Boston startups should be focusing more on creating strategic partnerships with big companies.

An “if we build it, they will come” mindset appears to dominate the Boston startup scene. Too many startups also rely mostly on a pricing and plans revenue model combined with implementing the latest inside sales and marketing 2.0 tools to “get found” while driving demand. A complementary and proactive approach in targeting big companies for strategic partnerships is needed.

Wake up… Most big companies have realized that their current set of technology providers lack the innovation and speed to deliver new competitive solutions. There are new sets of problems that need to be solved that may not have existed even a few years ago. As a result, new innovation programs and budgets have been established, led by senior executives. Their motivation is to fund pilots with emerging technology providers that most times lead to a much larger transaction and partnership strategy. Interesting areas include mobility, social, analytics, and cloud computing.

Take advantage of these customer-funded opportunities as these dollars may also complement your angel and VC funding efforts. Plus, for those leveraging lean startup principles, incorporating a big company “voice” to validate your product development roadmap may commit them to buy additional products and enhancements in the future.

If big companies are approached correctly, senior executives leading innovation programs will make swift decisions. Unfortunately, there are major challenges I see within the startup community to take advantage of these budgets. These include:

• Little focus on proactively targeting big companies. Also, the startup team and their mentors may not possess the sales skills or experience to effectively connect with and relate to big-company senior executives.

• Boston startups are too focused on the product and technology. Big companies are also evaluating their ability to work and collaborate with the startup team. Chemistry is important to these executives.

• You are not the center of the universe. There may be additional value in extending and leveraging existing ecosystem investments.

What I am describing here is not an outdated sales process where the cost to acquire a customer is high and the sales cycles are very long.

Keep in mind that big companies would rather … Next Page »

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“Money is money, anyone can do that,” says Brian Zimmerman, managing director of Boston-based OpenView Venture Partners.

Go on.

“We have this idea of providing real value to our portfolio companies. If we’re going to call ourselves partners, we really need to be partners.” he says. Plenty of venture capitalists say they like to take that partner approach to their investments. But OpenView is backing that statement up with staff and infrastructure dedicated to sales growth and more.

That comes in the form of what the venture firm calls OpenView Labs. At first mention, OpenView Labs sounds like it would be the name for an incubator arm at the firm. But, as my colleague Greg has written, OpenView brands itself as an “expansion-stage” venture firm, eyeing investments in the more complex business-to-business and cloud computing software spaces. Its target companies already have annual sales between $2 million and $20 million, so, no, its Labs aren’t about helping young mobile or consumer software startups develop their technology or roll out a beta version of their product. Instead the unit is focused on helping its startups tackle the more grown up challenges of recruiting and hiring talent, identifying key markets, and generating sales leads.

To that end, the company has four full-time recruiters, who have filled about 100 jobs across OpenView’s portfolio companies in the last few years, says Zimmerman, who oversees the Labs operation. The goal is to fill another 200 this year.

We said the OpenView Labs is past helping startups toy with their technology. But sales and marketing strategy are another story. Startups at the expansion stage need to work in refining exactly which market their targeting as their customer base, says Zimmerman.

“They’ll say, ‘we sell to small businesses.’ That’s not enough,” he says. So Labs has an entire research and analytics team focused honing and refining exactly which sub-markets and customer segments portfolio companies should be targeting. It starts with Internet research and goes all the way through calling and surveying customers in the potential markets, says Zimmerman.

Once the Labs gets the companies primed with staff and a market to go after, it helps them build their marketing message around those customers, and then find specific sales leads. That third component is what Zimmerman calls the Labs’ “go-to-market” team.

Zimmerman puts companies in three categories: startup (figuring out the technology and idea), expansion (building revenue and refining a target market), and growth (preparing for an exit). “We’re focused on everything it takes for … Next Page »

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What exactly is MedicalRecords.com? A health database? A doctors’ community? An encyclopedia site? Not exactly. It’s a lead generation startup for the electronic medical records sector. Sound boring or cryptic? Here’s why it’s not.

The U.S. government set aside about $27 billion through 2009′s American Recovery and Reinvestment Act to incentivize doctors to move patient medical records to an electronic system. There are about 750,000 doctors, dentists, and chiropractors who qualify for the money, and only 20 percent of the market has adopted electronic medical records (EMR). To top it off, it can be a confusing space: there are about 400 different EMR software makers, many with similar sounding names, says MedicalRecords.com founder Durjoy “Ace” Bhattacharjya.

The startup, which works out of Avalon Ventures’ office in Cambridge, MA, has developed a platform for connecting doctors with EMR providers in a meaningful way. MedicalRecords built a database of all the companies in the sector from the ground up, says Bhattacharjya. On MedicalRecords.com, doctors fill out some information on their practice and what kind of technology they’re looking for, and MedicalRecords.com’s engine finds a few EMR software makers that fit. MedicalRecords.com calls the doctor’s offices to confirm their identities and what it is they’re looking for, and then sells that doctor’s contact information as a sales lead to the software makers.

It’s a pricier sales lead, at $150 to $300 apiece, than what you might see in other software niches, says Bhattacharjya. But “nobody’s figured out how to solve this problem [of selling the software to doctors],” he says. “Some of these guys are GE, and they still can’t figure out how to get a doctor to buy their stuff.” They’re willing to pay to get in front of doctors who have actually started the shopping process, says Bhattacharjya.

Doctors aren’t exactly known for being an early-adopter, tech-savvy population, says Bhattacharjya. (He would know; he comes from a family of them.) Many are reluctant to take their records digital because they’ve gone on for decades with the paper format, says Bhattacharjya. But the incentives are there: the $27 billion in federal funding breaks down to about $44,000 for each practice that has implemented and used the software in patient care—and starting in 2015, the government will dock the Medicare and Medicaid reimbursements of those who haven’t made the switch.

MedicalRecords.com is looking to become a comprehensive, unbiased electronic medical records database, and to … Next Page »

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From Phil Fernandez’s point of view, there’s a precise moment in the sales process when a potential buyer is ready to be contacted by a seller. Reach out too soon, and they’ll be annoyed or spooked. Contact them too late, and they may have moved on to another vendor.

In the old days, human salespeople chose that magic moment—picture the car salesman standing in his office at the dealership, watching out the window as consumers wander the lot and calculating which ones are ready to buy and which ones are just tire kickers. Today, though, companies should “let the buyer control the dialog,” Fernandez argues. What’s more, he says they should let software pick the moment of outreach.

That’s basically what technology from Marketo, the San Mateo, CA, startup where Fernandez is co-founder and CEO, is designed to do. The cloud-based system monitors and scores a prospective customer’s every interaction with a company, down to the Web pages they visit and the e-mails they open. When its mathematical models say the prospect is ripest, the system prompts human salespeople to follow up with a phone call or meeting.

There’s no more role today for the hard-driving, Glengarry Glen Ross-style salesperson who goes on instinct alone, Fernandez says. In fact, he says, that kind of hucksterism could only persist as long as there was no data to show how dysfunctional it was. “The notion of a salesperson as a lone wolf is totally dead and obsolete,” he says. If companies retired their old-school salesmen and broadly adopted technologies like Marketo’s, he argues, it could add $2.5 trillion to the world economy every year.

Marketo CEO Phil Fernandez

That’s an extreme claim—but then again, companies convinced by Fernandez’s message are adopting Marketo’s technology at an extreme rate. The startup’s revenues grew by 1,486 percent between 2007 and 2010, making it the fastest-growing private company in Silicon Valley, according to a list published last month by the Silicon Valley Business Journal. More than half of the 220-employee startup’s $57 million in venture funding is still sitting in the bank, Fernandez says. The company has been able to fund most of its growth from its revenue, which will be between $30 million and $40 million this year.

Marketo’s technology is totally separate from salesforce automation or customer relationship management software like Salesforce.com or SugarCRM, although it communicates with those systems. This is about marketing automation: tracking every interaction between a company and a potential customer, and figuring out how to increase the chances that a prospect who enters one end of the marketing funnel comes out the other end as a buyer.

Marketing technology may not be as sexy as mobile app development or as socially enlightened as e-waste recycling or crowdfunding—but it’s an area that has attracted some serious investment over the last few years. Google Ventures and Sequioa Capital, for example, recently put $32 million into Hubspot, which Fernandez calls Marketo’s “East Coast doppelganger” (though it mostly serves smaller companies). And there are some serious brainiacs involved too—Marketo’s chief scientist Yan Zou is a Stanford statistics and machine-learning PhD who used to build financial models for the hedge fund industry.

Marketing automation has been both enabled by and necessitated by the rise of the Web and social media, in Fernandez’s view. “Prior to the mid-2000s, the seller had some degree of power, which was that they controlled information,” he says. “As a result the ability of the seller to control the dialog was very strong. The explosive shift to the Web and now social media has … Next Page »

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The San Diego-based Active Network today named former Monster Worldwide executive and chief information officer Darko Dejanovic as its chief technology, product, and innovation officer, a newly created role.

At Monster Worldwide, parent of the online employment giant Monster.com, Dejanovic was responsible for global IT strategy, product design, online marketing, consumer sales, and operations and development. He is expected to play a similar role at the Active Network, an Internet and online media company that automates online registrations for sporting, recreational, camping, and other activities.

An Active Network spokeswoman says Dejanovic’s background was particularly compelling because Monster, like the Active Network, focuses on both organizations and consumers, and has reached a revenue run-rate of over $1 billion.

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When I was in my 20s, I was taught the relationship between marketing and sales over a bonfire.

—

Over 30 years ago, before the arrival of the personal computer, there were desktop computers called office workstations. Designed around the first generation of microprocessors, these computers ran business applications like word processing, spreadsheets, and accounting. They were an improvement over the dumb terminals hanging off of mainframes and minicomputers, but ran proprietary operating systems and software. My third startup, Convergent Technologies, was in the business of making these workstations.

The OEM Business

Convergent’s computers were bought and then resold by other computer manufacturers – all of them long gone: Burroughs, Prime, Monroe Data Systems, ADP, Mohawk, Gould, NCR, 4-Phase, AT&T. Convergent had assembled a stellar team with founders from Digital Equipment Corporation and Intel and engineers from Xerox PARC. And once we went public, we hired a veteran VP of Sales from Honeywell.

As the company’s revenues skyrocketed, Convergent started a new division to make a multi-processor Unix-based mini-computer. I had joined the company as the product marketing manager and now found myself as the VP of marketing for this new division. We were a startup inside a $200 million company. A marketer for 5 years, I thought I knew everything and proceeded to write the data sheets for our new computer.

Since this new computer was very complicated—it was a pioneer in multi-processing– I concluded it needed an equally detailed data sheet. In fact, when I was done, the datasheet describing our new computer, proudly called the MegaFrame, was 16 pages long. I fact-checked the datasheet with my boss (who would be my co-founder at Epiphany) and the rest of the engineering team. We all agreed it was perfect. We’d left no stone unturned in answering every possible question anyone could ever have about our system. As we typically did, I printed up several thousand to send out to the sales force.

The day the datasheets came back from the printers, I sent the boxes to the sales department in Convergent’s corporate headquarters, a separate building across the highway, and sent a copy to our CEO and the new VP of Sales. (I was thinking it was such a masterpiece I might get an “attaboy” or at least a “wow, thanks for doing all the hard work for our sales organization.”)

So when I got a call from the VP of sales who said, “Steve, just read your new datasheet. Why don’t you come over to corporate. We have a surprise for you,” I smugly thought, “They probably thought it was so good, I’m going to get a thank you or an award or maybe even a bonus.”

Fahrenheit 451

I got in my car to make the five minute drive over the freeway. Turning into the parking lot, I noticed smoke coming from the far end of the lawn. As I parked and walked closer I noticed a crowd of people around what seemed to be an impromptu campfire. “What the heck??” As an ex sales and marketing VP, our CEO had a Silicon Valley reputation for … Next Page »

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Cambridge, MA-based Yesware kicked off late last year with the aim of building an entirely new e-mail system, one that would help salespeople close their deals and help enterprises actually understand their sales forces, says CEO and founder Matthew Bellows. It even raised $1 million on this premise. Then the company’s board spoke up. You see some of its investors knew the whole e-mail space pretty well, and told Yesware not to reinvent the wheel.

So Yesware scratched its plans for an e-mail reboot, and drew up new ones for a sales interface that would work with existing e-mail systems. Late last month the startup, which works out of Dogpatch Labs, opened up its beta version of an e-mail plug-in that offers customizable templates for salespeople. The objectives are still the same. At the individual user level, “we are down in the trenches with the salesperson trying to help them close that business,” says Bellows. And at the organizational level, “it extracts data that their enterprise needs from their activity, to learn from what they do and report on that.”

There are plenty of companies whose business is to generate and qualify sales leads (think Eloqua and HubSpot), and others aimed at managing sales account information (Salesforce), but few that provide tools for actually making the sale, Bellows says.

Yesware’s plug-in offers pre-set e-mail forms to help salespeople first connect with customers, and also to help them once they start getting objections from the customers they’re chasing. Say a salesperson keeps hearing from potential customers that the product costs too much, or that it can’t stack up to an existing offering from a big-name competitor. He or she can pull the appropriately template from Yesware addressing that concern.

“It’s a templates-on-steroids kind of thing,” Bellows says. “We help the salesperson with the right answers at their fingertips.”

The Yesware plug-in also has a button for automatically copying e-mails to a salesperson’s account on the customer relationship management system Salesforce. “It’s a very low cost way of having salesperson update Salesforce,” Bellows says.

Those updates are key to Yesware’s bigger mission of helping sales managers better track the work of their sales force—by actually looking at their communications with customers, rather than relying on the relatively cryptic notes salespeople often type into CRM systems, Bellows says.

“What a salesperson does from an action standpoint is going to be much more helpful than what they say that do,” says Bellows, who saw the frequent disconnect between the two firsthand while managing sales at companies like Vivox, Floodgate Entertainment, and WGR Media, the gaming media startup he sold to CNET in 2004. What’s more, “if we … Next Page »

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[Updated 4:45 pm to correct headline, copy reflecting Trinity as lead investor. Previous information provided by company spokesperson was incorrect.] Well, that was quick. Act-On Software, a Beaverton, OR-based online marketing company, has raised a $10 million financing round led by Trinity Ventures at what founder and CEO Raghu Raghavan calls “a substantial step up in valuation,” to about $40 million.

Act-On just raised a $4 million Series B round last November, co-led by Seattle’s Voyager Capital and Silicon Valley-based U.S. Venture Partners. Those two firms participated in the Series C round announced today.

Act-On makes marketing and sales software for e-mail, Web, and social media campaigns. Its clients include Cisco Systems, Progressive Insurance, Motorola and IBM. (Cisco also is an investor.) The company is “predicting close to 300% growth in 2011″ based on its first-quarter revenue, according to today’s news release.

Raghavan told Xconomy that Act-On actually wasn’t out looking for more money, but got enough inquiries from investors that the board decided to start briefing some of them on its progress. That led to multiple term sheets in the span of about a month, and “there was a feeding frenzy at the end,” Raghavan said.

“We didn’t need the money for operations,” he said. “I think it was just a case of us being able to speed things up dramatically.” Specifically, the company’s release said the money will go toward expanding marketing efforts, along with global sales and service teams. Act-On opened a European sales operation last month, partnering with Pipedream Marketing.

Raghavan was previously chief technology officer and co-founder of digital marketing firm Responsys. That company moved to California, but Raghavan stayed in Oregon and started Act-On. As he told The Oregonian’s Mike Rogoway last year, “It’s ridiculous to think you can’t succeed in Oregon.”

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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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Harvard University announced today that Gordon Jones will be the inaugural director of the Harvard Innovation Lab, a $20 million community center for entrepreneurship that’s slated to open this fall at WGBH-TV’s former offices in Allston. The goal of the lab is to foster startups and interactions among students, faculty, entrepreneurs, and the local community. Jones was previously a marketing and sales executive with Universal Pest Solutions, American Biophysics, and Gillette, and has worked with Harvard Business School’s admissions office. He also serves as a business advisor to a number of startups. He officially starts on May 9.

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San Francisco-based InsideView, which helps companies gather sales intelligence from social media channels and other sources, said today that it has raised $12 million in Series C Funding from Foundation Capital, Emergence Capital Partners, Rembrandt Venture Partners, and Greenhouse Capital Partners. In a blog post, the company said it will use the new funds to expand distribution partnerships and invest in market education programs such as its Social Selling University program for sales professionals.

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A rehab-robotics startup out of MIT is getting a second lease on life. And if the company succeeds in reaching the masses with its latest effort, a lot of stroke patients might just feel the same way.

Myomo, a Cambridge, MA-based rehabilitation and medical tech firm, announced this week it has rolled out version 2.0 of its powered robotic elbow brace that helps people with neurological impairments move their arms. The idea is simple, and it seems to work: stroke patients can wear the sleeve-like device to regain some range of movement and to strengthen their muscles over time. The technology works by picking up electrical signals on the skin when a patient is trying to move a partially paralyzed limb; the robotic system then provides a small amount of force to help the person extend or bend their elbow, to do things like pick up a plate or hold onto a walker. (More on what’s new with the system below.)

This is a classic story of a new technology that has been hard to sell—and the ups and downs of a young company that has taken its lumps but has lived to fight another day. Xconomy first wrote about Myomo in 2007, when the startup received FDA approval to market its first product, and again in 2009, when the firm pulled back and focused on research and development after slow sales. Myomo went down to four employees at the end of 2008, but is now back up to 12 full-timers.

“This is the path of perseverance,” says Myomo CEO and co-founder Steve Kelly. “We’re on track to ship more units this year than in the entire history of the company.”

Why should Myomo fare any better this time around? Let’s start with the latest incarnation of its product. Kelly and executive vice president Ela Lewis say the previous version was more of a “clinical product,” whereas the new version is more of a true “assistive device” that patients can use at home. The current product is streamlined and more portable. It has two electrode sensors (for biceps and triceps) instead of one. It includes wireless networking that connects to a mobile phone via an Android app that lets patients track their progress—range of motion, how many movements they’ve done, and so on. And it will include a structured program for clinical and home use, complete with video-game mechanics … Next Page »

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Redwood City, CA-based ConnectAndSell, which helps automate the placing of live telephone sales calls, said today that it has collected $7.5 million in Series C funding. Institutional Venture Partners led the round, and IVP general partner Steve Harrick has joined ConnectAndSell’s board. Mike Maples, managing director of the startup’s original seed investor Floodgate Fund, has also joined the board.

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In the Wild West of group-buying and daily-deals sites, there’s about to be a major showdown. Investors have been talking about consolidation in this sector for a while now—and it looks like that’s where things are headed.

But not without a few curveballs first. Last week, Google (NASDAQ: GOOG) was widely reported to be pursuing an acquisition of Chicago-based Groupon for a whopping $5-6 billion. Now it looks like the deal is off, with Groupon walking away from the offer on Friday—and perhaps looking to go public in the next year or two. Meanwhile, Amazon.com (NASDAQ: AMZN) has invested $175 million in Washington DC-based LivingSocial, which is currently No. 2 in daily deals behind Groupon, and is rumored to be worth around $1 billion.

Investors with skin in the game are keeping a straight face about these valuations. But investors and analysts not involved in group-buying companies have been much more cautious; some I’ve talked to have dismissed the industry as unsustainable (too much money for too small a market long-term) and indefensible (no real barriers to entry for new players). On this latter point, dozens if not hundreds of Groupon clones have sprung up around the world, though none yet has the scale or reach of Groupon.

What’s undeniable is that the big tech companies were caught by surprise when group buying took off—and now they have to do something about it. It’s the latest reminder that just when the Internet landscape looks like it’s settling into a predictable pattern—Google owns search, Amazon owns online retail, Facebook owns social networks—a startup can come out of nowhere and turn the whole thing on its head. (Groupon has gone from zero to $500 million-plus revenue and 3,000 employees in just two years.) It remains to be seen what Facebook, Microsoft (Bing), eBay, Yahoo, and AOL each will pursue in this sector, but it should be interesting.

I reached out to a couple of group-buying startups with strong ties to Xconomy cities to hear their thoughts on the recent developments. One theme that emerged is that the online technology giants really need feet on the street to cash in on local advertising—smaller stores and merchants trying to reach customers in Boston, say—and that they want to get into the game for different reasons. But it won’t be easy, partly because there’s a cultural mismatch between tech companies like Google and consumer-brand companies like Groupon.

The Groupon negotiation “shows Google’s desperation or belief that this daily … Next Page »

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OK, it sounds like the press has this “Harmonix for sale” thing mostly wrong. At least in terms of what it means for the Cambridge, MA-based company, and the future of its business. Earlier this month, New York-based Viacom (NYSE: VIA) announced it has put Harmonix up for sale after losing money on the business for the past few quarters. Viacom said it is in discussions with several potential buyers and will keep supporting the business until a sale is completed.

Harmonix was quick to post on its gaming forums that the news doesn’t affect the ongoing support of its Rock Band and Dance Central franchises in any way. Reached by e-mail, Alex Rigopulos, the co-founder and CEO of Harmonix, declined to comment on Viacom’s announcement or its significance to the company. Rigopulos had granted me an interview back in September in which he talked about the future of the business more generally. (He didn’t say anything about it being for sale.)

But people outside the company are talking, and an interesting picture has emerged. Several sources, who asked not to be named, say Harmonix and Viacom were a poor match in terms of their business models and capabilities. More specifically, it’s well established that Viacom did not have the expertise to make money from Harmonix’s games. So, while most of the press has harped on the fact that sales of music games have slumped in the past two years—definitely part of what’s behind Viacom’s decision—it’s clear that Harmonix should be able to find an owner that’s a much better fit. What that means for any future success remains to be seen, however.

“There are very few [game] developers that can consistently generate 90-plus Metacritic-scored games. That is incredibly rare, and that means they’re very valuable,” says Nabeel Hyatt, founder of Cambridge, MA-based Conduit Labs, now part of gaming giant Zynga. “Those developers will always have a buyer.”

Some quick background: Harmonix was founded in 1995 by Rigopulos and Eran Egozy, both MIT Media Lab alums. The music gaming company toiled in relative obscurity until its breakout hits Guitar Hero, Guitar Hero II, and Rock Band. In 2006, MTV Networks, part of Viacom, paid $175 million to acquire Harmonix. At the time, it seemed like a good fit; MTV is all about music, and so is Harmonix. [Disclosure: I'm in a band with one current employee and one former employee of Harmonix. The band, Honest Bob & the Factory-to-Dealer Incentives, has songs in Harmonix games.]

At its core, though, this is an acquisition that didn’t work out. Philippe Dauman, CEO of Viacom, spelled out the problem in his remarks last week. “For us, it is about focus,” he said. “The console games business requires an expertise and scale that we don’t have.” In other words, Viacom is a … Next Page »

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EMC, the data storage giant, has lots of irons in the fire when it comes to innovation. The Hopkinton, MA-based firm (NYSE: EMC) pursues an interesting mix of acquisitions and “organic” in-house research and development.

A few weeks ago, I spoke with EMC’s chief technology officer, Jeff Nick, about the company’s broader innovation strategy—which can be a tough thing for an outsider to grasp, especially when you’re talking about a 45,000-person company. But one big piece of EMC’s approach is to acquire other companies in strategic market positions. So I wanted to drill down into the firm’s specific approach when it comes to these mergers and acquisitions.

One potentially huge deal has been widely rumored for the past month: the prospect of EMC acquiring Seattle-based Isilon Systems (NASDAQ: ISLN). A report in the Wall Street Journal late last week said EMC “has cooled its interest” in Isilon, but that an agreement is still possible. It sounds like Isilon’s high stock value ($27.95 at Friday’s close) has driven up its asking price (rumored to be over $2 billion). The companies aren’t talking publicly about any such deal, of course, but outside sources tell me it is still likely to happen, because Isilon’s technology fills an important hole for EMC (networked-attached storage) in its competition with other storage companies like Silicon Valley-based NetApp (NASDAQ: NTAP).

EMC wouldn’t make any specific comments about Isilon, but the firm did speak with me about its M&A strategy more broadly—and about its acquisition of Santa Clara, CA-based Data Domain last year, which also went for $2 billion. “EMC has a long acquisition history and track record,” says Matt Olton, vice president of corporate development at EMC. “We’ve learned our lessons about what works and what creates more challenges.”

A caveat: EMC is “often viewed as a very acquisitive company,” Olton says, “but you’ll see investments in R&D equivalent to our acquisition spend.” Not many tech companies can focus on both internally and externally driven innovation on a large scale, says Olton, an 11-year veteran of the firm who works with a core team of about a dozen members, plus a much larger virtual team that cuts across all business functions.

To help frame EMC’s approach, Olton says any successful M&A practice boils down to five points:

—A core strategy that works. It doesn’t have to be the best strategy in the world, so long as it can be executed, he says. (I took this to mean everyone needs to be on the same page, even if it’s not the perfect page.)

—Evaluation discipline. This means having the patience to pursue fewer transactions, … Next Page »

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The MassChallenge global startup competition is in full swing. The 110 chosen companies have been pitching their wares over the past few days, trying to make the cut down to the 26 or so that will advance to the next round and compete for a piece of the $1 million prize.

Architexa, a three-year-old company led by ex-Microsoftie and MIT alum Vineet Sinha, was slated to present yesterday at the competition. I caught up with Sinha beforehand to get a quick snapshot of his company and its progress through the program. Architexa’s story is not necessarily representative of all MassChallenge entrants, but it provides a window into the proceedings—and a look at how much work goes into a company before it even enters such a competition.

First, some background. In the early 2000s, Sinha was working at Microsoft and wishing he had better software design tools—better than IBM Rational software, at least, which has become the industry standard but which Sinha says can be “useless” for developers. He decided to work on building better software tools by going back to school as a PhD student in MIT’s Computer Science and Artificial Intelligence Lab. By 2008, he had graduated and also had been a semifinalist in the MIT $100K business plan competition. Over the next couple of years, he and a small team bootstrapped Architexa, did consulting work, and built out their product using technology based on his PhD research. The product has been commercially available for just over three months now.

I won’t get into the technical details, but basically the tool gives developers a new way of “understanding” how software works at a deep level, instead of being focused on code generation and design, Sinha says. It’s all part of the burgeoning field of “unified modeling language,” which is a method developers use to visualize and construct code using diagrams and other tools for managing complexity. The sector took off with IBM’s purchase of Rational Software in 2003 for $2.1 billion, and Borland’s acquisition of TogetherSoft in 2002 for $185 million. But, according to Sinha, there’s still plenty of room for innovation.

Architexa currently has four employees. Sinha says it has been getting a lot of interest from big companies—Disney, Google, Motorola, and VMware are some of the ones trying out Architexa’s software. He says the product has more than 900 users, but wouldn’t say who’s actually paying for it yet. The company’s revenue model is subscription-based, which is different from competing software products that have perpetual licenses. “We want to make sure the developer benefits on a day-to-day basis” and therefore will renew his or her subscription regularly, Sinha says.

A key benefit of participating in MassChallenge has been the mentorship, Sinha says. “It’s been great to get feedback to refine our pitch,” he says. The kinds of lessons that have helped most: branding, intellectual property, customer development, and, more generally, being inspired. Mentors like James Woodward, Alec Karys, and Michael Shumann have helped Architexa with its priorities and timing—things like “you’re not ready at this time for this, focus on these other things,” Sinha says—as well as understanding customers and sales channels.

It’s still early days for Architexa. The company doesn’t need venture capital yet, for instance. As it heads down the home stretch in the startup competition, what it needs is to gain traction, and to raise a little bit of money so it can afford to hire experienced sales and marketing people.

“We’re trying to do it slowly and carefully,” Sinha says. “We’re working hard, we’re building a company, and we’ve made a huge amount of progress.”

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Nathaniel Borenstein is a man you either love or hate. Or both. There’s nothing in between. If you have more than 24,000 unread e-mails in your inbox, like I do, you curse the day he was born, even if you enjoy being able to communicate with friends and business contacts in real-time, for free.

Borenstein is one of the fathers of modern e-mail systems. Currently based in remote northern Michigan, about a three-and-a-half hour drive from Detroit, he is an original designer of MIME (Multipurpose Internet Mail Extensions), the standard protocol for Internet e-mail that supports different kinds of character sets, non-text attachments, header information, and other crucial (if boring-sounding) features. As of three months ago, he is also chief scientist at Mimecast, a U.K.-based company that is making waves in the U.S.—and has been expanding its presence in the Boston area.

Mimecast makes e-mail management software, primarily for mid-market and medium-size corporations. The goal of the software is to make e-mail systems and archives easier to manage, more efficient, and more secure. It also lets you do things like track detailed information about e-mails across different networks and nodes, so customers have a clear record of when a given message was sent, and exactly where it was received.

The company was formed in 2003 by a pair of South Africans, Peter Bauer (the firm’s chief executive) and Neil Murray (chief technology officer). They first introduced their product in the U.K. in 2004 and set up headquarters in London. In 2008, Mimecast came to North America with a very small team that has grown to about 50 people, including a growing office in Waltham, MA. The firm has 220 employees worldwide.

Mimecast says it has some 3,500 corporate customers, amounting to 700,000 users and about 11 million mailboxes. “We’ve grown pretty substantially,” says Mary Kay Roberto, the company’s senior vice president and general manager in North America. “Last year we doubled the business, and we’ll probably grow by 70 to 80 percent this fiscal year.”

Borenstein, 53, is key to the company’s growth strategy. At Mimecast, his domain includes intellectual property management, e-mail standards work, and research and development. He was previously an IBM Distinguished Engineer, a faculty member at the University of Michigan and Carnegie Mellon University, and a founder of First Virtual Holdings (an online payment system acquired by DoubleClick) and NetPOS (an Ann Arbor, MI-based e-commerce startup).

“It takes a lot of discipline for a company of this size to do anything but the short term,” Borenstein says. “I’m trying hard to put half the time into seeing where we can go. This is the right place to … Next Page »

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TimeTrade, an appointment scheduling software company in Tewksbury, MA, said today it has closed a $5.6 million Series D financing round led by Ascent Venture Partners. CommonAngels and other existing investors also participated in the round, which includes $1.7 million in convertible notes issued in December 2009. TimeTrade said it will use the money to expand its product line and to build out its sales and marketing teams and programs.

The company makes online business software for scheduling appointments. Its product is geared toward sales, marketing, and customer-support teams and uses a software-as-a-service model. The technology integrates with Salesforce.com, as well as Outlook, Google Calendar, and other related applications.

TimeTrade started in 2000, and is led by CEO Ed Mallen, a veteran of IBM, Xerox, and Xionics. It has raised a total of $17.9 million and has about 1,000 customers worldwide, including Best Buy, Coldwell Banker, Charles Schwab, Sears, J.C. Penney, Sprint, Mayo Clinic, Yale University, and the U.S. Department of Homeland Security.

“I was pleased that we were able to raise substantially more than we targeted,” Mallen said in a statement. “This financing round solidly reflects the continued confidence and support of our investors and their belief in the growing role online appointment scheduling will play as a central element in the fabric of the Social Web and the increasing importance of online connections to how companies do business with other companies and with consumers.”

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Seattle-based Verdiem is announcing today a new partnership with San Jose, CA-based Cisco Systems (NASDAQ: CSCO). Under the terms of the agreement, Cisco will market and sell Verdiem’s energy management software for PCs and networked devices under Cisco’s “EnergyWise Orchestrator” brand, through its worldwide distribution network. Financial details weren’t given, but it’s an original equipment manufacturing deal, so Verdiem’s software will be built into Cisco’s products—which could make it a very promising sales strategy for Verdiem.

Verdiem makes software to help big companies, government agencies, and universities control and manage energy usage by PCs on their network. The software includes features like automatically turning off computers when they’re not in use, and turning them back on when they need to install software updates. It also includes sophisticated dashboards for monitoring energy use. The partnership with Cisco extends Verdiem’s reach to other networked devices such as Cisco IP phones, wireless access points, and edge switches.

“Extending the capabilities of Verdiem’s enterprise platform for PC power management, Cisco and Verdiem are delivering to market the first energy management solution for PCs and networked devices,” said Jeremy Jaech, Verdiem’s CEO, in a statement. Jaech added that the agreement will give businesses and organizations “a trusted, holistic solution to measure, manage and monitor both their energy consumption and carbon footprint.”

Verdiem was founded in 2001 and is venture backed by Kleiner Perkins Caufield & Byers and NCD Investors, among others. Jaech, the co-founder of Aldus, Visio, and Trumba, joined the company in late 2008. Last summer, Verdiem said more than 300 corporations, government agencies, and universities had used its software, and had slashed their PC energy costs by 30 to 60 percent.

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