Startable – Healy Jones’ & Prasad Thammineni’s Blog

Groupon is getting ready to go public… and it might happen below the prices the company was getting in the private stock markets. This is going to test my thesis that there will be lawsuits after the secondary markets companies start going public for less than they were “worth” privately…

And here you can read a piece by Henry Blodget on what he thinks Groupon will be worth once it goes public. Henry is suggesting a $10 to $15 billion valuation… supposedly Groupon was valued as high as $30 billion or so earlier this year.

Wait a second!

The MoneyTree/PWC Q2 venture capital dollars by region shows Boston still on top over NYC for dollars invested in Q2 2011!

NYC vs Boston VC investments

This does not mesh with the data from CBinsights that was released just a few days ago.

I’ve reached out to my contact at CBinsights to see if he has any info on this. I bet there are just some differences in how the data is collected. But in the PWC data above New England is quite a bit over NYC.

At the end of the day this doesn’t really matter too much as long as all the regions software investments are up. I don’t believe that this is a zero sum game, and there can be multiple regions outside of the valley that have thriving internet hubs. NYC and Boston should both be among these. I dream of a interconnected Northeast coast internet hub from NYC to Boston along the Acela route… it makes sense give how connected these two regions are that startup talent, dollars and ideas flow along the coast in a giant melting pot of new startups, people and exits.

MoneyTree/PWC just released Q2 venture capital numbers – and the high level amount of VC investment in Q2 isn’t looking good.

But Software VC dollars are up.  So is IT services.

Software VC Dollars

In fact, according to PEhub, “Countering the decline was 23% jump in funding to software startups. With $2 billion invested – 29% of the total – the sector generated the highest quarterly investment level in 10 years, or since the fourth quarter of 2001.” Dollars per software startup was also up a lot.

By stage of development there are some interesting numbers as well… one is that seed investing seems to have taken a dip. Not too surprised – we’ve read a lot about the seed crunch recently. The good thing is that the early stage dollars are hanging in there, so the best seed deals seems to continue to get funding… (I hope.)

OfficeDrop has been very aggressive in our “cloud manifesto,” promoting the concept of Frenemies in cloud services.  Earlier this year Prasad wrote about how competing in the cloud is making companies frenemies in TechCrunch.

Today he penned one on “Building a Business Around Frienemies” for FastCompany.

What’s a Frenemy (or Frienemy, depending on how you spell it)?

An important business philosophy that we have here at OfficeDrop is the concept of “Frenemies” – we will work with other services that would historically have been considered competition if it makes sense for our customers. It means that we value our customers’ workflow and actively look to integrate our cloud filing system with other online, cloud and SaaS services that our customers are using. Our customers are small businesses who want to move to a “digital office” and away from having their different work processes silo’ed into particular, proprietary applications.

This is a big deal and it represents a major shift in the way software is made and consumed. Old, desktop software that wrote special, unique and proprietary files and that trapped your data are out. Remember when a file could only be opened by the program that created it? Well, in the cloud all the smart providers have open APIs, which means your data can now be pushed (securely, of course!) from one application to another – making it easier for you to get your work done. This means that our service may have to work with other online storage companies, or companies that have overlapping features. Should we be competing with these companies and avoid integrating with them?

Nope. We can only survive if our clients WANT to use our service. They can get their data out at any time, so we need to offer the best paper-focused, searchable storage service we can – and let customers use other best in class services in conjunction with ours – like our FreshBooks document management integration. We’ve got an open API, and if someone who might be close in features wants to connect with our service they are very much able to create a tight integration with the OfficeDrop service.

Lots of reports of the end of Massachusetts as a startup hub due to the fact that NYC raised more venture funding in Q3 2011 than Boston.

First of all, I am not upset that New York is becoming a real startup hub. Let’s got those technologists out of the backrooms of hedge funds and out there making some awesome products that people can actually use!

Secondly, I don’t think that there is a zero sum game here; if more and more companies do well there should be enough capital to go around.

Third, Mass has been huge in healthcare investing and has been less than stellar in Technology investments for a while now. As healthcare venture capital investments have dropped pretty agressively it makes sense that Massachusetts would dip.

IMHO, the thing that Massachusetts needs now to get it’s tech/internet mojo back is to have a few major exits take place – followed by the employees of those companies starting the next generation of startups + the local VCs recycling money back into the area.

I see some great companies in Boston that are ripe for doing just this. I hope that we see success with a few of them and can get the startup juices flowing again. I feel that the NYC to Boston Acela line could be the next startup super cluster, and I’d like Boston to pull its weight. Check out the CBinsights report for all the details; it’s the source of these charts.

There is a well crafted piece on Business Insider on the new iPhone 4S announcement and how it actually may make a lot of sense that Apple did not release an iPhone 5.

The thinking is that perhaps this phone is not aimed at current owners of the iPhone 4, since they are still bound by their existing 2 year mobile contracts. Instead, it says:

So the 4S isn’t aimed at these folks. It’s aimed at the other three categories of iPhone 4S buyers:

• Pre-iPhone 4 iPhone users (~70 million of them)
• Non-smartphone users (1+ billion, who can now get a 3GS for free, if price is an issue)
• Non-iPhone smartphone users (Blackberry, Android, Nokia)

The release of the forthcoming iPhone 5, meanwhile, which presumably will be a more radical upgrade from the iPhone 4, will likely be timed to appeal directly to the ~70 million iPhone 4 owners who will just then be starting to come off their two-year contracts. The iPhone 4 was released in the early summer of 2010. So the two-year window for these contracts will begin to roll off in the summer of 2012 (next June).

Hmm. Well, maybe that is a possible strategy… Anyways, it makes some sense. Who knows though!

Do we finally have a real competitor to the iPad? Is Amazon going to do it!?!? I’m getting pretty excited here.

Don’t get me wrong, I love my iPad (actually it’s my company’s, but hey). However, the world needs at least one legitimate competitor to the iPad to keep Apple honest and to push the industry to continue to innovate.

Preliminary sales numbers for Amazon’s Fire are supposedly very impressive. Mashable is reporting:

More than 250,000 Kindle Fires have been pre-ordered since Amazon announced the new tablet computer last Wednesday, according to a report from Cult of Android.

The blog says a “verified source” within Amazon provided screenshots of the company’s internal inventory system. The screenshots show the Kindle Fire has been pre-ordered at an average rate of 50,000 units per day.

That’s legit if it’s true! Note that I couldn’t link to the original source, Cult of Android, because their blog seems to be down. This is big news… Ah, wait, it’s working for me now:

These leaked shoots show that orders for Amazon’s Android-based tablet are racking up at an average rate of over 2,000 units per hour, or over 50,000 per day… Those numbers make the Kindle Fire’s launch likely to be the biggest tablet launch in history, beating both the iPad and iPad 2 in first month sales. The original iPad sold 300,000 units on April 3, 2010, its first day of availability. In the first month, iPad sales amounted to over a million units. By the time the iPad 2 came around in March of this year, Apple managed to rack up an estimated 2.5 million units in first month of sales.

What does this mean, beyond the fact that there may be another real player in the tablet space? I think that it shows that PRICE really matters in the tablet space. $199 is a sweet spot, perhaps. And remember that HP’s tablet flew off the shelves when the price was really reduced… it looks like there is a market for lower priced tablets. Of course, this follows along with the Google Android strategy of having a LOT of low end phones running on the software.

What will it mean for app developers? 1) Get in the Amazon Android marketplace. 2) Get ready for another form factor + potentially highly modified Android OS. 3) Get your hands on one of these devices ASAP so you can get a feel for how your applications will run on it.