Google's ultrafast Internet draws startups to KC

KANSAS CITY, Kan. (AP) — Inside a small bungalow on the street separating Kansas City, Kan., from its sister city in Missouri, a small group of entrepreneurs are working on their ideas for the next high-tech startup, tapping Google Inc.'s new superfast Internet connection that has turned the neighborhood into an unlikely settlement dubbed the "Silicon Prairie."
The home on State Line Road is one of several startup-friendly locations that have sprouted up in Kansas City in recent months. The catalyst is Google Fiber, the search-engine giant's fiber-optic network being tested in the Kansas City area that advertises speeds of up to a gigabyte per second — a rate that massively exceeds the average Internet speeds at homes hooked up with cable modems.
The advantage here for startups is simple: A fast Internet pipe makes it easier to handle large files and eliminates buffering problems that plague online video, live conferencing or other network-intensive tasks. Though the Kansas City location presents challenges for startups, including the ability to raise money outside the traditional Silicon Valley venture capital scene, entrepreneurs like Synthia Payne believe it's the place to be right now for up-and-coming tech companies.
Payne is one of those entrepreneurs hoping to launch her startup dream — an Internet subscription service for musicians who want to collaborate online — on the cheap. She shares the State Line Road house, known as the "Home for Hackers," with other startups under a deal that allows them to live rent-free while they develop their business plans.
Google's network was attractive, Payne said, because her business plan "is dependent upon really good, really fast Internet."
"Without this on-ramp here I probably would have found it very difficult to come here," said Payne, who in December moved from Denver to develop CyberJammer.
Residents here were thrilled when Google announced last year that Kansas City, Kan., and neighboring Kansas City, Mo., would be its test bed for Google Fiber. The Mountain View, Calif.-based company spent months and unknown sums installing optical fiber around the area. Google provides the full gigabit service for $70 a month and its own cable-TV like service for another $50. A slower Internet connection is free on a monthly basis after a $300 installation fee.
The first homes were installed with fiber optics in the fall, with more "fiberhoods" planned in stages over the next several months. Kansas City, Mo., and Kansas City, Kan., remain Google's only fiber market, though the company has said it plans additional roll-outs. Many in the tech industry believe Google's move could ultimately force broadband providers to accelerate their networks to compete. Making Internet access faster would give the company more opportunities to attract traffic and sell more advertising — the main way Google makes money.
The "Home for Hackers" and its unique business pitch is the brainchild of local web developer Ben Barreth, whose property was among the first wave of houses to be fiber-wired and is a block away from the Google Fiber offices. "Hackers" who pass Barreth's application process and show a real intention to work on a viable project can live there rent-free for three months. Since starting the home in October after cashing in his Roth IRA and putting a down payment on the $48,000 home, Barreth has gotten applications from nearly 60 people seeking a spot in the home.
"The whole startup thing in Kansas City is like this huge growing beast," he said. "It's got this crazy momentum."
The house has been full since mid-December with Payne and two others. One of the rooms also is reserved for fiber tourists who want a place for a day or two where they can download anything faster than they could elsewhere.
"The hope is that these startups will move their operations to Kansas City and this will really bless Kansas City, bring jobs and taxes and we'll build a really cool tech scene," Barreth said.
A few homes away from the "Home for Hackers" is the headquarters of the Kansas City Startup Village, which was started by local entrepreneur Matthew Marcus and where Mike Farmer, founder of mobile search app Leap2.com, has his offices. Farmer said Google Fiber brought attention to Kansas City's startup culture, "because it sort of ignites the imagination about what you can do with that sort of bandwidth capability."
"Most every week I meet one or two or three people that are looking to come in from out of town," he said.
Despite the growth, it remains a challenge for startups to raise money from Kansas City, Farmer said. Silicon Valley venture capital groups in particular want startup entrepreneurs to be nearby in California, he said.
"I've had some really incredible conversations with some big name VCs, and their first statement is that when you're in this early stage you have to be here, right next to us," he said. "That is a hurdle."
Andy Kallenbach recently launched FormZapper.com, an online forms management site, and also has offices near the "Home for Hackers." He said Kansas City has no aspirations to be the next Silicon Valley and may never have a "Facebook or a giant consumer-level company that takes over the world."
He said it may also be "better for us" that it's more difficult to raise money in Kansas City.
"The hardest thing about a startup is execution, OK? A lot of people can go out and raise money and get money for an idea or for some product or they can come up with some awesome presentation. But it doesn't matter if you can't build something that people will use," Kallenbach said. "I think here in Kansas City you have to at some point put your money where your mouth is. You have to 'do.'"

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New Corvette bursts onto the road after 9 years

DETROIT (AP) — When General Motors engineers and designers started work on the next-generation Corvette, they drew up the usual requirements for the star of American muscle cars.
Killer looks. Big engine. Handles like a race car.
But topping the list back was something at odds with the roar of the car's big V-8: Gas mileage.
The new Corvette could not be a gas guzzler. Stricter government rules were forcing a leap in fuel economy. If the car burned too much gas, it would trigger fines from regulators and never get built.
"There won't be a Corvette if we don't care about fuel economy," said Tadge Juechter, the car's chief engineer.
But the 2014 Corvette is here, the first all-new version in nine years. The king of American sports cars, driven by astronauts and celebrated in a Prince song, rolled out Sunday night in Detroit. It will arrive in showrooms this fall.
To many fans, the new Corvette symbolizes the rebirth of America's auto industry after its near death in 2009, showing the world that it again can lead in technology, styling and performance — at a lower cost that European competitors.
Getting there was tough for the 1,000-member Corvette team, which gave the car the code name "C7." GM's bankruptcy slowed development twice. With each delay, new safety and gas mileage regulations forced changes. The Corvette team overhauled the car: aluminum replaced steel, super-light rivets held parts together, and the V-8 engine kicked down to four cylinders at highway speeds, saving fuel.
All the changes helped it overcome nine years of government crash safety requirements that could have bloated the car. But even with the lighter materials, the regulations have pushed its weight to a little more than the current base model's 3,200 pounds. Still, it's an engineering achievement. The Corvette is so new that it only shares two parts with the current model.
GM said testing is still being done on the car's fuel economy, but it'll be better than the current base model's 16 mpg in the city and 26 on the highway. Juechter said the window sticker highway mileage won't reach 30 mpg, but he wouldn't be surprised to see some drivers get that or more.
The car's usual buyers — men in their mid-50s — will also notice dramatic changes on the outside of the two-seat car. The hood slopes low to slice through the wind. All the vents and scoops have functional purposes like cooling the brakes or transmission.
On the back, designers took cues from the1963 Corvette, with a sloping roof that tapers toward the bottom. The car has a small Stingray badge on each side, complete with gills. And there's a more modern rendition of the Corvette's crossed-flag logo.
A 6.2-liter small-block V-8 with 450 horsepower takes the car from zero to 60 mph in under four seconds. That's at least a few tenths of a second faster than the current base model.
Engineers also redesigned the somewhat-chintzy interior, giving it a jet cockpit look with leather, carbon fiber and soft plastics.
GM hopes the styling, performance and updated dashboard electronics will expand the car's appeal to younger buyers. The Corvette's been a favorite of adrenaline junkies for 60 years. Mercury astronaut Alan Shepard owned one from the first year — 1953.
The company won't quote a price on the 2014 model. But Juechter said someone who bought the current version can afford the new one. The Corvette starts at $49,600. That is more than $30,000 below what GM considers its chief competitor, the Porsche 911. The car makes a decent profit for GM despite relatively low sales, Juechter said.
GM wouldn't give sales targets for the new car. Last year it sold only 14,000 of the aging Corvettes, down from over 30,000 the first few years after the current version was rolled out. Porsche sold about 8,500 911s last year.
The prospect of a new 'Vette has fans waiting anxiously, browsing the Internet for unauthorized photos or drawings. Thousands of aficionados live in the U.S., and even Europe and the Middle East.
John Browning, 70, president of the Renegade Corvette Club of Hollywood, Fla., one of 600 such clubs in the U.S, said some Corvette lovers can't contain themselves.
"I've got one member, he just sold his '13 in anticipation, to wait for the '14," said Browning. "I think the Corvette is the icon. As far as I'm concerned you can't get a better deal."

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U.S. stake sale of GM to revive image

DETROIT (Reuters) - The sale of the U.S. Treasury's stake in General Motors and a possible credit rating upgrade of the U.S. automaker in 2013 will help distance the company from the stigma of its 2009 bankruptcy restructuring.
"We lose the stigma of 'Government Motors'," GM Treasurer James Davlin said on Sunday during a speech at a conference of automotive analysts. "People will be more focused on the things that they should, which is our underlying operations."
The U.S. Treasury outlined plans last month to sell its GM stake over the next 12 to 15 months. Last week, Chief Executive Dan Akerson said he expects GM to earn an investment-grade credit rating in 2013.
GM is already "trending toward investment grade," Davlin said. He pointed to GM's eleven-quarter streak of profits, its large financial cushion and its strong position in the world's two largest automotive markets, the United States and China.
"We want to ensure we have the liquidity to make it through the cyclicality of the industry," Davlin said, speaking to reporters and analysts a day before the Detroit auto show.
Until recently, uncertainty over when and how the U.S. Treasury would sell its 26-percent stake hurt GM's overall market value, Davlin said. But GM shares have risen nearly 20 percent since the U.S. government announced its exit strategy.
GM shares are ended at $30.36 per share on Friday.
Still GM has a number of challenges ahead, most prominently of which is Europe. GM is struggling to stem years of losses in the depressed and highly competitive European market where its core brands are Opel and UK-based Vauxhall.
It has made inroads in restructuring its European operations, including announcing plans to close its assembly plant in Bochum, Germany. But Akerson said he is not yet satisfied with GM's current position.
"That's probably my greatest concern -- how quickly can we turn that around," Davlin said, of Europe.
He also predicted that the U.S. dollar would rise against the Japanese yen and the euro this year. This would represent a "slight headwind" to GM, which must convert its earnings overseas into U.S. dollars. GM is also expecting a stable U.S. economy in 2013.
"We don't see a big rebound in the economy or a return to financial doldrums," Davlin said, of 2013.

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