The second big thing in the genesis of Twitter app store oneforty (the first being proof that a real economy was possible on Twitter—see Part 1 of the oneforty story) was that Laura Fitton couldn’t find anyone besides herself to manage the company.

As readers of the initial installment of this story will remember, Fitton (Twitter handle: @pistachio) was a single mom with a consultancy to run and a book to write. She didn’t want to work full-time on a startup. “Entrepreneurs are nuts and out of touch with reality, and they have to be to survive the process of believing they can do what they need to do,” Fitton says. She really didn’t want to go there.

But at the same time, Fitton couldn’t sleep because this idea of creating an app store for Twitter—what is now Brighton, MA-based oneforty—would not go away. Her solution: find a dedicated team to run the business, and she would serve as an advisor.

Fitton spent the early part of this year trying to do just that. But by early March, Fitton accepted that if oneforty was going to get going, she would have to do it herself. She hadn’t intended to go to the annual South by Southwest music and media conference in Austin this year: it wasn’t a good place to market her Twitter consulting business, because everybody there already embraced social media. But now that social media awareness meant people would understand her idea. Two days before the event, she decided to fly to Austin after all and look for angel investors.

One of the first people she sought out was Guy Kawasaki of Garage Technology Ventures, an early-stage venture firm in Palo Alto, CA. Fitton had an in with Kawasaki. Back in August 2007, she had been watching the live stream of him speaking at the Gnomedex tech conference, where he remarked that Twitter was stupid. In response, Fitton had e-mailed him her Ode to Twitter post and said, “I think you’re wrong.” They had a short conversation—and about three weeks later Kawasaki posted: “God help me, I’m going to start Twittering. Dave Winer and Laura Fitton convinced me to take the leap, so it’s their fault.” (That’s Dave Winer, the RSS pioneer.)

So Fitton met with Kawasaki in Austin and asked point black: would he invest in oneforty? Recalls Fitton: “He said, ‘No but I’ll advise. When I invest the company usually doesn’t do well, so advising is what you want anyway.’”

Having Kawasaki’s name to drop was nice (he’s still an advisor). Entrepreneurial strategist Dan Martell suggested she set up an angel pitch call, which allowed interested investors to dial in to hear her spiel, saving her one-on-one meetings. She did the call a few weeks after SXSW, and it proved extremely helpful. While no one invested directly from the initial call, everyone who was on it has “stayed involved in some way, shape, or form,” Fitton says. She learned a lot from the experience and the questions asked. And she put an edited recording of her pitch on a secure site that other potential angels listened to—and not only did several of them invest, she later learned it helped convince one of her first employees to sign on as well.

The buzz and momentum around Fitton built fast. Between mid-April and mid-July, Fitton …Next Page »

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“Ohh, Twitter needs an app store.” It was coming up on Christmas of 2008. Laura Fitton was writing a chapter on the top 10 applications for Twitter for her book Twitter for Dummies when the thought struck her like a tweet out of the blue.

She jumped up from her office in Brighton, MA, and ran to share the news with a friend. When she couldn’t find him, she went back to her desk and tried to forget the whole idea. She had a ton of things on her plate. Besides the book, she was a single mom with two little kids. And she had worked for a startup before and found them “really scary.” Launching her own startup to sell Twitter apps seemed even more scary. “I tried to shut my brain off,” Fitton says, but it was no use. “It just lodged in my head, and I couldn’t get rid of it, and I couldn’t sleep.”

[Editor’s note: This is Part 1 of a two-part story about oneforty. Part 2 will run on Tuesday, October 13.]

And that’s pretty much how Fitton, aka @pistachio (her Twitter user name), gave birth to her third child: oneforty. The startup, which indeed is an app store for Twitter and a bit more, is named of course for the 140-character maximum allowed in a tweet. The company, which now has four employees, three developers and Fitton, officially closed its long-extended angel round yesterday. Fitton isn’t saying how much she has raised—only that the extension builds on $250,000 she took in earlier in the year—but I’m guessing it is somewhere in the $750,000-$1 million arena. That was only a few days after oneforty dropped its beta status (under which an invitation was required in order to access the site) and opened up to the world. “oneforty is your Twitter outfitter, with tons of resources for all things Twitter. Currently tracking 1719 apps that make Twitter even better,” the home page read as of last night.

To say oneforty is the new darling of the Boston tech startup scene is hardly doing it justice. Fitton’s presentation was the highlight of the TechStars Boston (it’s actually here in Cambridge, MA) investor day in early September (she was part of the group’s inaugural class). Last week, she shined again at TechStars’ Bay Area investor day. Hubspot co-founder Dharmesh Shah, John Landry of Lead Dog Ventures, and Laura Rippy, former CEO of Handango, are three prominent Boston-area angels who have made their investments in oneforty public. But that’s just the tip of the iceberg. Fitton has been deluged by would-be investors from all over. Her funding round was vastly oversubscribed; she says she simply couldn’t take any more capital for fear of extreme dilution. She has a stack of invitations from the media and VCs requesting meetings, invitations for event appearances, and more. Her inbox is “unparsable,” she says. “It’s a great problem to have.”

And one more thing. Given that Twitter and a whole bunch of cool Web 2.0 folks are out in San Francisco, a lot of people who hear about oneforty suggest that Fitton should relocate out west. But great developers are everywhere—New York, London, Canada, and so on, she points out. “They’re in San Francisco, too, but they’re not only there.” Bottom line: oneforty is staying put in its Brighton HQ, at least for now. “Maybe oneforty will be the case that proves New England can do it,” Fitton says.

This, then, is the oneforty story. It’s not containable in 140 characters. It’s the story of a wild ride from motherhood and (relatively) peaceful consulting to mayhem, with a bit of altruism thrown in (Fitton says she is just not solely motivated by making money—read on). When I first interviewed her, Fitton was just coming off an East Coast-West Coast run where she hadn’t slept for 35 hours. So the story’s got insomnia and workaholism, too.

Smart People are Using Twitter?

You can without hesitation call Fitton an unlikely Internet entrepreneur. She puts March 2007 as the beginning of her awakening to the powers of the Web, and ultimately, Twitter, to promote …Next Page »

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Led by the Bay State’s strong healthcare sector, Massachusetts startups attracted just over $145 million in investment in June. That’s the tally from our new partner, ChubbyBrain, a New York-based information services company developing tools for investors, startups, and aspiring entrepreneurs.

Health care companies—spanning drug development, medical devices, and consumer health and wellness—were the focus of 9 of the 17 deals done during the month. But the investment activity ran the gamut from telecommunications and semiconductors to social media and online marketing.

Leading the pack in terms of dollars raised was Cambridge-based biopharmaceutical company Aileron Therapeutics, which pulled in $40 million in a Series D round led by GlaxoSmithKline and Excel Medical Ventures. But that still left more than $100 million for the remaining 16 deals spotted by ChubbyBrain, 14 of which were, like Aileron, venture investments, and two of which involved debt financing. Notably, with all the recent talk (including at the Xconomy Summit on Innovation, Technology, and Entrepreneurship) about early stage deals going by the wayside, 6 of the 15 venture financings were Series A rounds.

The complete June deals list is below. But here are a few other observations from the ChubbyBrain data:

—The most active area venture firm was Polaris Venture Partners of Waltham, MA, which took part in a trio of deals. Flagship Ventures, the Massachusetts Technology Development Corporation, and Baird Venture Partners were in two deals apiece.

—Of the 9 healthcare deals, four involved medical device companies.

—Not a single deal involved cleantech or energy. That is consistent with a nationwide falloff in cleantech investment in the first quarter noted by the National Venture Capital Association.

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This is it. After two months of all-out effort here at Xconomy, we are just about ready to rock and roll with XSITE 2009 at Boston University. The event starts first thing tomorrow morning, so we are down to the wire. We have over 350 people registered and fewer than 20 tickets left (get yours here). And we very much hope to see you there for a day focused on innovation in New England. “The Recovery Starts Here” is our motto, and we believe it.

There are fabulous keynote speakers like Dean Kamen and Juan Enriquez, and plenary panels that include Innovating Early Stage Venture and Meet the Innovators, featuring some of New England’s visionary entrepreneurs and innovators. Then come the breakout sessions on strategies for bringing energy innovations to market, how IT is transforming healthcare, and Boston’s little-known digital entertainment cluster (one of Wade’s favorite topics, which is why he’s the moderator).

And that’s just a sample of the day’s festivities. Other highlights of the day include:

—a special video update on Terrafugia’s roadable aircraft
—the XSITE Xpo, rapid-fire presentations from a dozen of New England’s leading startups, each with the potential to transform their fields
—two stealth company debuts
—a series of special announcements from attending companies

And then, of course, we’ll party, as the day will wrap up with a networking reception for all attendees. Hope you’re among them!

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Scene: An abandoned brick building along the Connecticut River. The image dissolves, then reforms to show a new, ultra-modern factory in its place. Move to interior shot of computers and server banks. Brilliant academics ponder the future. Highly trained young professionals walk purposefully, the future alive in their eyes.

I have no idea whether the scene depicted above is accurate. But that’s the vision planted in my mind by the announcement earlier this month that the state of Massachusetts and a coalition of corporate and academic institutions—MIT, Boston University, the University of Massachusetts, Cisco, and EMC—had banded together to plan a High Performance Computing Center (HPCC) for Holyoke, MA.

Xconomy broke the news about the HPCC on June 9. The general idea is that a state-of-the-art “green” data and computing center in Holyoke, cooled by the Connecticut’s waters and powered by affordable, renewable hydropower, will establish Massachusetts as a leader in next-generation computing technologies and bring jobs and dollars to the depressed Holyoke region. The center would presumably house the networked servers and storage systems needed to address complex research problems in fields from genomics to climate modeling, as well as various commercial projects. “The potential for breakthrough technologies and research is enormous,” said Governor Deval “the Govinnovator” Patrick in a statement, “and both the center and this collaboration will undoubtedly serve to lift up the City of Holyoke and regional economies throughout Western Massachusetts.”

That’s the essence of the coverage to date. But, of course, that is only the beginning of the story—since the plan hasn’t even been finalized yet. I was especially interested in the corporate angle to all this, since corporate innovation is an issue I’ve spent a book or two exploring. And while to date this column has dealt mainly with entrepreneurs, venture capitalists, and startups, innovation really does happen in big companies, too. And so, against the backdrop of the envisioned High Performance Computing Center in Holyoke, this is a look at such an attempt.

My guest for today’s column is Jeff Nick, SVP and chief technology officer for EMC. The story he tells isn’t just of a data storage and management company wanting to spur the construction of an advanced computing center to grow its current businesses. Rather, Nick laid out a multi-tiered strategy of how EMC plans to combine its shorter-term business ambitions with efforts to explore the future in virtual computing, cloud computing, data management, security, and more within the confines of the fully operational, fully commercial data center.

At a high level, Nick characterized the project as offering “three dimensions of opportunity” for EMC and its R&D strategy. The first lies in the opportunity to test new techniques involving the center’s physical infrastructure, what Nick calls “ping, power, and pipe.” (”Ping” is a new term for me that Nick says refers to the way cables are physically laid down to network computers together.)

Systems infrastructure, as opposed to the physical infrastructure, is the second area of opportunity EMC’s chief technology officer sees. This covers areas such as virtualization—the specialty of VMware, a California company that is majority-owned by EMC—and cloud computing, the domain of EMC’s Cloud Infrastructure and Services Division.

These technologies will be both the undergirding for, and to some extent the subject of, the research projects envisioned for the new center. For instance, Nick says the HPCC will …Next Page »

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There are three weeks and one day to go before XSITE—the Xconomy Summit on Innovation, Technology, and Entrepreneurship, which we are holding at Boston University on June 24—and we are pumped. We are finalizing the agenda, and have added a host of fantastic new speakers, including inventor extraordinaire Dean Kamen. We’re also putting the finishing touches on some great panels that uncover some of the incredible strengths (many of them underappreciated) of New England’s innovation community.

We are pleased to be part of Innovation Month in New England, and hope XSITE 2009 will serve as a great anchor for the month by devoting a full day to innovation and bringing together key players from across the innovation spectrum. Speakers at XSITE will include leading executives from EMC, IBM, Microsoft, Alnylam, and Sirtris/GlaxoSmithKline, as well as top entrepreneurs such as Yet-Ming Chiang of MIT and A123Systems; Tillman Gerngross of Dartmouth, GlycoFi, and Adimab; Mick Mountz of Kiva Systems; and Christina Lampe-Onnerud of Boston Power (who just announced ambitions to build a 600-employee battery plant in Massachusetts). And we’re very excited about keynote speakers Juan Enriquez of Excel Medical Ventures, and, of course, Dean Kamen.

And for those of you who want to drill down into one of New England’s most vibrant innovation sectors, XSITE’s afternoon breakout sessions will offer you three to choose from. Our chief correspondent, Wade Roush, will host a session on Boston’s little-known—yet highly influential—assembly of digital entertainment and media firms: The Digital Entertainment Cluster: Boston’s Best-Kept Secret. It’s a topic near and dear to Wade’s heart, and sure to spark some lively discussion. Atlas Venture’s Jeff Fagnan, meanwhile, will provide a tour of what we’re calling The Health 2.0 Hub, the local people, institutions, and companies that are using innovations from IT to transform healthcare, from bench side to bedside and beyond. And energy innovators, executives, and investors will come together in a third session—Getting Energy Innovations to Market—to talk about what it takes to translate and scale new ideas in solar, wind, batteries, grid management, and energy efficiency into market realities.

The up-to-date agenda is here—sign up soon because early bird registration ends tomorrow. Also, when you sign up, please take our quick survey about the economy—we want your views on when it will improve, and which sectors will lead us out of recession. We will be revealing your predictions at XSITE.

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You could say that her love of jewelry brought Deborah Besemer out of early retirement. But while that might have a certain, shall we say, ring of truth to it, it’s really only one facet of the story. There were other, more important factors, such as the opportunity to challenge herself in a new arena and to revolutionize how people buy and sell jewelry, a $60 billion market in the U.S. alone.

Oh, and then there was the chance to mentor a 23-year-old entrepreneur whom she paints as the next great entrepreneur in New England. As she boldly puts it, “I’m going to be a part of helping make Matt the most successful entrepreneur ever to hit the software industry.”

Matt is Matt Lauzon, the co-founder of Paragon Lake, a startup housed in incubator space at Highland Capital Partners’ headquarters off Route 2 in Lexington, MA. I guess you could call him a diamond in the rough, only he seems pretty polished. Lauzon recently gave me a quick tour of his already impressive operation. And when I heard that Besemer—who sold the last startup she ran, BrassRing, for $115 million and previously headed worldwide field operations for Lotus—was coming on board as the new CEO, I dove in to learn more about Paragon Lake.

The company was founded in August 2006 by Lauzon (who moved from CEO to COO with Besemer’s arrival) and Jason Reuben (who’s no longer with the company), when they were undergraduate students at Babson College. They chose “Paragon” for the company name because it “means the perfect embodiment of a concept,” says Lauzon. “Admittedly, there was not a lot of science behind ‘Lake.’” In 2007, the startup became part of the Summer@Highland incubator program—and hasn’t strayed from the Highland fold since. Last July, the company received $5.8 million in Series A funding, led by Highland and Canaan Partners in Westport, CT.

Lauzon’s gem of an idea is to bring a new era of customization and personalization to jewelry shopping. And the first step toward doing this is the Virtual Display Case, which launched with the company’s first retail partner this March.

The case is essentially a computer interface that allows customers to browse thousands of pieces of jewelry from up-and-coming designers. Think of it as a virtual inventory—and this is important, because as Besemer points out, the jewelry market “is still predominantly small, locally owned businesses.” These businesses are largely clueless about using the Internet to boost sales, she says, and “their inventory carrying costs are huge.”

The case, though, goes way beyond allowing store owners to display more items for sale. Paragon Lake’s proprietary platform involves digitally rendering each design so realistically it is difficult to tell them from a photo. This digitization allows customers to easily play with designs and switch key parameters around. As Lauzon explains, a customer might see a platinum ring embedded with diamonds that he liked but couldn’t afford. But imagine if the shopper could replace the diamonds with his daughter’s birthstone and change the platinum to sterling, personally designing “that ring for that special someone.”

Both Besemer and Lauzon call this a “wow” experience. “The consumer sees …Next Page »

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We were checking in at the front desk for one of the $100K events, and the security guard asked me, “So, the 100K—the ‘K’ is for kilometers? It’s some sort of race?”

No, it’s not a race, it’s MIT’s entrepreneurship competition. We’re the Web/IT track winner, and tonight we’ll be competing for the $100K grand prize in Kresge Auditorium at MIT. Rodney Brooks (co-founder and former CTO of iRobot and the founder and CTO of Heartland Robotics) will be giving a keynote, each of the track winners will give a three-minute pitch, and one lucky team will take home a giant check. It’s also the 20th anniversary of the competition, and they’ve promised to put on quite a show.

Getting this far has required some endurance, though, so maybe the guard wasn’t so wrong after all. Our company, Ksplice, has developed technology that can install software updates while applications are running, without a system restart. You know those annoying, “You must reboot to install new updates” pop-ups? We make those obsolete.

World domination scheme? We plan to license this technology directly to vendors. Your SAN, routers, virtualization layer, OS, database, ERP, and mail server are all critical to your business—and all need rebootless updates. It’s basically impossible to find a piece of audio equipment without a Dolby logo on it. Similarly, any self-respecting application or device will be Ksplice-enabled.

So who is Ksplice? Jeff Arnold, Tim Abbott, Anders Kaseorg, Nelson Elhage, and Waseem Daher (me). We’re all MIT engineers (four recent graduates and one, Nelson, still in school), and we’ve been working together on challenging software projects for quite some time now.

In fact, the initial spark that led to Ksplice came in 2006, from a problem Jeff encountered while maintaining servers at MIT. A new security update came out in the middle of the week, over the summer. Jeff was working a summer job at the time, so he decided to put it off until the middle of the night on the weekend, since the systems’ many users would not appreciate an outage during the day. Of course, this decision proved painful—the machine was compromised mid-week, and everything had to be wiped and reinstalled.

Naturally, Jeff cursed the powers that be, shook his fist at the cloudy sky, and vowed revenge as the rain came pouring down on him. But he was vindicated: his award-winning master’s thesis …Next Page »

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The silver lining in the big black rain clouds that were this weekend’s first quarter venture capital investment reports was that New England actually did better than just about anywhere else. As Bruce reported on Saturday, the nation’s venture outlays in Q1 tanked more than 50 percent, to their lowest levels in more than a decade. But thanks to some big deals (see below), led by A123Systems of Watertown, MA, venture investments in the region only slipped 15.5 percent.

That’s the glass half full view, of course. But the New England figures, from Dow Jones VentureSource, showed $594 million pumped into 61 regional deals during the first quarter, against $703 million invested in 83 deals in the same period of 2008. Compare that to, oh, say, the San Francisco Bay Area (which includes Silicon Valley in the VentureSource data). It still led the nation, with $1.14 billion invested in 139 deals. But the dollar figure was 57 percent off the first quarter of 2008, when $2.67 billion was pumped into 254 deals—and Q1 2009 saw the area’s lowest totals, in both dollars and deals, in at least a decade, according to VentureSource.

You can get the full story of first quarter venture investments in Bruce’s account here. But below are the Top 10 New England deals of the first quarter. Seven of the 10 are in healthcare/biotechnology, two (A123Systems and Lilliputian) are in energy and power, and just one, enterprise data protection company Sepaton, in pure information technology.

A123Systems (Watertown, MA) — $69 million
(Investors: GE Capital, GE Energy Financial Services, Conoco Phillips, Detroit Edison, Espirito Santo Ventures, North Bridge Venture Partners, CMEA, Alliance Bernstein, Qualcomm, Sequoia, Novus, and MIT)

Proteon Therapeutics (Waltham, MA) — $38 million
(Investors: MPM Capital, Intersouth Partners, Prism VentureWorks, Skyline Ventures, TVM Capital, Individual Investors)

Still River Systems (Littleton, MA) — $33 million
(Investors: Venrock, CHL Medical Partners)

Aveo Pharmaceuticals (Cambridge, MA) — $30 million
(Investor: Biogen Idec)

Lilliputian Systems (Wilmington, MA) — $27.9 million
(Investors: Altira Group, Atlas Venture, Fairhaven Capital Partners, Kleiner Perkins Caufield & Byers, RockPort Capital Partners, Stata Venture Partners)

Hydra Biosciences (Cambridge, MA) — $22.2 million
(Investor: MedImmune)

Marinus Pharmaceuticals (Branford, CT) — $20 million
(Investors: Canaan Partners, Domain Associates, Foundation Medical Partners, Sofinnova Ventures)

Sepaton (Marlborough, MA) — $15.5 million
(Investors: Focus Ventures, HarbourVest Partners, Jerusalem Venture Partners, Menlo Ventures, Valhalla Partners)

Surface Logix (Brighton, MA) — $15 million
(Investors: Arch Venture Partners, HBM Partners , Intel Capital, MPM Capital, Unilever Technology Ventures, Venrock)

Stemgent (Cambridge, MA) — $14 million
(Investors: HealthCare Ventures, Morgenthaler)

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Three quiet and unknown Finnish engineers in their late thirties, Kim Nyberg, Kari Sydänmaanlakka, and Teemu Rantanen, have spent their working careers at the engineering software company Tekla in Finland. Their clients have used the software they created to model several well-known buildings, including Frank Gehry’s Walt Disney Concert Hall in Los Angeles, New York’s Hearst Tower, the famous ‘Bird’s Nest’ that is Beijing’s Olympic Stadium, and the world’s tallest building, Burj Dubai.

But if matters had turned out a little differently, these men—and a former colleague named Kati Suominen (now Kati Borgers) who could not be present at the interview—might have become known as the Fathers and Mother of the World Wide Web browser.

[Editor's note: This article is our first from Juha-Pekka Tikka, Xconomy's new Fellow from Stanford University's Innovation Journalism program. "JP," a reporter at Ilta-Sanomat, a major national newspaper in Finland, will be based in our Xconomy San Diego offices.]

According to the trio, whom I met earlier this year in Finland, the Internet’s rise and emergence as a daily working tool might have happened a year earlier than it did had their group been able to complete their project.

The four Finns developed a graphical, point-and-click Internet browser a year before the pioneering Mosaic browser on which Netscape Communications was based: the historical Netscape IPO in August 1995 is widely credited with starting the Internet boom.

“Our 1991 X Window system browser, ‘Erwise,’ showed that a net browser was possible. We were ahead of the times. The next step, to commercialize it, did not happen,” Kim Nyberg says.

Aside from some local media, the Finns have never before been interviewed about this remarkable story. But Erwise has an important place in the Internet’s birth history. And its fate offers a case study of what happens when invention and innovation are not accompanied by funding, talent infusion, and a strong venture capital market or angel investor presence—all ingredients that Silicon Valley (where Mosaic was funded and developed) takes for granted.

In the U.S., commercialization of the browser, now so much a part of our everyday lives, began in 1994, after Marc Andreessen left the National Center for Supercomputing Applications at the University of Illinois, where he and Eric Bina had developed the Mosaic browser the previous year. Andreessen had moved to California following his December 1993 graduation and teamed up with Silicon Graphics founder Jim Clark, backed by venture capital powerhouse Kleiner Perkins Caufield & Byers, to form Mosaic Communications, later renamed Netscape Communications. Europe was quickly left out in the cold.

But for a few key factors, it didn’t have to be that way. In 1991, Nyberg, Sydänmaanlakka, Rantanen, and Suominen were young IT undergraduate students at HUT, Helsinki University of Technology. The campus is actually located in Espoo, just a few miles from Helsinki and only half a mile away from the headquarters of Nokia Corporation. At that time, Nokia was not internationally known.

The four were about half-way through their studies when they met that September at a HUT course on designing and coding software.

In Switzerland, meanwhile, Tim Berners-Lee had just laid the groundwork for the World Wide Web at the European Organization for Nuclear Research (CERN). He thought the Web would be a useful tool for researchers and others but was frustrated at its pace of growth, which he partly attributed to the lack of a point-and-click browser. As he notes in his 1999 book Weaving the Web, “We were so busy trying to keep the Web going that there was no way we could develop browsers ourselves, so we energetically suggested to everyone everywhere that the creation of browsers would make useful projects for software students at universities.”

How did this project end up in Finland? It was largely because …Next Page »

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Between President Obama’s speech to the joint session of Congress and California’s jobless data reported Friday, economics dominated the news last week. We saw the effects with a couple of layoffs here in San Diego’s innovation community, along with news about local startups, clinical trials, and new technologies. Read on!

—The unemployment rate in California hit 10.1 percent in January, providing a sobering backdrop for the student-managed Disciplines of Engineering Career Fair at UC San Diego’s Jacobs School of Engineering. UCSD engineering students were sensing the worsening job market before the state jobless data was reported Friday, but a survey of corporate recruiters attending the job fair offered some encouragement. About 40 percent of the corporate recruiters say they plan to hire the same number of full-time engineers in 2009 as they did in 2008.

—Speaking of unemployment, two San Diego life sciences disclosed layoffs last week. Pacira Pharmaceuticals, which markets two approved sustained-release drug delivery products, laid off about 40 employees after a setback in its development of a new product for treating post-surgical pain. The staff reductions represent about 36 percent of Pacira’s workforce.

—Histogen CEO Gail Naughton told me the life sciences startup laid off all 36 of its employees at the end of January after a funding crisis erupted. A group of angel investors withdrew their planned $2.4 million investment in Histogen at the end of January, after learning that a local rival company, Carlsbad, CA-based SkinMedica, had filed a patent infringement lawsuit against Histogen.

—San Diego-based Optimer Pharmaceuticals (NASDAQ: OPTR) reported encouraging results from a second key clinical trial of its antibiotic pruliflxacin, which successfully killed …Next Page »

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Leroy Hood says when he left the University of Washington in late 1999 to start an institute of multi-disciplinary team of scientists to study what he called “systems biology,” people snickered, saying “it was just a crazy way to raise money.”

Almost a decade later, the work of the Seattle-based Institute for Systems Biology still baffles a lot of people, even some very smart biologists I know. But Hood says it has carved out enough support to continue growing in the midst of an economic downturn. He made those comments in downtown Seattle this morning during a wide-ranging talk that was part of the Technology Alliance’s Science & Technology Discovery Series.

The Institute for Systems Biology now has 14 faculty members, 230 employees, and an annual budget of $35 million, Hood says. The Institute’s budget is leaping ahead to $55 million this year, thanks to the first installment of a five-year, $100 million grant from the government of Luxembourg. This tiny European nation has thrown its financial resources behind Hood’s method of using high-powered computers to study networks of genes, and how they interact, rather than the traditional ways of biology that Hood says are too narrow, looking at one gene, or one protein in isolation. He says the holistic approach of studying entire biological systems will lead science down the path to a historic attitude shift from reactively treating disease to what he calls P4 medicine, or predictive, preventive, personalized, and participatory medicine.

“Your physician will not think of you in terms of your diseases, but in terms of mediating your wellness,” Hood says.

As always, the indefatigable 70-year-old pioneer of high-speed gene sequencing packed a lot of information in this talk. Here are some of the highlights:

—On the P4 medicine vision: People will carry around a handheld device that extracts a pinprick of blood that will run analyses of tiny amounts of signature proteins in the blood. It would serve as early warning signs of a biological network that’s been thrown out of whack, and threatens to morph into a disease. It could tell you the status of your current immune defenses, whether you have any ongoing infections, and offer clues to all your previous exposures to pathogens, and your susceptibility to future bug exposures. The data would be sent to your doctor, who reviews it with you. “Physicians will be grand integrators of information,” he says.

—On politics: “The problem with most politicians is they are one or two-trick ponies,” Hood says. “We need a systems politics that recognizes mankind’s 10 or 15 biggest challenges.” He adds that President Obama “comes closer to a systems politician” than any he’s seen in a long time, and he even added. “If I was 10 or 15 years younger, I’d love to run for office just to see if this could work.”

—On the growing acceptance of systems biology: About 150 scientific centers around the world are now devoted to systems biology, although none are in medical schools. The nation’s top 5 medical schools …Next Page »

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Whether you’re a startup or a big company, your IT costs are probably going up these days. And what with all the laptops, desktops, mobile phones, servers, and data centers to keep track of—not to mention e-mail systems, software applications, and tech support—it’s getting harder to predict what those costs are going to be, or even understand where they are coming from. In this tough economic climate, more and more companies are looking for ways to save money, and IT is high on the list.

Which is where Apptio comes in. The one-year-old Bellevue, WA startup broke into the corporate market last summer with a software service for managing IT costs. The software automatically keeps track of how much a sales and marketing software package, say, is costing a company and what its value is. That’s simplifying things, but the idea is to do that kind of analysis over a wide range of applications, hardware, and financial metrics, and let the company know what the different cost scenarios will be if it makes certain IT decisions.

Last week, Apptio announced some new, high-profile customers, including Alaska Airlines, SkyTap, and SumTotal. (The latter two are host service providers that handle things like online training services for corporations.) The company raised $7 million in venture funding last year, and has also signed up Finlay Enterprises, HomeStreet Bank, Motricity, and other well-known buyers, so I wanted to find out what makes it tick.

I spoke with Apptio’s co-founder and CEO, Sunny Gupta, and director of marketing Jeff Day to get the story of where the company came from and where it’s going. Gupta was previously the founder of iConclude, a software firm that was acquired by Opsware and then Hewlett-Packard last year. In early 2007, while he was in the process of selling iConclude, Gupta says, “I had gone on the road talking about the acquisition and spending a lot of time on Wall Street. A couple early customers pulled me aside and said, ‘We’re really struggling with issues around optimizing IT financial management.’”

Gupta didn’t think about it much then, but after the acquisition, he picked up the thread. A team from his previous startup, Mercury Interactive, sought him out and was “looking to innovate,” he says. So they started thinking about corporate IT. They talked with about 30 companies, mainly in financial services, and concluded that “IT spending has gone through the roof in the past 20 years…It’s very strategic to the business,” Gupta says. “In financial services, 25 percent of the budget is IT.” (Gupta says companies worldwide spent $3.1 trillion on IT in 2007.) And while companies have a good high-level sense of the costs, there is little in the way of systematic methods to analyze “the true cost of products and services which IT is delivering to the business,” he says.

When it comes to making decisions like whether to upgrade certain servers or software applications, says Day, most companies rely on Excel spreadsheets once a quarter or even once a year. That takes a lot of time and effort, and it isn’t often enough. So Apptio sells its service to chief information officers, operations managers, and finance groups, to try to make the process more efficient, useful, and strategic. When they talk to potential customers, Gupta says, “Light bulbs start to go off—’I need to do this across my IT.’”

Apptio has some serious backers who have bought into the vision. In October 2007, the startup closed its $7 million funding round from Greylock Partners, Madrona Venture Group, Ignition Partners, and other investors including Marc Andreessen. Since then, Apptio has gone from renting conference rooms in the Bellevue public library to more stylish digs in downtown Bellevue. The company has just under 30 employees. Gupta says it could become profitable in six to 12 months, but the time horizon he’s looking at is about two years, “to build more value in the company.”

Looking ahead, Gupta says, “Every company is trying to buckle down. We are seeing increased pressures on IT costs…We believe as the economy is shaping out—not so good for most companies—this plays well to our core strength, being a strategic partner with these customers. We’ll be well-positioned in the next year.” He adds, “The long-term vision for the company is to become a strategic management tool for CIOs, like what Salesforce.com is for a VP of sales. We’re focused on acquiring customers.”

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Whether it’s John McCain or Barack Obama, what should the new American president do to promote technological innovation and global competitiveness? Computerworld asked a collection of tech luminaries from around the country for their advice, and published their thoughts today. Here are contributions from three info-tech experts in Xconomy cities.

Rick Rashid, senior vice president at Microsoft and head of Microsoft Research, writes, “Over the past 10 to 15 years, there has been a retreat from the successful research investment strategies of the past—strategies that created modern computing and the Internet.” Rashid advises that the new administration “work toward restoring a balanced system of support for long-term basic research in science and technology with a goal of ensuring the future competitiveness of the U.S.” Specifically, he advises that the administration “work with Congress to eliminate or limit [noncompetitive] earmark funding for science, restore the ‘long-term risk-taking’ parts of DARPA to its 1970s/1980s form, and fund the American Competitiveness Initiative.”

Ed Lazowska, professor of computer science and engineering at the University of Washington (and former chairman of the President’s Information Technology Advisory Committee), gives a five-point plan that begins with restoring integrity to U.S. science policy. “It is essential that federal policy benefit from the most complete, accurate and honest scientific and technological information available,” he writes. Lazowska also advises doubling federal investment in fundamental research over the next 10 years, making a “national commitment to science education at all levels,” making the R&D tax credit permanent, and using technology to address the critical challenges of the 21st century. That includes energy independence, climate change, global hunger, national security, and urban infrastructure. “None is optional,” he says.

Victor Zue, director of the MIT Computer Science and Artificial Intelligence Laboratory (and advisor to the U.S. Department of Defense and National Science Foundation), writes, “Advances in information technology and computer science…are the primary force that powers our economy.” Achievements like the Internet, mobile communication, and user interfaces “typically originated from university research and often took more than a decade to realize a $1 billion market.” So Zue says the new administration should “significantly increase its budget for long-term, fundamental research, e.g., by doubling the NSF budget annually for the next four years. We must invest in educating the next generation of [information technology] professionals.”

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Kryptiq, the Hillsboro, OR-based maker of software that enables health providers and health plans to share information, said it has acquired Portland, OR-based Secure Network Solutions. The acquisition allows Kryptiq to add features to help customers speed up work flow with its Connect IQ Platform, including automated appointment reminders, waitlist management and electronic billing statements, the company said in a statement. Kryptiq says its customers currently include Providence Health System, Medstar Health, and Blue Cross and Blue Shield of Minnesota. Financial terms of the acquisition weren’t disclosed.

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Every quarter, we journalists do the national story about trends in venture capital investing. We slice and dice numbers that tell the narrative of where money went over the past three months. Less than a year ago, Ken Myer and the folks at the Washington Technology Industry Association thought they’d try something different: a survey of local venture capitalists that attempts to measure their sense about where things are headed in the near future for venture-backed companies.

“We thought it would be intriguing to provide entrepreneurs, and even other VCs, a view that they haven’t seen before,” says Myer, the president and CEO of the WTIA, in a meeting yesterday at a local Starbucks near our offices on First Hill.

The third installment of this quarterly survey didn’t provide any shocking revelations last week. About a dozen Washington state VC firms have agreed to participate, and are granted anonymity to encourage candor. The consensus is they are worried that a national economic downturn will start to harm sales at their portfolio companies. In the inaugural two quarters, the VCs worried about something altogether different—the difficulty of recruiting and retaining talented workers.

Beneath the headline about economic angst, last week’s findings were a mixed bag. More than half of VCs surveyed predict their portfolio companies will have a 10 percent increase in their workforce in the third quarter. The number of new financings will probably be flat or slightly down in the third quarter, but that has a lot to do with this being a traditionally slow season, when VCs tend to head out on vacation, Myer says.

It’s too early to draw trend lines with only three quarters’ worth of data in the bank, or to see how the VC predictions match up with what actually happens in the quarters to come. That’s something I’ll want to ask about in the future, so we can judge whether this survey is a reliable predictor of behavior.

Myer also described some interesting changes he has pushed for at the organization since he took the top job in December 2006. The moves include:

—The name change from Washington Software Alliance to Washington Technology Industry Association in February. The organization means to include five primary industries—software, web services, telecommunications, digital media, and advanced manufacturing. The last part can include high-tech medical device companies, like defibrillator maker Physio-Control in Redmond. The WTIA recruited Physio CEO Brian Webster to its board as part of that outreach, Myer says.

—A younger generation of entrepreneurs have been recruited to the board, including Paul Thelen of Big Fish Games, James Sun of Zoodango, and Keith Smith of Zango. “We’re trying to make sure we’re relevant,” Myer says.

—The organization, which has 1,000 members representing 125,000 employees, has beefed up its services to startups. It has offered a bulk purchasing group for health insurance for a while, and now offers 401(k) plans, human resources contracting services, and corporate travel discounts to its members. Another idea in the works is a Web-based marketplace where members can sell stuff to other members. “We want to be a one-stop shop for discounts and services for our members,” Myer says.

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The U.S. economy’s seeming slide toward recession hasn’t affected high-tech hiring in the Massachusetts region, the Boston Globe’s Robert Weisman is reporting this morning. That parallels what we learned back in December, when we wrote about the out-and-out talent crunch many local high-tech firms are confronting, especially when it comes to hiring experienced software engineers.

Weisman cites figures from the state’s Executive Office of Labor and Workforce Development showing that Massachusetts gained 8,400 professional, scientific, and technical jobs in 2007, along with 2,100 jobs in scientific R&D and 800 jobs in information technology, while at the same time losing 2,600 manufacturing jobs and 3,300 construction jobs.

At SeaChange International, the Acton, MA-based video-on-demand company that we recently highlighted as part of our story on Greater Boston’s Internet video cluster, there are 75 job openings, Weisman reports. “It’s a very competitive job market for software engineers,” Laura Watson, the company’s senior director of human resources, told him. “Most of the people who come in here have offers in a few days.”

Of course, the growth in the IT sector could suddenly stop, as it did in mid-2000 with the collapse of the first Internet bubble. But so far, worldwide demand for software that brings greater efficiency to business or cheaper, more easily accessible forms of communication and entertainment to consumers seems to be bouying up the region’s information-technology economy. Hiring managers told us in December that the competition for qualified engineers is greater than at any time since the Internet boom days of 1999. “This is a great time for very talented people to wake up and look around,” said Jason Gasdick, interim vice president of talent at Web-based physician community Sermo.

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The bad news in a jobs study released last week by the Massachusetts Institute for a New Commonwealth is that Massachusetts lags every state in the nation save Michigan when it comes to creating new jobs. Manufacturing in the state has been in especially bad shape since the 2001 recession, leading to worries that, as the MassINC report puts it, a “boutique economy” is emerging “with great rewards for those with the requisite levels of education and skills and fewer options for everyone else.”

The good news from Xconomy’s own recent interviews with a host of area firms—if you happen to be one of those people with the requisite education and skills—is that the information-technology section of the boutique is booming. Human-resources managers at IT firms in the Boston area say they’re hiring more people than at any time since the feverish dot-com days. Demand is so great, in fact, that many companies say they’re having to pull out all the stops to find qualified job candidates—and the situation is getting worse (or better, depending on which side of the hiring fence you’re on).

“It’s absolutely harder to hire great people than it was a couple years ago,” says Microsoft’s Reed Sturtevant, who’s setting up a special innovation group based out of Microsoft’s new digs in Cambridge. Part of the problem is that so many big companies are trying to staff up their Boston-area operations all at once: while Microsoft is hiring aggressively, so are many other companies Xconomy has talked with recently, including Google, Akamai, IBM, and EMC. But “the competition I still see more of as I’m trying to pry people loose to join me is the startup world,” Sturtevant says, citing the boom in young Internet and software companies. “It’s very active.”

“The market feels like it did back in 1999 or 2000,” says Mark Minichiello, director of global recruiting at Cambridge-based Akamai. The networking company is nearly doubling the size of its Kendall Square headquarters and expects to hire over 300 people globally in 2008, about half of them in Cambridge. “You have to have a machine-like recruiting infrastructure to deliver those kinds of numbers,” Minichiello says.

And the machine is having to work harder. Executives say that fewer good resumes are circulating, partly because the most talented workers are getting snapped up faster—before they even have a chance to polish up their resumes. (Joe Chung, CEO of e-commerce startup Allurent, tells us that when he finds talented candidates, he has to make an offer—and a good offer—right away. Otherwise, they’re gone.) There’s also a shortage of generalists who have mastery of all the technologies that go into running a modern technology company. Hiring IT support people, for instance, has been a “real challenge,” says Jason Gasdick, owner of employment consulting firm Gasdick & Company and interim vice president of talent at Sermo, a Cambridge-based online community for physicians. “What was good three years ago really isn’t so hot now.”

A few companies are still lucky enough to have the pick of the litter, though, enabling them to bring on people as they’re needed. “I feel like I have complete control over my growth rate,” says Stephen Vinter, engineering director and site manager for Google’s Cambridge lab, which has expanded from a handful of employees to more than 100 in the last year. “We’re only limited by the number of people we can effectively absorb,” Vinter says.

But for everyone else, it’s important to have a range of strategies in place to find the best candidates. In talking with recruiters and HR executives around Boston, we’ve heard a few tactics mentioned repeatedly. So here’s a brief Xconomy guide to the best thinking on hiring amidst the IT talent crunch.

Use every recruiting outlet available.

“You need every channel operating so you can find that talent wherever it exists,” says Akamai’s Minichiello. That means, among other things, attending college job fairs, plastering campuses with posters, bringing on consultants and contractors, moving temps into permanent roles where possible, and …Next Page »

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