How are companies spying on each other these days? One of the surprising ways I’ve heard about recently is through the webcam in boardrooms.

That’s right, apparently it’s easy to hack into some companies’ video conference systems, because they lie outside typical security measures. Companies sometimes set up video conferences so they can be accessed directly on the Internet—leaving the door open for eavesdroppers to listen in on meetings, or even remotely monitor a conference room via the camera.

One local software company is helping organizations guard against this threat—and many others. Boston-based Rapid7 is one of the leaders in the growing cluster of IT security companies around town. Rapid7’s approach is complementary to firms like NitroSecurity (recently acquired by Intel/McAfee) and Q1 Labs (bought by IBM), which help organizations guard against security threats in their computer networks and systems.

What Rapid7 does is help organizations find security flaws throughout their IT infrastructure, and then test whether they’ve been corrected. To fuel its growth, the company raised a $50 million Series C round from Technology Crossover Ventures in November—one of the largest tech venture rounds in the Boston area lately. (Rapid7 has raised $59 million to date.)

“There’s a lot of cyber-espionage going on in business,” says Mike Tuchen, Rapid7’s CEO (see photo, left). The activity ranges from stealing sales plans, financial information, and intellectual property, to the aforementioned boardroom eavesdropping, he says. And, of course, it’s not just companies spying on each other; it’s governments and nation states as well, all trying to get their hands on everything from Citibank credit card numbers to the special sauce in Apple’s iPad design.

What’s a CEO to do? If you’re Mike Tuchen, you take a promising company and try to make it better. Tuchen joined Rapid7 as chief executive in 2008. (The company has been around since 2000.) Previously he worked at Microsoft as a group program manager and general manager of SQL server marketing. An engineer by training, he also worked at Sun Microsystems and co-founded Paramark, a dot-com-era online advertising startup.

When he arrived at Rapid7, brought in by Bain Capital Ventures (the firm’s original VC investor), Tuchen saw a company that had “a great engineering and sales team” but not much else. He says he didn’t have to tear up the company, just bring in some key additions: marketing, channel partners, new processes, and a broader product roadmap, including a more international market focus.

So far the effort seems to be paying off. The company has grown to about 240 employees (about half in Boston), and Tuchen says revenues … Next Page »

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It’s a question as old as human nature. You’ve heard the stories, you know all the famous examples. Steve Jobs, Larry Ellison, Michael Eisner, the list goes on. All difficult characters with strong personalities—and hugely successful companies.

So, in today’s ultra-competitive tech and business world, does a CEO have to be an asshole to be successful?

First of all, let’s get our terminology straight. There’s no hard and fast definition of the term, but you know it when you see it. Bullying or backstabbing behavior towards subordinates or partners? Check. Public humiliation of employees? Sure thing. Tantrums, abrasive language, egomania, and other unprofessional displays? Yep. (See a related Xconomy story about bad bosses.) But more subtly, there’s stuff like not returning messages, passing people off to underlings, talking way too much, and saying different things to different people. And more generally, not caring what other people think. Which, of course, can also be a very good thing.

Some months ago, a group of prominent Boston-area tech CEOs discussed this question of “assholicism”—rhymes with Catholicism—at their regular meet-up. Some may have felt they should be tougher leaders or negotiators. Some wanted to pick up management tips and strategies. Others were reflective about their own styles that have served them well. So…is it necessary to be a jerk? Apparently the discussion took all day (and even came up in multiple meetings).

The upshot: Yes, a CEO has to be somewhat of a jerk to succeed. At least, it can be helpful—but there were plenty of caveats.

“It was concluded on some level that this was the case,” says Dave Balter, the CEO of BzzAgent (owned by Tesco’s Dunnhumby), who was part of the group. “But there was a huge amount of debate and not everyone agreed.”

One of those dissenters would be Brian Halligan, CEO of HubSpot, the fast-growing marketing tech firm. Reached by e-mail, Halligan said that being a jerk “used to work” for leaders, but that “it is not acceptable today.”

His main reasons—neither of which I would call deeply fundamental to human psychology or the nature of leadership—are that “smart GenY-ers don’t put up with that stuff,” and that corporate information flow and reputations have become more transparent, so CEOs can’t get away with bad behavior anymore. It “used to be that information was centralized at the asshole,” he writes.

I also pinged Brad Feld, the tech entrepreneur-investor, while he was in town. He was unequivocal that good leaders don’t have to be jerks. “Some of the sweetest people in the world are super successful CEOs,” he says.

So perhaps there are deeper trends at work here. … Next Page »

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CEOs, investors, and board members frequently complain about ineffective board meetings. Steve Blank, Jeff Bussgang, Brad Feld, and Fred Wilson each have suggested board meetings could be improved by changing the format, process, or content.

Having good meetings starts by having the right people in the room (as discussed in the first installment of this series) and in having a good chair or facilitator for the discussion (as highlighted in the second). The board then can create the right agenda with a relatively simple, three-step process.

First, the chair and CEO should circulate the key questions and proposed agenda a week prior to the meeting, or even start collecting agenda items at the end of the prior board meeting. Most importantly, this helps everyone avoid wasting time creating dozens of slides that the board doesn’t value. It also allows time for reflection and input from other board members.

Some of the most effective CEOs and chairs I’ve seen call each board member in advance to get their input. Doing so also helps them build and maintain political clout with the board by encouraging board members to be heard, seeking their input, and avoiding nasty surprises at the meeting.

Second, in creating the agenda, the chair and CEO must reflect on what key questions are vital to the company’s success, as opposed to what are the most obvious. In the dozen years I have been on boards, I have seen too many stuck in the same routine. It’s easy—and a bit too comfortable—to review how sales were since the last board meeting, how many leads marketing generated, how the product has developed, and when the company might need more money.

All but the last question are like driving by looking in the rear-view mirror. Looking ahead to the next quarter’s sales or to the next release of the product at least focuses on the future, but only in the low-visibility fog of short-term goals. These are good questions, but more tactical than strategic. Of course companies need to address tactical questions, but too much attention there can lead to greatly missed opportunities.

Strategic discussions always start with tough questions that aren’t being asked. There are five areas for the board to have on its strategic checklist, with an optional sixth that should be reviewed at least twice per year (sometimes more frequently).

• Team. Does the company have the right people in the right roles? Are they the right ones for where it wants to be in six months or a year? Veteran entrepreneur and venture capitalist Bob Metcalfe once said that in big … Next Page »

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It’s been said plenty of times: If the U.S. wants to get out of this seemingly neverending economic malaise, we’ll have to innovate our way out.

It’s a good idea, and a great slogan. But actually making it happen is not so easy.

Sean MacLeod, president of Seattle’s Stratos Product Development, sees this kind of conundrum up close. Stratos is a design and engineering shop that other businesses turn to when they need help making a new product come to life, which means that it tends to fly under the broader public’s radar.

But its industrial designers and engineers know a thing or two about putting technology to work in new ways. Notable projects over the years have included the Xbox wireless video game controller and the Apple PowerBook 3400 laptop, plus a wide range of medical devices, sensors, and other gadgets.

Sean MacLeod

“A large number of our clientele are looking at the creative or the innovative process, and it’s very messy,” MacLeod says. “It’s a big pile of spaghetti, and they just don’t know how to pull it apart and organize it in a constructive manner. And what we’ve done here is create a process for dealing with that uncertainty. And it’s a really difficult thing to get your mind around.”

Ken Myer

What it takes is having the right group of people, culture, and systems in place to foster new approaches and ideas. I sat down with MacLeod and former WTIA president Ken Myer a while back to talk about the difficulty of innovation for businesses, and came away with these three big ideas.

HEY, BIG SPENDER
Throwing money at a project is no guarantee that you’ll get something new and valuable. But MacLeod says that’s too often the reflex of executives, probably more pronounced in a period when companies have been piling up cash.

“You get this: ‘We’re going to spend this amount of money in this quarter and we want results, and these results need to have clear and identifiable return on investment.’ And those are not the metrics,” MacLeod says. “The whole process is messy.”

“The attributes of an environment that is highly innovative tend to be almost the exact opposite of what a larger company tends to strive to do,” Myer says. “Because they’re looking for zero defects and scalability and predictability and not a lot of deviation from the norm.”

CAN WE PLUG THIS IN?
“Another thing I see is, ‘OK—we’re going to innovate. Let’s go borrow the innovation process from company XYZ and just plop it into our company, and it should work.’ And the reality is that because every company’s different, how they’re innovating and how that’s put together is different for every single company,” MacLeod says. Otherwise, everyone would just copy what Steve Jobs did, and we’d have hundreds of little Apple clones littering the ground, rather than the opposite.

“Or, you can buy it. There are lots of choices,” Myer says—an attractive alternative for smaller companies, particularly in a time when the IPO market has been an unreliable way for them to reward shareholders and employees.

CULTURE IS KING
The first key to having an experimental, innovative group of people is making it OK for projects to fail. The fear of that is typically what paralyzes organizations and makes it so hard for big companies to actually innovate.

Beyond that, companies need to foster a culture of connection and collaboration that will allow smart people to bounce ideas and approaches off each other, Myer says.

“There’s an expression, that chance favors the connected mind. And I think that’s a good summary of the value of connections,” he says. “Because the ability to see these possibilities often comes in very unrelated spaces.”

That need to connect also goes beyond the walls of any one business, MacLeod says.

“The reality is, to innovate, you are not going to have all of the core competencies within a single organization to truly make all those big, innovative leaps,” MacLeod says. “You either have to partner or you have to acquire. You have to be humble enough to know that you don’t know what you don’t know.”

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Stephen Wolfram is not one to be summed up in a few pithy quotes. Well, too bad.

Here is his life in a nutshell:

“I grew up in England and went to all sorts of good schools that I thought were completely irrelevant.”

“By the time I was 20 years old, I was a physics faculty member at Caltech, and I was building a big software system that was a forerunner of Mathematica.”

“Along the way, I learned a lot about what not to do in starting a company.”

“For about a decade I was almost a complete recluse, running the company from a distance, and spending every night working on basic science.”

“I don’t really have a boss. I just do what I want to do. The trick is not to have a private company that gets too weird and too pathological.”

That was a sampling of what the distinguished and controversial Wolfram had to say at our Xconomy Forum in Boston last week, called “6×6: Six Cities, Six Big Tech Ideas.” For those who don’t know, he is the founder and CEO of Wolfram Research, the creator of Mathematica and Wolfram Alpha, and the author of A New Kind of Science. He is also a recently minted Xconomist.

Wolfram, 52, set the table for the theme of our event, which involved some of the biggest ideas in technology and business from entrepreneurs and executives around the country. As only he could, the physics and software guru reflected on his 30 years in the tech industry and his contrarian approach to running big projects and building companies.

A few things really stood out to me in his talk. One was the importance of making mistakes early in his career. While at Caltech in the early ‘80s, Wolfram got into a “grisly early-IP-meets-university” battle over his software tools, he said.

“I ended up deciding I had to start a company around the software system I’d built, and of course I was just a physics kid. I didn’t know anything about starting companies,” he said. “I made lots of mistakes, like not running the company myself, hiring a CEO who was twice my age, and so on. The company quickly started doing things that I thought were silly and boring. In the end, after many trials and tribulations, it did in fact survive and finally went public and was gobbled up by bigger fishes.” (You can read more about his first startup, Computer Mathematics, which was venture-backed and later merged with Inference, here.)

Another thing Wolfram figured out early on was that university work was not for him. After spending time at Caltech and the Institute for Advanced Study in Princeton, NJ, he started a research center at the University of Illinois at Urbana-Champaign to study complex systems and complexity theory. “My plan A was to get lots of other people to help work” on the implications and applications of his findings, he said. “It was OK, but it was really slow. I got kind of frustrated and needed a plan B,” he said. “My plan B was to build … Next Page »

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“You will have meltdowns on a regular basis. You will have those moments. Make sure you have people you can talk to when you have those moments.”

That was Brad Feld, the tech entrepreneur-turned-venture-capitalist, on Friday afternoon, speaking to a room of Boston and New York entrepreneurs and angel investors, at an event organized by Silicon Valley Bank. The setting was the Microsoft NERD center in Kendall Square, Cambridge, MA. Feld was talking about the experiences that all founders (especially CEOs) go through with their companies.

Feld is the co-founder of Boulder, CO-based Foundry Group and TechStars, the seed-stage startup accelerator with programs in Boulder, Boston, Seattle, and New York. He relates very well to early-stage tech entrepreneurs, because he’s been there and done that himself. In his typical style, Feld spoke casually (and candidly) about the challenges of building a company. None of it was particularly earth-shattering, but it’s interesting to revisit these sorts of tips every once in a while, because different things jump out at you at different times.

Feld’s advice boiled down to two things: products and people.

1. “Be obsessed about your product.”

“The most important thing to focus on, early in the life of your company, is your product. In year two, it’s your product. In year 20, it’s your product,” he said. “If you focus on your product, most of your other problems will go away.”

But he has a broader definition of product—it’s not just the software you release, or your technology, or even your interface with customers. “The whole of the company becomes the product,” he said. “The whole lifecycle of what you do.”

That means entrepreneurs should be totally passionate about what they are building—not just starting a company to be their own boss, say—and they should be true to themselves. Feld admitted that with his first company, he got bored after four years. “I didn’t love the thing I was doing,” he said. (He sold it after seven years.)

2. “You cannot motivate someone.”

“The idea that a CEO can motivate people is a fallacy. All you can do is create an environment where people are motivated or not,” he said. Companies will make bad hires—talented people who aren’t a good cultural fit with the rest of the team—and they should get rid of those employees quickly, according to Feld. “You can’t change them,” he said, and you can’t “try to motivate people to work harder” through things like performance reviews. That simply doesn’t work, at least not for small startups.

Instead, founders need to continually make sure they are bringing on the right people for their team, communicating openly, “building the language of the company,” and tying that formative context and culture very closely to their product, he said. This will mean very different things for different companies, and it’s certainly not an exact science.

Feld said he sees a common mistake in young startups. “The CEO ends up doing a lot of the work,” he said, and “the non-CEOs don’t do the right work.” The CEO’s chief responsibility, over time, is to make sure “everyone is doing the right thing.”

Oh, and one more responsibility: “Don’t run out of money,” he said.

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For every tech company that leaves Boston, it seems, another one moves in. In this case, the local security software cluster just got stronger—and a new approach to combating cyber attacks has arrived.

CounterTack, a security company formerly known as NeuralIQ, has rebranded itself and moved its headquarters from Alexandria, VA, to Waltham, MA. The company has just raised $9.5 million in Series A financing led by Fairhaven Capital of Cambridge, MA, with other private investors also participating in the round.

As part of the deal, CounterTack has brought in new management. Neal Creighton, the former CEO and co-founder of GeoTrust (sold to VeriSign for $125 million in 2006), has been named CounterTack’s chief executive. Creighton, a data security and authentication expert based in the Boston area, most recently co-founded RatePoint and AffirmTrust. Other new members of the leadership team include John Adams, chief technology officer; Jim Harrison, chief financial officer; John Worrall, executive vice president of product management and marketing; and Robert Potter, senior vice president of sales. Meanwhile, founder and chief architect Alen Capalik and chairman William Fallon (a retired admiral in the U.S. Navy) are staying on with the company.

Part of what’s driving the new investment is the emerging trend around “advanced persistent threats.” Essentially, these are cyber attacks that target a corporation’s or institution’s software applications, data, employees, or end users. The goal is to steal sensitive information about finances, infrastructure, intellectual property, and so on. The attacks are tough to guard against with traditional perimeter defense techniques like firewalls or virus detection. Instead, they require an organization to look deep inside its own networks and applications and root out problems from within.

That’s where CounterTack, and a number of other security tech companies, come into play. CounterTack uses virtualization software to boost customers’ network intelligence and try to detect attacks that are currently in progress. Exactly how the technology works is a little vague (probably by design), but presumably network operators and administrators can respond to the cyber threats once they know about them.

CounterTack, which started in 2004, has fewer than 50 employees. The company says it plans to hire 12-15 new staff in Waltham over the next year. It is also keeping its Virginia office as a sales outpost.

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Technology companies’ boards of directors need better leadership. I made a case last month about reinventing the board of directors by treating the board as a team and doing annual assessments against company needs. Boards that are structurally more aligned with their company’s operations are better able to help them achieve success-or at least reduce the board’s contribution to company failure. That said, it’s hard for a CEO to do this alone. Even with a well-organized board, a lot of board meetings also are under-effective, ineffective, or worse, really stink.

Enter the effective chairperson.

The non-executive chair of the board has three responsibilities:

1. Set the board agenda for each meeting;

2. Run the board meeting; and

3. Manage board terms and help recruit new members.

Executive chairs take on additional functions and play an active management role, often including being an outward face with external stakeholders such as government entities, investors, and strategic partners. Those are important roles, but different from the role played by a non-executive chair. It’s also rare to have an executive chair in an early stage company. Non-executive chairs are very different; they talk less, listen more, and as one lawyer put it to me, “their job is to bang the gavel.”

Setting the Agenda: A big reason a lot of board meetings stink is they focus on the wrong things. If left to their own devices, management typically will set an agenda about what they want to talk about—or at least what will make them look good—rather than what is vital to the company’s long-term success. Alternatively, the board can operate on a rote formula, often covering activities such as sales, marketing, and engineering since the last board meeting rather than looking ahead to the future.

Even well-intentioned CEOs will have blind spots or resistance about what should be on the agenda, because they live inside their own tactical world and suffer from day-to-day stress. They may be unaware of or underappreciate strategic changes in the market. They also may want to postpone discussion of an important topic until they have what they perceive as enough time to address it sufficiently to look good in front of the board.

(Above, a short video with additional thoughts about what makes a good board chair.)

Instead, the chair should reflect on what tough questions should be addressed and which ones aren’t being asked. He or she may want to consult with fellow board members, management, and other informed parties in the market. These questions and an outline of the agenda should be circulated a week in advance of a board meeting. Early distribution of the outline can create constructive conflict about items of importance and ensure that management does not waste their time preparing elegant, but not very effective materials.

Unfortunately, what is typically considered best practice today is management preparing lengthy PowerPoint slides and distributing them one to two days in advance of the board meeting. Board members may or may not have time to review them and are often playing catch up when they walk in the door for the meeting. As a result, management often becomes frustrated—either when the conversation quickly derails from their agenda or, at the other extreme, board members sit passively listing to a parade of data, seemingly unappreciative of all the hard work that went into them and not adding any value.

Running the Board Meeting: Good chairs are facilitators. While many CEOs also are good facilitators, even some of the best ones I’ve seen have lost control of board meetings for one … Next Page »

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Today, during its third-quarter earnings announcement, Lexington, MA-based AMAG Pharmaceuticals (NASDAQ: AMAG) announced the departure of its CEO, Brian Pereira, and a restructuring plan designed to decrease its operating expenses. Wall Street applauded, pushing the embattled company’s shares up 18 percent to $16.21.The news came just a couple of weeks after shareholders voted down Amag’s plan to merge with Allos Therapeutics (NASDAQ: ALTH).

Amag spent the last several years trying to morph from a maker of diagnostic-imaging products to an inventor of cutting-edge drugs. But the company’s first therapeutic product, ferumoxytol (Feraheme) to treat iron deficiency, ran into safety issues, and the stock fell from $50 a share in 2009 when the product was introduced to below $14 earlier this year. The company sold about $15 million worth of the product in the third quarter and said its market share grew from 11 percent to 13 percent.

Under Pereira, who became CEO in 2006, Amag has started investigating ferumoxytol’s potential in broad markets, such as women with heavy menstrual bleeding or post-pregnancy anemia, and cancer patients. The company’s plan to buy Allos in an all-stock deal worth $686 million would have given it a product called pralatrexate injection (Folotyn), used to treat T-cell lymphoma. But investors were not wowed by the prospect of a single-product company merging with another single-product company.

Some analysts are cautious about Amag’s future. Jefferies & Company analyst Eun Yang called sales of ferumoxytol “sluggish” in a report today and put a price target on the stock of $12. Yang concluded: “shareholders could be better served if AMAG divests Feraheme, returns its value & current cash (~$11.8/sh) to shareholders.”

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Twitter has already sucked away 20 percent of your life. What’s another 30 minutes?

If you don’t know Kabir Shahani or his startup, Appature, here is your chance. I will be hosting a live Twitter chat with him tomorrow (Thursday, Nov. 3). This open chat will start at 2 pm Eastern / 11 am Pacific Time, and you can ask him whatever you want for 30 minutes.

What’s the occasion? Well, Shahani will be one of our featured speakers at Xconomy’s “6×6: Six Cities, Six Big Tech Ideas” conference in Boston on Dec. 1, and I want to give him a hearty welcome.

I got to know Shahani and Seattle-based Appature while I was living in the Northwest a couple years ago. The company has a remarkable story. It started in 2007 and bootstrapped itself to profitability before taking a VC round in late 2009. Appature is also interesting because it is complementary to many companies in Boston’s marketing tech cluster, like HubSpot, Constant Contact, BzzAgent (Tesco), and Buzzient. It works with a lot of healthcare companies and institutions around Boston and the East Coast. And, of course, it is going through many of the same growing pains that young companies around Boston (and elsewhere) talk about, as it expands its customer base across the country.

Appature’s founders are hardcore techies with a social networking background, but they chose to go after the healthcare market—making new kinds of software tools for medical device and pharma companies to build relationships with their customers (mostly hospitals and doctors), all in a fundamentally different way from traditional marketing.

So, in our live chat, I’m interested to hear what the big idea is all about at Appature and why it chose its particular niche. Other areas up for discussion include social marketing trends in healthcare and other industries; startup/VC lessons and tech advice; and maybe a little Boston vs. Seattle talk (in terms of innovation ecosystems, talent, and coffee). I’ll bet the tech and healthcare communities will have some good questions for Appature, too—so please get them ready.

Here’s how it will work on Thursday. I’ll send off a few questions to Shahani from @Xconomy, and then we’ll open it up to everyone’s questions. Shahani will be responding from his personal account, @Kabir, with an assist from his team @Appature. And we will all keep track of the running dialogue using the hashtag #XCappature. That’s the key for you to follow the conversation on Twitter. (You can use TweetChat or another app to focus on the half-hour discussion, or for however long you want to tune in.)

See you online at 2pm ET / 11am PT on Thursday…

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Get a bunch of prominent Boston-area founders and CEOs in a room together, and ask them provocative questions. It’s a tried and true recipe for a good discussion, and that’s exactly what we got at the end of the day on Friday at MassTLC’s 2011 unConference at Hynes Convention Center in Boston. The topic was “the secrets of scaling,” and it was a fitting end to a fun and productive day.

This was the Mass Technology Leadership Council’s fourth annual innovation conference, and the event has really solidified in its “unconference” format, in which hundreds of tech entrepreneurs, investors, execs, and other business leaders meet and create organic sessions to discuss whatever is on people’s minds. Most people are there for the networking and private meetings, but that didn’t stop a few lively sessions from breaking out.

The secrets of scaling session—focused on how startups get big—was organized by journalist Scott Kirsner and was more conference-y than unconference-y, as it was planned ahead of time and had the feel of a big panel. Here are some takeaways from that (before I get to some broader highlights later).

Each of the companies on the panel could be considered a Boston success story: Constant Contact, Gemvara, iRobot, Kayak, LogMeIn, Wayfair (fka CSN Stores), Zipcar. (See photo above by Jeff Bussgang, who noted that you can distinguish the pre-IPO companies from the public companies by who’s wearing jeans.) The idea was to tap into this collective braintrust and draw out some key lessons.

Paul English of travel site Kayak said he routinely asks people, who’s the smartest person you ever met? And then he goes out and tries to hire them. He relayed the story of recruiting Giorgos Zacharia, Kayak’s chief scientist, a process that took several years but was well worth it. “It was transformational,” English said. He also talked about Kayak’s expensive acquisition of rival SideStep back in 2007. Kayak fired all of SideStep’s engineers and created a duplicate version of its site. Lesson: hire and fire ruthlessly.

Niraj Shah from Wayfair talked about his e-retail company’s bootstrapped growth, starting in 2002. Once his team figured out how to make money from niche online stores, it faced lots of competitors and had to decide whether to raise money or stay the course. It chose the latter (until this year, when it did raise a big round). “We just launched new categories as fast as we could, built out selection in each category as fast as we could,” Shah said. “We let the growth compound on itself.” The key was “not letting early successes keep us from letting that compound,” he says. Lesson: stick to your knitting.

Michael Simon from LogMeIn, the remote access and IT management firm, started with the idea of being a lifestyle business, not a public company (it now has 450 employees, about 200 in Massachusetts). The key moment in LogMeIn’s growth was when it “started giving away stuff,” he said. This was before “freemium” was a popular model. The company’s revenues started very small but grew exponentially. “If you have an exponential growth curve, the absolute number doesn’t matter,” Simon says. “You’ll get there.” Lesson: start small and get traction.

Matt Lauzon from Gemvara, the online custom jeweler, represented the younger generation of entrepreneurs on the panel. Although it’s still fairly early for Gemvara (which started as Paragon Lake in 2006), the company seems to be on an impressive growth trajectory. “We didn’t want to … Next Page »

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It is hard to overestimate the importance of Steve Jobs on the American psyche. The co-founder and guiding force of Apple has died, succumbing to a long illness after only recently stepping down as chief executive. 
But his impact continues beyond his life, his business, his industry, his leadership, and his vision. One only needs to go to the Apple flagship retail store in Manhattan to feel his effect on the individual and industrial landscape. On any day of the year, the store is packed with tourists, many of whom are from other countries. In these moments, Jobs and his company personify an American cultural and business ideal of itself: “We invent these kinds of miracle things.”

Since this is the exact feeling (message, if you will) that the U.S. and global pharmaceutical industry would like to leave with the general public—as well as its traditional stakeholders of providers, payors, patients and regulators—what could pharma leadership take away from Jobs’ legacy?

Let’s start with the leader himself. Jobs’ name is listed on 313 patents. This is one of the most eye-opening points circulating around Jobs’ resignation. Can any actions (never mind words) speak louder than that in telling employees and the world how the company’s CEO views innovation? I challenge you to find it.

I realize that it can be difficult to make an apples-to-oranges comparison between the businesses of consumer technology, and that of … Next Page »

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Imagine a world where technology companies are more successful and grow faster because of the strategic help and guidance from their boards of directors. Or, at least imagine a world where they don’t suffer from unhelpful, or worse, problematic boards that consume management’s precious time. Some commentators like Steve Blank, Jeff Bussgang, Brad Feld, and Fred Wilson have suggested board meetings could be better by changing the format, process, or content.

Here’s a more fundamental recommendation: change the board.

Operational changes such as rethinking the meetings might create some temporary benefit. The company and shareholders, however, are still working with the same components. Further, in nearly any technology company, the board not only has an opportunity to change, it’s necessary.

Why take the time to address a potentially painful subject like the composition of the board of directors? Because only a small percentage of companies backed by angel investors and venture capitalists achieve success through a profitable acquisition or initial public offering. About half end in failure; others underperform initial expectations. If the board can at least not contribute to failure, or better yet, be neutral or even beneficial, we not only increase the likelihood of success for a few companies but also create a disproportionate effect on GDP because of the high economic value these companies create.

Boards not only are part of the company, but ostensibly, leadership starts at the top. The companies themselves evolve-or at least they should-and so should the board. We want technology companies that make new and innovative products and services to grow quickly, take over the world. If they aren’t achieving high growth, something is usually wrong. Whether they are growing rapidly, stagnating, or struggling, the company’s strategy, division of labor, operations, and team members change or need to change. The board should change, too, evolving in structure and skills to match the company’s situation and needs.

I was discussing this subject recently with a CEO friend, who responded, “The problem with your argument is you presume boards add any value at all. I see why investors need to look after their investments…but they shouldn’t try to do management’s job for them.” I told him I thought we were in agreement: Too many boards don’t actually add value, and their job shouldn’t be to micromanage the CEO.

(Above, a short video with additional information about building good boards.)

Good boards can help capitalize on opportunities and provide strategic perspective, complementary business development connections for management, and stability through transitions-good and bad-and have positive signaling value for other stakeholders. Further, they perform roles requiring independence from management such as serving on audit and compensation committees. But how does a company achieve a good board? First, let’s take a look at how things go wrong.

Creating and Evolving the Board: What Often Happens in Practice. When founders, CEOs, and investors create boards, they at least want an amicable board if not one that really creates benefits. Nobody starts out wanting to have a bad board, and like a lot of relationships, they tend to start out well. There’s an initial honeymoon period when the company is founded or gets its first investment. Alternatively, if boards are formed out of obligation to external stakeholders, usually investors, the selection process usually happens through the capital matchmaking process. Getting a “yes” from an investor and accepting the investment tends to be a mutual qualification process, albeit with some compromise on both sides.

Management and investors typically draw from their respective social networks to recruit board members. Doing so may create a relatively good fit, and may be necessary to persuade highly skilled and experienced people to join the board of an unproven company. However, this often creates … Next Page »

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Interesting day for a couple of companies whose names start with “Boston.” Who’s next, Boston Dynamics? Boston Harbor Cruises? Maybe the Boston Red Sox.

—Westborough, MA-based Boston-Power, a developer of advanced lithium-ion battery technology, saw three top executives leave last Friday, including CEO Keith Schmid. The news was first reported by Mass High Tech this morning. Chief financial officer Steve Byram and vice president of marketing Sally Bament have also left the company, according to the report.

Boston-Power hired Schmid as chief executive this past February, replacing founder Christina-Lampe Onnerud (an Xconomist), who took the role of executive chairman of the company.

A spokesperson for Boston-Power declined to offer any comment beyond what has been reported in area media outlets today; the accuracy of the reports was not disputed, however. Schmid, Byram, and Bament’s names still remain on the Boston-Power website as of this evening. The company is expected to announce a new financing round soon, much of which comes from Chinese investors, according to the original report.

—Natick, MA-based Boston Scientific (NYSE: BSX) has appointed Michael Mahoney, 46, as the company’s new president (as of next month) and future CEO (slated for November 1, 2012). Mahoney, formerly worldwide chairman of the medical device and diagnostics group for Johnson & Johnson, will succeed interim CEO Hank Kucheman. Just to complicate matters, Kucheman isn’t actually interim CEO yet—he’s executive vice president and group president—because current CEO Ray Elliott hasn’t stepped down yet (not until October 17).

Back in May, my colleague Luke reported that Elliott announced his resignation less than two years after he was brought in to help turn things around for the medical device company. “Investors will surely frown on the Elliott era,” Luke wrote, because of declining sales figures and stock prices.

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Some big changes are afoot at an interesting Boston-area laser startup. TeraDiode, a Littleton, MA-based maker of laser systems for cutting, welding, and defense applications, said today it has named Parviz Tayebati the company’s new CEO and board member.

Tayebati, the former chief executive of telecom laser company Azna and photonics firm CoreTek, succeeds TeraDiode’s founding CEO and investor, David Sossen. Sossen is no longer listed on the company’s website as a member of the leadership team, and the firm isn’t taking interview requests today, according to a spokesperson.

Earlier this summer, Sossen told me about TeraDiode’s history and some of its technology’s far-out applications, such as laser weapons that could be deployed on a tank or ship to disable UAVs or blow up incoming rockets. That’s still years away, though. TeraDiode’s present applications include industrial welding, military target illumination, and heat-seeking-missile deterrents.

The company’s technology, based on a technique called wavelength beam combining, was developed at MIT Lincoln Lab to make direct-diode lasers brighter, more powerful, and more focused. In 2009, TeraDiode raised $4 million in Series A financing led by Stata Venture Partners. Last month, the startup said it had secured $3.2 million in new defense-related contracts.

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The best way to get to know Dave Balter is over a beer. The founder and CEO of Boston-based marketing firm BzzAgent (now part of U.K.-based Dunnhumby/Tesco) is known for speaking his mind, but over a beer it’s even better. I’m not sure what he was drinking when he replied to my e-mail yesterday as he flew across the pond at 39,000 feet, but it appears to have loosened him up nicely.

I saw Balter speak at Angel Bootcamp in June, and his straight shooting impressed me then. Basically, he said that many entrepreneurs and execs have an inflated sense of themselves and their companies just because they’ve raised money and have had some success. Savvy investors should look for humble founders who are always learning, work harder than others, and have a fearless, grind-it-out mentality, he said. The following week, Balter came out with an article in Inc. Magazine in which he admitted his ego nearly destroyed BzzAgent; he implored entrepreneurs to stay humble, a process that he calls “the humility imperative.”

In addition to his CEO and angel investor duties, Balter is the author of two books on word-of-mouth marketing and the creator of numerous blogs, so he’s a bit of a polymath. He recently became a co-founder and executive chairman of Smarterer, another Boston tech startup. He’s also a newly minted Xconomist.

But his latest project (back to the beer now) is “DB Tech Prom,” a blow-out gala for the Boston tech community, to be held on October 20. There has been a lot of talk about creating a culture that celebrates entrepreneurship here in Boston, and this event seems to address that. At the same time, there’s no shortage of tech parties and gatherings these days, so I wondered what the real point was. Balter answered that, and much more, below.

Here are some highlights from our e-mail exchange:

Xconomy: Why is Tech Prom important for the Boston startup community, and what are its goals? If it’s about fostering a culture of celebrating entrepreneurship, how do we balance that with the humility imperative?

Dave Balter: After some very non-scientific poll-taking and survey-manipulating, we found that most individuals in Boston’s tech scene didn’t have the perfect prom experience. Some of this is of course due to intense, paralyzing high-school-nerdiness and less-than-impressive early-development social skills (see Sixteen Candles for widely referenced examples), but oh how things have changed. Now the techies have inherited celebrity status, and nerdiness…well, it’s in baby, it’s in.

This event should be a watershed moment that allows Boston to strut its stuff. And we’re not talking about flail-dancing during some Def Leppard song, but rather the celebration of how current … Next Page »

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Lots of comings and goings in the Boston technology scene in the past week. Here’s a sampling of notable high-level moves:

—Michael Simon, founder and CEO of LogMeIn (NASDAQ: LOGM), has joined the board of Cambridge, MA-based HubSpot, the marketing tech company. Simon replaces former (and longtime) HubSpot board member Gail Goodman, the CEO of Constant Contact (NASDAQ: CTCT). HubSpot chief Brian Halligan wrote in a blog post that Constant Contact’s social media tools “are starting to partially overlap with some of our stuff.” He adds that “the overlap is pretty minimal at this point and our target market is different, but it is close enough that we thought it would be prudent to part ways amicably.” (The board move has been brewing for a while, as Goodman indicated in a recent interview.)

—Ben Levitan, a former partner with In-Q-Tel (the investment arm of the CIA and other U.S. intelligence agencies), joined Waltham, MA-based IMN, an e-marketing firm, as its new CEO as of July. In an e-mail statement, Levitan said he is “excited about returning to operating and to be a CEO again,” as well as participating in the “fast growing world of marketing and customer communications.” He previously served as CEO at EnvoyWorldWide (now Varolii) and James Martin & Co. Levitan spent four-plus years with In-Q-Tel (which he could tell you more about, but then he’d have to kill you).

—Doug Levin, the Black Duck Software founder and former CEO, has joined the board of the Massachusetts Technology Development Corporation (MTDC), a Boston venture firm that’s state-owned and invests in Massachusetts companies across software, IT, digital media, health IT, and cleantech. MTDC’s portfolio includes Harvest Automation, OwnerIQ, Illume Software, uTest, Life Image, and Ze-gen. Levin, a former Microsoft exec, most recently founded Ayeah Games, a social gaming startup that closed down earlier this year.

—Daniel Matloff has joined Lexington, MA-based 1366 Technologies, the solar energy company, as its chief financial officer. Matloff was previously corporate controller for Hittite Microwave (NASDAQ: HITT), which he joined before its 2005 IPO. Before that he was with Millennium Pharmaceuticals, Thermo Fisher Scientific, and PricewaterhouseCoopers. So is 1366 looking to go public? Not just yet, especially given market conditions. But the company is looking to expand its solar-cell manufacturing business, said CEO Frank van Mierlo in a statement. So presumably it’s a good time to get its finances in order.

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When Progress Software CEO Richard Reidy told me in December about a “major transition” and a “whole new strategy” for the company, he wasn’t kidding. The transition, it turns out, involves himself.

Bedford, MA-based Progress (NASDAQ: PRGS) announced today that Reidy will leave the company once a successor is named; a search is under way. He has been CEO since March 2009 and will continue in that role (and as a board member) until his departure date. He originally joined Progress back in 1981.

Reidy (pronounced “reedy”) presided over the company’s shift from selling many different kinds of business software to focusing on helping businesses be more responsive to market events in real time and manage their transactions efficiently. Progress stock rose fairly steadily from September 2010 until February of this year; the recent trend has been downward, but with some ups.

The company “has undergone a profound and successful transformation over the past few years,” Reidy said in a statement. “We have repositioned and refocused the company in exciting new high growth areas and are executing well. New leadership will help accelerate our strategy going forward.”

We’ll update this story if we get more details about Reidy’s plans and the reasons for the move.

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It’s not every day I get to dine with the CEO of a public company worth $5 billion. Last month I sat down with Andy Ory, founder and chief exec at Bedford, MA-based Acme Packet (NASDAQ: APKT), for an in-depth chat about his company’s strategy and outlook in the area of networking technology.

The setting was The Friendly Toast in Cambridge, MA. Ory has a soft spot in his heart for the Kendall Square area—back in the late ‘80s, he worked at Boston Technology, the voice-mail pioneer whose office was next to where Friendly Toast sits today. (If you ever get a chance, ask him about the story of using the local pay phone for product testing.)

Over a BLT and huevos rancheros (if I recall correctly), we talked about everything from Ory’s startup lessons to big-company concerns and business regulations, from Microsoft’s acquisition of Skype to how Acme Packet is like Cisco back in 1993. (Ory is speaking tonight at a Boston-area event with Founder Collective’s Eric Paley; he will talk about Acme Packet’s story and his broader experiences in building companies.)

Ory is a leading light in the tech entrepreneurship scene. Before founding Acme Packet in 2000, he cut his teeth at Boston Technology and then founded Priority Call Management, which sold to LHS Group for over $160 million in 1999. Over the past decade, he and his team have built Acme Packet into a leader in session border control—technology that helps telecom network operators and big companies manage voice-over-IP (VoIP) and other communications and services over the Internet in an efficient and secure manner.

Yet things have not always been rosy for Acme Packet, which went public in 2006 and now has roughly 700 employees (about 450 in Bedford). The company’s stock fell below $4 in late 2008, before rebounding and rising strongly in the past year and a half, to around $70 in recent months. I wanted to hear about that dramatic comeback too.

Ory didn’t disappoint as either a lunch companion or an interview subject. It helps that he is a charmer and a natural-born storyteller. Consider how he explains where Acme Packet sits today:

“Imagine you were visiting a company back in 1993 called Cisco Network Systems. ‘What do you guys do?’ We make a router. You might say, ‘what’s a router?’ It’s a piece of hardware and software. The reason is enterprises are converting their infrastructure to IP [Internet protocol] because of e-mail. If enterprise A wants to send e-mail to enterprise B, they need a router between them. Well, you might say, ‘what percentage of enterprises are going to do e-mail?’ And they’d say, every single one on the planet. ‘And how many e-mail messages fill up a router?’ To figure out how many routers you’re going to sell. What was really interesting is, when you connect all these networks together, a network effect ensues. Of course I couldn’t say to you, Amazon, Yahoo, Google, Napster—I wish I could have,” Ory says.

“Now let’s fast forward 18 years and you’re visiting my company,” he says. “We make a session border controller. Enterprises and service providers are converting their service infrastructure to IP so they can do voice over IP. When they want to make a VoIP call from one enterprise to another, they need a session border controller to connect those two enterprises. So you’d say, ‘what percentage of enterprises and service providers are going to do VoIP?’ And of course my answer is, every single one. … Next Page »

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Slackers hate it. Go-getters love it. And store owners and managers? Well, so far they seem to be buying it. I’m talking about Objective Logistics, a New Bedford, MA-based software startup that’s looking to transform work environments, starting with restaurants and retail stores.

“It’s polarizing as hell,” says CEO and co-founder Phil Beauregard.

If you believe controversial companies are good, you’ve come to the right place. Objective Logistics has created a Facebook-like interface that accesses the point-of-sale database of a given store, ranks the performance of waiters and salespeople compared to their peers, and rewards high achievers with perks like getting to choose their own work schedules. In certain establishments, that can mean an extra $1,000 in tips for working a busy Saturday instead of a slow weekday, for instance.

“We’re kind of ‘gamifying’ the labor market,” Beauregard says. “The real vision is, if I can rank productivity through technology, I can reward you and compel you to perform better.” He adds that his company is about “objective transparency through technology.”

And despite its clunky name, Objective Logistics has been attracting lots of buzz among venture capitalists—and customers—this year. The five-person company’s software was first deployed last month at Not Your Average Joe’s (it’s slated to go live in 15 of those restaurants), with several other local stores and major chains also at various stages of adoption. Objective Logistics has raised $750,000 in seed-stage funding from angel investors including Richard Darer, Greg Pesik, Serguei Netessine, Nigel Machin, and other Boston-area investors. The company might look to close a VC round in the next few months, Beauregard says.

Beauregard, who turns 30 next week, is a former investment banker who started Objective Logistics in early 2009. His partners in crime include co-founder Matt Grace, who was reputed to be the youngest product management director in Oracle’s history, and engineering vice president Dan Velcea, a 3Com and Credit Suisse veteran and a Romanian native who, in 1986, dropped his army-duty AK-47 … Next Page »

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