Will the Next Great Boston Tech Company Please Stand Up?

1/30/14Follow @gthuang

Here we are in early 2014, and it feels like a zeitgeist-y moment for the Boston tech scene. So I wanted to weigh in and connect a few dots around town—and get people thinking.

Last Friday, Care.com became the first local tech company—a consumer-facing Web firm at that—to IPO since 2012. While nine Boston-area life sciences companies went public last year—and one more, Dicerna, had its IPO today—no one in the tech industry did. (As an aside, Boston is considered the best place in the world for biotech companies. That’s not true in tech, and that’s just the way it is.)

Care.com’s stock (NYSE: CRCM) has performed well—it’s up more than 50 percent from its IPO price of $17—even as the rest of the market has been down this week.

Meanwhile, we’re still waiting for the first big Boston-area acquisition of 2014. Around this time last year, public companies Acme Packet and Zipcar were snapped up by Oracle and Avis, respectively. Crashlytics, a fast-rising mobile startup, was bought by Twitter.

On the early-stage side, Techstars Boston named its seventh class of startups last week. Hardware accelerator Bolt has been up and running for half a year, and is working on its second round of applications. Keep in mind these startup programs—along with MassChallenge, LearnLaunchX, and various incubators—didn’t exist five years ago.

What’s more, MIT, Harvard, and other schools are upping their efforts to support young entrepreneurs. Much of this is geared toward keeping the next Mark Zuckerberg or Drew Houston in town.

Notable entrepreneurs like David Chang, Paul English, and Semyon Dukach are devoting time to running new startup incubators and angel investing. Walt Doyle, Matt Lauzon, Drew Volpe, and Yuchun Lee have been working on their next big things as entrepreneurs-in-residence at local venture firms. Interestingly, investors think there is a seed-stage funding glut in places like Silicon Valley and New York, but not Boston (yet).

So, there’s lots of activity on the early side and some on the later side. But I would argue that the most compelling players are in the middle—and that’s where a lot more effort is needed to grow successful companies in Boston.

Back in 2012, I posted a list of 11 private tech companies that had raised $50 million or more in venture financing—an arbitrary cutoff, but one that helped identify some of Boston’s biggest tech bets. Those are companies like HubSpot (which made news this week about its revenue and progress), Wayfair, Rethink Robotics, and Veracode.

Since then, a few others on the list—Jumptap, Kayak, and Verivue—were acquired. Care.com would have made the new, updated list up until its IPO. Other additions would be Visible Measures, Acquia, Bit9, Brand Networks, MC10, Extreme Reach, and uTest—with companies like DataXu, Gazelle, and Plexxi knocking on the door.

Some of these could potentially grow into iconic companies. Perhaps what’s most interesting is their diversity. Together they span marketing, e-commerce, networking, data management, electronics, security, travel, Web and mobile development, and more. And that’s what makes it so hard to answer this question:

What will the next great Boston tech company look like?

I’m not talking about valuations, or IPOs, or number of jobs created, or biggest wins for investors, per se. I’m talking about greatness.

It’s subjective, of course, but you know it when you see it. EMC. TripAdvisor. Akamai. Bose. Digital. Polaroid. Plenty of others.

Each defined an industry. Each is known nationally. Each became a tech icon and had impact on lots of people. If not a true household name, at least you know what it does, or did.

Something tells me the next great Boston company is one I haven’t mentioned yet. Great successes often seem to come out of the blue and are notoriously difficult to predict. Yet they are right there under your nose, toiling away for years, if only you knew what to look for.

Here are five candidates (plus a wildcard) to keep an eye on, based on recent conversations with entrepreneurs and investors. This was not an exhaustive survey, and there’s some of my own opinion in it. What’s most informative is not the particular companies I’ve listed, but rather their fields, stages, and approaches. All were founded in the past five to six years:

1. RunKeeper

Someone from the world of wearables and health/wellness apps should emerge as a big winner in Boston. RunKeeper has a head start in terms of users and brand recognition.

Other players: LoseIt, Bobo Analytics, Neumitra, Segterra

Challenge: Keeping its focus in a crowded field, and turning a loyal user base into big bucks.

2. Actifio

There’s something about data. Big data, data management, databases, data layers, analytics—someone will become the next big enterprise-data company in town. And cloud storage and backup seems a likely entry point.

Other players: Backupify, Basho, Cloudant, Nasuni

Challenge: Making money and getting enough traction before EMC or IBM figures it out.

3. Nanigans

OK, selling me on advertising or marketing tech is tough, but this startup is impacting how brands and companies represent themselves on the Web. The broader idea is how to create the future of digital marketing across different screens.

Other players: Brand Networks, DataXu, Fiksu, SiteSpect

Challenge: The whole business is predicated on Facebook’s platform and big Web advertisers. If either declines, watch out.

4. GrabCAD

Cloud-based collaboration is starting to change how physical products are designed, made, distributed, and sold. Computer-aided design (CAD) and product lifecycle management (PLM) might be ready for their second coming in Boston, and this is one of the companies in the lead.

Other players: Onshape (fka Belmont Technology), Dragon Innovation, Formlabs, Salsify

Challenge: Getting people and companies to care about the future of CAD enough to pay for it. Could cheap tools undercut the business?

5. Xamarin

The post-PC era is upon us. Mobile-app development, management, and testing have matured. There is a killing to be made in enterprise software, if you can get enough developers and testers on board—and this startup is getting there.

Other players: Apperian, Kinvey, Localytics, uTest

Challenge: Making enough money while remaining focused on developers—especially Microsoft developers, as the mobile-platform war shakes out.

Wildcard company: Akili Interactive Labs

This one is super-early and speculative—a video game to assess and improve brain performance. But there’s something big brewing at the intersection of games, content, education, and health. What it will look like, I’m not sure yet.

Other players: Change Collective (fka Revv), DoInk, Ovuline, Playrific

Challenge: Proving it really works and getting traction. Did I mention it was early?

 

One last note: I think the recent flap over “what’s wrong with Boston tech” and the perceived lack of coverage greatly inflates the importance of the media in the entrepreneurial success of our region and its companies. While it’s part of the puzzle, good press is ultimately trivial compared to whether your company solves real problems and brings real value to its customers.

Sure, there is a lot more transparency into company-building and investing than before. Anyone with an Internet connection can read about all the same great (and not-so-great) things happening in Silicon Valley and elsewhere. The tendency is to make comparisons between regions and wonder why Boston doesn’t measure up in terms of X, Y, or Z. This argument, in different forms, is as old as the digital hills; it goes back a decade or two.

To all that, I say (and I’m not alone): Shut up and keep working. Greatness will be earned. Boston tech will go on.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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  • http://miketrap.com/ Mike Troiano

    Good list, Greg. Thanks for including us.