Startable – Healy Jones’ & Prasad Thammineni’s Blog

OK, well, in case you were living under a mobile rock and didn’t know that the iPad was HUGE here is a chart from Chitika.

Android is still a ways away… and MSFT is just so far behind it’s hard to imagine how they catch up at this point. Poor MSFT.

I have just been nominated for a very cool Boston area technology leadership award. That’s right, little old me, Healy Jones! I’m pretty pumped. The award is the MassTLC’s Emerging Executive of the Year; there are five finalists. Basically, the award recognizes Massachusetts executives who have launched successful products, developed new strategies and achieved benchmark successes in the last year. OfficeDrop had a pretty great year last year, so everybody here is really excited about this nomination.

More about the Emerging Executive Award by MassTLC

Here is what the MassTLC has to say about this award: “This year the Council introduced a new judging model for the awards program that included 55 executives, investors, analysts, media and thought leaders who participated in the finalist selection process. The pool of finalists will be further narrowed over the coming weeks and the winners will be announced on Thursday, September 13, at the MassTLC Leadership Awards Gala at the Boston Renaissance Waterfront Hotel in Boston. Details and advance registration are available at www.masstlcawards.org.”

I’ll point you to a post we did on the OfficeDrop Bostinno Channel that we did that talks more about the cool things I’ve been working on with the team here at OfficeDrop. You can read about Healy Jones being a finalist for emerging executive of the year here on our Bostinno Channel.

Also, sort of unrelated, but you can read an interview with me on an important scanning/imaging blog regarding OfficeDrop’s white label/OEM strategy where we power larger companies cloud storage.

For the past few months I’ve been debating with other OfficeDropStars why the heck Amazon hasn’t ever lowered cloud storage costs. Well, looks like they are finally bringing them down! The first tier of storage pricing is coming down from $0.14 per GB/mo to $0.125. The lower tiers are seeing about 12% reductions in prices – but the biggest tiers have no stated decrease (i.e. they are staying constant!)

It’s a little odd the top tiers aren’t going down. I guess this is because those rates are more likely negotiated with the company using them, where as the lower rates are pretty much just plain old taken by the company using it?

Why is Amazon lowering storage costs?

What’s motivating the lower storage costs? Are other cloud storage companies starting to eat at their new business? I kind of doubt that it’s MSFT’s platform, I don’t know any startups using it. Perhaps Amazon sees Apple’s iCloud starting to take some of the newest startup storage needs, where the startup simply pushes the costs of cloud storage onto the end user by integrating their apps with iCloud and letting the user deal with it? Think about it – Amazon has basically been in the cloud storage business since 2007 and I don’t think prices have come down before! And cloud compute costs for sure haven’t!

Comparison of New and Old Storage Costs

These are the numbers I got from Amazon, and are current as of Feb 7 2012.

The lower prices are effective as of Feb 1 and are listed here.

Waiting until the last possible moment before I close the storm windows for the approaching hurricane – so here are a couple of links.

A take on Tim Cook

An acquaintance, Alex Bain, works at Apple and has a post up on his meetings with Tim Cook. It seems that he’s meet with him once a week, and so it’s interesting to hear his take on Tim’s leadership style. Very cool look inside the now most powerful man in tech’s leadership style. (Thanks to Kenny Kellogg for pointing out Alex’s post.)

Updating Mac Apps

I’m proud of a post over on the OfficeDrop blog about how to update apps purchased in the Mac App Store. You’d be surprised at how many people ignore the update icon (or who don’t know how to update their apps!). Anyway, hopefully this how to will make it easier for people to update their apps and perhaps not call our customer service to ask about how to do it. OfficeDrop’s ScanDrop Mac Scanner Software really does work better when it’s the most up to date version!

Dan Primack has a good interview with the CEO of BankRate.com, a company that was public, went private a few years ago, and returned to the public markets recently.

I’m not going to quote the entire interview here, you should just click the link above and read it yourself, but the part that interested me was about how being private with a PE backer let the company make some acquisitions that it would not have been able to make if it was public.

Fortune: Buyout firms often talk about the advantages of being private. Do they exist?
Evans: There definitely were some advantages to being private… We also saw strategic assets available for sale, and that acquiring them could really change the trajectory and competitive position of our company.
We wouldn’t have been able to make those acquisitions if we’d been a public company, both because the private equity backer provided capital and because one wouldn’t have taken our paper.

I’m more than a bit surprised about this reasoning. Usually companies cite having a public currency with which to make acquisitions as a major reason to IPO… this is totally opposite of what you’d usually consider the norm.

It also leads me to think about what happens when a private company that has shares trading on one of the private secondary markets makes acquisitions with stock. Is the acquired company then able to sell stock right away to third party accredited investors? Or is there the standard lock up language like you’d have when a public company acquires a private company? Or does the fact that the private co can control the sale of share on the secondary market negate the need for such a lock up?

I recently posted a piece on OnStartups on the topic of growing an internet company outside of Silicon Valley. I truly believe that this is possible, but recent history shows that a huge percentage of internet companies are based in the San Francisco Bay Area. This bums me out, as an internet guy out here in Boston… Here is my 8 tips for growing an internet company NOT in San Francisco.

Ok, so the Groupon acquisition by Google has fallen through.

Now it’s time to analyze the pieces. Props to the Wall Street Journal for taking on the proposed deal from a different angle. The WSJ compares the proposed Groupon acquisition, at $6 billion, to other large venture backed M&A exits and finds that “If Google had acquired Groupon for up to $6 billion, the deal would have been the largest for a venture-backed company since 1999 and the third largest acquisition on record.” Wow, that’s pretty interesting.

The WSJ goes on to state that this is a sign of the current internet company bubble and negatively compares the price to past bubbles, mainly the telco equipment maker bubble back in the late 90′s.

I find this to be a bit of a stretch, mainly because Groupon is at a run rate of $2 billion in revenue, up from no one having heard of it just a couple of years ago. And it’s cashflow positive. Vs. the telco equipment companies that may have had real IP, but were not generally producing that level of revenue so quickly.

I’m not saying there isn’t a bubble. In fact, I think there is one. But buying a cashflow positive company growing at hundreds of a percent year over year at a 3x revenue run rate doesn’t seem as insane as buying an equipment company growing more slowly with all the logistical headaches of building and distributing a product to a limited number of end customers.

Roy Rodenstein had a recent post on Mass High Tech called 5 Reasons Startups Move to Silicon Valley. He pretty succinctly sums up a number of the bigger issues facing the Boston startup scene and lists a number of smart things the area can do to better retain startups and the talent that creates them. It is a great piece.

The only area where I take issue with his reasons that startups leave is that he is very focused on funding. Basically, four of his five reasons are about the lack of depth of seed/early stage funding in Boston. I left a comment saying that if I was to list five reasons startups leave Boston I wouldn’t have funding be four of them. In other words, I see other issues as more important – onces he touches on in his fifth point, the point on the ecosystem.

I’ll try to elaborate on a few of the problems I see in Boston – problems that make it less desirable for startup founders to want to found/keep their companies here. My point of view is colored by the years I spent living in San Francisco and by the fact that I am not originally from New England. Also, please keep in mind that as a guy helping run a startup in Cambridge I actually do think this is a great place to found a technology company.

1) Willingness to take a risk on less experienced founders. Or lack thereof. I think there are investors here who are willing to back new, cool companies. However, I don’t see that many investors who are willing to back young, unproven entrepreneurs. I can think of a number of successful companies on the West Coast who have very young founders who received funding. Everyone always points to Facebook, but the one that I really think of is Box.net. Very young founder focusing on an enterprise space gets funding from well known West Coast VCs. Are there any Boston area b2b companies where an early 20 something got funded and remains the CEO? Or even got funded?

2) Little willingness to roll up the sleeves and mentor/help other companies. This is a follow up to the first point – is Boston willing to help young company founders grow? I kind of feel that very few people in Boston will back young founders because few people really want to take the time to actually mentor them. I’m hopeful that things like TechStars and the Mass Challenge will provide a bit of the framework – and more importantly create lasting relationships between younger entrepreneurs and experienced mentor-types who can help them grow into executives like Zukerberg or Gates.

Ok, maybe those first two points could be considered somewhat related to “funding” so I’ll go in the opposite direction with the next.

3) Very few here-is-how-you-grow-your-company events. There are so many Boston events on getting funding – boring. What I want to know is how do I grow my company. I want events where people from successful local companies like Monster and Smart Bargains and Constant Contact tell war stories. Where the hell are these people? I have no desire to see a group of VCs talk about how they back management teams and pick big end markets. I want to hear what works and what doesn’t from people who have just created big, awesome tech companies. Some of the recent customer development and unconferences are big steps in the right direction.

4) Very little national, customer driving press. I can only think of one blogger/reporter in Boston who can actually get me customers – Scott Kirsner of the Boston Globe. The other journalists here try hard, but appearing in their publications doesn’t drive traffic to my site that converts into paying customers. TechCrunch, Mashable, Lifehacker, GigaOm, Gizmodo… I don’t think they have anyone in Boston. Connecting with reporters directly is very important to starting a dialog that gets your startup featured. I can’t do that here very easily. I am hopeful that both Xcomony and BostInnovation will grow into publications that DO drive customer growth – the reason why I think this will happen is because they both do in depth style writeups on products, not just articles around which companies are getting funded by whom. (Please note, I still love getting any and all press for OfficeDrop!)

5) It is hard to feel welcome as a “non-native” in Boston. When I first moved to San Francisco I felt like it was my city in just a few months. It took over a year to even begin to feel welcome in Boston. It’s hard to meet new people here. Mobility, which is a big part of getting to know and feel at home, is very challenging due to the fact that the drivers here are worse than those in third world countries that I’ve visited. It’s not just that there are no street signs, it is also that I really think there is a basic lack of understanding of the rules of the road,  civility in the car and enforcement of driving rules. There is also something strange about the culture that makes it harder for people to strike up conversations and relationships with people they’ve never met before. I believe that small steps are being taken by things like the Shutup Startup weekend coming up this weekend (I think I’ll go to the Friday night event). Hopefully this be a move in the right direction in helping students feel like part of the Boston community. (Also, since this particular point is becoming a little bit of an all over the place rant – Boston needs real happy hours. I think part of the reason I quickly made so many friends in SF was how easy it is to bond with people over cheap, after-work drinks. Ok, so that particular point is a stretch, but I really really miss happy hours.)

Boston is a great place to start a company. We have funding, world class universities, blah blah. But more importantly to young founders, Cambridge and Boston are great places to live. Unlike Silicon Valley, which is a really boring place to live when you are 24, Cambridge provides both a fun atmosphere and somewhat affordable startup real estate (trust me, I tried to live in Menlo Park when I was in my early twenties and only lasted 9 months. It is the most boring place in the world to live when you are young; other than the great Indian food it is way worse than Cambridge.)

So, if you want startups to thrive in Boston, do your part. I’m trying to get a group of experienced marketing folks together to mentor startups (calling it Boston Internet Guild, BIG). I’m making an effort to attend events where young startup folks gather. I’m talking up how great of a place Boston is to be. I’m sure I haven’t thought of everything – help me think of other things we should be doing to keep startups in Boston.

Quick link to some interesting recent stats on technology M&A as the “new” exit paradigm on gigaOM.

My friend from business school, Matt Soldo, has a well written post on MBAs in the tech startup world, “In Defense of the MBA.”

Matt has held positions with a few different internet companies, and is currently with Box.net. I also know he seriously batted around a few legit startup ideas while getting his MBA as Wharton. So I respect his opinions.

Since I was sort of famously quoted in TC on my MBA experience (and my MBAs and Startups post continues to get good traffic) this is a good opportunity for me to revisit my MBA post from last year.

As OfficeDrop has grown I’ve found my MBA more and more useful. Basic stuff like statistics, pricing strategies, etc are particularly useful. I sure that I could have learned this in a book, but there is something about the classroom learning environment that is good for the way I acquire knowledge.

The connections I made during the MBA are very useful. For example, I wanted to test out an idea for a new verticalized product offering at OfficeDrop. I glanced through LinkedIn, saw several classmates who were in the targeted field and had some quick conversations. I could have done this without the MBA, but it was nice to know that there were people who would pick up the phone. And of course the connections were helpful during our fund raise.

I’ve said it before, but my Managing People at Work class was really good. People, outside of the greedy finance world, are pretty fun to manage because it’s not just about the money. My MBA has provided a structure for me to think about this.

I still wish there had been more emphasis on leading sales teams at Wharton. How is this not the most important skill for almost anyone running a company?

The environment of business school is a real problem for people thinking about starting their own company. So many MBAs run for the safety of things like consulting, banking and big corporate positions (and have their post-graduation jobs sewn up with high salaries by the early part of their second year) that you feel strange trying to do anything different. I know for a fact that this atmosphere pulled some potentially great startup people into the boring safe jobs. My friends at Stanford and Harvard who started their own companies said they felt this pressure there too, so I think it’s safe to say this is a pretty standard MBA program problem.

And, finally, business school loans are the bane of anyone looking to start a company because they destroy so much free cash flow.*

Those are my current, unfiltered, thoughts on my MBA. Just as my position has changed over the past year I’m sure it will change again. Would love your comments, and don’t forget to read Matt’s post!

*On a somewhat unrelated note, does anyone else think that student loan situation in the US is the major cause of the educational cost inflation that we have here? In other words, because the federal government makes loans so easily available it is driving up the cost of higher education? I’m starting to think that government policies may be part of the reason that education is becoming so expensive – flood a market with cheap financing and the asset prices will go up??