Friday, July 25, 2008

Stonebraker's Latest Start-Up: Byledge

Database pioneer Mike Stonebraker is quickly becoming one of Boston's most prolific parallel entrepreneurs. When I wrote about him last December in the Globe, it sounded like there was something new cooking.

Turns out, there's at least two new pots on the Stonebraker stove. (Stonebraker is a founder of StreamBase and Vertica, which have together raised more than $50 million in VC funding... and earlier in his career helped start Ingres Corp., Illustra, and Cohera.)

The first is Byledge, a new company funded by Kepha Partners and Flybridge Capital Partners (formerly IDG Ventures Boston.) There's no site yet, and no funding announcement. The company hasn't set up offices, but there's a team taking shape, and a rough strategy.

I'm told, by someone who is familiar with the company, that Byledge will focus on "long tail travel search," scouring the Web for hidden information about lodging, restaurants, activities, and events and organizing them in easily searchable databases. (Another person who knows about Byledge described it as "semantic enrichment" -- trolling for unstructured data and then applying the right tags and labels and categories to it.) If you're looking to go salmon fishing in Alaska, how do you find all the guides, and information about the terrain they cover? Byledge aims to supply the answer.

That places the company squarely in the middle of Boston's travel info cluster, which includes companies like TripAdvisor, ITA Software, and Kayak, which is partly based here and partly in Connecticut. Kayak co-founder Paul English told me he hadn't yet heard of Byledge when we spoke yesterday. The idea sounds to me like it's closest to what TripAdvisor does -- but TripAdvisor relies heavily on human editors to organize and clean up information from around the Web.

The Byledge technology originates at MIT, where Stonebraker is a prof. I'm told it was developed by a researcher named Mujde Pamuk, who has worked alongside Stonebraker at CSAIL, the computer science and artificial intelligence lab. (Here's some of Pamuk's published work, with Stonebraker as co-author.) Also involved in the start-up are Andy Palmer, who also helped start Vertica; Vince Russo, a former chief architect at Lycos; and Mark Watkins, who headed the development organization at the enterprise search start-up Endeca, and before that worked at PTC.

Stonebraker isn't talking about the company, describing it as "currently in stealth mode" in an e-mail. Chip Hazard, the Flybridge partner who's serving on Byledge's board, wouldn't talk about the company's focus but hinted that it could be broader or different than travel. I'm told that Byledge may try to both license its technology to other companies and also run its own destination site on the Web, a hybrid strategy that Paul English characterized as pretty difficult to pull off.

Andy Palmer said that "we're gonna work pretty hard to keep our cards close to the vest." But he did tell me that both he and Stonebraker will remain involved with Vertica. He wouldn't say how much the company raised, except to describe it as "well-financed." Hazard said they have "enough to get the company to critical milestones. It's not $50,000." Update: Tango at Kepha Partners wouldn't peg the exact amoung, but wrote via e-mail that "we did a seed round a bit ago and did close an A round recently." Byledge is the third investment for Kepha, which is essentially a one-man firm.

Stonebraker's second new project is an initiative that will be part of Vertica, code-named Horizontica. Palmer describes it as an open source database designed for cloud computing applications. Sounds like there's some cool potential there.

Vertica's also in the midst of preparing for a move from Andover to Bedford.

How many projects can one person juggle simultaneously, while still teaching at MIT? Stonebraker seems intent on setting a record.

Byledge, by the by, is the name of the street Stonebraker lives on in Manchester, NH.

(A thank-you to Genotrope, where I stumbled across the first mention of Byledge.)

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Thursday, April 17, 2008

What Happened Between IDG and Flybridge?

I'm developing a few columns related to the venture capital world, so this afternoon I had a chance to chat by phone with IDG founder and chairman Pat McGovern.

One topic I wanted to ask him about was the split between IDG and the former IDG Ventures Boston team, which rebranded itself last month as Flybridge Capital Partners.

I'd run into Jeffrey Bussgang last week, one of the original partners at IDG Ventures Boston. He said that there were no hard feelings between IDG and the Boston investing team... but that IDG had chosen not to put money into the new $280 million Flybridge fund, after participating in two prior IDG Ventures Boston funds.

McGovern told me this afternoon that when the IDG Ventures Boston team asked how much he wanted to invest in their third fund, he said that he'd been getting better returns investing outside the US. (McGovern and IDG have funds in China, Vietnam, India, and Korea, among other places.)

"We didn't think the returns were competitive with the returns we could get elsewhere," McGovern said.

He was also bothered by the Boston team's desire to do more investing outside of New England and the East Coast. "They didn't want to stay east of the Mississippi," McGovern said, and they wanted to invest in some sectors outside of pure IT. (Another IDG fund is based in San Francisco.) "Your goals and the IDG brand are no longer aligned," McGovern said he told the Boston team.

"We agreed, they'll change their name, and raise money from people other than IDG," he said. (In 2005, when the Boston team raised its second fund, a $180 war chest, IDG had put in $25 million.)

Oddly, McGovern, who gave $350 million to MIT to start the McGovern Institute for Brain Research, said he thought the Boston team's forays into med-tech and diagnostics, like Predictive Biosciences' urine-based cancer tests, were too much of a stretch. "They were getting into areas where was no longer the major competitive advantage."

But McGovern said that "we're hoping that they do extremely well," referring to the new Flybridge fund. "We still have a lot of cash at stake in funds I and II." He said the team's historical returns had been "better than average."

McGovern is not totally pulling out of U.S. venture investing, however. McGovern said he's supporting a second IDG Ventures San Francisco fund, currently being raised. "We're putting 25 percent of the money into the new fund, which is a month or two away from closing at $180 million," he said.

I also spoke today with Flybridge managing partner Michael Greeley. (Disclosure: Greeley and I serve on the advisory board of the Nantucket Conference together.)

Greeley said, "It's a mischaracterization to say we've gone off-strategy," adding, "[Pat] has great personal interest in the healthcare convergence scene," given his philanthropic activities. Greeley also said that he expected about 80 percent of the new fund's investments to be companies that the partners can drive to from Boston, though he wouldn't rule out doing a seed deal on the west coast (though he termed it "unlikely").

Greeley says one big reason for the name change, and the split from IDG, was that he worried entrepreneurs would confuse his new fund with the IDG Ventures San Francisco fund. He and the other partners said that raising money for this new fund wasn't a problem, even without IDG's allowance: "We did not to an offering memo" to market the new fund, Greeley told me.

He also told me that the firm is looking for new space in the Back Bay, having outgrown its current digs at One Exeter Plaza, IDG's headquarters. "It's a shame not to be able to bring on entrepreneurs-in-residence because you don't have enough space," Greeley said.

(PEHub's Dan Primack served up some inside info on the relationship between McGovern and the new Flybridge fund last month.)

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Thursday, February 7, 2008

IDG's Jeff Bussgang on the Exit Window

I was wondering back in November about some of the things that could make the Web 2.0 investing bubble go 'pop.'

Jeff Bussgang at IDG Ventures looks at that question again, in light of a possible combination of Microsoft and Yahoo. What'll be the impact on venture-backed start-ups, which are more often bought than taken public?

(I have to wonder whether the Microsoft take-over offer is already stalling one possible Web 2.0 deal -- Yahoo's rumored acquisition of Maven Networks.)

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Thursday, November 29, 2007

Last Night's "Thinking Big" Party: How Do We Build a New Generation of Really Big Companies in Massachusetts?

I've been interested for a while in the question of how we can build a new generation of "pillar" companies in Massachusetts...companies like EMC, Lotus, DEC, Akamai, Genzyme, and Boston Scientific.

Last night, a group of folks put together a cocktail party to talk about the issue.

It was an amazing crowd -- it felt like someone had summoned the 'Super Friends' to the Hall of Justice. George Hatsopoulos, founder of Thermo Electron, was there, as was Bill Warner, founder of Avid Technology, Carol Vallone, CEO of WebCT, Scott Griffith, CEO of Zipcar, Tim Healy, co-founder of EnerNOC, Rick Hess, CEO of Konarka Technologies, Aron Ain, CEO of Kronos, Jonathan Seelig, co-founder of Akamai, and Robert Coughlin, the new head of the Mass Biotech Council. At one point, Russ Wilcox of E Ink was showing off a new Amazon Kindle e-book reader, which uses a screen made by his company. Wendy Caswell, CEO of ZINK Imaging, was our host, and the firms KMC Partners, Goodwin Procter, and BSG Team Ventures helped underwrite the event.

Dan Bricklin has some photos and an audio recording of the discussion. Paul Maeder from Highland Capital Partners touched on some of the same issues he brought up at a lunch last month: "We have been selling the seed corn," is his assessment.

Here are some of my thoughts on the evening's "main event" -- a conversation that Maeder and Michael Greeley of IDG Ventures led, with my help and lots of input from the crowd.

First, the question of why pillar companies are important:

    1. They get big, employ lots of people, and tend to be supportive of their community (through philanthropy, supporting local schools, etc.)
    2. They tend to attract media and Wall Street attention, which lets the world know something important in their sector is happening where they are based. They also hold conferences for customers/users... think of the annual MacWorld conference in San Francisco as an example. All of this sends a message that a particular place is a center of gravity, which brings more people interested in that area -- and more small companies -- to that place.
    3. They tend to think like acquirers rather than acquirees.
    4. They tend to spin off smaller companies in their space. (But we need to get rid of non-compete agreements to foster this.)
    5. They serve as a source of experienced employees and executives to other companies in their space. (Again, we need to get rid of non-compete agreements to foster this.)
    6. They make it easier for companies in their space to recruit people to the area. Say a consumer tech company in Boston -- like Bose -- is trying to bring a marketer in from the West Coast. That person, should things not work out at Bose, will not have a lot of other wonderful choices of other employers here in the Boston area. Same is not true when a chip company like Intel tries to recruit people from anywhere in the world to move to Silicon Valley.
    7. They pay more taxes.

Now, as for what we can do...

    1. Entrepreneurs need to have a jones to build a big, important company. The typical New England VC will not push them to brush off acquisition offers and stay independent.

    2. Big companies get their start by discovering emerging sectors and opportunities. I don't think we're going to build an important, independent new PC company in Boston, or a networking equipment company, or even a medical device company. Boston Scientific got big because they saw the opportunity for less-invasive medical procedures before anyone else. Invent a cool new medical device today, and you're basically gonna get integrated into the product line of someone like a Boston Scientific or Medtronic before you have a chance to launch a second product.

    3. So that means we need to support entrepreneurs dedicated to building pillar companies in new, as-yet-undefined market sectors. (Avid, which helped establish the market for digital video editing, is a great example.) I think the media -- that's me -- plays a role, and I'm gonna do my best to focus on entrepreneurs working on these new frontiers. But angel investors and VCs also play a role (can they avoid the temptation to fund a serial entrepreneur doing his seventh enterprise software start-up, instead of a first-time entrepreneur who is breaking new ground?) And finally, entrepreneurs and executives who have built really big companies need to give back. This does not just mean donating to or speaking at their alma maters. They ought to be serving on boards, or as informal advisors, to a handful of interesting start-ups in or near their areas of expertise. Some do, but too many don't.

Dharmesh Shah, founder of HubSpot, offers a different perspective on his blog.

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Friday, October 12, 2007

Why Not Think Big?

I am really glad that people are continuing to have the conversation about what it will take to build a new generation of really big, really important companies in New England.

Last week, Atlas Venture held an event in Vermont called the New England Founding Entrepreneurs Summit on Technology. Speakers included Analog Devices CEO Jerry Fishman, Venture Hacks blogger Babak Nivi, Rich Chleboski from Evergreen Solar, and Michael Zane from Kryptonite Locks.

Xconomy founder Bob Buderi moderated a fireside chat with Fishman, and he also blogged about the discussions around what it'll take to create more Analogs (and EMCs and Akamais) here.

I'm glad Atlas is focusing on the issue; I helped organize a dinner last year on the same topic. But both the Atlas conference and our dinner on "Building Billion-Dollar Companies in the Bay State" (which featured the founders of Boston Scientific and Thermo Electron) were top-secret, invitation-only events.

I'm helping to put together a gathering for Wednesday, November 28th, in the evening, in downtown Boston. I'll be doing a fireside chat there with Michael Greeley of IDG Ventures, who also heads the New England Venture Capital Association, and Paul Maeder of Highland Capital Partners, who is on the board of the National Venture Capital Association.

There will be limited comparisons between Silicon Valley and New England - I promise. But we will discuss what the factors are that seem to compel New England companies to cash out, rather than keep on truckin'.

Our venue on the 28th is limited to 50 attendees. We're going to limit attendance to company founders/CEOs and investors (VCs, angels, etc.)

So while this event is theoretically open to anybody who is building or funding companies, we need to be selective. But please e-mail me if you think you ought to be there: kirsner at At the very least, I promise that we'll do an audio or video recording, and you'll hear about it when it is online.

And you don't need to be completely sold on the idea of building big, independent companies -- essential to the mix of attendees will be people who believe that a sweet acquisition price isn't necessarily a bad thing.

For some background, here's a piece I wrote in the Globe back in January, about growing oaks, not saplings.

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Sunday, September 23, 2007

Today's Globe column: Why VCs Do (or Don't) Blog

Today's Globe column deals with the ways that blogging is changing the relationship between entrepreneurs and VCs. From the piece:

    There's a bifurcation happening in the Boston venture capital world: Some firms blog, and some don't. And the divide isn't just about being hip to the latest trend. It signifies an important shift in the way VC firms interact with entrepreneurs.

The video is below (it features Bijan Sabet of Spark Capital, Jon Radoff of GuildCafe, MIT Sloan student Sim Blaustein, and Mike Feinstein)... and after it, some additional thoughts e-mailed to me by VC bloggers Fred Wilson of Union Square Ventures and Jeffrey Bussgang of IDG Ventures.

From Fred Wilson:

    [Blogging is] a huge benefit to our business. Of course it brings incremental deal flow, but it also filters the deal flow and makes it more targeted and more relevant

    Its also a great way to bring needed attention to the companies we invest in

    And its a way to do research on new sectors and learn about other companies that compete with our companies

    And its a great way to learn about emerging technologies. Check out the comments to my andreessen post yesterday or my post on AIR last week. You can't buy that kind of education and I get it every day for free

    I could go on and on. Its the best tool for vc investing that I've ever seen and I've been in this business for more than 20 yrs

From Jeffrey Bussgang:

    - Definitely less about deal flow and more about transparency and providing accessibility, humanizing the VC process
    - Open dialog helps me keep in touch with entrepreneur’s latest issues and hot buttons
    - Provides sense of accountability to the entrepreneur community
    - Helps me understand social networking, community, blogging, and many other Web 2.0 phenomenon from a practical standpoint as a practioner, not theoretical

Interestingly, one thing I didn't mention in my column... at least one Boston firm, North Bridge Venture Partners, has an internal blog that's visible only to their partners and entrepreneurs.

(In my blogroll at right, I think I have a comprehensive list of all the Boston-area VC blogs.)

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Monday, September 10, 2007

Let's Fix What's Not Working

Usually, when I do fireside chat conversations at events, I'm the interviewer. Yesterday, at the Vilna Shul on Beacon Hill, I was the interviewee and Doug Levin, CEO of Black Duck Software, was flinging the questions.

One thing he focused on, given the subject matter of yesterday morning's column ("Why Facebook Went West") was the differences between the tech economies here and in Silicon Valley.

I know that there's a feeling that we should stop obsessing about this... every time I make an East-West comparison in print or on this blog, I get e-mails and comments. To which I say, if you're not #1, and you've got a competitive spirit, it's natural to think about what you can be doing better.

Two people who were in the audience yesterday, David Aronoff of IDG Ventures and Chris Herot of Zingdom, posted some thoughts about the issue. (Dan Bricklin also has a post and a podcast recording of the event.)

As I see it, there are five things that aren't working:

    1. Our big companies locally don't seem to spawn enough start-ups.
    2. Boston doesn't yet have a truly vibrant blogosphere that can help bring attention to new products/companies
    3. Investors here can have blinders on when it comes to consumer-focused technologies, or anything that seems wacky at first (let's start a Web site that provides free hosting for videos, and has no business model, and let's call it YouTube)
    4. Graduating students (or drop-outs like Facebook founder Mark Zuckerberg) sometimes don't feel like there's enough of a vibrant community here that will support their ideas/start-ups
    5. We don't have any big consumer device or consumer Internet companies locally.

Problem #1 will get solved, in part, if we get rid of non-compete agreements in Massachusetts. Let's make it as easy as possible for a smart person with a great idea to leave EMC, Analog Devices, Akamai, or Nuance and start a new company.

Problem #2 is getting solved -- slowly. But I'd challenge more entrepreneurs, VCs, and big company executives to start blogging (even if it's just once a week) about what you're interested in, cool companies you've seen, or new products you're playing with. In the Valley, one thing that can give new companies momentum is bloggers talking about, experimenting with, and evaluating their new sites or products. I don't think Flickr or Twitter would've been successful were it not for blogger support.

Problem #3 is hard to solve. We do have some VC firms and angel investors making risky bets. If they blogged about their riskiest deals, their most out-there bets, I think that'd be a positive thing (and it'd help with Problem #2). So I'm giving VCs permission to crow about the edgiest stuff they're doing. This does not mean explaining to us why your new enterprise software company is really a Web 2.0 company in disguise.

Problem #4 is getting solved; Chris, in his post, lists a bunch of new events that have been started in the past year or two, most of which are extremely open to anyone who wants to come. But there's more we could do. So two challenges to you:

    1. If your company benefits from having a vibrant innovation economy in our region, you ought to host (or co-host/sponsor/support) at least one event a year that is open to anybody, and will help foster connections and conversations about innovation. It might be a gathering about how the Internet is changing PR (which I suggested last week to my friends at Schwartz PR) or an unconference about video or a breakfast panel about reputation systems in e-commerce. But it needs to be open and free. Think about the BU student or recent MIT grad who is starting a company that you'd like to do business with at some point, and make it possible for them to attend. Publicize the event on sites like Mark's Guide or Upcoming.

    2. Established entrepreneurs, investors, attorneys, PR folks need to make themselves accessible to younger, less-established entrepreneurs. This might mean giving talks at local universities...judging business plan competitions...attending conferences on campus. This next generation of entrepreneurs needs your help, and the benefit of your connections.

Problem #5 will get solved if we work on Problems #1-#4.

So let's start working, shall we?

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Thursday, August 2, 2007

Dirty Little Secrets About VCs

After covering venture capitalists for about ten years, I've finally learned two things (I'm a slow learner):

    1. They need to hear about companies before their competition. (As a journalist, I can relate.)
    2. They compete fervently with other VCs to get their money into the best start-ups at the right valuation

Though they like to portray themselves as omniscient and omnipotent, they're actually quite anxious about missing the next big deal.

Blogging is still a new phenomenon among VCs here in Boston. (Jeff Bussgang at IDG Ventures has been at it the longest, as far as I can tell.)

One major purpose that blogging serves for the less-established VCs who do it is to raise their profile among entrepreneurs, to show entrepreneurs that they understand a particular space, that they are totally in sync. Older, more established VCs have a reputation, and entrepreneurs are magnetically pulled to them because of their track record, or because successful entrepreneurs make an introduction -- go see Mr. Greybeard, who's a partner at Established Venture Partners at the Bay Colony Center. They don't have to blog. (Yet.)

But the less-established VCs blog, and I suspect that is going to make them appealing to a new generation of not-yet-proven entrepreneurs with compelling ideas...and help them hear about these ideas first. On the West Coast, David Hornik of August Capital is the best example of a VC who has built his reputation atop his blog. Entrepreneurs know who he is.

I think the same is beginning to happen out here with the VC-bloggers (there's a list of them at right). The Rolodex and schmoozing and personal connections are still going to be important, but a blog is a great way to broadcast that you understand what's changing in the tech world -- both to entrepreneurs in New England and elsewhere.

What got me thinking about this was David Beisel's great post on "Seven Coming Digital Uber-trends which are Ripe for Startup Opportunities." This kind of stuff is flypaper for entrepreneurs; I know David's going to get e-mails from a bunch of start-ups saying, "Hey, I'm working on trend #2, can we set up a meeting?"

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