Friday, April 30, 2010

Notes from Nantucket Conference: Building Big Companies

(Photo of Bob Metcalfe skyping with Jason Calacanis, CEO of Mahalo at Nantucket Conference 2010.)

I attended a session at the Nantucket Conference on Building Big Companies lead by Avid Technology Founder Bill Warner, Flybridge Ventures Partner Michael Greeley, Communispace CEO Diane Hessan, and iRobot CEO Colin Angle. Bill described the goal of the session as being to change beliefs and actions to help grow companies to scale in the region. He described a taxonomy of "Singles" being companies with revenue, "Doubles" being companies with under $10M, "Tripples" for under $100M, "Home Runs" for market cap of under $1B, "Grand Slams" for market cap under $10B, and "Walk off Grand Slam" for under $100B.

Bill asked the audience of about 30 tech leaders and investors to describe in a couple words how we can accomplish this goal. Here are the responses (mostly just raw notes): galvanize angels, role models to give back, more risk taking, stop thinking about small exits, feeder system for ideas, more mentors for wannabe entrepreneurs, more professional seed investors, connect colleges and talent, unlock IP at universities (like MIT has done), invest in consumer companies, celebrate buying (rather than selling) companies (ie Kayak's acquisition of CA-based company), help young women take entrepreneur leap earlier in life, inspire and galvanize younger generation, respect (rather than patronize) digital natives (aka young generation), richer counter culture outside business (ie Fort Point Channel), fund really big ideas, affordable housing, how to "print" buildings, promote successes, make it cooler to be an entrepreneur in MA, cooler to join start-ups, more collaboration amongst start-ups, less of a "club" and more inclusive of early, Boston-based "Lunch 2.0", business plan contest to connect Media Lab and non-MIT students, more investing outside 128, focus on density, more access to Ray Stada, aggressive recruiting of talent from outside, diversity -- Boston is close to Europe, less analysis of MIT/Harvard people going to CA, differentiation -- what is our identity, work from our own identity, more engagement with developing world, why is healthcare underrepresented at this conference?, more focus on healthcare and biotech, more invention that crosses technologies, get universities to collaborate on mentoring program across schools, "type 2 angels" to focus on getting triples to home runs (Bill Campbell did that for Google), raise the stakes, more events like this, returns data suggests that East Coast funds seem to outperform, better exposure to how we really compare, recycling talent, investing for IPO and big company rather than for acquisition and easy exit, are we just farming short quick trees or do we want to nurture big giant Oaks?, if you take the founder (Colin) out of the company (iRobot) then you are less likely to grow the big company, founders have a vision and drive companies over time to succeed, how do we keep founders in companies, first companies are often successes.

What are we trying to accomplish? Create lots of $100M companies and sell? This may be a good economic outcome. Does the management team want to build it big despite attractive exits along the way? It is a matter of will to do it. Let’s draw road maps and help big companies take the next few steps. How can we "up the stakes" and passionate desire to get there? Do I want to be done? Is my vision achieved yet? If not, do I have the motivation and support to keep doing it? I have a vision of where I want to take it. When you reach double and triple level, you are always faced with attractive options/exits. Am I doing the right thing for the shareholders? Do I have the vision to take it to the next level?

Rational thinking is not a generator of wealth or great human achievement. Rational thinking might make you want to sell. Founders are important because they have more heart in it. Colin noted that "it would matter to my decision if I felt that MA was behind me and supported me." We are counting on you and will get you the support you need. How do we up the ante? The issue is what you do with what goes right and what you are going to do with more success, rather than with what is going to go wrong.

Why big companies? We don’t just want to churn $100M companies. Cannot be world center for innovation in [robotics] without anchor companies. Just small companies without anchor companies would be catastrophic to the ecosystem. We need big companies and need to think about growth. Just creating more small companies (without changing the mindset) will not necessarily result in any more big companies. We need global market leaders, not just big companies. What we are doing is not okay.

Bill said that what scares him is the prospect that the economy will get better and we will just become a feeder system for other regions. We're pretty good at building $100M companies. Who can mentor a $100M 10 year CEO to get to $1B? Some companies are point solutions and never be a $1B company. There are fewer $1B mentors.

Why $1B companies are important: $100M exit is not big enough to have real money to invest (as founder may only get $10M). We are not on top of a real trend right now. Need to identify the next area or really big growth and mobilize around it. If social media, then unleash to keep Facebook here. There is tons going on in healthcare. Let's aim our laser to grow big companies in these areas. What are the big things that are happening and let galvanize around it. Why do students leave. Culture is to make things to sell. We don’t believe and fund companies that will have an effect on lots of people -- Facebook, Twitter, etc. There are measurable cultural differences between MA and CA (ie non-competes). Bill is going to CA to meet with and learn from some Super Angels.

Why do we want big companies? Why does it matter? It contributes to our brand, helps generate spin off companies (already 5 mini iRobots). Though not specifically mentioned in the meeting, big companies are also important for their massive informal "alumni" networks, R&D capacities, and their ability to create more significant angel investors. In 5-10 years, what do you want to see?

Read my prior blog post, "MassTLC Issues Call to Arms for Tech Community to Create 100K new Jobs by 2020."

Tuesday, April 27, 2010

Concerns Raised about Angel Funding Provisions in Financial Reform Bill

MassTLC reached out to U.S. Senators Brown and Kerry regarding two provisions of the initial Senate financial overhaul bill, each of which would have tightened rules on angel funders and possibly curtailed the availability of funds to entrepreneurs. The Council urged the Senators to pay attention to concerns about these provisions as raised by TECNA, an organization of technology associations from across North America that includes MassTLC.

Angel investors are a critical component of our technology ecosystem -- particularly to entrepreneurs in fast-growing sectors such as mobile applications, social media, and digital games as many innovative new ideas are untested. Given low barriers to entry, the corresponding capital requirements are often low as well.

Under current law, angel investors need to have either $1 million in net worth or income of at least $250,000. The original provisions of the financial reform bill would have raised those requirements to $2.3 million in net worth or $450,000 in current income. According to the Angel Capital Association, those provisions would have disqualified 77% of the current investors and also would have subjected angel investors to more stringent regulation, especially when a deal involved angel investors from more than one state.

According to reports from D.C., there is good reason to believe that the Senate leadership may have already agreed to make changes in the bill -- which may be debated and voted on this week -- to keep the current angel requirements intact. MassTLC nevertheless is making sure our Bay State lawmakers are aware of the impact the bill could have on job creation in our local tech industry -- the second largest employer in the Commonwealth.

MassTLC will continue to work on issues like this, and the Start-Up Visa bill, that impact the growth of the tech sector and give the Massachusetts tech sector a more consistent voice in public affairs.

Sunday, April 25, 2010

MassTLC Celebrates National Robotics Week at Museum of Science

MassTLC joined iRobot and the Museum of Science in throwing a Robotics Block Party to raise awareness of robotics and get kids excited about STEM (science, technology, engineering and math) careers through robotics.

Friday, April 16, 2010

MassTLC Joins Verizon in Breaking Ground on Technology Innovation Center

I joined Massachusetts Secretary of Housing and Economic Development Greg Bialecki, Waltham Mayor Jeanette McCarthy, and several Verizon executives for an important event at thier Waltham campus that is sure to benefit our local innovation ecosystem for years to come.

The global telecom giant broke ground on a new Technology Innovation Center, which will be a catalyst for development of new and innovative devices and services that connect people, places and things using next-generation wireline and wireless technology. The new Waltham facility, focused on 4G Long Term Evolution (LTE) wireless networks, will build upon the history of the existing Verizon Technology Campus in Waltham where dynamic research and testing that has influenced the daily lives of Americans has been taking place since the 1940s.

Verizon Northeast President Donna Cupelo hosted the event and Dick Lynch, executive vice president and chief technology officer, was the featured speaker. Lynch announced the new building will house more than 300 employees, another sign that Massachusetts is becoming a hotbed for global companies looking to do cutting edge technology research.

Verizon joins Google, Microsoft, IBM, Cisco and others in establishing significant R&D facilities in Massachusetts.

I thanked Cupelo and Lynch for their commitment to Massachusetts, noting that the new lab would be a first step towards recognizing our recently unveiled MassTLC 2020 Challenge -- challenging the state's tech sector to create 100,000 jobs over the next decade by "thinking big and playing big." The Challenge has received enthusiastic support from both public and private sector leaders.

Thursday, April 15, 2010

R&D IT Best Practices for Growing Small/Mid-Sized Biopharmas

As smaller biopharma companies grow and mature into larger organizations, they need to transition from relatively ad hoc, spreadsheet heavy, lightly supported R&D IT environments to more comprehensive, scalable platforms and support models. This presents substantial challenges to scientists, managers, and IT professionals, ranging from prioritization of new features and functions, creation of new workflows, budget and staffing issues, in-house platforms versus COTS (commercial-off-the-shelf) platforms, and getting support for necessary changes. MassTLC's Life Sciences Cluster presented these issues and more during an interactive roundtable discussion.

Participants included Joseph Cerro of The Schooner Group as moderator, David Osterman, Director of Research Informatics at Biorelix, Tom Plasterer, Adjunct Professor at Northeastern University, Keith Robison, Lead Senior Scientist at Infinity Pharmaceuticals, Jeff Warhaft, Associate Director, R&D IT Solutions Delivery at Biogen Idec, Barry Wythoff, Scientist & IT Project Manager at Ironwood Pharmaceuticals, and David Yee, Head of Knowledge & Information Systems at Archemix Corporation.

Wednesday, April 14, 2010

Robotics Innovation Day in Massachusetts

The Robotics sector in Massachusetts is exploding with new ventures spinning out of established companies and our constellation of world class R&D programs. Technology and business leaders met at MassTLC's Robotics: Growing Here: Starting and Growing your Robotics Company in Massachusetts.

Panel participants included: Gregory Bialecki, Secretary for Housing and Economic Development, Commonwealth of Massachusetts; Rod Brooks, Cofounder and CTO, Heartland Robotics; James Geshwiler, Managing Director, CommonAngels; Michael Greeley, General Partner, Flybridge Capital Partners (invested in PolyRemedy); Charles Grinnell, CEO, Harvest Automation; Tom Ryden, Cofounder and COO, North End Technologies; Nina Saberi, Managing General Partner, Castile Ventures (invested in North End Technologies); Austin Westerling, Partner, Charles River Ventures (invested in Heartland Robotics)

Secretary Bialecki delivered a proclomation from the Governor declaring the day Robotics Innovation Day in Massachusetts...

The event was followed by MassTLC's Robo Tuesday networking event bringing students and hiring managers together in an informal setting.

Tuesday, April 13, 2010

Member Roundtable: The Silver Tsunami

Beginning in 2011, 75 million baby boomers will reach age 65 in the United States alone. At a rate of 8,000 Americans reaching 65 each day, this will be nothing short of a silver tsunami. Due to sheer numbers, affluence and technology savvy, they will have a profound impact on healthcare. Ken Accardi, CTO of Ankota, a health care delivery management system, addressed MassTLC members at a member roundtable on care delivery outside of the hospital.

He noted that, as of 2001, patients with chronic conditions accounted for:
83% of US health care spending
81% of inpatient stays
91% of prescriptions
76% of physician visits
98% of home health care visits

He contends that the system consists of the following pieces:
Communications and Engagement – email, chat, video, pC
Home Safety and Security
Health and wellness -- telehealth, medication dispensing, disease management and fitness
Learning and Contribution -

He notes that all of these pieces need to tie together and become interoperable but they don't. By 2020 it is estimated that the market will have grown by 10X. Ken proposed that the opportunity is here for entrepreneurs to become involved and help the situation. In the early fall, MassTLC's health care cluster will sponsor a public program on the Silver Tsunmai and the emerging technologies to support it -- we hope you can join us!

Monday, April 5, 2010

MassTLC Participates in Legislative Forum on Tech Future at EMC

MassTLC participated in a special legislative forum on the future of the digital technology industry at EMC's Franklin facility. The event was organized by State Senator Karen Spilka of Framingham, who chairs the legislature's Joint Committee on Economic Development and Emerging Technologies. Other legislators in attendance included Representatives Michael Brady, Cory Atkins, Carolyn Dykema, John Fernandes, and Richard Ross.

I had the opportunity to present MassTLC's 2020 Challenge, outlining the Commonwealth's tremendous assets -- first-class universities, highly trained workforce, world class venture capital, and tremendous entrepreneurial strengths -- and challenging the sector to collectively grow 100,000 new technology jobs over the coming decade.

Also presenting at the meeting were Trustees Colin Angle of iRobot, Mohamad Ali of Avaya, and Steve Krom of AT&T. Also representing the IT and communications sector were Donna Cupelo of Verizon, Paul D'Arcangelo of Comcast, Ted Morgan of Skyhook Wireless, Bill Sawyer of IBM, and executives from the Mass Tech Collaborative, MITX, Tech America, and other groups.

MassTLC President Emerita Joyce Plotkin joined a panel on science and technology education and described the success of DIGITS, a program designed to bring tech professionals into middle schools to help stoke student interest in tech careers. DIGITS is funded by the state Department of Education and is sponsored by MassTLC and several other tech associations.