R.I.P. Orange Labs Cambridge (2002-2009): A Story of Opportunities Missed
[Corrected and updated, 10/28/09, 12:40 p.m.; see page 4.] Back in 2002, it must have sounded like a good idea for Orange, a fast-growing European wireless provider known more for the simplicity of its services than for their sophistication, to open an R&D center in Boston, where it could hire a troop of brainy engineers, consultants, and startup entrepreneurs to come up with ideas for new high-tech services that would continue to fuel its growth.
In practice, though, an array of barriers meant that Orange Labs—which settled near MIT in Cambridge, MA, and became home to what one former employee calls “the most talented, most passionate group of people I’ve ever worked with”—never really fulfilled its potential. Eventually, it lost the pull it needed within Orange and its parent company, France Telecom, to keep growing. And after a seven-year run, the lab will close its doors tomorrow.
France Telecom’s decision to shutter Orange Labs Cambridge is ostensibly part of a corporate consolidation effort—there’s another Orange laboratory in South San Francisco, and in tough economic times it’s hard to argue that any European company needs two U.S. research centers.
But several former Orange Labs members tell Xconomy that the Cambridge facility’s demise was so long in the making that it could perhaps have been predicted from the start. It was rooted, these sources say, both in cultural differences between the lab’s American engineers and their British and French overseers, and in textbook organizational frictions and rivalries that prevented most Orange Labs initiatives from maturing into products that could be deployed to actual Orange customers. Just as important, the former employees say, Orange’s San Francisco lab developed far stronger political connections to the France Telecom leadership, making it obvious which of the two labs was more likely to survive any cost-cutting round.
But while Orange Labs Cambridge may not have fulfilled its creators’ hopes, it will leave a lasting footprint on the Boston technology scene. Developers at the lab prototyped services such as push-to-talk, mobile photo sharing, localized search, and app-like “widgets” long before any of these technologies became standard on mobile phones. The lab provided a home, at its height, to about 60 brilliant hardware and software engineers, including many graduates of MIT and other local universities. And it acted as a springboard for entrepreneurs who have gone on to play other important roles in the mobile industry—the most prominent being Orange Labs’ founder and first director, Rich Miner, who later co-founded mobile software startup Android, helped transform the Android operating system into an industry standard before and after the company was acquired by Google, and now runs Google Ventures.
Still, there’s a sense that the lab could have accomplished much more. “If I were to summarize the ultimate legacy that the lab had for Orange and France Telecom, I would say ‘missed opportunity,'” says Iliya Rybchin, who was a program manager at Orange Lab from 2002 to 2004 and is now overseeing digital development projects at publisher McGraw-Hill. “The fact that [France Telecom] wasn’t willing or capable of tapping into that talent pool, with that amazing level of innovation and insight and passion, is frankly unfortunate, because the kinds of things that we were producing in the lab really had the potential to be transformative in the industry.”
Officials at France Telecom have not responded to Xconomy’s requests for comment on the shutdown, nor has Orange Labs CEO Frank Bowman.
The story of Orange Labs starts with Orange itself, formed in 1994 by a consortium of British and French companies. Industry insiders describe the early Orange as a scrappy, innovation-focused, startup-style company that shook up the European telephony scene—still dominated at the time by government-run landline providers—through aggressive marketing to consumers and business users.
Orange’s startup culture probably first began to unravel in 2000, when France Telecom bought the company for some $40 billion. But the French giant soon sold much of its Orange stock in an IPO on the European markets, making it a stakeholder rather than sole owner. And the France Telecom acquisition didn’t stop Orange from buying Lexington, MA-based Wildfire Communications—a startup co-founded by Miner and Avid Technology founder Bill Warner—as part of a bold plan to soup up its services with new technologies.
Under Warner and Miner, Wildfire had built a voice-activated personal-assistant service that was an early precursor, in some ways, of today’s Google Voice. Orange kept Wildfire largely independent and began to roll out parts of its technology to consumers in Europe. But it soon reassigned Miner to head an “imagineering” group, which was formalized as Orange Labs in 2002. Around the same time, Miner was put in charge of a $225 million corporate venture fund called Orange Ventures, which ultimately invested in nearly a dozen companies, including Marlborough, MA-based data-warehousing leader Netezza (which went public in 2007) and Danger (which made the famous “Hiptop” phone and went on to be purchased by Microsoft in 2008).
The big idea in both of Miner’s efforts was to help Orange do more to harness innovation, both inside and outside the company. (Miner spoke with Xconomy about his time at Orange Labs, but declined to be quoted.) Orange Labs, like many corporate R&D labs, had both a blue-sky research wing, focused on areas like new voice recognition techniques and wireless networking protocols, and a more product-focused wing, charged with investigating applications that could be commercialized by Orange within a few years.
One person Miner hired to work on these shorter-term applications was Jason Karas, now the CEO of Cambridge, MA-based Carbonrally. “I was brought in to find ways to move the lab’s innovations to market,” says Karas, whose title was director of commercial development. “Orange wasn’t seen as a technology innovator as much as a marketing innovator at that time. They felt like they needed to get a better handle on emerging technologies to fortify their advantage.”
Building on the Wildfire technology, Karas helped Orange develop a voice-driven automated assistant intended to help customers navigate Orange’s services via the telephone. “You could say ‘Check my bill,’ ‘Give me a news headline,’ ‘Call John Smith,’ ‘Check my voicemail,’ and things like that,” says Karas.
But even more important, Karas helped to create a rapid development program called Orange First, which set itself the goal of readying six new mobile services for market trials in Europe every year. “We were really trying to drive more of a beta-test mentality for the carrier,” Karas says. “You don’t always need to go through 18 months of development; you can do a quick test on a hundred or a thousand customers and really learn a lot by getting basic feedback.”
The labs used the Orange First process to bring several new voicemail-related services to market in France, and later experimented with some of the first mobile widgets, small software programs for tasks like getting weather forecasts. “This was two years prior to the iPhone, so it was really prescient work we were doing,” Karas says.
But Karas says his commercialization work was fraught from the beginning with issues of both geographical and cultural separation. “Of course, it’s always very difficult to move products from innovation to deployment—there are challenges around the stakeholders you need to get buy-in from across the company,” he says. “But there was another layer on top of that, which was that we were based in Boston, and we were very removed from the market in some ways. In terms of getting traction toward commercialization, we really would have needed to be in the 17 European markets where Orange was operating. So a lot of my time was spent trying to understand the visions and dreams of people in those operating countries, and listening to what those [local] business units were trying to achieve with their products, and then taking that back to Boston and trying to map it onto our technologies.”
One of Karas’s allies in that task was Rybchin, a former consultant with high-flying Web consulting firm Viant. Miner had brought Rybchin in to be his man in London, representing Orange Labs’ interests to the company’s UK-based executives. It was a big job, to hear Rybchin tell it. “You had a bunch of guys in Boston who were out of touch with the Orange consumer, so part of my job was to create more communication between the people managing P&Ls [profit and loss statements] in Orange’s 22 countries and these smart guys in Boston who have great ideas but in many cases don’t have any telecom experience or customer-facing experience,” he says. “The job was to focus on the things that were market-relevant, so that when it came time to make a business case we weren’t trying to put round pegs in square holes.”
But sometimes it wasn’t just a case of the pegs not fitting the holes—the way Karas and Rybchin describe it, there were often people inside Orange’s operating units pushing the pegs back out.
“I think there are a couple of issues that doomed the organization from the start,” Rybchin says. “One was the sheer distance. These guys were literally outcasts on an island that didn’t have any Orange customer touch points. On top of that, you had the cultural issues—remember, 2002 to 2004 was not a very good time in American-European relations. There was this kind of distaste for a bunch of smart, mostly MIT-educated Americans coming in on a plane every month and telling these people who had been with Orange for years what the future of the business was going to be like. So there was a lot of tension, and frankly, there was a not-invented-here, don’t-give-a-shit attitude from a lot of people two or three levels down the product chain.”
Without buy-in from the middle managers, in other words, it didn’t matter how much Orange’s executive vice presidents loved what Miner and his crew were doing in Boston—almost nothing got deployed. In the end, Rybchin says, “We could probably count on one hand the number of things that went from the Orange lab in Boston all the way into a customer-facing product.”
2003 is a big year in the Orange labs story. That year, France Telecom bought back the Orange shares it had spun out in the 2001 IPO, becoming Orange’s sole owner once again. The UK-based managers who had been the Cambridge lab’s main proponents and protectors began to be edged out by executives in Paris, according to Rybchin and Karas. “A lot of the believers and stakeholders were in the UK organization, and as the power shifted, we lost a lot of the decisions makers, who either left the company or became subordinate to product people based in France,” Karas says.
That led to more discomfort in Cambridge, he says. “The Americans and the French and the British all do business in slightly different ways, and we had to relearn the French approach, which is perhaps more analytical—they really like to understand where things are going in an elegant and exhaustive way. But we were coming from an organization where we had more of a beta-test mentality.”
[The following three paragraphs have been corrected and updated with additional information from sources.] Also in 2003, Orange hired a new CEO, former US West chief executive Sol Trujillo, who brought with him a number of former US West subordinates, including Frank Bowman. In 2004, Bowman was assigned to run Orange Labs. That bought the lab a temporary new lease on life.
“The group kind of had a reboot when Frank came on board, which was just after I left,” Rybchin says. “Putting this guy who was a friend of Sol’s in charge of this signaled something—doors were instantly opened to Frank that Rich had had to try to beat down. We had laid the foundation and built the network, and Frank kind of took it home with his gravitas and his personal contact with the senior leadership.” Bowman had good relationships with executives in France, even after Trujillo left Orange in 2004, which helped the lab get few more of its ideas to the product stage.
But the organization Miner had built still had an uncertain role inside France Telecom. In 2004, the company shut down Orange Ventures and transferred management of its investments to Innovacom, its existing venture capital subsidiary. In the spring of 2005, Miner left Orange to join Andy Rubin, the founder of Danger, who was working on new phone operating system at Android.
After that time, the lab became more and more marginalized inside Orange, according to Karas, who left in 2007 to pursue his interest in energy and environmental issues by starting Cambridge-based Carbonrally, a site where members compete to reduce their carbon footprints. Meanwhile, Orange’s sister lab on the West Coast only seems to have strengthened its ties with the mother ship: the co-author of France Telecom CEO Didier Lombard’s 2008 book, The Second Life of Networks, is none other than Georges Nahon, the CEO of Orange Labs San Francisco.
Despite the frustrations, though, Karas credits Orange Labs with teaching him a lot about product development. “I wouldn’t have been able to do Carbonrally in 2002 [before joining Orange]—I wouldn’t have had the confidence,” he says. But having watched a lot of products developed quickly—even though some never made it to market—prepared him for the challenges of running a Web 2.0-style startup. “We’re using the same beta-test mentality, and working in that agile way and building on feedback and getting to market as quickly as possible.”
But at this point, almost eight years after Orange Lab’s founding and six years after Miner’s depature, closing the lab down and letting its employees move on may actually be the decent thing to do, Karas says. “It was getting more and more difficult for that lab to have an impact, and that just gets frustrating for people who are really inspired and motivated,” he says. “In some ways it’s a suitable time for France Telecom to scale it down and for those folks to apply some of their wonderful energy somewhere else.”