Will Paul English’s Blade Boost Consumer Tech in Boston?

5/19/14Follow @gthuang

Be careful how you e-mail Paul English. Or talk to him, for that matter.

That’s one message I got from the Kayak co-founder when I met him at Blade, his new venture-creation outfit and startup workspace in South Boston. It was a few hours before Blade’s opening gala on Friday, and English (pictured) took time out to chat about his views on building consumer-tech startups in Boston and beyond.

First, that e-mail story. Entrepreneurs have been contacting English for months, pitching him their ideas. One guy cold-called him—“he kind of harassed me for a while, and I thought his idea sucked”—but after a few e-mails, English changed his mind.

“I loved him, he was very logical and fast,” he says. And when English finds “someone who has bandwidth” and is “very intense and thoughtful,” well, good things can happen. (That’s as opposed to people who waste his time, whether it’s with e-mails or hallway conversations.)

In this case, English ended up investing in the founder—and in “a much bigger idea” spawned from their discussion, he says. That’s one of three investments Blade has made in undisclosed startups so far. He’s not giving details about the companies yet, but as I understand it, one is in photo management, one is in social networking, and one involves hardware. He also said one was aimed at the “college market,” but it’s not edtech.

English stepped down as chief technology officer of Kayak at the end of last year. He co-founded the online travel company with Steve Hafner in 2004 and stayed on through its IPO in 2012 and subsequent acquisition by Priceline for $1.8 billion. In the past few months, while also dabbling with consumer apps such as Road Wars (which he says has fizzled), he has been busy getting Blade off the ground as its founding CEO.

To that end, he has raised a $22 million fund, most of it from General Catalyst and Accel Partners, both Kayak investors. English and fellow Kayak alums Hafner, Bill O’Donnell, and Paul Schwenk also put in money. The latter two serve as Blade’s chief technology officer and chief operating officer, respectively.

Here’s the model: Blade will invest $250,000 to $2 million in promising founders and will help build out their startup teams, in exchange for an equity stake. The focus is on direct-to-consumer tech—nothing enterprise or third-party—and on companies they think could get at least 10 million users. Blade’s staff will take active roles as co-founders, and English says the biggest thing he brings is recruiting power.

Oh, and please don’t call it an incubator. English hates the term, saying what Blade is doing is “not comfortable, it’s very in your face.” Also, he says, his team is building just a few companies at a time, unlike many traditional incubators—the goal is something like 10 over the next several years.

Blade lit up at night. Photo courtesy of Blade.

Blade lit up at night. Source: Blade.

Blade needs to attract top talent in user experience and design for its companies to succeed. And English believes that, despite a lot of perceptions to the contrary, Boston has enough raw talent and expertise to become a consumer-tech hub.

To be successful, he says, a consumer-focused company needs the right team, the right problem, and a simple product. “People say the best technology won’t always win. I disagree with that,” he says. “At the end of the day, people have to think your product is really simple and it has to solve a problem. Most technology fails because it solves a problem that’s not important.”

English’s investment philosophy at this stage boils down to 70 percent “who’s the entrepreneur,” 20 percent “what’s the market,” and 10 percent “what’s the idea,” he says. Interestingly, it sounds like he’s looking for founders who have had success, but not necessarily in tech or business; one entrepreneur he’s funding was a college hockey player who had no tech experience.

As for the sectors Blade likes, think consumer areas like e-commerce and payments, in addition to social. But not edtech or health and wellness—both buzzy fields these days. On the latter, English says “there’s too much chatter there right now.” And there’s too much “trying to get people to spend money doing something they’re not used to spending money on,” he says.

Instead, he wants to focus on “markets where there’s a known behavior pattern.” And also a known market leader that’s been at the top for many years. At Kayak, he says, “we were gunning for Expedia.” You can extrapolate that to PayPal in payments and Amazon in e-commerce, he says. “There’s a lot of room for innovation,” he says.

In e-commerce, English hints that he’s working on a startup idea in fashion, together with Ben Fischman, the former CEO of Rue La La.

And for now, Blade is staying away from travel as an investment sector. Though it’s still a ripe area for startups, English says he and his Kayak comrades need a break. “I’ll get over it, I just need to work it out of my system,” he says.

One tidbit: English kicks himself for not inventing something like Uber himself. Back around 2007, he says, he talked to limo firm BostonCoach about putting a button on Kayak where users could book a ride. It didn’t work out, and English didn’t follow up on the idea.

The biggest challenge now for Blade is finding the right people. English is bullish on Boston’s talent pool—“we want to keep the MIT kids here,” he says—but he also wants to pull in people from California and New York.

Part of the draw is the coolness factor. The Blade space itself is a mix of no-frills and frills (see below). On one hand, there’s no sign at the entrance, just an unmarked green door in an alleyway off Fort Point Channel; its staff and startups will work in a standard-looking open floor plan. On the other hand, it has a trendy nightclub feel, complete with a full bar, DJ booths, LED column lighting, a state-of-the-art audio system, and interactive apps that make the room respond to you by lighting up your favorite drink or projecting your Instagram photos on the wall. Blade plans to host occasional events and concerts.

Blade startup space. Photo by Greg Huang

Blade startup space.

There seems to be a proliferation of “non-incubators” that follow a roughly similar model: entrepreneurs make a zillion bucks on an exit, raise a fund, and open what amounts to a private club for other entrepreneurs building startups. They are all a bit different, but you can see what Heavybit Industries, I/O Ventures, Redstar, and others are trying to do: make a difference in their ecosystems from the top down.

So, will Blade be the birthplace of the next Kayak, Wayfair, or TripAdvisor, or just a sign of another tech bubble? It’s hard to bet against Blade, or other similar efforts and funds, because of the entrepreneurial success of their founders. But these outfits will have to establish their own track records of investment success—and it won’t be easy.

Meantime, English says he “never worked this many hours at Kayak.” Why? Fear is a big motivator, he says. “I had a big hit, and now there’s a lot of pressure. I love pressure.”

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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