, he ran for the office of Judge-Executive of his rural county, and won in a landslide.

Now, in a stunning move to those who knew him in Boston, he is running for Congress in one of the most heated races around the country. He has been endorsed by U.S. Representative and presidential candidate Ron Paul (R-TX) and his son, Senator Rand Paul—both prominent figures in the conservative Tea Party movement. The Republican primary in Kentucky is next Tuesday, May 22, and as of last week polls showed Massie in the lead. Since the county is predominantly Republican, if he wins, he will be the presumptive favorite to represent Kentucky’s 4th District in the U.S. House of Representatives.

That’s right, the boy-wonder genius from MIT—the founder of SensAble, a pioneer of haptics—is now a political hero of the Tea Party. And he wants to reform our government. An unlikely story? You be the judge.

Diversity Was a Catholic

Thomas Massie grew up in northeastern Kentucky, in a small town called Vanceburg, on the Ohio River. From a young age, he was interested in taking apart radios and vacuum cleaners, blowing things up with gunpowder, and building mechanical contraptions—everything from a self-watering flowerpot to a robot arm. He entered numerous science fairs and competitions from grade school through high school and often won, despite not having much in the way of resources. That changed when he got to MIT as a freshman in 1989 and was surrounded by world-class facilities (and fellow geeks).

“He was probably the first person from his ZIP code that ever went to MIT,” says Bill Aulet, a current MIT faculty member who helped lead SensAble Technologies as its president from 1996 to 2002. “He would say, ‘Diversity where I came from was a Catholic’—a Catholic, singular.”

As an undergrad, Massie worked in roboticist Kenneth Salisbury’s lab in the old Artificial Intelligence Laboratory. (Salisbury would move to Stanford University in 1999.) One of their later projects was to build a device that would simulate being able to touch and manipulate objects in the virtual world with your hand. It consisted of a computer-connected robot arm with a thimble on the end that you could stick your finger into; when you moved your finger, the computer sensed your precise motions through the movements of the robot arm, and then provided force feedback through the apparatus to simulate the feel of an object on the screen (a button, say). Massie built early versions … Next Page »

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A few years back, molecular geneticist Tom Maniatis was approached by a Harvard Business School student with a heart-wrenching story. The student, Avichai Kremer, then 29, had been diagnosed with amyotrophic lateral sclerosis (ALS), otherwise known as Lou Gehrig’s disease. Kremer had an unusual idea: He wanted to advance ALS research by offering million-dollar prizes to scientists who made meaningful contributions to research into the disease.

Maniatis was both skeptical and intrigued. He had lost his sister to ALS, and was the longtime chair of the research and drug-development committees for the Amyotrophic Lateral Sclerosis Association. “The prize model had never been tried in life sciences,” says Maniatis, who is now a professor and chair of the department of biochemistry and molecular biophysics at the Columbia University College of Physicians and Surgeons (and one of our Xconomists). “At the time Avi entered the scene, the ALS community was pretty small. And the drug companies did not see it as a profitable pursuit.

As it turns out, Maniatis says, ALS was a perfect model for a prize-based research approach. In 2006, Kremer’s idea became Prize4Life, a Cambridge, MA-based nonprofit that is now one of the most influential forces in ALS research. In addition to offering a $1 million research prize each year—-the latest of which will be announced at a fundraising gala in New York on June 6—Prize4Life has spearheaded several programs designed to mobilize and energize scientists working in ALS. Kremer and a handful of his HBS classmates are running the entire endeavor, says Maniatis, who is a member of Prize4Life’s scientific advisory board. “They had such an affection and respect for Avi that many of them put off jobs to stay in Cambridge and work for this nonprofit,” he says.

Kremer and his classmates spent more than 1,000 hours talking to experts from the drug industry, academia, and nonprofits, before officially launching Prize4Life’s model. “What inspired me was the success of the Ansari X-Prize,” Kremer says in an e-mail, referring to the California organization that provides incentives to researchers in education, energy, the environment, life sciences, and exploration. “It proved to me that a prize can correct a market failure.” In Prize4Life’s case, he explains, that market failure is the lack of capital “to focus innovation coming from academia and small biotechs on ALS,” he says.

This year’s award will mark the third effort by Prize4Life to support ALS scientists with $1 million in research funding. In 2010, 33 teams of scientists—about half of whom came from academia and the other half from pharma companies—competed for the organization’s first $1 million award by proposing treatment protocols meant to extend the lives of mice with ALS by 25 percent. Ultimately, none of the teams met the goals set out by Prize4Life, and the $1 million prize went unclaimed, though several of the applicants are continuing their research with the organization’s support. (Prize4Life also sponsors a number of smaller research grants.)

Last year, Prize4Life awarded $1 million to Seward Rutkove, co-founder of Woburn, MA-based Convergence Medical Devices, for his work developing a biomarker that can measure the progression of ALS in patients. The tool is designed to make clinical trials of potential new drugs more efficient.

This year’s major prize will be a revival of the inaugural award’s goal—the promise of $1 million for research that demonstrates 25 percent survival in ALS mice. “In the previous round, no one was able to achieve that, but there are so many … Next Page »

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