Xconomist of the Week: Reed Sturtevant of Lotus, Idealab, and Microsoft Fame Talks Tech Trends to Watch

9/15/11Follow @gthuang

You know the type. He’s at every tech startup event, every investor event, and every incubator and early-stage mentorship session (at least every good one). He’s talked to every entrepreneur in the area and has had a hand in the development of many of their companies.

He has been a fixture of the local software scene for some 30 years, even though he doesn’t look nearly old enough for that. Worst of all, he comes across as a genuinely nice guy and doesn’t seek the limelight or talk a big game.

That would be Reed Sturtevant—and his reputation is as distinguished as his name. He is one of the Boston area’s most active and respected techies, known especially for his technical prowess and product experience. He’s also an Xconomist—one of our informal advisors who helps keep Xconomy plugged in to the innovation scene—so I wanted to take some time to catch up with him in more depth.

Sturtevant grew up outside of Washington, DC, and is a self-professed MIT dropout (we need more of those, don’t we?). He started his career as a programmer at Strategic Planning Institute in the late ‘70s and went on to work at Graphic Communications, maker of Freelance Graphics—which was bought by Lotus Development, where he stayed for about 10 years. During the ‘90s, he co-founded Radnet and RadioAMP before taking a senior role in 2000 with Idealab, where he was responsible for new company development in Boston. There he helped start six companies: Refer.com, Compete, Picasa (bought by Google), Newbury Networks, Paythrough, Pathspace, and Newbury Payments.

After Idealab, he became chief technology officer for Eons, the Jeff Taylor-led social networking site, and stayed for almost two years. He left Eons and helped found Microsoft Startup Labs in 2007, where he directed a team that developed the user experience for Bing Twitter search, among other projects. He left Microsoft in late 2009 to focus on startups and investing—which brings us to what he’s doing today.

Sturtevant currently co-runs Project 11 Ventures, a seed-stage investment fund (co-founded with Katie Rae) that works together with angel investors to back young tech startups. He tells me that since last fall, Project 11 has invested in seven companies—Locately, Scriptpad, peerTransfer, GreenGoose, and three undisclosed startups. In his spare time, he is a mentor for TechStars Boston, a lecturer at the MIT Sloan School of Management, and a founding member and trustee of the Awesome Foundation.

I caught up with Sturtevant over e-mail this week, asking him a variety of questions ranging from the state of the economy to the challenges of building a consumer-focused tech company (especially in Boston), to the most important trends to watch in computing. Here are his answers:

Xconomy: Let’s talk about the broader economic backdrop for what you do: startups and investing. How does the bleak macro-outlook for jobs and the stock market affect your strategy?

Reed Sturtevant: Obviously we’re all better off in times of economic tailwinds, but I’m seeing a couple of effects on the very early stage startup arena.

First, job security in established companies and industries is clearly an illusion. I teach at MIT and this week I asked our students whether they expect to work in, or found, a startup. Two-thirds of the class raised their hand. Though any one startup is risky, when you think of your career as a portfolio, joining a startup is a pragmatic choice—and a lot more fun.

Second, yields are lousy across many asset classes and this creates an opportunity for investors in very early stage VC. The rate of value creation is steepest at the earliest part of a startup’s life, in relative terms, but it’s hard to capture this at scale. There is a structural gap between the amount of dollars that see this asset class as potentially attractive and the day-to-day process for investing in and assisting so many small companies. It is a check-size issue for [limited partners] and a partner bandwidth issue for [general partners]. This is driving innovation in accelerator programs like TechStars and Y Combinator and the various emerging micro-VC models. The dust has not settled yet.

X: Do you see a tech bubble? How do you think it will shake out in the coming years?

RS: No bubble, just the universe expanding. In 1994 I had one of the first 50 Web servers in Massachusetts running in my house. At the end of the ’90s during the dot-com boom there were only about 50 million people on the Internet. Today there are perhaps 2 billion. With that reach, and with so many fundamental tech platforms still nascent (mobile, cloud, tablet, sensors, med tech, etc.) you cannot overestimate the disruptive opportunities in industry and in life. I love it.

X: A lot of people say it’s tough to build a consumer-focused startup in Boston, compared with Silicon Valley. What lessons can we draw from your experience at Eons and Idealab?

RS: It’s tough to build a successful consumer-focused startup no matter where you are.

When success hinges on the emotional engagement of individual end users, you need a lot more than just strong engineering and sales & marketing. You need leaders with a great product sense and a fantastic user experience and design team. Those are creative roles that require insight rather than just skill and experience. People with those gifts will always be scarce and a limit to growth.

I wouldn’t sell Boston short, however. We’ve had plenty of successful consumer-facing businesses ranging from TripAdvisor, Kayak, Shoebuy, Harmonix, Carbonite, Wayfair (CSN Stores), Rue La La, to name just a few, to earlier companies such as Monster and Lycos. And don’t forget strong offline brands such as Zipcar and Staples.

Consumer-facing startups continue to be built and funded in Boston: Krush, Kibits, The Tap Lab, Gemvara and a surprisingly long list of others.

X: You mentioned this to me before, so I’ll ask: Where are end consumers going, and how will life be different two years from now, say, in mobile and social tech? Can you give a concrete example of how a startup might go after such opportunities?

RS: One unarguable trend is the end of the PC. Not that laptops and desktops will disappear, but more and more the phone will be our most “personal” computer. As an entrepreneur, think of what I can’t do on my phone yet. Write code, build a complex spreadsheet, CAD [computer aided design]? Much of this may seem awkward and out of place today, but it is ripe for exploration and invention.

Another trend I love has to do with the rise of a producer class and the shifting ratio of producers to consumers. If you watch the growth of the DIY/Maker culture I believe that their creativity around physical product will lead to mainstream impact just as in the 1970s computer tinkerers fledged the PC revolution.

Entrepreneurs should pay attention to emerging companies that are building links in the creative chain of commerce from design to funding, through production to discovery and distribution. Take a close look at Quirky, Kickstarter, Shapeways, Makerbot, Ponoko, Adafruit, Spoonflower, and GrabCAD. Mix in an understanding of the use of digital tools in the global supply chain, emerging social marketplaces like Etsy, Svpply, Pinterest, and Curisma, and you have plenty of ingredients to foment change.

X: The FutureM conference is going on this week around Boston. In what specific areas of marketing tech do you think local companies and innovators will have the greatest impact?

RS: We’ve got a history in ad tech going way back to CMGI’s Engage and Burst Media. I’d bet on Boston’s particular strength in mobile which has produced exits such as Enpocket (acquired by Nokia), Third Screen Media (acquired by AOL) and Quattro Wireless (acquired by Apple). We’ve also got a cluster around location based tech such as Where (acquired by PayPal), Skyhook Wireless, SCVNGR, and Locately. (Disclosure: Project 11 is an investor in Locately and in a stealth mobile ad tech company.)

Boston also has a record of success in marketing services companies such as Constant Contact, BzzAgent, and more recently, HubSpot. Though HubSpot has been a talent sponge recently, absorbing Performable and Oneforty, some sponges reproduce by a process called “budding” where small parts break off and grow into new sponges. That cycle could easily expand this ecosystem in Boston.

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://www.scriptpad.net Adam Shepler

    Gregory, thanks for writing this article about Reed. It’s well deserved as he is a fantastic mentor, advocate and investor. It’s really been a pleasure for us at ScriptPad to work with him, and we look forward to a long partnership.

    Cheers,
    Shep
    @ScriptPad
    http://www.scriptpad.net