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I’ve been thinking a lot about passion lately — passion for ideas, teams, the shared pursuit of common goals.  More and more, I believe passion is the critical differentiator between really good, and great, teams.  And, at the end of the day, I think passion is what separates the Bay Area from all other pale imitations to the undisputed startup mecca.

I spent the last two days at the 500 Startups Demo Days, where a wide-range of startup companies gave 5-minute presentations describing their mission, progress, funding needs and objectives.  There were three sessions spread over two days, with fairly identical presentations given at each.

In short, I was blown away with the quality of the companies, and more important, the energy, intelligence and focus of the teams.

Dave McClure’s 500 Startups (Disclosure: I’m an investor, advisor, and mentor, and Dave’s a TeachStreet investor, board member, and very good friend. That said, my feedback is direct and blunt.) is a new kind of seed fund and startup accelerator.  Based in Silicon Valley, but investing around the globe, they believe successful Internet startups are born from usable design, customer-focused metrics, and online distribution.

Dave Schappell

They provide early-stage companies with funding ranging from $10,000 to $250,000 via seed investments through their startup accelerator program, and new micro-fund models like the Twilio Fund and d.Fund (focused on designer-led startups).

500 Startups boasts over 120 experienced startup mentors around the world and 10,000 square feet of awesome working space in the heart of Silicon Valley. It is a vibrant community of startup founders.

Demo Days gave a group of their first 100 or so startups investees (invested in just the last 12 months — yes, they’re handing out money in wheelbarrows) a chance to shine.  I came into the event not knowing what to expect.

I was a little worried that there would be a little bit too much Bay-Area-Echo-Chamber-Social-Media-App-iosity, with too little broad market appeal.  And, the recent hype around a startup investment bubble made me even more concerned.

But, within the first few presentations, I started spending less time looking at my laptop, and more time tuned in to the presentations.  And, while I did get the sense that money’s flowing more freely (and MUCH more freely than in Seattle), I also noticed that the teams are doing much more, with much less.

The cost of experimentation is dropping like a rock, and I think the investor rewards will go to those following a diverse portfolio theory, levered by a distributed network of trusted mentors, advisors, and on-the-ground presence.

Below, I rank all of the Startups (yes, all of them), with the disclaimer that it’s only my opinion. It also comes with my own biases related to markets that I don’t like very much, and I’m not really an investor (Of course, like all wanna-be-successful entrepreneurs, I think that my ability to pick winners has to be better than suit-wearing, conference-room-occupying, investing-other-peoples-money, never-built-companies-themselves Venture Capitalists!)

A) Best of Show:

1) Visual.ly — Infographics Automation Studio (built by the Mint.com team. I’m not sure how enormous the market is, but this one’s a slam dunk)

2 & 3) Baydin (email Game) and AwayFind: Priority inbox, done right, for businesses.
Both of these companies are in the e-mail space, and both impressed me. The “email problem” is getting bigger every day, and it needs solving

4 & 5) InternMatch: Helping college students find internships, and vice versa. This business is growing rapidly, and critical to great hiring. & YongoPal: Photosharing to Enable English Language Learning for South Korean/Asian students)
(Disclaimer: I’m an advisor to both of these Seattle startups, but I’d tell them if they suck)

6) 955Dreams: Nnew media publishing company.  Check out their iPad app, “The History of Jazz”.  ’nuff said.  Oh, they didn’t even present on Day 2, as they’d already closed their investment round!

7) SayGent: Voice analysis platform, to help call centers increase conversions. (Think helping Comcast operators KNOW if their customer is really wanting to cancel their service, and to know when to give them upsells.’) Or, “having pollsters know with more certainty the feedback of respondents”

8 ) ReadyForZero: Helping people resolve their credit card debt issues. Massive market, that’s screaming for a non-scammy solution.

9) SpeakerGram: Helping speakers, and conference organizers, find one another — bigger market than people understand, and a great solution.

10) evozMonitor: Data-driven parenting (Runkeeper for Moms/Babies). For those of you who have been following my recent passion for HealthMonth, RunKeeper, WakeMate, Tap & Track, and more, you won’t be surprised that I think this one is also a sure thing.  Mom’s love tracking their baby’s progress, even if it’s to say they’re in the 99 percentile for being a moron.

11) MotionMath: Learning apps that incorporate tactile/motion-based interactions with children. Parents in the crowd were wowed, and the team was really solid.

12) MYGENGO: Scalable translation services, via API, and with open-source plugins.

B: Unsure, but Left me Intrigued.

13) Volta: Helps you weblab/A-B Test your phone calls/sales efforts. This one must be solid, given McClure’s excitement about them (after working closely with team), but I wasn’t wowed by the demo.  It may have been too short to clearly demonstrate the process.

14) CrowdRally: Interesting company that built something that was ‘too good for Facebook, so the big bad FB legal team shut them down.’  Now, they’ve already got some interesting investors lined up for a video sharing service that was so amazing (as a demo), that it makes you think that this one’s gonna be a quick talent pick-up.

15) Ginza Metrics: SEO automation for big businesses. I think I’m just bitter about this industry, after the recent Google Panda/Farmer update, and also a little biased by my love for Seattle’s own SEOMoz (although they play in different spaces).  Probably a good exit, but didn’t seem gigantic to me.  Seemed more like a solid services business.

16) SocialStork: CEO is an amazing guy. Built highly profitable HitGrab, and was also a Canadian Idol finalist!  This is a Facebook for Babies and their Moms/Dads.  I wasn’t overwhelmed because I’ve seen how things can turn out for companies that build on platforms like Facebook and Twitter, and also that there’s a big segment of moms that don’t want their children’s content on the web).  But, given the success of the entrepreneur, it’ll probably do just fine.  Just not my cup of tea.

C) Most Likely to Pivot to an Even More Awesome Money Making Market.

17) Brainient: Turns video ads into engaging experiences, like Mixpo?  I was left confused.

18) WorkersNow: OpenTable for Construction Crews looking to manage Temporary Workers) — because of my experience in the local, non-tech-heavy space, I’m resistant to ideas that require large changes in workflow, by customers who are resistant to technology adoption (i.e. changing habits is hard).  I admit that the market’s probably enormous, but I wouldn’t invest here.

19) Ninua: News, the right way. Friends + Mainstream News + RSS) Their tagline is “News. Life. You.” This space is just littered with failures, and incredibly well-funded, well-managed competitors such as Flipboard, Google Reader, Zite, Trove, and more — that said, they already have 1.5 million users.  And, I don’t :-)

20) Rewardli: Get Rewarded for your Business).  Just not in my interest zone.  But, they have amazing partners lined up already.  Had to do with giving you rewards for your business, and then incentivizing you to recruit friends.  I think.  I think people are getting tired of this.  But I’ve been wrong about so many things.

21) Punchd: Customer loyalty program for Local Businesses, via Smartphones.  May work.  But massive competition with Foursquare, Yelp and many others.  Plus, another behavior change & technical barrier in a land of people very resistant to that (see #18).

22 & 23) All About Wednesday/Wednesdayslunch & SpoonDate.” These were two apps that help people find people to go to lunch/eat with.  I know that I wasn’t fully understanding, but they seemed a lot like Brian Dorsey’s NoonHat. It’s an idea that I personally like, but I don’t believe in the market potential, or the unmet demand.

Remember folks, these are just my opinions.

But what’s amazing about that group is that 16 to 18 out of 23 (70-78 percent) look like very good investments to me.  Even with a give or take of 3-6 (yes, they could ALL make it across), it makes for a remarkable, diverse, far-along group of startups, that I think have a high likelihood of finding profitable market opportunities, and their passion and supportive energy and camaraderie was palpable.

It’s a great reminder for me about where the bar is set for programs like Seattle TechStars and the local entrepreneurial environment.

It’s not just about the demo, but the supportive culture at every stage.  The room was full of press (Rafe Needleman, Ben Parr, VentureBeat, and more), VCs and Angels (Kleiner, DFJ, Sequoia, Morganthaler, CRV, Emergence, Mark Goines), and interested entrepreneurs, 500 Startups Advisors and Mentors.  And if you didn’t notice the noise on the social media squawk box, then I guess you didn’t read this far down anyway.

Onward folks. We’ve got our work cut out for us.

Dave Schappell is the founder and CEO of TeachStreet. Follow on Twitter @daveschappell.

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