Startable - Healy Jones’ & Prasad Thammineni’s Blog

Funny. Last night I was watching the president speak at the state of the union address and fired off a tweet about something that caught my attention - elimination of the capital gains tax for small business investment. From @HealyHoops: Don’t understand how it will work, but sounds interestingRT @jsteig: eliminate cap gains on all small businesses . . . that’s good! #SOTU

Then I stop paying attention to Twitter… but lo and behold, CNN is using some pretty interesting social media measuring tools and somehow decides to mention my tweet on the air. You can see it here - my tweet is about one minute and forty seconds into the clip.

First of all, the social media monitoring and display technology they are using is pretty cool. It’s a pretty interesting segment.

Secondly, I do think that the elimination of small business taxes could be really powerful for sparking investment in local and startup businesses. I really don’t understand how it will work, as in what will stop it from becoming a vehicle for tax avoidance and how will it impact venture investing? Will GPs count as small business investors? How about LPs? Will funds be counted the same as grandma helping her daughter getting her hair salon off the ground? Pretty interesting questions…

Third, thanks to Joseph Steig for the tweet I retweeted/commented on.

Finally - Can I now say that I’ve been featured on CNN? Or As Seen On TV?

Update - HealyHoops on the Daily Show too!

This is getting a little out of hand, but my little (re)tweet was also on the Daily Show. The twitter/CNN bit starts around 9:55 into the show (I found the video navigation a bit difficult with Chrome.) I don’t think the particular sketch is all that funny, but it is amusing to have my tweet mentioned by Jon Stewart. And I don’t agree with Jon that Twitter is totally useless!

Today I use a ton of applications on my iPhone to get the full experience of online services/sites like Facebook, Amazon, LinkedIn, Wikipedia and others. But the beauty of the web (at least on the PC) is that you don’t need to download software in most cases to get a full, awesome experience. I can just log into eBay and start trading stuff; I don’t have to wait for a download to get going.

But on the mobile phone it’s different. To get the best experience I need to hit the app store and download something. It’s a like a weird step backwards from the point where anyone could easily use any site with a browser (from your PC) without downloading software to a place where each site has its own special software that requires a download and install.

According to MediaPost:

Gartner estimates the combined installed base of smartphones and browser-equipped enhanced phones will surpass 1.82 billion units by 2013, eclipsing the total of 1.78 billion PCs by then.

But the firm warns that many sites still are not optimized for the mobile Web, even though cell users expect to make fewer clicks on their phones than on a PC. To successfully expand into mobile, publishers will have to reformat sites from the small form-factor of handheld devices.

I totally buy this argument. While one can quibble around the exact number of mobile devices vs. PCs, there is a clear and obvious trend that mobile devices are becoming an important secondary, and to a lot of people, the primary web access device.

So I wonder - will web sites just automatically be optimized for mobile viewing, or will the “app” become even more important? Is this whole app thing for using online services a real of “de-evolution” of the web - or a mere blip before mobile browsers and bandwidth become powerful enough to support the real web experience? What do people think, are mobile web apps here to say or just a strange passing fancy?

Photographic evidence that Windows 7 kills kittens!

Just kidding; the little guys are taking a nap. For some reason they love sleeping on my computer.

Windows 7 Kills Kittens!

And I have to say, I like Windows 7. I’ve been using the beta version since the middle of the summer and it hasn’t crashed at all. I also dig the little universal search box; I still use Google Desktop, but MSFT’s search box has become part of my workflow. I have gotten used to the windows-button-tab-button way of circulating through open windows, and graphically it is very appealing. The help documentation is pretty good too, so I’ve been able to modify the preferences I want to pretty easily.

I’ve completed the second step of my recovery from being a venture capitalist* and am now the head of marketing at Pixily, an online document management service focused on the small business customers. (Yes, it’s Prasad’s company!) I’ve had the opportunity to get close to a number of startups since I left Atlas earlier this year, and have loved a bunch of them - particularly some of the ones over at TechStars. But I found myself slowly spending more and more time at Pixily, from a few days a week to 30 hours a week to 60 hours a week plus lots of brainstorming time in bed at night when I was supposed to be sleeping. Eventually Prasad and I decided that I might as well take the plunge and go full time.

I’m really excited about working with Prasad and the team at Pixily for a bunch of reasons:

• We are growing, and growing fast. Guess what - growth is fun! Even more fun on the inside of the company vs. being an investor looking in from the board level.
• It’s new to me. I’d been an investor/finance type for my whole career. But marketing is totally new. I think I’ve got a feel for what I want things to look like from a high level from my days as an investor, but actually getting there is the challenge.
• I still get to play with numbers, since marketing is now a metrics driven function. I always liked running different scenarios for potential portfolio companies - now I just get to do it in real time…
• Working at Pixily has really stepped up my passion level. Passion matters more than when I was an investor. One of the greatest investors I worked with was a partner at Summit Partners. He had the uncanny ability to dispassionately evaluate every little detail of a deal, and had no “sunk cost” fallacies. If an important part of a deal didn’t check out he would walk away, regardless of the amount of time we’d spent working on it - even if we’d spent a year and a half and had spent hundreds of thousands on due diligence. I think that is part of the reason he was such an amazing investor. But when you are company trying to grow, you can’t be dispassionate. You have to believe that what you are doing is going to work, even when little things go off the rails. So, while the ups are great, it is the excitement I feel for the company’s potential that keeps me chugging on through the occasional setback.
• It’s really cool to do something that actually, directly helps customers. I’m getting a lot of the passion I just mentioned from customers. It was after taking a few customer support calls that I really “got” the problem that Pixily was solving. Small businesses really like this service and they are changing the way the work and integrating Pixily into their everyday processes. There is a real, unmet need in the market - small companies are still paper-based and a new generation of business owners want to manage their businesses’ information online, not in filing cabinets, and from their phones, not from their desktop. Helping people make this change is really exciting!

There are a ton of other things I’m finding really fun - but the one thing I do miss (besides the deep, peaceful slumber of the money man) is having time to blog more. I hope to pick back up the blogging pace, since I’m experiencing all kinds of new things and want to share and get people’s opinions.

Finally, sign up for a free trial for your startup! Send us your paper documents, upload your digital files, and start using Pixily as a search engine for all of your companies’ paper! And you can use the “HJ2009″ coupon code for $5.00 off when you sign up for a paying plan.

*The first step was acknowledging that I had a problem

I am a little late to the party, but earlier this week Dharmesh Shah posted on the “10 Things MBA Schools Won’t Teach You” if you are doing the startup thing. It was a great post and I agree with his points. I know I’m a bit new to the actually being an entrepreneur (ok, ok, pretending to be an entrepreneur), but I’ve thought about his ideas and came up with a few of my own. Keep in mind I can really only speak to my experience at Wharton; different MBA programs are probably pretty different and may teach these particular issues.

Sales - When I was a venture guy hanging around BOD’s, and now that I am trying to help Pixily with customer acquisition, it is quite clear to me that my MBA program lacked real “sales” education - yet this seems to be pretty much the most important part of taking a company from $0 revenue and product to $100 million and profitable. Selling is fricking hard. I thought selling money at Summit Partners was hard. Selling a product that has never been invented before from a company no one has ever heard of is really hard. You’d think that an MBA program would at least have some sort of a course on how large companies sell their product and:

Compensation structures - particularly for sales. There was certainly a class in one of our core courses around managing and incentivizing people, and I have to admit “Managing People at Work” taught by Peter Cappelli was one of my best courses (I actually dragged my wife to it a couple of times because it was so good.) However, compensation probably deserves its own course. Perhaps if I had been a management major I would have noticed the existence of a course on this topic… My experience as a VC was that a TON of time is spent setting up the correct compensation and incentive structure for the team and it doesn’t feel any less important from within an entrepreneurial venture.

Other major issues, not related directly to the course work, were:

Winner take all attitude - Too much emphasis on “being right” and not enough on admitting mistakes. Read the rest of this entry »

I’ve been spending a day or two a week over at the TechStars Boston office, and so far it’s been a ton of fun. I think that the TechStars teams are building some potentially very cool applications attacking real markets. After having interacted with a number of the teams, I’ve decided to post my ideas on how they can get even more out of the program. Keep in mind that these tips, plus $3.50, will get you a coffee at Starbucks. (In other words they might not be worth that much! And they are in no particular order.)

Tips for the TechStars Boston people:

1. LinkedIn is your friend, and if you’re smart you’ll be LinkedIn buddies with every single mentor you meet. This way, if you need to try to reach someone in a particular industry/field/company you’ll be able to see into the mentors’ networks. Remember that you can search in your nearby networks for specific companies or job titles/descriptions. I’m willing to bet that many of the mentors will be happy to make intro’s to people in their network, and LinkedIn will give you the ability to know who knows who where.
2. Carry your business cards, because I get the feeling there will be very interesting/relevant people wandering around the halls here in Cambridge over the next few weeks - even if you don’t have a real chat with someone you will probably want to get their contact info, and giving them your card is an easy to get them to reciprocate with theirs. Of course, I like the sexy little Moo cards, but as the Baydin and Localytics guys have pointed out, I’m a bit of a walking Atlas portfolio company advertisement.
3. Start promoting yourself on Twitter. I’ll follow you on Twitter, and I’m sure many of the other mentors and TechStars entrepreneurs will. You’ll probably find that members of the local and tech media will want to follow you too because of your association with the program.
4. I want to hear your pitch. Hit me with it as often as you can! Since the pitches keep changing I want to keep up to date on your thoughts.
5. Be aggressive in asking the mentors if they want to get your weekly progress update emails. These updates make people feel like they have a stake in what you are doing.
6. Bother Shawn a lot. Try to get intros out of him, even to people who aren’t mentors. Need an expert in a particular field? See if he can help, or at least point you to a mentor who may have a contact or two.
7. Start thinking about your funding needs. I may be bringing this up before the TechStars organizers want me to, but the program will be over before you know it. How are you going to continue to fund the business?
8. Do you want to hire any of the mentors? (Ok, this is the most controversial thing I’m going to say.) Some of these mentors are real tech-community rockstars. Some of them are legit leaders. Some of them may bring loads of venture capital to any company that they join. Do you think that you could get any of them as the CEO of your company? Or as a head of marketing, engineering or something? If your team has holes and you think one or more of the mentors would be the ideal person to fill them, start gently courting them now. Coffee chats, email updates, asking for intros to people in their network who you can impress and learn from - carefully get this moving.

Good luck to all the awesome entrepreneurs at TechStars this year!

When Scott Kirsner, the Boston Globe Tech Columnist and New England’s Champion of Startups and Entrepreneurs sent me an email sharing details on his upcoming event, What’s Next in Tech, I started wondering what that would be. I came up with few predictions and asked some of the people I respect to validate my predictions. So here are my predictions for what we can expect in the coming years:

Mainstreaming of On-demand Small Business Services

Since late 1990s, large companies have benefited immensely with the SaaS-ification of services. Salesforce.com, NetSuite and many others have built large businesses providing enterprise business services over the web. Enterprises loved them as they did not have to make upfront capital investments and benefited from all the free upgrades, maintenance and more. These services are exhaustive in their capabilities and therefore complex to use requiring a lot of training.

Since 2004, and the launch of BaseCamp by 37Signals.com, small businesses started to get a taste for on-demand services. The success of 37signals.com and FreshBooks.com has shown that small businesses are looking for simple to use business applications that help them become productive, efficient and mobile.

I predict that more and more small business related services will migrate online and will be offered as an on-demand service. Some of the applications you will see include expense management, document management, bookkeeping, tax preparation, and virtual assistant services. Moreover, these services along with those already in the market will move beyond early adopter phase and become mainstream.

Read the rest of this entry »

The person who runs the CIC (Cambridge Innovation Center, I think it’s called) has a new idea for a shared office space in Cambridge. To be called the “Cambridge Co-Working Center,” it sounds like it will be a shared office where startups can rent shared desks or couches. Not sure what to think, at $250 a month, but could be a great startup jam-session kind of a place if the right ecosystem of people moved in…

I had the chance to visit the Techstars Boston space last night and spend some time with some of the mentors for the program, Shawn Broderick who is running the program in Boston… and I got to sit with one of the companies that has already set up in the space and is hard at work on their project!

Shawn (and Brad Feld and David Cohen) have put a huge amount of work into getting the seed program going here and recruiting an amazing group of mentors. In the initial companies selected for the Boston program there are some really fun concepts, and I am hopeful that the entrepreneurs will be just as solid. Hopefully I’ll be able to spend some time over there this summer!

An article in today’s New York Times on the recent decline in real estate mobility in the US got me thinking on the importance of location, mobility and venture capital. The Times article has a number of realtors, movers and economists freaking out because the absolute number of Americans who have moved recently fell to the lowest level since 1962 - when the nation was something like 40% less populated.

What does real estate have to do with technology innovation?

Location matters.

Successful companies spawn other successful companies. Usually this happens in the same geographic area where the original company was based, for obvious reasons. Entire ecosystems of startups have come from DEC in the Boston area and a number of great companies in the SF Bay Area have been born out of previous winners like SGI. With critical mass these ecosystems become self-reinforcing and can continue to spark innovative companies for many, many years. 

Academic institutions matter and are location specific. The impact of MIT and the surrounding schools on the Boston area is immense! (The same is true for the Stanford ecosystem.) The students and professors at institution will continue to create commercializable technologies and having the right startup attitudes and resources in the area is very important to taking these technologies from the laboratory to the customer.

VCs like to be near their portfolio companies. Certain regions dominate venture capital and angel funding landscape, and startups in these areas have more venture firms to speak with and more options during their funding search. This tends to beget more opportunities for startups in a particular area.

Gummed up real estate market = bad for innovation

If up and coming technology executives can not afford to sell their homes (say they are underwater on their mortgage) and move to a technology eco-center to join great technology companies than the self-reinforcing cycle of successful startups spinning off new startups may slow down. Technologists and managers need to be able to physically move to the best areas if they are to eventually start a new company there based off of the learnings (and hopefully cash) they gained by working for awesome bigger/successful companies.

There is a limited supply of talented sales people and technology managers, and they need to be mobile enough to move to academically rich areas so that they can help commercialize technologies coming out of universities. While universities may be great at coming up with new technology ideas they often need help taking that technology and making it into a product that customers can understand and use.  There needs to be a deep pool of business talent in an area to cope with the massive amounts of amazing technologies created at a place like MIT, and that pool needs to be constantly refreshed with new talent from outside the area. Finally, students and professors need to be able to frictionlessly move to the institution that will support their research. If the real estate market is too gummed up how can this happen?

Since venture firms like to be near their startups, startup founders often move their businesses to be near their VCs. (I know, it sounds crazy but it’s true!) Venture funds do not want a large part of the proceeds to go to paying off moving expenses, including taking care of underwater mortgages, so the startup ecosystem needs mobility in the real estate market.

Basically, startup founders need to be ale to move to the best location for their startup. Certain areas have deep resources; resources that help people start companies. Support groups, recruiters, VCs/funding, experienced lawyers, landlords who understand it is ok to rent out their property to unknown startups, etc. A lack of mobility in the real estate market hurts founders’ ability to move to the best place for their business. Hopefully the real estate market will begin flowing again!

I’d love your comments and thoughts;

Thanks,

Healy Jones