Russ: This is The BusinessMakers Show, heard here and seen online at thebusinessmakers.com. It's guest time on the show and I'm very pleased to have with me Kirk Coburn, Co-Founder and Managing Director of SURGE Accelerator, Kirk, welcome to The Business Makers Show.

Kirk: Thank you very much.

Russ: You bet. Well, let's start by you telling us about SURGE Accelerator.

Kirk: SURGE Accelerator is a mentor-driven seat accelerator that's trying to solve the world's energy problems using software so we will actually invest in ten startups, we'll give them cash, we'll give them free resources, in exchange for equity and we'll try to help them go from idea, progress, to landing a pilot and going to that next round of financing.

Russ: My goodness, okay, so it kinda sparks all kinda questions. Number 1, how much cash?

Kirk: We're gonna give 10 companies $30,000.00 in cash.

Russ: Okay.

Kirk: And we're gonna put 'em through a three-month boot camp as a result of that so it's really enough money to survive for three months.

Russ: Okay and then you mentioned that - that SURGE Accelerator takes a piece of the company. How big a piece?

Kirk: We ask roughly for startup about 6 percent.

Russ: Okay

Kirk: And it's common equity so we're not tryin' to - we really wanna be equal with the founders.

Russ: Okay, okay. Now solving the world's energy problem with software could be rather challenging. What sorta sparked this idea and what sort of expectations do ya have that you can make a huge impact in the energy business with software?

Kirk: Well, we looked at the model. There's two entrepreneurs that started. One was called TechStars, out of Boulder --

Russ: Right.

Kirk: which we have an announcement to make with them and Y Combinator outta Silicon Valley and what they did is they took business-planning competitions, like Rice, --

Russ: Right.

Kirk: and they made it professional and they looked at tech and social-media deals and what they have found is that they're extremely successful because if you can take an entrepreneur or entrepreneurs, put 'em through a three-month boot camp, at the end of that, they come with a much better idea, they have a little funding and now they have exposure to all these mentors, which is the key to the program --

Russ: Okay.

Kirk: that helps them get to landing customers, landing more money.

Russ: Okay, all right, so - so you're - you're, sort of, patterning your process around these other two accelerators.

Kirk: That's right, we - we looked at these accelerators, about 50 around the world --

Russ: Mmm-hmm?

Kirk: and we said, "Why don't we create one in Houston?"

Russ: Okay.

Kirk: There's one in Austin and there's one in Dallas but let's focus on what we're the best in the world at, which is energy --

Russ: Right.

Kirk: and energy IT --

Russ: Right.

Kirk: so we want to focus, in Houston, on our greatest resource.

Russ: Okay, so what you're, kind of, out there looking for is innovators, entrepreneurs that - that have an idea that might've seen something that's missing in the energy IT space and think that they can develop around that and, perhaps, hit the big-time and you're here to help 'em hit the big-time.

Kirk: We want 'em to hit the big-time.

Russ: All right, that's good. That's great! That's a good objective.

Kirk: That's right, go big.

Russ: Okay and - and I mean, have there already been, like, is there, sort of, a - a history of some software companies that you're trying to pattern this after that have done just that?

Kirk: Well, there's quite a few energy software companies that have made it big.

Russ: Okay.

Kirk: HERA is one of 'em that just raised a whole buncha money. There's Opower, for example, and they're probably more in the extreme side. We're not looking for companies to get that big. We'd like 'em to.

Russ: Right.

Kirk: Tendril is another idea, so we're looking at companies in three primary spaces: Smart grid applications to solve the electricity utility problem --

Russ: Mmm-hmm?

Kirk: energy trading and risk management as well as the digital oil field.

Russ: So share with us who your cofounders are.

Kirk: So Blair Garrou at DFJMercury, our local hero venture capital firm --

Russ: Right, right.

Kirk: Andrew Clark, who is Houston Angel Network former chairman and Brett Perlman, who is a former Public Utility Commissioner that deregulated the utility business.

Russ: Right so you've got some expertise there and - and potentially even some follow-on investor opportunity with that group.

Kirk: That's right. We actually have over 67 mentors and most of them are VC's, angel investors, corporate energy executives that are lookin' for the next big deal.

Russ: Okay, okay.

Kirk: So we're all in this together.

Russ: Okay well sorta - sort of describe the mentor role, Kirk. I mean we know what mentor means but, in this kind of process, early-stage, it could be extremely important.

Kirk: Well I think what I hear from a lot of entrepreneurs, they need somebody and they need ideas, they need help because you can only work 24 hours in a day, so these mentors are really there to help them with their business plan, how do I make it better, how do I solve the market need and have I really figured it out, they need connections to capital, so they need money and they need customers and one of the key things in energy is and any other big business is that most big companies won't do business with you unless they know you --

Russ: Right.

Kirk: and they know our mentors and so that's a key, key piece.

Russ: Okay, wow, so what's in it for the mentors?

Kirk: Well the mentors really are in it for two things: Primarily entrepreneurs are in it to give back so there is a community service in there but, primarily, they're in it for finding a good investment.

Russ: Okay.

Kirk: They're looking for a good idea so that they can be involved.

Russ: Okay, wow, and you have 67?!

Kirk: We have 67 and we have more venture-capital mentors than any other accelerator, we have the clean-tech and energy-focused mentors and we optionally have energy executives and companies that are willing to give pilots to these companies.

Russ: Wow, really cool, real cool. Now the 67's an impressive number, particularly when you take into consideration, I mean, this is - this brand-new, right?

Kirk: That's right, that's right.

Russ: Okay.

Kirk: First year.

Russ: Are you in business today?

Kirk: Uhh, no.

Russ: Okay.

Kirk: We launched our website, surgeaccelerator.com, and what we're looking for is we're gonna open applications in November this year and we're gonna pick ten of the best companies around the world so we're not just looking for local Houston entrepreneurs, which we love 'em --

Russ: Right.

Kirk: but we're looking for global entrepreneurs tryin' to solve the world' energy problems, they have a software product --

Kirk: Right.

Kirk: and we'll select them and invite them to Houston starting March of 2012.

Russ: Okay and so what's - what's the basis of selecting 'em? I mean do you already have software idea people contacting you or are they supposed to come into the website and say, "Hey, choose me, I'm a good guy?"

Kirk: Well, we have them checked at the application, check on the website for the application.

Russ: Okay.

Kirk: It's gonna go live, November 1st.

Russ: Okay so that - they can't even do an application today but on November 1st they can fill it out?

Kirk: They can go online today and they can register their information.

Russ: Okay.

Kirk: So we'll at least know who they are.

Russ: Okay, yeah.

Kirk: But if they know someone that's a part of surgery of all the - actually we have most of our mentors listed on the website, if you know one of 'em, reach out to them!

Russ: Okay, cool.

Kirk: Or reach out to me.

Russ: Cool, okay. We're talking with Kirk Coburn, Co-Founder and Managing Director of SURGE Accelerator and we'll be back with more with him after this. This is The Business Makers Show, heard on the radio and seen online at thebusinessmakers.com.

Russ: This is The Business Makers Show, heard on the radio and seen online at thebusinessmakers.com. We're continuing on with Kirk Coburn, Co-Founder and Managing Director of SURGE Accelerator, so pretty cool, pretty exciting time, if you're just now starting to get these first ten applications. You know carry me through how long these ten will kinda be mentored and pushed down the process and what happens after these ten?

Kirk: Great, very good question. We're gonna put these companies through a three-month intensive boot camp. We're gonna give 'em free office space. We're gonna office together like a boiler room, in a really cool house, called The Red House, where companies like PentaSafe was formed out of.

Russ: Right, right.

Kirk: They're gonna have a lotta fun and then they're gonna get free hosting by Rackspace, free banking by Silicon Valley Bank and so forth.

Russ: Cool.

Kirk: One other key importance is after the program is done, three months later, we kick 'em out.

Russ: All right.

Kirk: So they need to go grow up!

Russ: All right.

Kirk: And there's a term as an entrepreneur that you and I have discussed before but it's fail fast.

Russ: Right.

Kirk: So either you succeed and fly or go back to the drawing board.

Russ: Right, okay, so that's the end of SURGE Accelerator, those first ten?

Kirk: Well, we're actually, it's gonna be an annual fund, so, every year, we're looking for ten more companies. If we --

Russ: Okay.

Kirk: If we see so much - so many deals, we might actually do 2-classes-a-year, so, 20-companies-a-year.

Russ: Cool! Do you see yourself ever, potentially, expanding beyond software?

Kirk: Absolutely, I think there's opportunity for energy technology in general. We look at software because it's easy to pivot and it's easy to develop quickly. Hardware is a little bit different, it takes longer time. We're not sure it's our sweet spot but we'll look at it.

Russ: Okay, really cool. Well, I guess, knowing a little bit about your background -- that being the Managing Director of SURGE Accelerator - is a cool position for you to be in, I assume. Is that correct?

Kirk: Oh, it's fantastic. My grandfather was in the oil business, my dad was in the technology business and, as a seventh-generation Texan, I'm back, in Houston, where I grew up to do this and I love it.

Russ: Okay well, share with our audience your background because I think that's pretty fascinating as well.

Kirk: Well, I grew up wanting to be an entrepreneur but my dad kinda gave me the advice of, "Go learn something from someone smarter than - than yourself and go work for a big company," so I was a financing accounting undergrad at school, I went and got my MBA but I learned from - most of my experience - in Dell, up in Austin and then, after Dell, I decided to try a few startups, I failed miserably, workin' for other people. Thank goodness it wasn't my money I spent.

Russ: Right, right, right.

Kirk: And then I, back in 2003, I started my first company and 3 companies later, I'm here!

Russ: All right.

Kirk: So I figured it's easier to work for yourself than it is for someone else.

Russ: All right, really cool, so what did you do at Dell?

Kirk: At Dell, I was known as a jack-of-all-trades, so I started in Sales, I managed the Marketing Team and managed Pricing. I worked in Finance and Worldwide Procurement so they sent me all throughout the company to learn, basically, how to be a general manager.

Russ: Okay, well I imagine was it - did it feel like you were takin' a major risk when you left the company to start your own businesses?

Kirk: You know I always believe that. My dad said sumpin' to me as a young kid that never left me, which was, "When you work for someone else, you're never in control."

Russ: Right.

Kirk: And what that means is they could fire me at any point, so I - I worked as if - and I took a risk, inside of companies, as if I could get fired any time and so I - it - it never scared me to take risks because I was waiting for that call into the office.

Russ: All right, all right, lemme ask ya this. That really begs another question. Let's imagine that we have a young aspiring entrepreneur that's tuned in right now. Maybe they weren't an aspiring entrepreneur until they heard your comments about, you know, you wanna - you're always workin' for somebody else. What kinda general advice would give such a person?

Kirk: I've talked to hundreds of entrepreneurs; I'm sure not as many as you have.

Russ: Okay.

Kirk: I tell the aspiring entrepreneurs one thing, I said, "If you can do something over a five-year period and look back and have made no money and say you wouldn't change anything then that's worth it."

Russ: Yeah.

Kirk: And so that's what I look at. It's like if I can look back on this, having made nothing and say, "It was worth it," --

Russ: Yeah.

Kirk: That's success.

Russ: Yeah, absolutely.

Kirk: That's what I tell 'em.

Russ: Okay, okay, well - well what about, you know, ideas and attitudes and - and passions that you think helped you in your success?

Kirk: You know, it - during my first deal, I learned a valuable lesson, which is 100 people have had the same idea as you, 10 people are trying it and only 1 succeeds and what I learned is 99 people want me to fail. I'm just looking for the 1 out of 100 that are looking for me to succeed and so I ignore the 99 because you get more "No's" than "Yes's."

Russ: Right.

Kirk: And so I take my own advice and don't quit. I mean don't quit.

Russ: Cool, really cool. All right, lemme tell you what, before we wrap it up, I wanna leave you with this message: After you get a few of these cooking down the line, we prolly wanna have you back but maybe on The Energy Makers Show, our other show, --

Kirk: We would love that.

Russ: where we're focused on the energy and you can tell us and, perhaps, even bring a couple of the guys, the entrepreneurs.

Kirk: Love to have 'em.

Russ: All right, good deal. Okay, thanks a whole lot, Kirk, for comin' in and sharin' your story.

Kirk: Yeah, you're welcome, Russ. Thank you --

Russ: You bet.

Kirk: for havin' me.

Russ: All right and that wraps up our discussion with Kirk Coburn, the Co-Founder and Managing Director of SURGE Accelerator. This is The Business Makers Show, heard on the radio and seen online at thebusinessmakers.com.