Tuesday, February 28, 2006

MIT Enterprise Forum: Charting Your Course through Open Source

Matthew Szulik, CEO of Red Hat, opened his keynote address at the recent MIT Enterprise Open Source event with an impressive video, "Truth Happens." If you get minute, take a look. I'm sure he uses this often, but it woke up the 300 attendees at 8 a.m. on a Saturday -- not an easy task.

Szulik is an entertaining guy, walking the crowd at the front of the room, speaking without notes. He shared these tidbits among many others (I've done my best to capture them verbatim):

  • "We did one of those team-building raft trips. As we started out, the guide asked us, 'What do you guys do?' I told him we sell free software." He said, "That's a hard job."
  • "We have four folks under the age of 14 who are Red Hat Certified Engineers."
  • "As we think ahead, how do we avoid being the K-Mart of software."
  • "What can we learn from our mistakes? We underestimated the power of infrastructure, the infrastructure we'd need to build the next generation of the company. We didn't spend enough time on attracting talent. We do now."
  • "We've signed 40K net new customers in the last 2 quarters."

The Plenary Panel

This high-octane panel featured Simon Phipps, Sun's chief open source officer; Mike Milinkovich, exec. director of Eclipse; and David Skok, general partner at Matrix. It was charmingly moderated by Stephen O'Grady of RedMonk fame. Sadly, my notes here are sketchy as I got pulled out for a bit on a logistical issue.

Phipps noted that the most important element of an open source community are the governance rules - who owns the IP, who gets to commit, how the ecosystem is managed. It's like the keiretsu model, he said - a keiretsu of code. For Simon's eloquent take on this, read here.

The Entrepreneurs Panel

This panel, moderated by the always insightful Anne Thomas Manes, featured Andy Astor, CEO of EnterpriseDB; our client Theresa Friday, VP of marketing for Palamida; and Murray Berkowitz, a technology partner at Kodiak.

Of open source, Astor noted "Customers are not asking me about open source. They are saying we're paying too much for our database and want a better value. They want a quality database with better support at a lower cost."

This theme was oft repeated at the conference. This isn't about selling an open source solution. It's about solving customer problems. Some things don't change, no matter the latest trend.

Friday noted that while Palamida's product is not based on an open source project, their IP Amplifier product uses 19 open source components, and one proprietary component. This mimics the ratio that Berkowitz cited. The average enterprise application might have 20 million lines of code; of that, just 1-2 million are custom. But they are the value add that might provide the enterprise with a competitive edge.

More next time on the CIO panel...

Sunday, February 19, 2006

Raising Funding: What VCs Want to Hear

From CHEN PR co-founder Brenda Nashawaty...

In his State of the Union address last month, President Bush reiterated the need for the U.S. to decrease our dependence on foreign oil.

As usual Massachusetts is a hotbed of innovation in creating alternative energy sources that can cut our use of foreign oil and fossil fuels in general.

Last week at an MIT Enterprise Forum of Cambridge Energy Special Interest Group, close to 200 entrepreneurs, students and investors gathered for the kickoff of the 2006 $125K Ignite Clean Energy Business Competition aimed at making New England the center for clean energy economic development.

What’s striking about remarks from speakers Cary Bullock, CEO of Greenfuel Technologies; and Rana Gupta, managing director at Navigator Technology Ventures, is that whether you want funding for your renewable energy or enterprise software company investors want the same information:

  1. A compelling idea -- Tell investors what’s new or different about your product or solution.
  2. A sweet market opportunity -- Minimize the investor’s risk. Size the market. Know your revenue potential based on current market figures
  3. A cohesive team -- Make sure every team member tells the same story with enthusiasm and conviction (and your team can include advisors, beta customers, partners, etc. who will champion your idea)
Mr. Gupta emphasized the importance of showing investors how you will minimize their risk by demonstrating a deep level of preparation. In addition to understanding your market, customers, and revenue potential delve further. He used the example of understanding who inside a potential customer company will buy your product. Is the person who says "yes" the one who’ll write the check, or will you have to go through another process to close the sale? Key pieces of information like this tell investors that you’ve done your homework, and make it easier to assess the risk.

In addition to developing a solid business idea, the old joke about how to get to Carnegie Hall (practice, practice, practice) was in the air.

Practice your presentation until it’s as natural as breathing. Anticipate and prepare for questions about market size, prospective customers, competitors, what makes your product or solution different, etc. before your first investor meeting. Mr. Bullock emphasized the importance of being able to respond, not react, to questions and shifts in the conversation and suggested creating a FAQ. (He also shared his strategy of giving his pitch to investors before beginning his funding campaigns so he can hone his presentation.)

Considerations for companies looking for funding:
  • Tell your story from a business viewpoint. Focus on the pain or possibility your product will provide the market.
  • Tell the investor why your business proposal is a good risk.
  • Note your assumptions and recognize what is most variable.
  • Use more business slides than technology slides.
  • Promote your success to-date. Are you already in beta? Do you have partnerships, patents pending, etc.?
  • Be honest. Investors conduct due diligence prior to funding a company.

Thursday, February 16, 2006

Wales on Wikipedia

From CHENer Nick Harris...

Imagine a world where democratic and aristocratic governments co-exist and women hold the most powerful positions in society. This is not a monarchy. Dictators are not welcome here. Voting is a tool used for building consensus rather than as a binding mechanism. Reputation and promotion is a natural outgrowth of human interaction. People collectively write their own textbooks and encyclopedias and education is free, available to all. Every human has access to all human information.

Welcome to the human experiment that is Wikipedia.

I recently had the pleasure of hearing Jimmy Wales, founder of Wikipedia.org and the non-profit Wikimedia Foundation, speak at the Mass Technology Leadership Council’s 2006 Annual Meeting. Wikipedia is a freely licensed global online encyclopedia collaboratively written by thousands of volunteers in many languages. In total, there are over 3 million articles across 200 languages, which makes this quite a sizeable project. Wikipedia is a top 20 website, and according to one study conducted by Alexa.com, the site reaches a more unique demographic mix than the NY Times, L.A. Times, Wall Street Journal, MSNBC.com, and the Chicago Tribune. A wiki, as defined by Wikipedia, is “a type of website that allows users to easily add and edit content and is especially suited for collaborative writing.” The term wiki comes from the Hawaiian word wikiwiki meaning quick, fast or to hasten.

Although Wales touched upon the operations and technology behind the project, his message stressed the purpose and mission of Wikipedia: “to provide a high quality, neutral, free encyclopedia.” “This is a social, not a technological innovation,” he said. This is not just about creating a global encyclopedia, but enabling all people throughout the world to become part of the process. Wales also shared some of his personal findings about the Wikipedia community: “Wikipedians” are generally in their late twenties to thirties and tend to be academic post-grads or professionals, 50% of all edits are done by just 0.7% of all users (615 people), and in all countries the most trusted and respected users who yield the most power among wikipedians are female.

Tuesday, February 14, 2006

Beware of... the Riveting BLOG!

A post from CHENer Katie Walker...

I have to admit that the first time I had a friend say that he “blogged” the other day and that I should check it out, I quickly dismissed his request with, “No thanks.” Little did I know at the time that I was passing up a chance to expose myself to one of the most contagious and facile means of communication from one person to a seemingly limitless audience. The “Web log,” as it is formally known, is as simple as it sounds: a log of experiences or thoughts, located on the Web.

So what’s the point? Why do people write in blogs if they can issue a press release, or be interviewed by a reporter?

The answer is in the voice of the blogger. Human contact. People enjoy reading about others’ opinions, interests, beliefs and personalities. It’s all about connecting with the creator, who is not afraid to communicate in a personal, direct way with his or her audience. Who is the CEO behind the revolutionary ideas? Who is the engineer behind the intricate products? It’s only human to be interested in the prolific minds behind the cutting-edge technology we have at our disposal. But in the case of emerging companies, here’s an important tip: the key to a good blog, as in any article or news story, are the elements of originality and controversy.

Probably one of the greatest aspects of blogs is the ability to choose to start a dialogue with the creator. An opinionated, yet informative post can facilitate further discussion on a topic, thus creating more traffic and exposure for a company in a particular market. Blogging “networks” are created amongst those centered around similar interests, and people can link to others’ blogs to continue an ongoing discussion. This observation was discussed at an event titled, “Wikis, RSS, and Blogs - New Ways to Solve Old Problems,” held last month by the Mass Tech Leadership Council.

But as this virtual journal entry becomes a regular means for updating the market on important news or events in a company’s life, we mustn’t forget that these logs do take place in a public forum. To be candid, somewhat less “desirable” news issued to the public will not go ignored, and could quickly become the “white elephant” of every forthcoming post. As in every relationship, in the case of a blogger addressing his or her audience with bad news, it’s essential to recall that honesty is the best policy. Avoiding or hiding the truth from readers may prove to propagate animosity and suspicion not only regarding the blog in question, but also the company and those associated therewith.

That said, mum’s the word when it comes to anything NDA. One slip and you could find yourself in a spot more controversy than you originally bargained for.