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Innovation Economy

West Coast culture nurtures new ideas

By Scott Kirsner
Globe Correspondent / December 28, 2009

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Highlights from Scott Kirsner’s Innovation Economy blog. For the full blog, visi t www.boston.com/innovation .

The lure of the West Coast.

When I met Bill Clerico and Rich Aberman in 2008, the two recent Boston College graduates were just starting to talk to local investors about WePay, their online payment start-up. They had an idea - help groups of people make payment easier for collective projects like renting a ski house or throwing a bachelorette party - and they were working to build a prototype. I wrote about them as part of a column about how hard it is to change the way we pay for things, using new technologies like mobile phones.

Fourteen months later, Clerico and Aberman are living in San Jose, Calif., and they’ve just raised $1.65 million from Menlo Park-based August Capital and a group of angel investors including Eric Dunn, a former chief technology officer at Intuit Inc., the maker of Quicken personal finance software. Earlier this month, they moved into their first office space on University Avenue, the main drag in Palo Alto.

The former tenant? Another company started by Massachusetts emigres: Facebook.

I had coffee with Clerico and Aberman last month to catch up. They were in Boston over the Thanksgiving holiday, mainly to recruit a few Bostonians to help them build the company. (They were successful, hiring two software developers who are heading west. “There’s great talent in Boston,’’ Aberman said. “And you’re not competing against as many sexy companies as you are in the Valley.’’)

Clerico, who helped start the business plan competition at Boston College, said they had met with more than a dozen venture capital firms and angel investors around Boston. “They told us we were too early-stage, mostly,’’ he said. “They pointed out that we hadn’t yet nailed down the cost of customer acquisition, which was true.’’

The two applied to various entrepreneurship programs earlier this year, including the new TechStars Boston boot camp, and Y Combinator, a program once based in Cambridge and Silicon Valley that now operates year-round in the Valley. Y Combinator accepted them into its summer program; TechStars did not. Last May, they drove west and rented a house in San Jose. They shared it with three other teams that had been chosen by Y Combinator.

Over the summer, Y Combinator gave them the chance to hear from vaunted Valley entrepreneurs like Max Levchin, a founder of PayPal, and LinkedIn cofounder Reid Hoffman.

They opened the WePay site to a small number of beta users. In August, they took part in Y Combinator’s Demo Day, presenting the technology and business plan to investors like Ron Conway (a prolific angel investor who put early money into Google), tech executives like Bradley Horowitz of Google, and representatives of Facebook’s in-house investment fund. They plan to open the site to all comers early in 2010.

There’s a clear cultural difference between Boston and the Valley, Clerico told me over coffee:

“It’s accepted as normal to have started a company - you feel like a normal member of society. People ask you things like what your pre-money valuation was. Here, I think they wonder if you’re involved in some kind of pyramid scheme.’’

“All of my friends in California are start-up founders, and here [in Boston] my friends are investment bankers, accountants, and lawyers,’’ said Aberman, who chose the entrepreneurial path over law school. Both of them were raised on the East Coast: Aberman in Florida, and Clerico in New Jersey.

But what lured the pair to the Bay Area was acceptance into the Y Combinator program, which is run by a group of now-former Bostonians, including Paul Graham and Jessica Livingston. (Clerico said that if they had been accepted by the TechStars program, they would still have chosen the more-established Y Combinator.) And what is keeping them there, much like Facebook before them, is the fact that they found investors willing to put money into a still-nascent idea targeting consumers.

It’s too early to tell whether WePay will be a hit. But the fledgling company’s move west shows that California’s lure is still powerful, especially for first-time founders.

Overcaffeinated undergrads? I stopped by Olin College last week to see what was shaking at the Olin Expo, a showcase for student projects held at the end of each semester.

Yes, there were sleekly designed bikes, robotic plush toys, Baja off-road vehicles, and augmented reality systems.

But I was most struck by a trio of student groups working on projects related to coffee and tea. Is this small engineering school in Needham turning into Starbucks U?

Chris Fitzhugh was showing off an electric tea kettle - slim and sans handle - that looked like a bottle of Voss water. Dan Greeley had examined the environmental impact of drip coffee makers, finding that they waste lots of energy by overheating the water, then cooling it.

And Ben Salinas, a senior at Olin, was showing off the Luminaire Bravo 1: a single-cup coffee maker designed for the most discriminating of java swillers. The coffee maker lets the barista control the temperature of the water, the rate at which water flows into the filter, and the brewing time - some baristas, Salinas explained, like to add water to the grounds, stop, and then start again. Coffee beans from different countries that are roasted in different ways need to be brewed differently, Salinas said.

The Luminaire prototype is already in use at Barismo in East Arlington, and Salinas said he’s planning to have a few more prototypes in the field by next year.

Why all the research-and-development interest in coffee and tea?

The materials science professor who helped the students organize the expo, Debbie Chachra, said Olin students tend to dive into topics near and dear to their hearts.