Fireside Chat with Gail Goodman and David Friend, from Future Forward

I had a chance to conduct a "fireside chat" with two of Boston's most successful start-up CEOs this past Wednesday, at Future Forward 08.

David Friend is CEO of Carbonite; Gail Goodman runs Constant Contact.

Founded in 2005, Carbonite is an online back-up service that has raised $50 million in venture capital, and has users in 120 countries. David Friend had earlier started companies like eYak/Sonexis and FaxNet. Constant Contact went public last October, and I wrote about them recently in my Boston Globe column. Goodman had previously run the e-commerce group at Open Market Inc.

The audio file is an MP3, about 35 minutes long. Quality is good -- except for a few beeps at the end indicating that my digital recorder was about to run out of juice. We talk about what each CEO learned from prior ventures... raising money... going public... marketing and advertising... and surviving near-death experiences.

Kleiner Perkins Dialing Up Activity in Boston?

Last month, Michael Greeley of Flybridge Capital off-handedly mentioned that Kleiner Perkins had dialed up its presence in Boston, with two partners located here.

So I wanted to check if that was true.

When I asked KP's PR person if there was anyone based out here permanently, or an office that they'd set up in Boston, their reply via e-mail was, "KPCB’s official offices are in China and California. There is a plethora of innovation happening in the Boston area, and KPCB is involved in identifying new ideas and helping to build companies." They apologized for not being able to share more details.

Greeley mentioned that Tom Monath (formerly chief scientific officer at Acambis) is on the KP team, and based in Boston. KP wouldn't confirm that. But here's a two-year-old Mass High Tech article mentioning that they'd brought Monath on board, and were opening an office. But Monath seems to live in Harvard, Mass., and I couldn't find a listing for KP in the Boston area, though he is still listed on KP's Web site as a partner in the firm's "pandemic and biodefense fund." (He didn't respond to my e-mail last week.)

What Kleiner does have locally is a "strategic partnership" with GreatPoint Ventures in Cambridge. Kleiner doesn't have money in the GreatPoint fund, but they do get a first look at "interesting deals we bring them," according to Aaron Mandell of Great Point. That arrangement has been in place for "about six months," he said. They've invested together in GreatPoint Energy and Alta Rock Energy, a geothermal energy company. Mandell said GreatPoint is definitely not an affiliate or "branch office" of KP...

Among Kleiner's Massachusetts portfolio companies are CodonDevices, Bit9, Epizyme, Mascoma, Upromise (acquired by Sallie Mae), and Lilliputian Systems, which just yesterday announced plans to expand its manufacturing facility and add about 100 jobs.

Are you hearing about other KP activity in town? Post a comment if you would....

Foley blogs about non-compete law

My Globe colleague Todd Wallack just called this new blog to my attention: Massachusetts Noncompete Law, published by the law firm Foley Hoag LLP.

Here's blogger Michael Rosen's description of it:

Foley Hoag’s Massachusetts Noncompete Law Blog focuses on developments in Massachusetts in the areas of covenants not to compete, non-solicitation and non-disclosure agreements, trade secrets and the many related issues that arise when employees move between employers. As court decisions and other legal developments arise, this blog will describe them and discuss their implications for the businesses and individuals affected by them.

In several of the industries that are significant drivers of the Massachusetts economy—including high technology, life sciences and financial services—employers routinely require employees to sign various types of agreements restricting their activities during and after their employment. As a company’s intellectual property is placed at risk every time a valued employee walks out the door, the movement of talent between companies—particularly competitors—begets litigation. We hope to promote a working dialogue on these developments—post your thoughts and join the discussion.

(Unfortunately, the Alliance for Open Competition blog, run by a group of people who hope to change the way non-competes are enforced in Mass., seems to have gone dormant for half a year.)

NH Wants to Wine and Dine Ya

This press release from the New Hampshire Office of Economic Development struck me as funny, so I'll share the first couple paragraphs...

Visiting Companies to Receive First Class Treatment
NH Businesses Extend “Open Invitation” to MA Counterparts

NASHUA, NH – The New Hampshire business community is making Massachusetts companies an offer they can’t refuse – a chauffeured limo ride and whirlwind tour complete with lunch, hockey tickets and an overnight hotel stay, all for the small price of exploring the business advantages offered by the Granite State.

The New Hampshire Division of Economic Development’s Business Resource Center joined with a group of local businesses at the Radisson Hotel Nashua this morning to unveil the “Open Invitation” initiative, a new business recruitment program aimed at attracting Massachusetts firms to the state.

As part of the initiative, a chauffeured limo provided by Capital City Limousine will drive a Massachusetts business prospect from the border to a special luncheon at a Common Man Restaurant location. After a discussion with a New Hampshire business recruiter, the prospect will be given an overview of New Hampshire’s business atmosphere before being led on a guided tour of available properties. Later, the company owner will have the opportunity to ski at Cannon Mountain or take in a Manchester Monarchs game before spending a restful evening at the Radisson Hotel Nashua.

“The Open Invitation initiative is a tremendous partnership between the state and a group of dedicated private sector partners,” said New Hampshire Business Resource Center Director Roy Duddy. “At absolutely no cost to New Hampshire taxpayers, these businesses have presented us with a creative way to reach out to Massachusetts firms that are interested in expanding or relocating to our state. What better way to attract new companies and secure new jobs than to show New Hampshire’s at its finest?”

...New Hampshire Division of Economic Development Communications and Legislative Director Steve Boucher said that with the current economic downturn and need for creative business recruitment ideas, he feels that the time is right for the “Open Invitation.”

“We have a tremendous value proposition to present to Massachusetts companies as well as businesses throughout the United States,” he said. “In addition to being named the ‘Most Livable State’ for the past five years, we have a tremendous tax advantage and a government that is completely business friendly. We’re a state that is proud to say that we welcome your business and will work hard to support you in any way possible.”

Over the next week, the Business Resource Center will mail special “open invitation” letters to over 800 Massachusetts companies to complement radio ads being broadcast over Lowell-based WCAP. In addition, the Center has also announced the launch of “nhopeninvitation.com,” a Web site that details New Hampshire incentive programs, cultural amenities and a state-to-state cost comparison.....

Free skiing? The Manchester Monarchs? Man, they are *aggressive* about their economic development up there in the Granite State.

Student Brainstorming

What are some of the ways we can better connect graduating students with the innovation economy here in New England? That's the topic of today's Globe column, and I'd love to hear your thoughts in the comments below.

From the column:

The greatest renewable natural resource we've got in New England is smart young people. Hundreds of thousands of them are getting educated in our region right now; in Massachusetts alone, about 75,000 will earn degrees come May. And once springtime approaches, most graduates will return home or seek their fortunes elsewhere - often in Silicon Valley.

A study commissioned by the Greater Boston Chamber of Commerce last month found that over the next five years, Massachusetts will have the lowest rate of population growth of any state, when you're looking specifically at people 25 years old or older who've earned at least a bachelor's degree. Joining us on the laggards list are neighboring states Rhode Island, Connecticut, and Maine.

"Our problem in New England is that the ripe entrepreneur-age kids are leaving in droves," says [Angelo] Santinelli, a consultant and ex-venture capitalist who also teaches entrepreneurship at Babson College in Wellesley. "Our biggest export is brains."

Here's a video clip of a recent chat I had with venture capitalist and entrepreneur Bob Metcalfe on the topic.

And an earlier blog post here graded Boston's networking groups and trade associations based on how welcoming they are of students.

Surviving (and Thriving?) Through the Recession

This past Sunday's Globe column focused on eight rules for surviving the recession. It mentions companies like MessageSling, EMC, VistaPrint, Cubist Pharmaceuticals, and Cognex Corp. Here's the opening:

There are two predictions that no businessperson in Boston is ready to make: how bad this recession is going to get, and how long it will last.

"I'm afraid it's gonna be longer than six or 12 months," says Michael Bonney, chief executive of Cubist Pharmaceuticals Inc., a Lexington drug developer. "This is the biggest economic disruption since my parents' youth in the 1930s."

"This will not be easy to fix," says Robert Shillman, chief executive of Natick-based Cognex Corp. "People are in a gloomy mood, and if enough people feel like they shouldn't be spending money, you get into a downward spiral."

...So what do we know about how the economic climate of the coming year will affect our region's innovation economy? In talking last week with a dozen CEOs, chief financial officers, and venture capitalists, some common themes surfaced.

The video is an interview with Chris Marstall, a Cambridge software developer who runs the Web site Tourfilter.com. He talks about the merits of a one-person start-up with unbelievably low operating costs.

What's Polaris Up to in San Francisco?

Waltham-based Polaris Venture Partners seems pretty active out in the Bay Area these days...

This summer, the firm did a seed round for Plinky, a new company co-founded by Sim Simeonov (a technology partner at Polaris' Waltham office) and funded by Mike Hirshland, who also technically works out of the Waltham office. Plinky is based in the East Bay, in Lafayette.

Now, Hirshland has helped launch The Dog Patch Lab. It's a work space and series of networking events to bring together Web entrepreneurs. Polaris is the "founding sponsor," and Hirshland is one of the "top dawgs" at the lab.

It is based in San Francisco, on Pier 38.

(I've had a few meetings scheduled this year with Hirshland, but he has blown off most of them. No doubt because he's in California?)

Keep on Bailing, or Invest in Innovation?

Thermo Fisher chairman Jim Manzi and James Henry have an article in The Nation titled 'Invest in Innovation.' Well worth a read.

"For more than a century America has led the world in innovation," they write. "This has been true not only in science and technology but also in business management practices, the design of new approaches to service delivery, political institutions and civil rights. ...But if the United Stakes stakes its future on resource-based competition--the kind of low-innovation, 'big houses/big debts/big cars' model favored by automakers, Wall Street and the oil industry...[our long-term] competitive advantage shifts to countries with the largest supply of cheap resources, the lowest taxes and the cheapest, most oppressed workers--not a formula for vibrant democracies either at home or abroad."

One recommendation is to create more innovation hubs like Boston and Silicon Valley. Henry and Manzi write:

Take a lesson from successful public-private collaborations in technology hubs like Silicon Valley, Boston and Austin. In all these cases, private venture capital and entrepreneurs played crucial roles--and so did federal dollars. For decades the federal government generously subsidized basic research in fields like engineering, biology, physics, chemistry and computer science at premier universities like MIT, Harvard, Stanford, Carnegie Mellon and the University of Texas.

...The question is whether we can replicate innovative new Bostons and Silicon Valleys in other geographies, focused on energy, healthcare, the environment, education and transportation.

What If We Didn't Bail Out the Automakers?

I was reading this morning about the pleas from Ford, Chrysler, and GM to be the latest recipients of a couple billion dollars of government largesse...

...and remembering the time in 2004 that I visited GM's R&D headquarters and listened to their execs diss the potential of hybrid technology. From the piece:

"You always have your early adopters," said Alan Taub, GM's executive director for R&D, about today's hybrid buyers. "Toyota sells as many Priuses as we sell Pontiac Aztecs. Is that a success?" Earlier this year, at the Detroit International Auto Show, Bob Lutz, GM's vice chairman of product development, had said that the company's decision not to make a hybrid car "was a mistake from one aspect, and that's public relations and catering to the environmental movement."

Now, Toyota alone has sold more than one million hybrids, and our indigenous car-makers want a taxpayer hand-out.

I know it'd cause major pain in Michigan (and beyond) if one, two, or three of these companies went under.

But could it also give rise to new kinds of car-makers and parts-makers? If GM went bankrupt, would some private equity firms buy the Chevy Volt project, keep it alive, and do a better job of bringing it to market than GM? Would other manufacturing companies spring up in old Ford plants, hiring former Ford workers? Would more companies like Tesla Motors spring up, and take advantage of some of that existing infrastructure and worker expertise?

I tend to think they would.

But maybe that's because I was at the Bedford, MA headquarters of ZINK yesterday morning.

This is a company that bought all of its intellectual property from Polaroid (and then continued to develop it). Zink bought most of its prototyping and manufacturing equipment from Polaroid (for 50 cents on the dollar). They bought an old Konica-Minolta plant in North Carolina to make their product. (ZINK designs ink-less mobile printers, and they produce the paper used in those printers.) The bulk of their employees once worked at Polaroid.

Would ZINK have ever happened if the government had bailed out Polaroid and kept it on life-support?

Boston's Biggest Trade Associations Flunk the Student Test

Let me be clear: I really hate students.

They don't really add anything to our local economy, except for sometimes when they start companies upon graduation (like Microsoft, Akamai, Facebook, iRobot, MicroCHIPs, Harmonix Music Systems, Brontes Technologies, etc. etc.)

They also don't really help local companies by joining them... with all their youthful energy and fresh ideas.

That is why I agree with all of the major trade associations that it is not a good idea to get students involved, or make it easy for them to participate in events.

What would be the benefit? It's not like students would ever start a company that might pay the annual membership fees to belong to one of these associations, or work for a company that might join.

OK, enough sarcasm for one post.

To me, the biggest way to make Boston more competitive and innovative right now is to do a better job connecting students with our innovation economy. Which is why it pains me that our trade associations and networking groups make it so hard for students to get involved.

Here's my assessment of how our local organizations are doing on this front. The most informal groups (those that don't tend to charge membership fees) rank high. Oddly, the groups that charge the most for annual membership fees also seem not to care much about developing new members for the future. I'd say that bodes poorly for their long-term health.

How'd I grade these groups? I looked at the remaining 2008 events on their Web sites and evaluated how easy/affordable it would be for an undergrad or grad student to attend, and whether they offered memberships to students. I plan to turn this report card into a Globe column soon, and I plan to talk to some of these organizations about why they are so impenetrable to students... it will be interesting to see if any of them change their stance at all between now and then.

A+. Mobile Monday Boston organizes panels and networking events at least once a month, which cost nothing to attend. An October meeting focused specifically on bringing together student groups from local schools with successful mobile entrepreneurs. The goal? "...[E]xpose local students to the professional opportunities available in Boston's mobile industry."

A+. Web Innovators Group organizes monthly demo nights at the Royal Sonesta in Cambridge. They're free to attend, and while drinks are served, there's no problem for under-21-types to get in.

A+. OpenCoffee Club Boston: An informal gathering of entrepreneurs every Wednesday morning in Cambridge. Free to everyone.

A. TIE Boston: Student memberships cost $25, and that brings down the rate to attend most events to $10 or $20. Some events are free for members. Non-member rates for students are posted for all events, and tend to run only a bit more than that. Going to the annual TieCON East conference, though, is a bit pricey even for student members: $175. What TIE (The IndUS Entrepreneurs) does better than most associations is make it obvious that students are welcome to be part of the group... and not just Indian students!

A. Harvard Business School students organize several events throughout the year... including the Cyberposium in November. The cost to attend as a student is $20 to $30.

A. MIT Enterprise Forum of Cambridge. Student membership costs $20 and offers free admission to some events, $10 to $35 admission to many others.

A. Xconomy has just begun offering a limited number of student passes to their events, at $35. The next one up is focused on Energy Innovation.

A-. The biggest event at Babson College is the Babson Forum on Entrepreneurship & Innovation. Cheap for Babson students ($35), but $45 for other students.

A-. MIT holds an annual conference on venture capital in December, along with other events throughout the year. The VC conference is $55 for students outside the MIT community, and $40 for MIT-ers.

A-. Search Engine Marketing New England offers a $95 annual student membership, which provides free admission to all of the group's meetings.

B+ The Renewable Energy Business Network organizes free schmooze-fests... but they're at bars, so unfriendly to the under-21 crowd.

B+. Boston Post Mortem puts on a monthly event for folks in the vidgame industry. It's free, but held at a bar... (Update: Darius Kazemi of Post Mortem mentions that anyone over 18 can get into the pub where the event is held. But the group's Web site should let people know that.)

B. Biotech Tuesday: Students aren't eligible to join the networking group, but can attend its cocktail parties for $17.

B-. The Massachusetts Innovation and Technology Exchange (MITX) has a $25/year student membership. That's great, but the typical event costs between $35 and $50 for members. The annual MITX Awards ceremony, coming up later this month, is $95.

C. The Mass Biotech Council is holding a career fair in November. It's free, and open to anyone with two years of life sciences experience or at least a two-year degree in a life sciences-related field. In December, the council holds its annual investor's conference, which has a $300 rate for academically-affiliated attendees. Three other November events are open only to member companies and their employees. Universities can become a member of the council for $2500 in annual dues. I called the office, and found that students at those universities can attend member events for free, but that policy isn't outlined on the Web site.

D. Mass Technology Leadership Council has no memberships available for students, and all of its November events cost $80 for non-members to attend. I happen to know that one of the council's monthly events, Tech Tuesday, is free for students to attend, but I couldn't find any clear info on that event's registration page that explained that. Also, it's held in a bar, which rules out most undergrads from attending.

D. The Mass Network Communications Council has two events in November. They cost $65 and $80 for non-members. Universities and colleges can apply to become members for $1000, which presumably would enable students and faculty to attend events at the member rate ($45 and $50 for the November events)... which is still a bit high for an undergrad or grad student. There's also no list on the Web site of which universities, if any, are members. I called up the head of the council to ask what the scoop was, and he said that they often allow a few interested students to attend events for free. It's a great policy, but shouldn't it be explained somewhere on the Web site?

D. The Greater Boston Chamber of Commerce charges $90 or more for non-members to attend its events. While many universities (Harvard, MIT, BU) are members, it is not clear whether students at those schools could take advantage of member rates (which still average $50). I called them up and found out that students can take advantage of those member rates if they go to a school that's a Chamber member, but it shouldn't take a phone call.

D. The Massachusetts Medical Device Industry Council has a membership category for academic institutions. If you call them up, you learn that students at those institutions can take advantage of the member rate (but that isn't explained on the Web site.) Students who don't go to those member schools would pay the non-member rate of $85 to $250 to participate in council events.

D. New England Clean Energy Council offers no student memberships. Universities pay $500. The council's November event, a "green tie gala," costs $330 for individual non-members to attend.

I'm not going to give a grade to the events I'm involved with locally. It's very hard for students to go to the Nantucket Conference without paying the pricey registration fee, although there have been a few editions where we've invited high-schoolers to participate. We usually set aside a small number (somewhere between 2 and 4) of passes to Future Forward to current students. And at the Convergence Forum in June, we sometimes set aside a few "scholarship" passes, usually for grad students and post-docs working on an entrepreneurial venture. I'm also trying to weave a few students into a breakfast series for entrepreneurs that I'm organizing.

If you feel that it's important to pave the way for students to get involved with our innovation economy here in New England, and you're a member of any of these groups that don't score so well, would you help agitate for change?

Often, it's only a case of making it more obvious on the organization's Web sites that students are welcome, and explaining how they can participate.

The tech layoffs begin...

The Globe has this run-down of layoffs and office closures. Leading the list is Egenera, which is cutting 87 jobs.

Egenera is focused on data center virtualization. They're a company founded during the dot-com boom that never managed to achieve escape velocity and go public, despite having raised $176 million. (Their latest round was -- you guessed it -- an F round.) Kodiak and YankeeTek were in at the very beginning, and Lou Volpe from Kodiak is still on the board.

This week's column: Gail Goodman and Constant Contact

When I went to see Gail Goodman recently, she remembered the last time we'd bumped into one another: at a Mass eComm mixer somewhere in the 'burbs, five or seven years ago. She was running Roving Software (the company that evolved into Constant Contact.) At the time, it was a tiny e-mail marketing firm, not really distinguished or differentiated in any way. No significant revenues, either.

Now, Constant Contact is public, the industry leader in e-mail marketing for small businesses, and continuing to hire even in the midst of a recession. They were also one of the last firms to get public, last October, before the window slammed shut. They've got $100 million in cash on their balance sheet, and are spending heavily to scoop up more customers. Expected to bring in about $125 million in revenues next year.

Goodman talks about what she learned at her previous company, Open Market, the pioneer of e-commerce, where she was a division GM. “Our #1 mistake at Open Market was trying to do everything – be a great e-commerce platform, do Web security, content management, and on and on,” she says. At Constant Contact, the goal was to make it easy companies communicate with customers via e-mail -- and that was it.

Here's the column, and the video is below. In it, Goodman shares some tips for successful e-mail marketing.