Twenty Companies Ranging From Seed Stage to Mezzanine Will Showcase Next Generation Technologies from Various Industries at the 27^th Annual VCIR Winter 2010 Conference

Denver, CO, February 23, 2010 – The Rocky Mountain Venture Capital Association today unveiled its final lineup of growth companies at the 27^th annual Venture Capital in the Rockies (VCIR) 2010 Winter conference. This year’s conference will highlight twenty promising early-growth companies; all based in the Rocky Mountain region and a majority of which are focused on clean technology, a burgeoning industry in the area.

The VCIR Winter 2010 conference will be held at the Park Hyatt in Beaver Creek, Colorado, February 23-25, showcasing early-growth companies from Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.

Along with company presentations and ample networking opportunities, Dan Caruso, CEO of Zayo Group, will give this winter’s keynote address. As an active member of the telecommunications and Internet community, Caruso will address the attendees about the virtues of starting a company in the Rocky Mountains.

The conference will also feature a Technology Showcase, an inaugural demonstration of five very early stage technology companies that is designed to feature the next generation of innovation from the region and further VCIR’s legacy of entrepreneurial mentorship.

“The Venture Capital in the Rockies 2010 Winter conference is a premier event for both promising companies and attendees,” said Seth Levine, chairman of VCIR and a managing partner at the Foundry Group, a Boulder, CO-based venture capital firm. “Over the last 10 years we have seen impressive numbers that show the conference being an initiator in the future success of presenting companies.

“That is why the conference has become an annual opportunity to identify great companies from around the Rocky Mountain region,” he continued.

Companies from Colorado represent the majority of presenters and constitute all of the clean technology and new energy companies participating in the conference.

· zettasun manufactures efficient commercial rooftop solar panels using proprietary optical technology to dramatically reduce the cost of solar electricity to be at or below grid costs.

VCIR Launches 20 Promising Companies/Page 2

· Cool Energy is an energy technology company that has developed a 100% clean conversion engine that transforms heat to electrical power for solar-based combined heat and power home applications and for waste heat recovery.

· RavenBrick delivers innovative solar-controlled windows, which reduce energy costs by up to 50 percent.

· BioVantage offers an algae-based, “green” alternative to classical wastewater lagoon aeration significantly reducing costs while helping municipalities to comply with new stringent mandates.

· Eco-Products is the nation’s leading brand of single use food service products made from renewable and recycled resources.

· Ice Energy delivers distributed energy storage and smart grid solutions to leverage higher efficiencies associated with generating and transmitting less expensive off-peak power.

· Pure Energy Solutions is the developer of superior wire-free charging technology and rechargeable battery solutions for consumer electronic devices.

· VanDyne SuperTurbo offers a product that increases horsepower and therefore improves thermal efficiency in vehicles, potentially improving fuel efficiency 36% in gasoline cars and trucks, with no loss of performance.

· Green Garage is a new kind of garage that makes cars gentler on the planet and easier on the wallet. Green Garage aggregates proven, sustainable, energy saving automotive maintenance/repair related products and delivers them through convenient consumer valet and corporate mobile on-site services.

Additional Colorado Representatives

· TruEffect merges the interactivity and reach of the Web, with the precision and effectiveness of direct marketing to deliver increased media performance and unparalleled new insights to global advertisers.

· UniversityParent.com provides college parents with critical campus information and connects parents with local services near campus, such as restaurants, hotels, and storage facilities.

· TopSchool, Inc. is a leading SaaS provider of Student Lifecycle Management (SLM) solutions for higher education, empowers student-centric institutions to drive growth, reduce costs and meet accountability requirements.

· Clementine Arts markets the first full line of natural art supplies for children.  All of the products are made in the USA and are naturally non-toxic, while functioning on par or better than traditional art supplies.

Consumer, Information Technology, Medical, and Imaging Technologies also Represented

· iMemories provides a single Web destination for consumers to digitize, preserve and store their full length home videos and photos online, regardless of the original media format, and share them across multiple consumer platforms, ranging from televisions and mobile phones to popular social networks and blogs.

· Mangia allows sports fans to order food and merchandise (and eventually tickets) using a mobile phone and have it delivered right to a stadium or arena seat.

· DICOM grid is a healthcare information technology that helps hospitals, imaging facilities and physicians manage and distribute radiology health records to meet the needs of the rapidly evolving healthcare industry.

VCIR Launches 20 Promising Companies/Page 3

· Infopia is a leader in SaaS (Software as a Service) eCommerce platform solutions—giving retailers the tools they need to sell effectively online and helping merchants grow their business faster and more effectively than any other technology provider.

· CradlePoint engineers and manufactures wireless 3G/4G broadband routers and software platforms that facilitate secure Internet access via 3G/4G wireless (cellular) broadband networks.

· Firerock Technology develops, licenses, and sells proprietary hardware and software that improve the performance, security, and reliability of Information Technology systems.

The three-day conference is about both new companies and new ideas, as well as giving attendees a chance to network with over 300 investors, CEOs, entrepreneurs, and service professionals.

About VCIR

Venture Capital in the Rockies (VCIR) is the region’s oldest and best attended venture capital conference and will hold its 27^th annual VCIR Winter edition in Beaver Creek, Colorado in 2010. Along with the annual VCIR Fall conference, the two VCIR conferences encompass the premier venture investing conferences in the Rocky Mountain region and among the most respected venture conferences in the country. Creating a dynamic marketplace for ideas and investment, both editions of VCIR invite over companies seeking investment to present to panels of venture investors, as well as an audience of other entrepreneurs, CEOs and professionals servicing the venture community. More information can be found at www.vcirwinter.com

There’s been an extremely lively debate online over the last few months about the practice of charging entrepreneurs to present to VCs. You can see my post on that subject here, one from my partner Jason Mendelson over on peHUB here, Jason Calicanis’ very popular post on the subject here (and a quick search on Google will pick up dozens more). At issue is the question of whether it’s reasonable to charge entrepreneurs to get in front of potential investors. I’m clearly on the side of not charging entrepreneurs to pitch to investor groups – reputable events of this nature can attract sponsor dollars and/or the angel investors involved should be footing the (relatively small) bill.

While the original discussion around this topic was specific to angel groups, the more recent conversation has included other forums where investors and companies come together such as conferences (like the one that Jason talks about in his post). To be completely clear, I don’t object to charging companies that attend these conferences the same registration fee as other paying attendees and I completely support the ability of conference organizers to make money by putting on a quality event through sponsorship dollars and attendee revenue. The practice I object to is charging only the presenting companies and/or charging them a multiple of what other attendees are charged.

I know that you can successfully operate a conference in this fashion because for the last 27 years the Rocky Mountain Venture Capital Association and KPMG have been running the Venture Capital in the Rockies conference that brings together companies headquartered in the Rocky Mountain Region with investors from across the country (and the world). I’ve had the pleasure of being the conference chair for the last two years – an experience that was eye-opening (running a successful conference is hard work!) but reinforced my view that one can successfully put on an event that both supports entrepreneurs and makes money. And while, as I state above, I think it’s fair game to charge presenting entrepreneurs who attend conferences the standard registration fee, in the case of VCIR we don’t charge our presenters anything at all. In fact we also allow them to bring additional executives from their companies for a deeply discounted rate from the standard conference fee (we actually lose money on these attendees as well). For 2010 this is not only true for the 20 main-track presenting companies but also true of the 5 “Technology Showcase” companies that are giving shorter, DEOM-style quick pitches at the front end of the conference (the Tech Showcase is something new that I’ve put into this year’s program).

We do this because it’s the right thing to do and because it helps us attract the best possible group of presenting companies from across our region, which in turn helps us attract quality investors, which in turn allows us to support the event through sponsors and attendance fees. I know that we have a quality product from the large number of sponsors, the number of returning attendees and the number of non-presenting companies who attend for the quality program and networking. The conference turns a profit (even this year in a difficult economy) and our presenters have been very successful attracting investment after their participation – all without charging our presenting companies.

As promised in my last post on adoption, below are some of the amusing, crazy and occasionally insulting things that people have said to us over the years about adoption. I generally give my friends a lot of latitude around this stuff since they all mean well. So please don’t think I’m singling you out (or mad at you) if you’ve said one of these things to me (other than the Bradgalina one – that does universally annoy me) <g>. My hope in posting this is to raise awareness just a bit and make people think a bit more before they ask these questions. Language and intent really do matter here…

“What do I call _____”. First a few thoughts on adoption terminology since a lot of people ask me. Our daughter by birth is our biological daughter (“bio” in adoption slang vs. “adopted” for our other kids, although we don’t often refer to our children by any modifiers – our son, our two daughters…and leave it at that). Our adopted kids biological parents are their “first family” (this is preferred over “birth mom/dad” – which implies that they had only one task in this arrangement). We’re their “forever family” (although again, only really in context since we’re just “family” like any other family). Our kids were at a “Care Center” before we brought them home – generally a preferred term over “orphanage” which is more of a permanent facility (i.e., kids grow up there, they aren’t there waiting for their forever families).

“Why was your child put up for adoption? What happened to their mom and dad?” We’ve shared this information with some of our close friends, but when you think about it, this is a deeply personal question and both my wife and I don’t feel comfortable outside of our immediate circle of friends talking about it. It’s not that we’re embarrassed about our kids history or even that we don’t want to share it, but we (and many adoptive parents) feel that ultimately this history belongs to our kids and it’s up to them to decide when and how to share it (they’re clearly too young to decide that for a while). When someone who we don’t know well asks us this we typically make some very general statement so as not to give away too much information (and both my wife and I have literally been asked this question by completely strangers). Best not to ask unless you’re close friends with the family.

“[insert name of adopted child] is so lucky”. This is by far the most common thing people say to us about our kids and I’m 100% certain that everyone who has said it meant it as a compliment to my wife and me (i.e., we’re good parents and we’re in the fortunate position of being able to provide a good life to our kids). I say that because I really do want to be clear on this one that no one has hurt my feelings in any way by saying this. But I don’t agree with this sentiment and here’s my chance to say why. Clearly the world would be a better place if adoption wasn’t necessary – if parents could take care of their kids and provide at least a basic life for them. I feel truly sad for my kids that they’ve lost the part of themselves which is their connection to their first family and their country of birth. I get that they are “lucky” in the sense that by world standards they now live in a wealthy country with parents who can provide to them things that their first families weren’t able to but I don’t really believe that this life is better than a life where they had been able to stay with their first families. I’d also point out that our biological daughter is similarly lucky (which is often lost in the equation) and that even more so, my wife and I are truly the lucky ones by getting to have such great kids in our lives.

“When did you get him?” To be clear, the issue here isn’t people asking how long one of our adopted children has been home, it’s the “get him” part that just doesn’t sit right. The kids aren’t a new car or a handbag – and we didn’t “get” them.

“Are you going to tell them they are adopted?” Just a quick comic interlude in an otherwise serious post. I really did get asked this question (once – by Ross, our Director of IT). When I just stared back at him blankly he quickly figured out that brown-skinned kids with pink-skinned parents will probably figure it out…

“How much did you pay for him?” Ok – back to serious stuff. This one really irks me and we actually do get asked it on a regular basis. Adoption does cost money (as does giving birth, I might point out) – there’s money to the social worker who does your homestudy, money to take state-required parenting classes, money to the government to get fingerprints taken, money to the foreign agency to provide care for kids, money to travel, money for visa and more paperwork . . . you get the picture. In none of this is anyone “paying for” a child any more than when you give birth and pay the doctors, ultrasound technicians, nights at a hospital, nurses, etc. are you “paying for” your bio child. If you’re interested in adopting and are curious or concerned about the costs, say that exactly (even when people ask in a nicer fashion about the costs of adoption I typically respond with “why are you asking?” so I understand the context – I generally don’t discuss my finances with friends or strangers, so if the person is simply curious rather than asking a question as it relates to their own decision to adopt I will typically blow it off).

‘"You guys are just like Brad and Angelina!” Seriously? Is this the most original thing you can think of to say? I’m actually shocked at how many people have said this to us (usually strangers, often at a party or some similarly casual event). I typically respond “wow – I haven’t heard that one before!” and leave it at that. While I don’t actually know Brad Pitt and Angelina Jolie personally, it sure seems from the outside that they are good parents who care about their kids. I get that these days it’s somehow seen as trendy to adopt a child, particularly one from Africa and I’m sure that some celebrities and non-celebrities alike have gone into adoption influenced by other famous people who have adopted. In fact, we know several people who have adopted in part because they were familiar with our family and our experience. So maybe Brad and Angelina are just following our trend! (I actually can’t recall if they had already adopted when we started our process or not)

I could go on, but I think that’s a pretty good start. I’d love to hear from some of my readers (a number of whom – I learned from my last post – are also adoptive parents) about their experiences, both good and bad.

I’m reposting a note from Eric Norlin, our partner in both the Glue and Defrag conferences which really struck a chord with me. While Foundry invests across the US, we’re based in Colorado and do our best to support the local startup ecosystem. As part of this we very deliberately set up camp with both Glue and Defrag here in our backyard in an effort to make Denver/Boulder the center of the technology universe for a few days of in depth discussion and networking around all things technology. Glue is coming up at the end of May. It’s an in depth look at the “connective” technologies that are changing the way we live and work. If you’re a technologist that’s working in and around this space I’d encourage you to show up. Especially if you live here in Colorado – come support our effort to bring greater focus and energy around these topics right in your backyard.

As a guy who organizes two tech conferences that take place in Colorado, I’m in a bit of a weird place. I’m part of that “Colorado tech community” via my friends/cohorts/biz partners — people like Brad Feld begin_of_the_skype_highlighting end_of_the_skype_highlighting, Seth Levine, Andre Durand, Rob Johnson, Josh Fraser, John Minnihan, David Cohen, etc — but I’m also not part of that community, as I don’t get to be absorbed into all of the day to day stuff (by virtue of the fact that I don’t physically reside in Colorado). However, I believe that Colorado (Boulder-Denver especially) is one of the best places in the country that you could “get involved” in the internet-software space. I’ve railed against the “if you’re serious you move to Silicon Valley” myth so many times (and called the purveyors of that falsehood more names than I care to remember) that I can’t even believe it still ever comes up. And, in some ways, I think this recession has really helped to expose people to the fact that there is so much good entrepreneurial activity happening outside of the valley. I mean, is there any *hotter* (trendy, successful, honest, fun) group of VCs than Union Square Ventures (Twitter, Zynga), Foundry Group (Zynga), Roger Ehrenberg (new fund on Big Data) and Howard Lindozon (Stocktwits)? Nope. Do *any* of them live in Silicon Valley? Nope. Places outside of “the valley” are where it’s at right now (much to the dismay of some), and Colorado is leading that charge.

Similarly, I often get asked why Glue (or Defrag) isn’t located in the Bay Area. My answer is always the same, “don’t you think the bay area has enough tech conferences?” The Bay Area really isn’t the center of the universe. I know – shocking, right? The second question I always get is “why Colorado?” That answer is a bit more complex, but really it boils down to “because it rocks, that’s why.” (And it does Bay Area folks good to actually *go* to a conference sometimes.)

It is in that spirit that I wanted to reach out specifically to everyone in Colorado in the software, internet, startup space. We’re bringing some *amazing* people and sessions to your backyard for Glue, so I’m making my case early: If you live in Colorado, and are interested in software, you need to come. Now, let me explain why:

1. Speakers: Look, there is no shortage of genius in Colorado. But that doesn’t mean that mixing that genius with other geographically different genius-types doesn’t yield good things. With that in mind (and keeping in mind that the agenda is still a very early draft), let’s look at the speakers that are already confirmed –

Doug Crockford (creator of JSON), Joe Shirrey (Azure team, Microsoft), Dwight Merriman (CEO, 10gen), Sunir Shah (Freshbooks), Scott McMullan (Google biz stuff), John Musser (Programmable Web), Clay Loveless (CTO, Mashery), Dave Smith (Basho), Jonathan Ellis (Rackspace), Mike Miller (Cloudant), Emil Eifrem (Neotechnology), Michael Barrett (CISO, PayPal), Chris Hoff (Director of Cloud, Cisco), Laura Merling (Alcatel-Lucent), Ryan Sarver (Director of Platform, Twitter), Jack Moffitt (Collecta), Jeff Lindsay (Webhooks), John Fallows (CTO, Kaazing), Brian Mulloy (Apigee), Jeff Lawson (Twilio), Rick Nucci (CTO, Boomi), Phil Windley (Kynetx), Joe Stump (SimpleGEO), David Recordon (Facebook), Eric Marcoullier (Gnip), Chris Messina (Open Web Advocate, Google), Eve Maler (PayPal)

…and that’s the *early* draft. The agenda is probably 30% complete.

2. Topics: What about topics we’ll be covering?

Webfinger, User-managed Access, Federated Provisioning, Open/Linked Data, Cloud Data Management, Facebook’s Open API, Understanding Twitter’s APIs, MongoDB, Activity Streams, A6 (cloudaudit), OAuthWRAP, managing multiple APIs, XMPP, webhooks, PubSubHubBub, HTML5 websockets, cloud security, SAML, OpenID, Facebook Connect, NoSQL (Neo4J, Cassandra, Riak, CouchDB), API terms of service, State of the API marketplace, How to build your own computing cloud, AWS, Force.com, Windows Azure, Google App Engine, Web Oriented Architecture, and a ton more that we’re still adding.

3. Price: You can register right now for Gluecon for under $475 bucks (just use “louie1″ when registering) — a price that’s already cheaper than 80% of the conferences you’d attend in the Bay Area (and absolutely cheaper than any other “cloud” conference – which are running about $1895). Throw in the fact that the conference is in your backyard (ie, no travel expenses) and it becomes an unbeatable Colorado deal. Keep in mind, that price is covering your food, drink, evening reception, wifi – everything — over 2 days.

4. And let’s just say that $472.50 is still out of your price range – then at a minimum you should be registered for the Cloud Camp happening at Gluecon. It’s free (and only has 140 tickets remaining, so don’t wait), so there’s no excuse there.

Bottom-line: if you’re doing internet-software-startup stuff in Colorado, Gluecon covers every possibility (price, topics, speakers, location). You literally have to work at it to come up with a reason NOT to go if you live in Colorado.

I’m saying all of this for a very simple reason: My hope is that the Colorado “presence” at Gluecon is overwhelming this year. Last year, about 70% of our gluecon participants came from outside of Colorado. That just isn’t right.

So, my Colorado friends, you can stay home, not meet amazing people, not participate in hackathons, not get involved in a new project, not increase your knowledge and help your career, and wonder why it is that Silicon Valley gets to have all of the fun, OR you can realize that the Valley doesn’t get to have all of the fun, and do something about it by participating in Gluecon. I really hope you’ll choose the latter, because we’re gonna have a blast.

I don’t often write about very personal topics on this blog (although hopefully my personality shows through in my writing some) but with my wife 8,500 miles away adopting our third child (2nd adopted child) I thought that I might take a post or two to talk about our experience.

I wrote about adoption after we came home with our now 5 1/2 year old daughter a few years ago and was turned off by the experience after receiving some annoying comment traffic (mostly challenging me on why we didn’t adopt domestically – none of their business, of course, but especially in the way they commented about it). I expect I’ll see some of that again, but I’m hoping to do a better job ignoring it this time.

Why adopt? Of course this answer is different for everyone who goes through the process. For us it was a very personal decision about what we felt would be the best way to grow our family. We love being parents to our biological daughter and we equally love being parents to our two adopted children.

Why Ethiopia? Both of our adopted children are Ethiopian. There’s no formula for how this works – it was a decision that my wife and I came to after looking into programs from a number of countries and after considering a domestic adoption (I don’t really want to get into our reasons for choosing an international adoption over a domestic adoption but I’ve found that there’s a certain group of people in the US who think that adopting a foreign born child is somehow unamerican. As I referenced above this can often be pretty mean spirited and xenophobic. I don’t run around asking people why they chose to have biological children vs. adoption – I expect people to give me the same privacy around why we adopted and why we adopted from Ethiopia).

How long did the process take? What’s it like? For us, both of our adoptions took a little under a year, but it varies (often quite a lot) from country to country and on how well organized you are in pulling together the volumes of information that adoption agencies and the government require as part of the process. My wife jokes sometimes about the process that “no one every accidentally adopted” – a reference to the multiple finger prints, government clearances, reference letters, financial statements, etc that adoptive parents have to provide. And then there’s the home study, which involves a social worker making several visits to your home and interviewing you, your spouse (together and separately), your kids and checking out your home. In some states (Colorado included) you are also required to take “parenting classes” – in our case 24 hours of classroom time.

Can you really love an adopted child as much as a biological child? I thought I should just get this out there. I don’t get asked this question much, but I have the feeling a lot of people wonder this. I also expect that it plays a roll in people’s decision to adopt (or not to adopt) as well.  Our experience is a resounding “of course!”. This may sound stilly because our adopted kids have a different skin color than we do, but sometimes I truly forget that they’re adopted. I just don’t think about it that way at all.

Aren’t there a lot of really religious people who adopt? Is that weird if you’re not religious? I’ve been asked this a few times as well and it has occasionally been a bit challenging for me. We participate in a number online forums and groups about adoption and yes, there are many very religious people who choose to adopt. And some of them can be pretty evangelical about their beliefs (although many are not). And for someone like me, who is not religious, it is at times a little over the top. I mostly just tune out the religious stuff. We’re friends with plenty of devout people so it’s not that. But there can be something a bit “in your face” at times about the way religion works its way into adoption circles and I do sometimes feel a bit like the odd man out. I’ve heard from some people that this has turned them off some from adoption and I’d encourage you to not let that happen if that’s on your mind.

Baby or older child? Again, a very personal decision. Both of our adopted children were toddlers when we brought them home. There are a lot of adoptive families who prefer younger children but there are also a large number of wonderful older children who may have to wait longer for a family because of their age and would love a great home.

How did the first months go? Although this is not always the case my sense is that the first few months for most families is really really challenging. For us it absolutely was, made worse by the fact that we thought at the time that we were pretty much the only family in the history of adoption that had a rough time coming home (the transition period is something that’s being talked about more now in adoption circles but at the time was pretty much a taboo subject). We now joke with our daughter about her early aversion to ice cream (she loves it now), her insistence on wearing her shoes to bed and her absolute fear of our dogs (she now wants to be a “doggy doctor”). These are just surface examples of what was really going on at the time which both my wife and I found extremely challenging. Fortunately with a little time things eventually eased up and the challenge of those early months has faded to a distant memory.

 

Next post – things you shouldn’t ask an adopted family. Stay tuned!

I’ve received a few lengthy emails recently that contained the following:

IF YOU READ NOTHING ELSE READ THIS SECTION

While I suppose one could argue that this encourages the reader to skip over the rest of the email, I disagree.  I think it’s brilliant. Each email was full of information – the kind that takes a good chunk of time to parse through and think about. They were the kind of email that ends up in your “read later when you have time” folder which would have been fine assuming that you 1) got back to it at all and 2) got back to it in a somewhat timely manner – they each required a response. The “READ THIS NOW” section was a single paragraph that summed up the information that I could now go through at my leisure as well as the action required in response to the email. Well done!

This is a cross post from the VCIR blog. We recently put together an analysis of companies that have presented at VCIR over the last 10 years. And the numbers are pretty impressive – reinforcing why the conference is such a great opportunity to see great companies from around the rocky mountain region. For more information on the conference itself, including how to register, visit the VCIR Winter website.

VCIR By the Numbers:

Presenting companies: 212

Companies who raised additional funding after their VCIR appearance: 127

Total funding raised by these companies (only includes amounts raised after their VCIR presentations): $2.5 Billion

Presenting companies acquired: 29

Total acquisition value (includes announced values for 19 of the 29 transactions): $4.4 Billion

The clear take-away, of course, is that VCIR is an event that showcases outstanding companies from around the Rocky Mountain region. Hope to see you there.

My longtime friend Marion Jenkins, CEO of IT consultant QSE Technologies wrote what I think is one of the most eloquent and well thought out rebuttals to the proposed Colorado “Software Tax” (HB 1192).  With his permission I’m posting it here in its entirety. If you feel the way I do about this issue, I urge you to take a stand on this issue.

I urge you to oppose HB 1192, the so-called “Software” Tax.  It is bad legislation and it will add significantly to non-productive administrative and legal overhead and kill productivity within the technology sector in Colorado (including not only technology-related businesses, but virtually every business – and every consumer – who uses technology).  It will also lead to a mass exodus of key jobs and technology talent from Colorado, and it runs counter to many Federal initiatives aimed at creating jobs, improving job skills and implementing automation and efficiency to help the country get out of this recession. It will also lead to a massive expansion of government, whose only function will be to try to interpret and unravel an impossibly complex set of new tax rules.  Those new government jobs will not provide any benefits to citizens, and particularly not provide any benefits directly to underserved populations, they will consist of auditors, analysts, enforcers and the like.

First, some background and disclosure:

1. I run an 8-year old information technology company in Englewood, QSE Technologies, Inc..  My family and I have lived in Colorado (Centennial) for nearly 12 years.  I live in House District 47 (Spencer Swalm) and Senate District 27 (Nancy Spence).  Our business is located in House District 44 (Mike May), and Senate District 30 (Ted Harvey) and most of our ~15 employees live in these same or surrounding Districts in the South Denver area.

2. I grew up on a family potato farm in SE Idaho and I have a PhD in Engineering from Stanford (also known as The Farm).  So I feel I have pretty good mix of horse sense and formal education.  I have been in the technology industry for 30+ years. 

3. I serve as adjunct faculty at the University of Denver, where I head up a graduate program division in healthcare information technology within University College. I serve on the board of directors and many other committees of the South Metro Denver Chamber of Commerce.  I also belong to the Aurora Chamber of Commerce, CHIMSS (Colorado Health Information Management Systems Society), AHIMA (American Health Information Management Association), CMS (Colorado Medical Society), CMGMA (Colorado Medical Group Management Association), CHSM (Colorado Healthcare Strategy and Management) and other business/technology organizations.

4. Among other corporate positions in my career, I have been a Chief Information Officer, Chief Technology Officer, Chief Operating Officer and Senior Research Engineer for small private companies, and also some Fortune 500 and even Fortune 10 companies.

5. This bill will NOT affect our company.  It will not cause us to raise prices or lay off people, or relocate out of state.  That is because we do not sell, or use, anything other than “canned” software, for which we collect and remit appropriate sales taxes.  Therefore I am not trying to protect any personal or business rice bowl.

6. Along with about 15 colleagues from CSIA (Colorado’s technology association) and other groups, I testified in opposition of this bill on Wednesday night/Thursday morning.  (thank you for your time and attention to our testimony, by the way). 

7. Although you sat through our testimony, I don’t think you understood it.  I think you saw and heard the same kind of turf-war, rice-bowl protection that you had been hearing all day.  The purpose of this email is to clarify some facts, because this is an extremely confusing issue.

There are many reasons why I oppose this bill (the way it is crafted, which in my opinion is a net new tax, which should go before the voters; the way all these initiatives were pre-packaged and front-loaded at the beginning of the session, before most citizens knew what was going on; the hearings that stretched into the middle of the night, in an obvious attempt to “wear out” the opposition; the way they are all characterized as “business” taxes, but in reality they will merely be passed on to all consumers – and therefore these are net new taxes on citizens, not on businesses.)

(As an aside, I have lots of other objections.  I object to this “nibbling at the edges” of the state’s budget deficit problem by trying to implement taxes here and there in a piece-meal fashion and splinter any opposition and paint this as a “business” problem, which sets up a “business versus K12 education” issue.  If the state has budget issues, which I believe it does, and needs to raise tax revenue (which has other options available such as cutting staff, eliminating duplication and programs and implementing automation – all of which businesses have been doing for the last ~2 years), then let’s raise taxes.  Don’t set up dozens of new statutes that tax sodas and candy and vending machines and Styrofoam cups and ketchup packets, go ahead and come out into the open and craft a bill to tax everything sold in a grocery store, including food, and/or implement a tax on all services (including attorneys, accountants and consultants) and take the problem to the people and see what they say.)

However, the only thing I am going to address in this email is the enormous complexity that makes HB 1192 simply impossible to implement and enforce, and that is why it should be opposed.

When Representative Pommer introduced HB 1192 to your committee Wednesday night, he positioned the bill in an incredibly simplistic fashion.  He said that people who download “standard” software (like TurboTax) from the internet should pay sales taxes, just like someone who buys TurboTax in a box at BestBuy.  His premise was that the delivery method of software – and whether there was actual media involved (i.e., CDs) – shouldn’t change whether the software should be taxed.  I actually agree with and could support that idea, at least in principle.

The TurboTax scenario seems straightforward.  But at the margins – for really large and really small software packages – this bill is a disaster.  On the low end, think of a download of small mini-apps:  a $.95 ringtone, a $1 MP3 song, a $2 e-book, a $5 upgrade to your GPS.  How can you tax those things, and would it even be worth it to try?  Do you tax a business traveler from Texas who orders TurboTax on his WiFi at Starbucks in Cherry Creek or a tourist from Oklahoma who does so from his SmartPhone while sitting on the chairlift at Vail?  How about a person who moves here from Boston but keeps his Boston phone number on his SmartPhone and uses it to surf the web and order “software?”

These are tricky but important details.

At the other end of the size/complexity spectrum, it gets even worse.  This bill defines “standard” software as any software package – or portion thereof – that is sold to more than one person or entity.  All such “standard” software (or portions thereof) would be subject to tax.  That has huge implications for virtually any business, whose software purchases and implementations are infinitely more complex than a person downloading TurboTax from the Web.

As an illustration, let me share with you the list below, which came to me yesterday in an email solicitation from a company that collects this kind of technical information from big companies and markets it to companies like ours, hoping we will buy their marketing/intelligence lists. 

This is a list of all the technology used by a Fortune 500 Company (not Qwest) listing all their major
technology systems, subsystems and software. 

Technologies:
Hardware/OS/Systems Environment

AT&T Sterling Commerce Yantra Warehouse, Cisco IOS, Citrix MetaFrame, HP-UX, HP-UX 11i, IBM AIX, IBM AS/400, IBM OS/390, IBM VSAM, IBM z/OS, INM CICS, Microsoft Active Directory, Microsoft Cluster Server, Microsoft Terminal Server, Microsoft VPN Servers, Microsoft Windows 2003 Server, Microsoft Windows NT Server, Norton Ghost, Novell NetWare, Red Hat Linux, Sun Solaris 8, Sun Solaris 9, Teradata Data Warehouse, Unix, VMWare, VMWare Server, Wyse Winterm, Avaya Intuity Conversant
Data Management / Business Intelligence
BEA WebLogic 8.1 / Oracle WebLogic Servers 8.1, BEZ Systems BEZPlus Data Warehouse Tool, DB2, File Aid, IBM Cognos, IBM Cognos PowerPlay, IBM DB2, IBM Informatica, IBM Informatica Builders WebFOCUS, IBM Informatica PowerCenter, JD Edwards World, Microsoft Access 2000, Microsoft SQL Server 2000, Microsoft SQL Server 2005, Microsoft SQL Server 7, Omniture SiteCatalyst, OmnitureHBX, Oracle 10g, Oracle 8i, Oracle 9i, Oracle Fusion Middleware, Oracle Hyperion, Oracle PeopleSoft Financials, Oracle PeopleSoft Financials 8.8, Oracle real Application Clusters, Qualys QualysGuard, SAP Business Objects Broadcast Scheduler, SAP Business Objects Crystal Enterprise 8.5, SAP Business Objects Crystal Enterprise XI, SAP Business Objects Crystal Reports 8.5, SAP Business Objects Set Analysis, SAP Business Objects Web Intelligence, SAP NetWeaver Business Information Warehouse, Security Innovation, Sun MySQL, Sybase 10, Teradata Active Enterprise Data Warehouse v2 R6,
Networking / Information Security
Connectria Integration Services, Progress Software DataXtend CE, Tuxedo, BMC Marimba 6, BMC Marimba 7, CA Unicenter, Cisco CiscoWorks LAN Management System, Citrix MetaFrame XP, Citrix Presentation Server 3.0, Citrix Presentation Server 4.0, Citrix Presentation Server 4.5, Citrix XenApp, EMC EmailXtender, HP Mercury LoadRunner, HP OpenView, Microsoft Internet Security and Acceleration server, Microsoft SCCM 2007, Microsoft SMS, Microsoft SQL Server Management Studio, Oracle Enterprise Manager, Oracle Identity Manager, Symantec backup Exec, Symantec Veritas NetBackup, Symantec Veritas Storage foundation, VMWare WorkStation, 123 EDI Shipping Outsourcing, Cisco PIX Firewall, ArcSight Log Consolidation system, Wavelink Avalanche server and client, Sygate Secure Enterprise Solution, Cisco Secure ACS Solution Engine,
Development / Programming Tools
Ab Initio, Adobe Coldfusion, Adobe Dreamweaver, AJAX, Altova mapForce, Altova XML Spy, Apache maven, Apache Struts, Apache Tomcat, Autonomy Interwoven sitePublisher, Autonomy Interwoven TeamSite, Borland VisiBroker 3.4, C, C++, CA ERwin, Citrix, COBOL, Compuware File Aid, Cywin, Eclipse, Embercadero Sapid SQL, Hibernate, HP Mercury Quality Center, HP Mercury Test Director, IBM Rational Clearcase, IBM Rational ClearQuest, IBM Rational Rose, IBM WebSphere Application Server, IBM WebSphere MQ, Java, Java Beans, JavaScript, JSF, JSP, JUnit, Microsoft .NET Framework, Microsoft ADO.NET, Microsoft ASP.NET, Microsoft C#, Microsoft Internet Information Services, Microsoft Office Communications Server, Microsoft SharePoint Server 2007, Microsoft Sybase T-SQL, Microsoft Team Foundation Server, Microsoft Visio 5, Microsoft Visual Basic .NET, Microsoft Visual Basic 6, Microsoft Visual Basic for Applications, Microsoft Visual SourceSafe, Microsoft Visual Studio 2005, Microsoft Visual Studio 2008, Open Text LiveLink 9.2, Oracle BEA JRockit, Oracle BEA Tuxedo, Oracle BEA WebLogic Application Server, Oracle PL/SQL, Oracle Primavera TeamPlay, Oracle SQL*Developer, Oracle SQL*Loader, Perl, Progress Software DataExtend CE, Red Hat iPlanet Web Server, Red Hat JBoss, ROBOT, SAP Business Objetcs Application Foundation, Spring, Sybase powerbuilder, Tibco rendezvous, TOAD, Vignette Builder, Vignette Content Server, Scrum Development,
Enterprise Applications
Amdocs Clarify CRM, Amdocs ClearCall Center, Amdocs Clearsales, Amdocs ClearSupport, AT&T Sterling Commerce Yantra Warehouse Management System, Descartes Mobitrac Transportation Execution System, EMC Documentum, Hodes iQ Talent Management, IBM Lotus Domino, IBM Lotus Notes, Lotus Notes, Microsoft Exchange 2003, Microsoft Exchange 2007, Microsoft SharePointServer, Open Text BlueBird, Open Text Hummingbird RedDot Enterprise Content Management, Oracle Financials, Oracle PeopleSoft 7.5, Oracle PeopleSoft 8.9, Oracle PeopleSoft 8.8, SAP Global Trade Services, SAP R/3,
Other Technologies / ITO Agreements / IT Intel
ABC has created a custom application server using Oracle Fusion Middleware and Oracle WebLogic Server called ABC Unified Strategic Information Optimization Network, or FUSION. It allows the company to eliminate the lines between their separate business units as well as improve customer satisfaction, 123 EDI Shipping Outsourcing, ArcGIS geographic authoring, BGT Partners consulting for B2B portal and CMS, Clarity Consulting for ABC QuickShip Application Development, Computer Aid, Inc. for managed mainenance automotive), Connectriaintegration Services, Cstomer Fsion Database, Dun & Bradstreet Dashboard, Google Analytics, IBM Global Technology services, Interknowlogy consulting for Application development, Loftware barcode and RFID Software, Microsoft Visio, Microsoftproject, Quad Graphics Parcel Direct, Six by Six, Telefonica Datacenter

Look through this list and ask yourself this question…do you think your 0.95 FTE employee in the DOR (which was claimed to be the only headcount needed to implement/oversee HB 1192) would even have a clue as to half of what these software packages are, how they are used, and which ones are “standard” and which ones are custom, or how and to what extent some standard modules may be embedded inside of the corporation’s customized software systems?  I have been in technology for 30 years and I recognize barely about 75% of them.

It would take a small army of experts to figure this out.  The other night I gave you a SWAG number of 25 DOR FTEs to oversee this.  After further thought my slightly more educated SWAG is now well over 100.  An equal number of non-productive administrative/audit people would be needed on the other end, within businesses who use technology, as well as their technology partners.  Every software project would have to be separated into “standard” (taxable) and “custom” (non-taxable) categories.  You would literally have to go through the software code line by line to determine compliance.  And, by the way, software code isn’t even written or measured “line by line” any more.

Any similar company (Colorado currently has 11 Fortune 500 Companies) would have a similar list.  Obviously a smaller company would have a smaller list, but even a 20-person company can easily have dozens of software applications, some “standard,” some custom, and some a mixture.

This is a nightmare.

As a result of your other tax proposals, will people go to Cheyenne or Salt Lake for a Pepsi or a Snickers bar or Chinese takeout?  Will Colorado businesses close down or move out of state if some of their supplies now get taxed?  Will Colorado consumers stop buying things on the Web if they have to pay taxes on them?  Those are debatable. 

Would technology jobs leave the state as a result of HB 1192?  Not only is it a definite yes, but you must understand that it is relatively easy to do so.  Moving a manufacturing facility is hard.  Moving a technology platform is easy.  Any sizable company would find it easy – as well as advantageous – to move their technology to Seattle or Omaha or Minneapolis to avoid the brain damage of auditing and accounting for and paying the taxes under HB 1192.  Not only would that company’s technology jobs move along with the technology platforms, but the jobs of any outside consulting/implement
ation partner would move out of the state as well.  And no large or growing company – and definitely no high-tech company – would consider moving into or investing further in Colorado if faced with this imposing and formidable barrier to technology, automation and efficiency.

There are many other technical issues…SaaS (software-as-a-service).  Cloud Computing.  Virtualization.  Managed Services/Hosting.  Object-oriented development.  Data center hosting.  Disaster recovery and remote/hot site services.  Software re-use.  Service-oriented architecture.  Software toolkits.  Telecommuting and virtual workforce.  Hosted telecom apps and VoIP services.  These are just some delivery methods and technology concepts that are at the leading edge of the technology frontier, and Colorado is at the forefront of these and other innovations.  Every one of them has special circumstances that will have to be investigated – and analyzed and unraveled – to comply with HB 1192.  So instead of spending time on productive efforts like innovation and implementation, companies will have to invest significant time in non-productive audits and compliance.

I want to emphasize again that this doesn’t just negatively impact technology companies like QSE and our peers, it affects every business who uses technology in their business.

Additionally, in Colorado and elsewhere, there is a shortage of students entering STEM – Science, Technology, Engineering and Math.  There are many formal and informal initiatives aimed at training and re-training both youth and adults to enter or shift to the technology workforce.  Several Federal jobs training programs are focusing on these efforts.  In addition, information technology is at the core of green/sustainable energy initiatives.  HB 1192 runs counter to those efforts, and would undoubtedly stifle future growth of talent here in the state, and cause the loss of federal education and training funds.

And lastly, the ARRA/HITECH act earmarks $19.5 billion in Federal funds for the implementation of IT in healthcare, which has shown to help lower our outrageous healthcare costs, reduce costly medical errors and improve patient outcomes.  Providers and other entities are reluctant to adopt automation and technology, primarily because of costs and other barriers.  By taxing software, HB 1192 increases those barriers, and would definitely cause the State of Colorado to miss out on some of those federal funds…they would go to other healthcare entities in other states. 

This issue isn’t about the software industry, or even the technology industry.  It’s about every business and every consumer in the state.  Technology is one of the few industries that is helping to lead the recovery, and helps all businesses become more efficient.  Colorado has grown in talent, infrastructure, and status to become recognized as a critical technology hub, and this bill will absolutely reverse that trend and shift the jobs and the capital investments to other – and eager – states.  But our testimony earlier this week, and this email, isn’t to protect the technology industry from further taxes.  Although the citizens and businesses of Colorado don’t realize it, my CSIA colleagues and I are working on their behalf.  Most of them don’t even know yet that HB 1192 exists, or what negative impact it would have on them.

In summary, I urge you to oppose HB 1192.  Its unintended consequences and confusing definitions are anathema to the economic health of Colorado.

Both were compelling for sure, but what did the Twittersphere have to say about it? Buzz monitoring company Retrevo put together some stats which suggest that wile the Apple announcement was big (topping out at 7,000 tweets per minute), the President edged the iPad out (peaking at 9,000 tweets per minute). I’d love to see the graph below with an overlay of what topics caused each of the spikes (they have this for the iPad announcement, but not the State of the Union Address – click through to the article to see the detail).

I travel a lot. It’s mostly to relatively fun places (New York, San Francisco, Seattle, etc), but it’s pretty much all within the US. Living in Denver and traveling to the coasts makes it pretty difficult to rack up frequent flier miles (a round trip to New York is barely 3k miles). So while I feel like I’m constantly on the road (trying to change this habit for this year – more on that in a different post), I’m perennially falling just a little short of reaching 1K status (100,000 flight miles) on United.

So when I checked my account balance after my last scheduled business trip in December and found that I was only a few thousand miles short of 1K this year I felt compelled to remedy the situation. Even if it meant a pointless flight (United won’t allow you to purchase a flight to get miles – you actually have to make the trip). It’s a great example of what happens when you offer your best customers meaningful rewards (in United’s case better upgrades, shorter lines, priority boarding, etc; see a great post on this topic from Jim Keenan here). I spent about $600 and a day of my life flying from Denver to Washington, DC to earn just enough miles to hit 1K (I ended the trip with 100,030 flight miles in 2009). And I did it happily. Just to get the additional rewards offered by 1K.

Now I hope to never make 1K again (that’s a lot of miles and too many nights away) and at least one of my partners thinks I’m completely insane for doing what I did, but I’m extremely happy with the effort and the outcome.

Let’s hope United can get me where I’m going a little more reliably ontime this year…