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The Madrona Labs team: Amy Falcone, Brian Fioca, Ben Gilbert, Brendan Ribera and Matt Terich.
The Madrona Labs team from left to right: Joe Heitzeberg, Amy Falcone, Ben Gilbert, Brendan Ribera, Brian Fioca, Matt Terich, and Greg Gottesman. Photo via Madrona.

Coming up with a legitimate startup idea on a cocktail napkin is hard enough. But actually taking that sketch, quitting your day job, hiring the right people, accepting no salary for the next year, attracting customers, and turning that idea into a real company? That’s a whole new level of hard.

madronaventurelabs111This is why Seattle’s Madrona Venture Group today debuted Madrona Venture Labs, a new incubator within the VC firm that helps take great startup ideas and turn them into successful companies by way of recruiting, product development, financial investment, and more.

Founded in 1995, Madrona has already incubated startups like Z2 Live, Farecast, and Rover.com from inside the firm. But as Madrona managing director Greg Gottesman explains, this process has often been “ad hoc” without much structure. For example, Rover — the dog-boarding service — was only created because a developer was looking for a summer job, and he happened to be at a Startup Weekend event with Gottesman.

“Labs is about taking incredible people and being more systematic about building companies,” Gottesman said.

Gottesman and veteran entrepreneur Joe Heitzeberg are leading the charge at Labs, which has a team of seven that help develop concepts around software applications and services.

Madrona Venture Labs' first spin-out is Spare5. The founding team: Loren Bast, Patrick O’Donnell, Matt Bencke, Daryn Nakhuda, and Matt Shobe.
Madrona Venture Labs’ first spin-out is Spare5. The founding team: Loren Bast, Patrick O’Donnell, Matt Bencke, Daryn Nakhuda, and Matt Shobe.

The first spin-out of Labs is Spare5, a new startup that enables everyday people to perform short tasks on their smartphone — like photo tagging, price guessing, and simple surveys —  in exchange for payment. The idea for Spare5, which we wrote about earlier this week, was conceived at Madrona Labs in May. From there, the Labs team validated the business model, recruited a team of experienced entrepreneurs, and helped the company land $3.25 million in seed funding.

“The point of Labs is that, you test an idea, and if customers seem to be engaging like crazy — like they are with Spare5 — then you keep going,” Gottesman said.

Heitzeberg, who has founded several startups like Poppy, MediaPiston, and SnapVine, said that going from “napkin to traction” is one of the hardest parts about starting a company — particularly for talented people who work at Seattle tech giants like Microsoft and Amazon that are wary of leaving their well-paid gig for a risky startup opportunity.

“It’s confusing,” he said. “It’s like walking blindfolded into fog and trying to find your way. It’s a skill.”

That’s where Labs wants to help — take an idea and help turn it into a working product that has real traction with customers. From there, it recruits the right people who can take the startup to the next level, much like it’s trying to do with Spare5.

The Labs team has high ambitions for its spinouts, too.

“We aren’t going after something that’s not potentially huge,” added Heitzeberg, a former Madrona entrepreneur-in-residence.

Seattle skyline and Rainier at sunset
(Photo by Kevin Lisota)

Both Heitzeberg and Gottesman — who repeated the word “fun” numerous times when talking about Labs — think that the incubator could have positive implications for Seattle’s startup climate as a whole.

“What we aspire to be at Labs is a small but relevant part of what we think is one of the best tech ecosystems in the world,” Gottesman said.

Gottesman noted that Madrona will continue investing in early-stage companies and house them in the firm, separate from what Labs is doing. He also said that “we don’t know of any other VC firms that are doing this.”

“We would love to be able to create two to three meaningful companies a year out of Labs,” Gottesman said. “If we can do that, we’ll play a small role in helping make Seattle even better than it already is.”

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