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?

Zink's first product: In stores this weekend

Zink Imaging's first products, marketed under the Polaroid brand, will hit stores this weekend, according to VentureBeat. Earlier coverage of Zink, which makes mobile printers that don't require ink (only special dye-coated paper) is here. Zink was founded in 2005, but the technology had been in development at Polaroid for years before that...

Polaroid's Sunset (and Sunrise)

Sunday's column was about the seeds of Polaroid: interesting companies relying on people, equipment, or ideas from the fading Polaroid Corporation.

Polaroid, once one of Massachusetts' great engines of innovation, is now basically a licensing operation, allowing Asian electronics companies to stamp an intrinsically American brand on DVD players, digital cameras, TVs, etc. The company, I'm told, has no true internal R&D function left. The current owner of Polaroid, Petters Group Worldwide, refused to disclose to me how many employees are left. (The peak was about 15,000, in the 1970s.)

One reader wrote in to me after the column ran and said that he'd inquired about buying Polaroid's instant film business, which Petters decided to shut down last month. The company hasn't returned his calls.

Here's this week's video -- a demo given to me last week by Wendy Caswell, chief executive of Polaroid spin-off ZINK Imaging.

Sunday's Globe column: Consumer Electronics for 2008

Yesterday's Globe column focuses on some of the consumer electronics products we'll see from Boston area companies in 2008, starting at the Consumer Electronics Show in January. (One company I should've included, but forgot: Chestnut Hill Sound and their George iPod dock.)

From the column:

The consumer electronics industry fuels its growth not only by introducing new technologies, but by persuading you to ditch perfectly good products for Version 2.0. The Consumer Electronics Association, which organizes the Consumer Electronics Show, expects the US-based segment of the consumer electronics industry to hit $160 billion in revenues this year. And in no industry do fresh products become has-beens so quickly - except perhaps for sushi.

But while thousands of new and improved products will debut at the Consumer Electronics Show on Jan. 7 and MacWorld, Apple's major trade show on Jan. 14, talking about them in advance could cause consumers to put off purchases, holding out for the next generation of a products, and the promise of longer battery life, higher resolution, or a less-painful price tag.

Here's the video: conversations with San Francisco-based Bug Labs, and Cambridge-based Ambient Devices about what they're up to:

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.

Mini-Printer Co. Gets $25 Million

Zink stands for "zero ink," and the company is developing technology for tiny portable color printers, which would work with handheld devices and phones. It is run by Polaroid alum Wendy Frey Caswell, and the technology came out of Polaroid's R&D labs. Zink plans to manufacture the special paper required for its printers, and have other electronics companies make the printers.

Sharp guy Dan Primack e-mails to let me know that Zink just closed a $25 million VC round -- about a year after a $70 million round led by Polaris fell apart. His blog post is here. Will Polaris one day regret passing? We'll see....