Time for an update on Boston’s marketing tech cluster. It’s one of the real strengths of the local entrepreneurial ecosystem. And it looks like it’s getting stronger, with a couple of leaders making news this week. Here is a tale of two companies that have become competitors:

—Constant Contact (NASDAQ: CTCT), the Waltham, MA-based online marketing firm, has seen its stock price jump nearly 30 percent—from about $24 to just over $30—since Facebook filed for its IPO last week (coincidence?). Constant Contact has been positioning itself as a leader in digital marketing for small businesses across e-mail, social media, and Web platforms—especially social campaigns. The company also released some promising stats on its revenues and profits for 2011 and its most recent quarter.

—HubSpot, the Cambridge, MA-based marketing tech firm, said it has hired J.D. Sherman, Akamai’s former chief financial officer (also a former IBM exec). The company says Sherman is being brought in partly to help it prepare for a future IPO. HubSpot has been hiring aggressively and working on new products, while it pares away others (like Oneforty.com, which it acquired last summer). It remains to be seen whether the company will actually make it to an IPO before getting snapped up by Salesforce.com or some other suitor.

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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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Don’t know about you, but I’m less interested in Facebook’s IPO than I am in the efforts of people trying to find the next Facebook out of Boston/Cambridge. One such effort is the new Experiment Fund, based at Harvard University, which I wrote about earlier this week.

Turns out there’s more to the latest seed-stage fund in Boston than initially meets the eye. I had a chance to speak with the Experiment Fund’s co-founders, Hugo Van Vuuren of Harvard and Patrick Chung, a partner at Silicon Valley-based New Enterprise Associates (not that Patrick Chung, that Patrick Chung).

They clarified the goals of the new fund and provided some more context around how it plans to distinguish itself from other similar efforts. I’ve also talked with a number of other early-stage investors around town and have gotten a better sense of how the Experiment Fund is being received locally (more on that below).

First, some mechanics of the fund, which has been in the works for about two years. Harvard has no financial stake and will have no say in the fund’s investment decisions, but it has provided support and office space, Van Vuuren says. He declined to specify the projected size of the fund, but he said it plans to make four to six new investments over the next two years, each in roughly the $100,000 to $250,000 range.

The Experiment Fund has already invested in four companies: Rock Health (see my colleague Wade’s stories here and here), Omada Health, Punch Media, and Tivli. Interestingly, only Tivli is based in the Boston area. Rock Health and Omada are in San Francisco, and Punch Media is in the DC area. They all were started by Harvard students—the key ingredient for now—but the fund intends to invest in teams from other schools around Boston and the East Coast, as well. So I’m guessing its next four investments will be pretty different from its first four, at least geographically.

“We want to meet them here,” Chung says. “We want to help you right here in Boston where the ideas were first born, where the team was put together.”

One issue they wanted to address was the notion that the fund is … 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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Now that it’s got a very Apple-like system in place—tablet computer paired with digital media—Amazon.com appears to be cranking up the volume on its online music service as well.

The San Francisco office of Amazon’s a2z research and development subsidiary is chock full of job ads for people to work on the Amazon MP3 store and Cloud Player, the e-commerce giant’s challenger to Apple’s long-dominant iTunes music platform. The company says it’s looking to “rapidly grow this team,” and the 21 job ads listed paint a picture of that growth.

Amazon’s looking for a lot of different skills. The company’s got ads for developers and engineers to tackle both the front-end software and mid-level networking systems. It wants designers to help polish the user interface, engineers to specifically take on overseas products, and program managers to oversee things. And, of course, mobile developers with experience in both Android and Apple’s iOS—a system that doesn’t currently have a native Amazon music player application.

Amazon’s MP3 store has been lurking around for several years, but has really picked up steam with the broad adoption of Android-based smartphones, which often have the Amazon store pre-installed. Its Cloud Player, which debuted last year, is bundled with the Amazon MP3 service.

(Trying to become a default music player for Android is another clever way that Amazon is yanking parts of that mobile operating system away from its sugar daddies at Google, which was late to the game with a serious digital music competitor last year. The more prominent example of Amazon’s bigfooting is now the Kindle Fire itself, which runs on an extremely customized version of Android.)

I’m not sure how much people will use the new Kindle Fire to listen to music, but that would fit into CEO Jeff Bezos’ concept of the Fire as “a fully integrated media service.”

That’s a key distinction. While Apple got into the digital music business to drive sales of its hardware devices, Amazon is plainly coming at the tablet and mobile-app markets as ways to just sell more stuff, whether that’s music or e-books or streaming movies or groceries (still in Seattle only!) or tube socks, for that matter. The longer you stay in Amazon’s digital storefront, the more they know about you, and the likelier it is that you’ll buy something from them next time.

iTunes could certainly stand to face a strong competitor here—from a user’s perspective, the software can be very difficult to navigate and sometimes feels like it’s barely been updated in years (just ask one of the whiners on this “I Hate iTunes” Facebook page.) But even with an integrated MP3 store and attached Cloud Player that makes listening easier, Amazon still has a ton of work to do if it hopes to make a dent in Apple’s huge music-selling lead—especially now that Google also is also on the case.

At the moment, Amazon and other runners-up in digital music are still fighting over scraps. Market research firm NPD Group has estimated that Amazon accounts for about 14 percent of the digital song download market, with Apple claiming about 70 percent. From the look of these hiring plans, Amazon is hoping to get serious about changing that balance.

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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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Merry Christmas, Boston. You asked for it, and you got it. A big, publicly traded consumer tech company to put us on the map alongside the Silicon Valley bad boys and uppity New Yorkers. I present to you: TripAdvisor (NASDAQ: TRIP).

Sure, we already have Zipcar (NASDAQ: ZIP), Carbonite (NASDAQ: CARB), iRobot (NASDAQ: IRBT), and privately held but well-established companies like Wayfair, Kayak, and Harmonix. But TripAdvisor is different. Although the online travel firm is not new—it’s been cranking here in Boston for more than a decade—it has become one of the biggest consumer-focused Internet companies on the East Coast, with more than 1,100 employees; 50 million-plus unique visitors a month checking out hotel, restaurant, and travel reviews; and, oh yeah, a market cap north of $3 billion. Yet it hasn’t received as much media coverage or tech-community-adulation as you might expect over the years. (An exception to the former would be this in-depth story by my colleague Wade Roush; the latter would be this commentary from investor Chris Dixon.)

I spoke with TripAdvisor CEO Stephen Kaufer on Wednesday, the day his company officially became independent from Expedia (NASDAQ: EXPE) and started trading on the Nasdaq under its own stock symbol. Here are my takeaways from our chat:

1. TripAdvisor wants the spotlight now. “We have generally been very, very surprised at how little attention the press have paid to TripAdvisor,” Kaufer said. He pointed to his company’s size, number of employees, traffic, revenues, and profits, calling it “the $3 billion company in our own backyard.” On the local training and ecosystem front, he says college interns are turning down offers from Facebook and Google and working at TripAdvisor instead.

2. TripAdvisor is global. Seventy-five percent of the traffic to the company’s branded websites comes from outside the U.S. Think about that for a minute. “We’re almost unchallenged in most countries in the … Next Page »

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What’s in a tech startup name? More specifically, is there a correlation between the type of name a company has and its success?

That’s a question every startup founder and investor should be interested in. Because if there is a correlation, then using a name-based strategy for picking winners would be, well, about as good as any other strategy. And much faster.

Consider the following companies: Google, Apple, Amazon, Microsoft, Oracle. And more recently, Groupon, Twitter, Zynga. Or how about these biggies: Facebook, Salesforce, Qualcomm. These are all top companies, no doubt about it.

Notice anything about their names? None of them has a capital letter in the middle of its name—sometimes referred to as “camel case,” because an upper-case letter in the middle of a word looks like a hump. (Of course, there’s also plenty of startup name-ology around whether to use real words, made-up words, misspelled words, acronyms, and so forth, but we don’t have all day.)

Maybe I’m getting punchy as the holidays loom, but as an end-of-year exercise, I thought we’d play the name game and see where it leads. So let’s drill down into some specifics. What I’m really talking about are company names that are two words mashed into one, where each word or part could stand on its own. Because there are so damn many of them these days. Not just Facebook, Salesforce, Qualcomm, and Rackspace, mind you, but also Admeld, Airbnb, Dropbox, Foursquare, Zipcar, Wayfair, Redfin, Evernote, Flipboard, Shopkick…and the list goes on.

Note that the above companies—all of whom are doing reasonably well, I think—spell their names without the camel case. It’s Facebook, not FaceBook. Salesforce, not SalesForce. You can probably see where I’m going with this.

Historically, camel-case companies have had their share of difficulties. Consider the plight of AltaVista, the early search engine that lost out to Google. Or of struggling MySpace, which seems to have actually changed its moniker to Myspace—exactly my point, of course. More recently, GlassHouse, the cloud computing and virtualization company, withdrew its plans for an IPO earlier this month (for the second time). BlackBerry hasn’t done much to … Next Page »

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News flash: Another Massachusetts software company is joining Big Blue. Armonk, NY-based IBM (NYSE: IBM) said today it is acquiring Emptoris, a Burlington, MA-based maker of supply and contract management software. Terms of the deal weren’t given, but it is expected to close in the first quarter of next year. This will be the 20th acquisition IBM has made of a company based in (or with major operations in) Massachusetts since 2003, out of a total of 70-plus acquisitions since then.

Emptoris has 725 employees worldwide, and IBM says the company will be integrated into its software group. A Big Blue spokesman declined to comment on whether Emptoris will move into IBM’s Mass Lab in Littleton, MA, since the acquisition hasn’t closed yet. Prior to this deal, Emptoris was majority-owned by Marlin Equity Partners. The software firm is led by CEO Patrick Quirk.

The deal is being spun as part of IBM’s “smarter commerce” initiative, which seeks to help businesses adapt to shifting customer buying patterns. Emptoris’s software includes cloud-based analytics tools that are specialized for procurement and supply chain operations.

IBM’s recent Massachusetts acquisitions include Netezza in business analytics and data warehousing, Q1 Labs in software security, and Unica in marketing and e-commerce software.

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Into the lair of beasts strode Adam Goldstein. Armed only with his wits and a mean set of slides, he descended on the Boston area on a warm, early winter day. He was no stranger to the premises. Goldstein had been an MIT undergrad before moving to San Francisco to participate in the Y Combinator startup program with his online travel company, Hipmunk.

Goldstein, the startup’s CEO and co-founder, spoke at Xconomy’s “6×6: Six Cities, Six Big Tech Ideas” conference earlier this month, representing the Bay Area. I say he was among beasts because Boston is the land of heavyweight travel firms such as ITA Software (now part of Google), Kayak, and TripAdvisor, and upstarts like Hopper, WaySavvy, and SilverRail (now based mostly in the U.K.). And Goldstein has been on record saying other travel sites “have really dropped the ball on flight search.” (On the other hand, Hipmunk formed a licensing partnership with ITA about a year ago.)

Indeed, the whole culture of Hipmunk is about coming “into an established industry with a focus on usability,” says Goldstein, in a polite-but-firm jab at the big players who don’t seem to care as much about being user-friendly. (As for the company’s name, let’s just say the cute-animal logo is its main justification.)

I must confess, I was skeptical at first. Since part of me still lives in the ’90s (the early to mid-‘90s, mind you), any bluster from new travel sites tends to fall on numb ears. Most travel sites seem pretty much the same, and even the worst ones are still more convenient than what people like me used to do, which is call up travel agents and individual airlines, get some options, and repeat until settling on a purchase. Hipmunk is about making the whole search process simpler, more intuitive, and more visually interactive.

But there’s only so far that can take you as a business, as my colleague Wade probed a few months ago. What stood out to me most about Hipmunk is its strategy of building a business by focusing first on getting lots of loyal customers—not trying to cash in on every eyeball.

“The entire world, especially in the world of travel, has become sort of addicted to the idea of making as much money as possible from each time someone visits their website,” Goldstein said. “What that’s led them to do over time is bombard their customers with advertisements and pop-up windows and all sorts of other things that just distract them.” Conclusion: Hipmunk won’t make money from ads, just referral fees when people book trips. But it does need to gain users—lots of users.

Here’s a short video interview with Goldstein, conducted by my colleague Lilly O’Flaherty. I like the part at the end where he references a talk by Northrop Grumman’s Bill Walker, also at 6×6, on high-altitude UAVs (unmanned aerial vehicles). Heck, maybe someday an entrepreneur will pitch an idea for a company that’s a “Hipmunk for UAVs.”

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Beware of CEOs who dress like their company logo. Beware of Jason Baptiste.

Just kidding. Baptiste is one of the most intensely likable startup founders around (emphasis on intense). His company, New York-based OnSwipe, is trying to take the tablet publishing world by storm. And not just with its aggressively stylish magenta-and-black color scheme.

OnSwipe makes a software platform for publishers to display their content and ads on tablet Web browsers, starting with the iPad. If that sounds a bit similar to Google Currents, the mobile publishing app that the Web search giant unveiled last week, well, Baptiste doesn’t seem too worried about the competition. In response to an article saying that “Google Currents might be OnSwipe’s nightmare,” Baptiste tweeted: “I fear Currents like Twitter feared Buzz and YouTube feared Video.” (OK, he doesn’t lack for confidence.)

We caught up with Baptiste earlier this month in Boston, where he spoke about the deeper ideas behind OnSwipe at Xconomy’s “6×6: Six Cities, Six Big Tech Ideas” conference (you can see photos here—Baptiste represented New York with flair). He also shared some broader views on the future of Web content and advertising, and argued for OnSwipe’s vision of browsing via tablets and touchscreens.

“Instead of a world with ugly text-like ads, we’re going to see a world with beautiful full-page, magazine-like advertising that will finally fill the gap” in the $50 billion in ad spending that’s expected to move from print to digital media, Baptiste said after his talk.

In a short video interview produced by my colleague Lilly O’Flaherty, Baptiste talked a little more about OnSwipe’s specific goals and challenges. You should check out the video below, but here are three highlights to whet your appetite:

1. “The tablet is the TV of this generation.”

2. “It’s not going to be 300 channels or 3,000 channels, it’s going to be millions of channels.”

3. “If Google gained its distribution by powering search, OnSwipe wants to gain distribution by powering [tablet browsing] experiences.”

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As we turn the page on the year 2011, there is no shortage of topics about which the entire world seems to be debating. One that interests me the most is the renewed debate on the role of government in the energy sector, specifically in the United States. Budget shortages, deficit increases, front-page analysis of public-backed private enterprises, and a particularly bitter political climate have combined to push this topic to the forefront more so in 2011 than in recent years. It’s as though we are back in the smoky classrooms of the University of Chicago in the ‘50s and ‘60s where economists engaged in frequent Keynes Vs. Friedman (Milton not Thomas, mind you!) debates.

Energy is always a popular topic in the U.S., given its strategic importance to national security. All this recent debating has been interesting to follow but a bit confusing. Economists, reporters, business folk, and politicians do not seem to agree on what constitutes a government subsidy, let alone which sub-sector is the recipient of how much. While I do not want to take any sides, I thought it would be worthwhile to examine what constitutes a government subsidy, and what subsidies and how much were provided by the U.S. government historically.

As I began to think about what sectors to focus on, it made sense to examine those that have been of significant strategic importance to U.S. economic growth in the past. The rise of the U.S. to be the largest economy in the world was driven to a large extent by what some refer to as the second industrial revolution constituting the rise of the railroad, steel making, telecommunications, petroleum, and the automobile industries. This article attempts to capture the subsidies provided by the U.S. government to some of these industries at different stages of their growth cycle.

What is an energy subsidy?

I am no economist, but it seems to me that we can all agree on what constitutes a government subsidy without too much debate. Table 1 (below) attempts to summarize the different forms that energy subsidies can take. Most of these subsidy types are immediately recognizable. The “type” that has generated much debate so far is the “Failure to include Externality Costs.” No matter where you stand on the climate change debate, it is not that hard to see that pollution has at the very least caused smog and acid rain—ask the residents of the Los Angeles from the ‘80s and, more recently, those from Beijing. There has not been a worldwide accepted externality cost measure yet, but as we move forward the chances of that happening are higher.

Regardless, it is safe to say preferential tax treatments and price controls are as much a government subsidy as a cash grant or a low-interest loan. The U.S. government wallet is a bit lighter in both cases.

Historical U.S. government subsidies

The growth of the U.S. economy after the Civil War to become the world’s largest economy was driven by increasing commercialization of technologies including the railroad, iron and steel making, petroleum, and the internal combustion engine. Besides private capital and resources, an important catalyst behind the development and growth of these industries were U.S. government subsidies at different stages. Table 2 summarizes the amounts, types, time period, and stage at which government subsidies were provided to these industries.

Railroad and transportation

U.S. railroad companies laid more than 35,000 miles of track between 1867 and 1873—more than three times that laid in the previous 30 years. Congress gave the railroad companies more than $64 million ($8 billion in 2011 US$ at 3.5 percent inflation) in loans and tax breaks and more than … Next Page »

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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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I read the book and found it quite enjoyable.

And with all due respect to Eric Ries and all of the VCs out there chasing lean startups, I recognized one simple truth. I still like my startups Phat.

A phat startup aims to solve a very big, very difficult problem that will transform an industry. They typically take many millions, or even tens of millions and 1-3 years to get the first product out the door. They are big ambitious bets on deep technology and market transitions that are difficult to predict. They require invention and problem solving and risk, yes risk. They are a venture in the true sense of the word.

But my goal is not to dismiss the good ideas in the Lean Startup bible. There are many, but some simply don’t apply.

For example, in Phat startups, the challenge is not whether customers will want it (or whether you need to pivot or iterate or some other euphemism). The challenge is whether it can be built in the first place—will it work at all? Will it perform to spec? Will it scale? Will it be reliable? Can it be manufactured? Will it hit the price point?

Very frequently, the last question is whether customers will buy it. I know this sounds “unconventional” and decidedly old-school, but in many of these cases, if you CAN build it, they WILL come.

Why? Because phat startups often address problems that simply can’t be solved any other way, and customers are in dire need of solutions—from cancer treatments to robots for bomb disposal to switches capable of handing exponential growth in mobile data.

And that’s why, once the product is proven, phat startups have been many of our region’s, and our country’s fastest growing and biggest winners. All of these were $1B market cap companies:

*These are my estimates based on VentureSource.

And there’s a new generation of New England companies following in their footsteps:

Demandware (on-demand e-commerce), QD Vision (display color enhancement), 24M (grid storage), 1366 (direct solar wafer), Plexxi (10 GB networks), Affirmed (4G Mobile), Actifio (secondary storage), Qualtre (smartphone components), Xtalic (electronic components), Akiban (scale out databases).

But a key question comes to mind: Are phat startups riskier than lean startups? It depends how you measure risk.

One of the great virtues of lean startups is that they … Next Page »

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The Boston ecosystem for tech startup investing just got a little more active. Boston Seed Capital said today it has hired Dave Balter, the CEO of BzzAgent, as a venture advisor (see photo, right).

Balter joins Peter Blacklow from Worldwinner, now executive vice president of digital for GSN, as a top advisor to the fund. Both are keeping their current roles in their respective companies as well.

Boston Seed Capital is run by Nicole Stata, the founder and former CEO of human-resources software firm Deploy Solutions, which she led for 11 years before its sale to Kronos in 2007. (If there’s one thing you get from this article, please learn how to pronounce Stata correctly: “STAY-ta.” Yes, she comes from a famous family.)

Boston Seed, which has offices in Newton, MA, is an early-stage investment firm that is about a year old. It invested in eight startups in its first year—most recently, Shareaholic, FitnessKeeper, and Relive (just last week). Other investments include Krush, Yottaa, EverTrue, Kinvey, peerTransfer, and Smarterer. Most of its startups are based around Boston, though Stata says, “We invest from Boston to pretty much anywhere.”

Stata (see photo, left) declined to give specifics about the size of her fund or how much she’ll invest in a typical startup. She did say she’s looking at seed-stage to Series A investments, is testing “the micro-venture model” while “keeping as close as possible to a traditional venture fund,” and is “eager to work with [other] venture firms.” In terms of sectors, Stata says Boston Seed focuses on “enabling platforms for Internet, mobile, and data.”

There is a question of how Boston Seed will differentiate itself from other local micro-VC funds such as NextView Ventures and Project 11 (not to mention angel groups). Stata herself has expertise in software as a service, human capital management, and business software. Blacklow brings plenty of gaming and marketing know-how. And the addition of Balter brings more leadership in marketing, social media, and company-building, as well as more contacts with entrepreneurs, investors, and thought leaders.

Indeed, the point of bringing in Balter is to provide “existing CEO feedback” to startups, says Stata. “It’s something I wish I had done when I was running Deploy,” she says. (Balter’s company, BzzAgent, is owned by Tesco/Dunnhumby after an acquisition earlier this year.)

So why does Stata want to do venture capital now, instead of starting another company herself? At Deploy, she says, “I was heads down, and quite myopic in my field. I wasn’t good enough at looking around at what was happening. I wanted to understand, what does the world look like today and where is it going?” As an investor, she says, “I can help a lot of companies instead of just one. That’s a big motivator.”

That brings her back to Boston Seed’s essence. “We really want to help startups,” she says. “That’s the reputation we want to get. We have to earn it.”

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Anti-theft technology for mobile devices just got smarter. Boston-based Skyhook Wireless announced today that its location-finding software has been deployed by Mountain View, CA-based Symantec (NASDAQ: SYMC) in its new Norton Anti-Theft Web service. Financial details weren’t given, but the arrangement will put Skyhook’s software on more devices over a broader range of applications—namely, security.

The anti-theft Web service enables people to lock, locate, and, if all goes well, recover a lost or stolen laptop (Windows-based), smartphone (Android), or tablet (Android)—all from afar. Skyhook’s technology, which uses Wi-Fi, cellular, and GPS signals to locate a given device, is already used by tens of millions of devices and applications, the company says.

Skyhook has been embroiled in two lawsuits against Google (NASDAQ: GOOG) since last year. The suits allege that the search giant infringed on four of Skyhook’s patents and interfered with deals that Skyhook made with Motorola and Samsung. Those deals involved putting Skyhook’s location-finding software on Android devices.

Symantec’s deployment of Skyhook’s software is the latest example of how Skyhook has managed to maneuver its technology onto Android devices despite its feud with Google, which, like Apple, wants to own location technology for its devices itself.

Back in May, Skyhook CEO Ted Morgan talked about his company’s technology being deployed by MapQuest, Citysearch, Priceline, and other Web applications on Android (and other) devices. “We’ll get on every Android device, but it will be through the apps instead of device makers,” he said.

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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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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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In advance of his appearance at Xconomy’s “6×6: Six Cities, Six Big Tech Ideas” conference on Dec. 1 in Boston, I did a live tweet chat with Kabir Shahani, the co-founder and CEO of Seattle-based Appature, yesterday. Thanks to all who tuned in and sent us their thoughts; we had a great audience.

Appature is a four-year-old startup that makes Web software tools to help healthcare, pharma, and medical device companies reach hospitals and doctors and build important relationships with them. The big idea, as I see it, is to allow brands to drill down into a huge customer relationship database and quickly target the right people to sell to—and for the right reasons, namely, patient health. Yes, it’s big data, analytics, cloud, marketing, and healthcare, all wrapped up in one.

Which is why I think Boston-area tech companies like HubSpot, Buzzient, Constant Contact, SocMetrics, Kyruus, Ginger.io, Athenahealth, and others should be interested. And young entrepreneurs, who can really relate to Shahani. Plus I hear there are a few pharma and medical device companies (and hospitals) around town…

While some things don’t necessarily come across in tweets (like Shahani’s youthful charisma and CEO hair), other things do. Here are my top takeaways from the chat:

1. Appature knows more about Boston than Boston knows about Appature. “There are some incredible companies in Boston,” Shahani tweeted. “We have customers there and I absolutely love being out there to spend time with them.” Sure, Appature has customers and partners around town (and soon, employees—see below), but the general Boston tech and health-IT community doesn’t talk about this company very much. I’m telling you to pay attention, because Shahani and his crew are potentially on to something big. Whether they’ll execute and take full advantage, we’ll see.

2. The cutting edge of marketing tech for niches like healthcare is moving fast. “The dynamic has changed dramatically in the past 12-18 months,” Shahani wrote. He was talking about pharma companies trying new ways to reach and target customers, rather than just pursuing traditional approaches with their sales reps. It’s no surprise that cloud-based analytics and social technologies are transforming the way most industries work.

3. Growth is challenging for any startup, especially one based on relationships. Shahani, who bootstrapped Appature to profitability before taking a venture round, tweeted that his biggest mistake was “not getting an [East] coast office sooner.” (The company has employees around the New Jersey/Pennsylvania border, presumably to work with lots of pharma customers. It also has people in San Francisco, San Diego, and Chicago.) And here’s a news flash on its expansion: “Stay tuned on news about a Boston team in [January],” he wrote.

For the record, here’s the full live chat stream, via Storify (thanks to my colleague Lilly O’Flaherty for this).

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His last name means “forest” in Norwegian. Which is appropriate, because this guy sees the forest for the trees.

David Skok of Matrix Partners is one of the most talked-about venture capitalists in town, among young entrepreneurs and experienced ones alike. He is best known for his investments in JBoss, the open source middleware company (acquired by Red Hat for $420 million in 2006); AppIQ, the network and storage management firm (bought by HP in 2005); Diligent Technologies, a data protection company (bought by IBM in 2008); and CloudSwitch, a cloud infrastructure startup (acquired by Verizon this year). He currently serves on the boards of tech companies such as HubSpot, CloudBees, Digium, Enservio, and Solidworks.

Critics say he hasn’t had a big exit in a while. Supporters say he has a real knack for building companies and getting them acquired for good prices—and that what he touches often turns to gold.

Whatever you think of him, Skok has carved out a reputation as a hard-working investor with both technical expertise in business software and a deep understanding of sales and marketing from a customer’s perspective. For the past decade, he has been a general partner with Matrix. But when I sat down with him recently, I was more interested to hear about his previous life as an entrepreneur and five-time CEO, and how that shaped who he is today—both the decisions he makes as a VC, and the kind of mentorship he provides to startups.

It’s not quite Batman Begins or Casino Royale, but here is the David Skok origin story—and its lessons—in three parts.

Act I: A New Hope (Software)

The story opens in Johannesburg, South Africa, where Skok was born to an English mother and Norwegian father. His parents didn’t want him to grow up with apartheid, so they sent him to school in England, where he lived from age 8 to 20, in London. From there he went to college at University of Sussex, where he was part of the first class of graduates in England to be awarded computer science degrees. That was 1976.

His father made him come back and join the blue-collar family business, which involved machining equipment. He went to apprentice training school and survived his first week when all the tough guys tried to haze him. By the end of the course, he knew how to use a new tool for machining parts that followed a program stored on punched paper tape. The problem was, if there was a tiny error in the tape, the part would be ruined and “you’d have a huge wreck on your hands,” he says.

So Skok wrote a piece of software to get around this. “If you designed the part on the computer, you’d be able to do the machining without worrying about the geometry,” he says. That led him to start his first company, Skok Systems, which became a computer-aided design (CAD) firm.

“I’m accidentally an entrepreneur,” Skok says. “I didn’t plan to be an entrepreneur, I didn’t have any training in it, I didn’t have any mentors to turn to to teach me how to be an entrepreneur. I’m trying to figure out all the sales and marketing stuff that’s going on.”

The company went through a few shifts, but the pivotal moment happened in … Next Page »

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