After Silicon Valley success with Ustream, Dallas’ Brad Hunstable revving up next project in Texas
Brad Hunstable launched his first company in a Palo Alto copy room closet. His Internet video startup, Ustream, came of age in a trendy San Francisco neighborhood that’s home to some of the country’s most recognized startups. And he sold that company in January to tech giant IBM.
But the entrepreneur and native Texan has a different plan this time around. He started his second company in a backyard shed in Granbury, a short walk from a creek where he played as a child. Its closest neighbors are country homes and cattle.
The 37-year-old Aledo resident has pulled televised pranks with actor Ashton Kutcher. He’s toured the Tesla factory with Elon Musk and visited with the late Apple founder Steve Jobs. he was a regular guest on Bloomberg TV and CNBC.
Hunstable has been held up as a Dallas success story — a local startup that made it big. He spoke at Dallas Startup Week last spring about how he founded Ustream, a video streaming pioneer, and grew it into a company worth buying. But the reality is more complicated.
For years, he has shuttled between two worlds: his work in the tech capital of Silicon Valley and his life in a rural community in North Texas. And after years of that life, he’s looking to what’s next. He’s building something here — a company that he hopes can revolutionize electric motors.
On a recent summer day at the backyard shed, he drove up in a Tesla, wearing Prada sunglasses and a T-shirt with Texas’ outline and the word “Home.”
“I’m just a little kid from Granbury,” he said. “I feel like I have an obligation. I have skills. I have resources. I feel like I have a civic duty and moral obligation to make this place better.”
Growing up in Granbury
Brad’s interest in technology began with the computers that his father, Fred, brought home from Kmart and RadioShack. A Commodore VIC-20. A TRS-80 Model 4 about the size of a suitcase. A Compaq computer. A Dell.
He is one of three children. All three of them grew up to be entrepreneurs.
As a young boy, he would watch his dad, Fred, play with the early versions of computers — the ones that Fred now jokes are “museum pieces” — to write programs or do calculations.
Fred Hunstable knew his son had caught the computer bug when he started taking the machines away from him and going to RadioShack to buy computer parts and accessories.
“I started early on in the computer age, so Brad grew up in it,” Fred said.
When Brad was a teenager in the early 1990s, he ran a bulletin board system where people could dial into his computer to download files, play games and exchange messages. It was what Brad describes as “a prehistoric version of the internet.”
And Brad always had an entrepreneurial bent, too, Fred said. When he started driving and wanted to buy a car, he bused tables at a local German sausage shop and restaurant. He saved up money to buy a Nissan pick-up truck.
He graduated from Granbury High School and left to study at West Point. He was in the Army stateside for five years.
During his time in the service, he and a few friends started a side business taking photos of college parties, weddings and spring break trips on clunky digital cameras. People could customize the photos with filters and frames and order prints.
Brad had graduated from West Point in June 2001, just months before the country shifted from peacetime to the 9/11 era. He saw his buddies from West Point deployed all over the world, far from their families.
The seed of the idea for Ustream began when he thought about them, thousands of miles from a brother’s wedding, a best friend’s birthday, a baby’s first step.
“I saw all these people missing the most important moments of their lives,” he said.
One of his colleagues who had enlisted saved all of his money to send his daughter to Duke University. A week before her graduation, Brad, as his colleague’s commander, had to break the news to him that he would be leaving for Iraq instead of back home for the family’s celebration.
“Having that conversation with him was one of the most painful conversations I’ve ever had to have,” Brad said. “That just resonated with me. And I thought, if I had technology, at least he could watch it.”
On nights and weekends, Brad sneaked his camera, Wi-Fi card and laptop into Deep Ellum clubs where his brother played in a band. He used his brother’s gigs as a testing ground for live video streaming — the idea that became Ustream.
He’d take the gear out of his backpack and head to the middle of the mosh pit. Then he’d call his co-founders and ask “Can you see it? What does it look like?”
A surprise investor
After West Point and five years of military service, Brad worked in residential real estate for Hillwood Development, a Dallas company founded by Ross Perot Jr. But as he spent more time on his side project of Internet video, he felt confident it could become a company.
In 2007, Brad decided to quit his job, trade his pick-up truck for a car and head to Silicon Valley — a region he knew for its vibrant tech scene, plentiful venture capital and garage success stories of entrepreneurs like Steve Jobs. But before he left town, he got a surprise from his former employer.
After he put in notice at Hillwood, Perot Jr. wrote him a $300,000 check — his first investment.
He started Ustream with two cofounders, John Ham, who he met in the Army when stationed in Kansas and Gyula Feher, a Hungary native who he met at a tech conference. They had all worked together on the party photo business.
Brad left for the Bay Area in June, about two months after his wife, April, gave birth to their second child.
He viewed the long-distance relationship like a military deployment — difficult, but necessary for his company to thrive. “I believed and she believed in me,” he said.
He expected to either grow the company and move his family to California or return home after giving it a shot. Instead, his wife and children stayed in Texas, near extended family.
He adopted a new routine: He took a flight home each Thursday. He went to his kids’ soccer games each Saturday. He attended church each Sunday. And then he flew back to San Francisco.
For about nine years, he lived out of a suitcase and in a hotel. Even now — after years of the Ustream being headquartered in San Francisco — he says he couldn’t find his way around the city.
In the early days of Ustream, his father, Fred, ran a twice-weekly video forum to chat with Ustream users about the platform and to offer technical support. Ustream hit 1,000 consecutive viewers in 2008, but most were from Dallas, Fort Worth or Granbury, Fred said.
“And then suddenly it was Johannesburg and Stockholm, Sweden,” he remembers.
Ustream takes off
Churches started using Ustream to broadcast Sunday services, and schools used it for sports events. A San Francisco resident used Ustream to broadcast the birth of puppies. A guy in Iowa set up a webcam of an eagle protecting her nest. The company received bags of letters and cards from schoolchildren who watched the live video.
Ustream took part in national news during the Virginia Tech shooting in 2007 when a student used the video service to broadcast live from his dorm room. It was shown on NBC Nightly News with Brian Williams.
Brad’s parents watched the logo for Ustream flash onto the screen.
“Here is a large tragedy that’s happening that you’re sick to your stomach about, but on the other side you thought, ‘My God, this shows the power when you broadcast live,’” Fred Hunstable said. “It was a very strange thing. There’s been so many of those.”
Over the next few years, Ustream broadcast President Barack Obama’s inauguration and the landing of the Curiosity rover on Mars.
Brad said the power of Ustream was always its immediacy. “It’s not just that you can see a video,” he said. “You can feel it in your heart.”
In 2009, Ustream peaked at 60 million unique views per month, Hunstable said.
In 2011, Brad became CEO of the company. In the months that followed, he had to make a difficult decision about Ustream’s future: Should it go head-to-head with YouTube and similar video companies chasing the same content and ad dollars or should it pivot?
He made the decision to lay off some staffers and turn the Internet video company into a software-as-a-service video platform. Big companies became customers, using the service to stream live meetings and conferences. Ustream switched from covering the uprisings of the Arab Spring to streaming company presentations by Cisco.
In January, Ustream sold to IBM in a deal valued at around $130 million, according to news reports, but the exact amount was not disclosed. It became part of a new division of IBM, the cloud video services unit.
Since Ustream’s sale, Brad has traveled for work to Dubai and New York, Budapest and Vegas. He still shuttles back and forth to San Francisco to work for IBM.
But more of his attention is on the next chapter. He co-founded his new business, Linear Labs, with the man who inspired his love of computers: his dad. They built a shed in Brad’s parents’ backyard a few years ago and started the company as a father-son project.
Fred dropped out of college, preferring to get his hands dirty. He went to trade school for training as an electrician. He spent his career inspecting quality control and safety checks at nuclear plants across the country. Much like his son, he spent many of his workdays on the road and nights nights in hotels.
The idea for Linear Labs was born on the front porch of Brad’s parents’ house, when Fred, now 63, reminisced about how he and his friends would hang onto pumpjacks as children until they were tossed off by their power.
How could they harness a more efficient kind of power, like the power of windmills? Brad wondered.
That research inspired a new more powerful electric motor with a different configuration and design. Father and son stayed in touch about the project by sharing photos and talking on video. They’ve made a handful of prototypes in the shed and had them tested by researchers to measure their efficiency.
On weekends, they’d gather in the shed. The inside resembles a machine shop with a concrete floor, tools, a lineup of motor prototypes and a white board with a few words scrawled in marker: “the skunk werks.” It also includes an oven where Fred can bake parts of the metal prototype — and the occasional TV dinner.
Fred said the more efficient motors could have universal applications in everything from ceiling fans to drills to drones.
They plan to create a family of motors that could be used in different types of products. They’ve spent the last few years developing the prototypes and applying for patents. They plan to pursue licensing agreements with manufacturing plants or automobile companies.
Babak Fahimi, a University of Texas at Dallas research scientist and professor of electrical engineering, researches renewable energy and vehicular technology. He’s tested electric motors for Linear Labs.
He said its electric motors can generate more power, while taking up less space and using fewer materials, such as steel or copper. He said the motors could disrupt the automotive industry by saving on manufacturing costs.
Each year, just a small fraction of cars sold have been hybrid or electric. He said making electric motors more reasonably priced could make the cars lower priced, too. He says the innovative design of the motors could be used in other ways, such as high-speed trains.
When Brad left the Dallas-Fort Worth area for Silicon Valley about nine years ago, there were no accelerators, entrepreneur centers or coworking spaces. He had no idea where to go to raise funds — or if there were any funds at all.
He’s returned to a Dallas area that has an ever-growing startup scene. And looking around Dallas-Fort Worth’s entrepreneurial ecosystem, he says many things have changed — but some have not.
He hasn’t been shy in pointing out some of the weaknesses of Dallas’ entrepreneurial ecosystem. Even after selling his company to IBM, even with his contacts and clout, he says he struggled to raise money from local investors to launch Linear Labs.
“I pitched some angel groups and the amount of work they had you do for an $100,000 check is unbelievable,” he said.
He kicked in his own money and got some funds from angel investors in Silicon Valley.
He says Dallas has three main problems: Its angel investors have the wrong investment strategy. Its startups don’t have venture capital firms to fund the next stage of growth. And the city needs mature startups to exit through acquisitions, initial public offerings or other financial deals.
And he says Dallas-Fort Worth investors take the wrong tack when it comes to investing in startups. He compares venture investing to a game of poker. Put in a small number of chips and then double down if you like the cards that you see. Investors should write smaller checks, instead of going all in — and getting burned.
After selling to IBM, Hunstable could have retired, but he said he’s driven by more than finances.
“It’s one thing to build a company and create jobs all over the world, but I want to create jobs here,” he said. “For me, it’s a passion. I like businesses that not only make money but do something good for the world.”
He’d like to see Linear Labs’ electric motors fight pollution, promote energy-efficiency and fuel similar technology that decreases the carbon footprint. And he said the time is right to build a company in Dallas, especially with companies like Toyota moving here.
He may have made his big sale in California, but back home, his successes have been richer — He made his mom proud. He was inducted into the Granbury Hall of Fame in 2014. His mom watched as he walked onto the football field and people cheered.
Hometown: Born and raised in Granbury; Lives in Aledo
Education: West Point for bachelor’s degree in engineering management; The Ohio State University for master’s in business administration
Family: Married to wife, April, for 13 years; 12-year-old daughter Addison, 9-year-old son Hayden and four-year-old daughter McKinlee