Wall Street Journal

Last week, the Wall Street Journal Weekend Edition sent John Jurgensen, an entertainment features reporter, to Austin, in order to spend a day observing Thumtronics’ search for the funding needed to bring the Thummer to market.

John had written a WSJ piece on Les Paul, his contributions to inventing the modern electric guitar, and the fact that he was still playing regularly in New York (at 92). I emailed John, suggesting that now that he’d covered the past of musical instruments, he should consider covering their future, too. He liked the idea, his editor approved, and voila! out he came. Cool!

His angle on the story appears to be, “New musical interfaces are proposed frequently but not one has gained mainstream acceptance for over a century [with a few debatable exceptions]. Jim Plamondon thinks his new interface, the Thummer, can beat those odds – but to bring the Thummer to market he needs cash. Let’s observe as he makes his case to potential investors.”

John joined me at the following meetings:

• OpenLabs: Hank Coleman and Victor Wong stated that today’s commercially-successful musicians & producers were (a) computer-based and (b) not classically trained, so that they had everything to gain and nothing to lose by using an easier-to-learn and more-expressive computer-based music-control interface such as the Thummer. They demonstrated the surprising realism of software music synthesis using physical modeling (specifically waveguide synthesis) and emphasized how useful the Thummer would be in unleashing its expressive potential.
• CTAN: Jamie Rhodes discussed the relationship between angel investors & VCs and what both groups looked for in an “ideal” investment. No specific discussion of the Thummer, because Thumtronics had only submitted its proposal a few days earlier and CTAN had not yet had time to review it.
• Fito Kahn and David Peterman: Angel investors who are considering investing in Thumtronics. Asked questions about IP ownership, possible partnership with Chinese OEMs, other issues preparatory to making an offer (probably this week).
• Ian Varley: An archetypical Music Brain, Ian is a serious musical hobbyist – with an extensive home studio and a busy performance schedule – who works as a computer programmer. He demonstrated the Thummer and discussed its merits, including the simplicity of its patterns, its stimulation of creativity, the importance of novelty in capturing the attention of the audience, and the Thummer’s infectiousness. John videotaped much of this discussion, which will hopefully appear on the WSJ’s website.
• Wes Cole: A Venture Capitalist with Austin’s Gefinor Ventures, Wes was kind enough to set up this meeting on short notice. His responses to the presentation were right in line with those of other VCs – and more clearly enunciated than most – which was ideal for this meeting’s purpose.

In between meetings, John and I discussed issues such as why previous new musical interfaces had failed to gain mainstream commercial success, the characteristics needed for any innovation to succeed, and the reasons why some investors shied away from Thumtronics (all of which I will address in subsequent blog postings).

I also introduced John via email to people who could comment credibly on relevant issues, such as Stan Leibowitz on the Lock-In Fallacy, Roger Linn on new musical interfaces, Reuven Brenner on finance, Ajit Kambil on Value Maps, etc. (all without endorsing the Thummer per se).

John said that he could not guarantee that the story would appear, but that he was confident that it would – else his editor would not have approved sending him out to Austin in the first place.

If it does appear, it should be in one of the next few issues of the WSJ Weekend Edition.

This could be very cool. :-)

Where?

Thumtronics started in Busselton, Western Australia, because that’s where I happened to be living when I thought up my first musical innovations. Busselton is a very pleasant seaside resort town – but it’s a lousy place to start a new high-tech company. It’s three hours’ drive south of Western Australia’s capital city, Perth, which is “the most isolated major city in the world.” It’s as far from the next large Australian city as LA is from New Orleans (about 1700 miles), with absolutely nothing in between but sand, salt flats, and stranded Japanese tourists. Perth is a great place to raise money for a new nickel mine, but a lousy place from which to launch a high-tech disruptive innovation.

Australia’s venture capital community is absolutely clueless. This is not just an opinion; it’s a demonstrable fact. Over the decade from 1995 to 2005, American venture capitalists earned a whopping 41.4% Internal Rate of Return (IRR) on their investments (overall). Over that same decade, Australian venture capitalists earned 0% – that’s right, zero, nada, zilch. Even the top quartile only earned 2.7%, which was less than inflation. Whatever else people might say about American venture capitalists, they know how to pick companies that earn incredible returns – and, demonstrably, Australian venture capitalists don’t. Australian venture capitalists wouldn’t recognize the next Google if it hit them in the face.

So, I couldn’t get funding in Australia, despite the recognized disruptiveness of Thumtronics’ innovations. To get funding, it became clear that I would have to move Thumtronics to the USA.

But… where in the USA should Thumtronics go? Perhaps a high-tech center, like Silicon Valley, Boston, or Raleigh? Or perhaps a center of the music industry, such as New York or Los Angeles? What I really needed was a single city that had successful industry clusters in both electronics and music.

Austin has both. Although its much-touted claim to be the Live Music Capital of the World is somewhat dubious, there is no doubt that Austin takes music – and the music industry – very seriously. Whereas in other cities, having a CEO play live gigs in a local band would be considered somewhat flaky, in Austin it is normal and well-regarded. Austin’s live music scene is mentioned repeatedly in Richard Florida’s Rise of the Creative Class as being one of the hallmarks of, and contributors to, its success as a high-tech city.

Likewise, Austin has a deep local electronics industry, with numerous large firms such as AMD, Applied Materials, Cirrus Logic, Freescale, IBM, Intel, National Instruments, Samsung, Silicon Laboratories, Sun Microsystems, United Devices, and others having headquarters or major facilities there, and thousands of smaller electronics firms. Importantly, Austin also has a deep and broad infrastructure of service providers such as lawyers, accountants, patent attorneys, etc., that understand the needs of innovative high-tech start-ups. Austin’s rapid growth has also spawned a host of high-tech millionaires, who are ready and able to invest in the Next Big Thing.

Austin is Texas’ state capital, giving me access to Texas’ government decision-makers and influencers. This will become important as Thumtronics’ innovations start to move into government-funded educational institutions. With 23 million people, Texas is the USA’s second-most-populous state after California, so influencing Texas can influence the USA, which can influence the world. Furthermore, Austin is still a relatively small city (at 1.5 million, about the same population as Perth), so it’s relatively easy to gain access to Austin’s movers and shakers.

Austin is also a remarkably nice place to live, which has attracted (and will continue to attract) top talent from elsewhere. Finally, its cost of living is low enough to allow Thumtronics to minimize its burn rate.
Fortunately, Austin’s investor community understands disruptive innovation, so I am quite confident that, one way or another, Thumtronics will get the funding it needs to disrupt the $30 billion musical instrument & lesson industries from its new home here in Austin.