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Stop Ashton Kutcher before It’s Too Late

Stop Ashton Kutcher before It’s Too Late

I don’t want to believe that the tech industry is inescapably bound towards another dangerous bubble. I have been able to rationalize my denial with the idea that the Silicon Valley of the ’90’s is not the Silicon Valley now. We are smarter, more calculating, and led by veterans who know how to help nurture the sustainable growth of a global market.

Then I heard that among the panel of judges at Startup Weekend in Los Angeles were Ashton Kutcher and Demi Moore.

More like "Dude, where's my bubble?"

FML.

The Wall Street Journal recently published an article on how modern Silicon Valley is starting to look a lot like 1999. While the tech industry is more mature than we were 12 years ago, it’s hard to deny that tech’s rise from the recession could very well turn into another unsustainable bubble.

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Hacking The Planet: The business behind high tech’s hacking culture

Hacking The Planet: The business behind high tech’s hacking culture

“I don’t want good students. I don’t want Ivy League kids. I don’t want the typical rank and file that go off to IBM or get pulled into Microsoft and Google because they got an internship via their career center.

I want kids that spent their time doing things that live and breathe algorithms. I want the students that enjoy programming competitions and breaking into each other’s computers. I want the kids that cracked a copy of Photoshop not just because it was cheaper than buying it – but also because it was fun.

I don’t want computer nerds or even software engineers. I want hackers.”

These were the words from my friend Jen, a recruiter at a very-well funded startup in Silicon Valley. Jen’s comment highlights a growing trend in Silicon Valley – the popular embrace of the hacker in establishing and maintaining a culture of innovation.

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The Emergence of Coworking: Startups share offices before they scale

The Emergence of Coworking: Startups share offices before they scale

If the Bay Area economy was akin to a baseball game, the technology and startup entrepreneurs are wearing their rally caps and driving in the jobs. As the startup industry grows, led by founders and powered by angel and venture funding, community has become the glue to hold it all together.

Whether it’s a high-profile departure from Facebook or a graduate from MIT, there is a lot on the line in starting a company, and there is tremendous value in surrounding yourself with others who have the same passion and work ethic.

Founders are joining coworking spaces and venture-backed incubators, sharing offices with larger companies, or leasing office space. There are myriad ways to establish your company’s headquarters, but the common denominator to opening an office is community.

At the GigaOM Net:Work Conference in Mission Bay, we held a coworking workshop in which leaders in coworking discussed the new phenomenon. Julian Nachtigal, the mind behind pariSoma which is quintupling in size in San Francisco’s SoMa district, and Jeremy Neuner, CEO of Nextspace with two locations in SF and Santa Cruz.

The message was clear: co-working thrives around community, where entrepreneurs can share best practices, network with various industry professionals and rent a desk to plug a computer in and get to work. If you don’t know what a co-working space is, read this Quora thread.

Coworking @ Parisoma

Coworking @ Parisoma

“Coworking got a jumpstart during the economic crisis and crisis equals opportunity. Lean startups of 2-6 people with early stage seed funding can’t afford to have their own office, and we offer them a solution,” says Julian.

Coworking spaces in SF are growing at rapid paces, with The Hub at the San Francisco Chronicle Building expanding (See San Francisco Chronicle story), SOMA Central taking more space at 153 Townsend, and Rocket Space opened a large 50,000 square feet in SoMa to fit 500 people geared to later stage startups. See my blog post on the launch of RocketSpace.

“Community is the biggest part. People by nature are social. At coworking, entrepreneurs prove their product, raise funding, then choose when to scale and branch out to larger office space. But the community that was started at places like pariSoma lives on,” Julian explains.

Entrepreneurs may leave the co-working, but the coworking certainly doesn’t leave the entrepreneur.

Coworking works in tandem with the office market. “My dream would be to have every person working at NextSpace start an office of their own and grow to be the next Facebook.” Says Jeremy Neuner.

“The trend bodes well for the city because small businesses are expected to contribute significant numbers of jobs in the current economic recovery.” See the full SF Business Times article on coworking, “Tech startups dare to share”.

The Hub

Coworking at The Hub

Owen Thomas, Editor of VentureBeat, tweeted to me the other day, “Silicon Valley used to be about cheap office parks. Now it’s about gathering brains, shortening commutes, and providing for play.” Entrepreneurs are seeking out community in an office space just as they do at a coworking space.

Community is the main reason South of Market and Palo Alto have become the epicenter for startups. The vacancy in Palo Alto hovers around 5%. Similarly, vacancy in South of Market shrinks every quarter and rates have grown to $40 per RSF at the high end. In my article on VentureBeat, I show the tremendous activity going on in SoMa and Palo Alto despite the rising rates.

Companies like Twiliohave opened their own office, but did not isolate themselves in the process. They shared the office with another startup in the beginning, and they have used their office to give back to the community. Take a look at the pictures from the SF New Tech Holiday Party, hosted by none other than Jeff Lawson and the whole Twilio gang at their headquarters on Folsom street.

My client, Thumbtack, a leading marketplace for local services, opened a beautiful office this month in South of Market and wants to encourage groups to work from their space. They have a full kitchen, open layout, loft space and a cook that visits their office two times a day to cook them meals. They certainly will have a great community within their own office! Check out their ad!

2011 is ripe for another tech boom, and the lean startup method with smaller starting offices and coworking spaces will make it sustainable. The Bay Area is on the verge of an exciting year, and more lights will be burning late in coworking spaces and startup offices alike.

We are having a Coworking Unconference event to start SXSW in Austin Texas as well! So if you are planning on going to SXSW, sign up and join the conversation and the movement!

Justin Bedecarré is a real estate advisor for technology and media companies at Cushman & Wakefield, a commercial real estate firm covering the Bay Area. He has represented firms from Fortune 100 to startups in media and technology, including Broadcom, Thomson Reuters, AKQA, and Hearst Corporation, to name a few. He writes a blog on the intersection of technology and commercial real estate at www.BayAreaComRE.com. He can be reached via email at justin.bedecarre@cushwake.com or at About.me, @jtbed on Twitter, Facebook, LinkedIn and Quora

Hummer Winblad Venture Partners

Hummer Winblad Venture Partners was founded in 1989 as the first venture capital fund to invest exclusively in software companies.

Contact:
Lars Leckie, Managing Partner
lars@humwin.com
www.humwin.com

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Morgan Stanley Smith Barney

John Lin and The Cypress Group at Morgan Stanley Smith Barney work primarily with technology entrepreneurs and executives to identify solutions that address both their personal and professional financial needs. Our objective is to provide value added advice and services to our clients within the startup community, so that they have more time to focus on building their companies.

Contact:
John Lin, Wealth Manager
john.s.lin@mssb.com
fa.smithbarney.com/thecypressgroupsb

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Backblaze, Inc.

Backblaze online backup provides the easiest way to protect all your data.
Built upon the unique Backblaze storage cloud, the service automatically backs up all data for consumers and businesses for just $5/month with unlimited storage. Start your free trial now.

Contact:
Gleb Budman, CEO
gleb.budman@backblaze.com
www.backblaze.com

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Nearsoft, Inc.

Software Product Development firm that works as innovation partner for ISVs, SaaS, Consumer Facing Sites.

Contact:
Matt Perez, COO & Co-founder
mperez@nearsoft.com
www.nearsoft.com

RocketSpace Inc.

The ultimate all inclusive shared office space for tech & new media companies with between 1 and 30 employees.

Contact:
Duncan Logan, Founder & CEO
dlogan@rocket-space.com
www.rocket-space.com

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Waldron Consulting Group

We work with founders, executives and investors to grow high performance companies. Creating actionable business plans to build out operational, marketing and leadership strategy.

Contact:
Kevin Waldron, CEO
kevin@waldronconsultinggroup.com
waldronconsultinggroup.com

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Microsoft: The Empire Strikes Back

Microsoft: The Empire Strikes Back

Last year one of my friends quoted something from Twitter that has had my noodle cooking for a while now:

Welcome to the 21st century.  Java is a restricted platform, Google is evil, Apple is a monopoly, and Microsoft is the underdog.

The early 2000’s have not been kind to Microsoft. Windows Vista was met with dismay upon release, despite a variety of  technology enhancements over Windows XP. Arch-rival Apple had gone from near bankruptcy to titan with the iPod and a refresh of both its Mac hardware line and operating system. With its new muscle, the Cupertino-based firm has exacted a serious toll on Redmond’s annual revenues across the consumer sector in the past decade.

Google’s rise to power and the introduction of open source as an enterprise standard has also bloodied Microsoft. In addition to providing Redmond with a new major threat in a variety of software markets, the blossoming of Google has helped to propel the parallel rise of open source software in enterprise deployments. No longer was running an expensive Windows Server with SQL, and IIS the norm. The LAMP (Linux Apache MySQL PHP) stack emerged and eliminated Microsoft’s foothold in the web server market – a paradigm shift propelled by competitors Oracle and Google.

Even worse Microsoft was no longer cool. True – Apple’s artistic flair and Jobs’ beatnick style helped to always make the company the more hip alternative. But Microsoft always remained easily within the top three of in-demand tech companies to either intern or start ones’ career in. Google and Post-Google Silicon Valley firms like Facebook have largely usurped Redmond as the fun place to be for new engineers, jeopardizing Microsoft’s position in the eyes of young hacker talent.

This is a very dangerous proposition for Redmond. If Generation Y decides to go to Microsoft’s competition instead, innovation for the next twenty years in computing will go with them.

Even in the first strokes of this new decade though, it’s clear that there’s a change in the wind coming from the cold north of Seattle. Post-Gates Microsoft has emerged swinging hard, wielding an impressive value proposition to consumers and young job-seeking engineers. Truly, winter is coming. Redmond is striking back.

While Apple certainly commands a significant control of the consumer electronics and ultra-mobile computing space, and both Apple and Google remain the dominant players of the skyrocketing mobile phone market in the United States, Microsoft remains strong in its core competencies and is gaining fast in the mobile OS sector. Windows 7 is considered a success at 250 million units sold as of Q4 2010. Windows Phone 7, Microsoft’s late entry into the mobile OS market, is gaining remarkable steam on Android and iOS and expected to supplant RIM’s OS in market share by the end of 2012. Microsoft Office remains the dominant Office suite despite a variety of (even free) alternatives, and Redmond remains an exciting and fun place to start one’s journey into technology despite heavy competition.

So what happened? How has Microsoft been able to reverse their fortune and strike back at their competition in just three years?

They refreshed their brand and technology strategy from the inside out. In effect, Microsoft is rebuilding the death star we all saw in the 90’s. Only this time it’s bigger, stronger, more popular, and minimizes the number of catastrophically explosive exhaust ports.

Microsoft has started to recover its momentum in three ways:

Beauty – UX/HCI

Much of Apple’s rise to power is arguably the result of their competitive advantage in industrial design. The iPod, the Macbook, and even OSX are all cool because they provide an amazing user experience. In contrast, Windows XP was – while ubiquitous – boring. Early 2000’s and 90’s desktop PC’s were beige monoliths that did little to defeat Apple’s portrayal of the PC industry in their famous 1984 ad. Even when competitors began to release MP3 players with similar functionality to the iPod that were more friendly to Windows, they were quickly discarded in favor of the more beautifully functional Apple alternative. Microsoft addressed this need by pushing their research initiatives towards the ever-important and nascent fields of UX (user experience design) and HCI (Human Computer Interaction). Much of this was the result of them hiring Chief Scientist Bill Buxton, an eccentric computer scientist cum industrial designer who helped the firm revolutionize its approach to how the company’s products interact with the user.

Examples of Microsoft’s new emphasis on UX design can be seen in the Zune and Windows 7/Windows Vista’s Aero interface.While Apple and Google continue to lead at the front by having first-mover advantage with technology like mutlitouch and instant-boot technology, Microsoft’s investments have them hot on their trail – and in some cases even superior. The Xbox 360, Windows 7, and Windows Phone 7 showcase exemplary UX polish that’s accentuated by a fluent and inarguably beautiful symphony of typography, solid realization of core design fundamentals, and functionality. This has allowed them to close the gap with OSX in operating system UX, and even enabled the company to make their late entrance into the mobile phone market a disruptive one.

Popularity – Entice the Resource Market

Being a college programmer is a bit of a mixed bag. Even though you’re an invaluable resource to large companies because of your fresh ideas and wide-eyed wonder, your lack of experience with the development of a company’s technology is a detriment.This makes introducing development experience core to a company’s product development key for major tech firms, and explains why firms like IBM and Google spend considerable sums of money in contributing research and technology to major tech schools in order to help control the curriculum of computer science majors.

Microsoft realized that their traditional approach of “being the only game in town” was slipping with the rise of open source languages and OS’s  like Java and Linux. Furthermore, by not being beautiful, late ’90’s/early 2000’s MSFT was even less incentivizing college students to invest time in learning proliferating core Microsoft technologies like the early .NET framework and the Windows API. Microsoft has since rolled out a series of programs meant to win back Generation Y.

Addressing the issue of cost, Microsoft created the MSDNAA (Microsoft Developer Network Academic Alliance). This allowed vetted tech schools to provide free versions of Windows, SQL server, and development tools to college students. The MSDNAA allowed Microsoft to better compete with free open source software, and trumped expensive student alternatives within Apple that required college students to purchase membership in Apple’s expensive developer program.

Addressing the issue of popularity, Microsoft created the MSP (Micrsoft Student Partner) Program and Imagine Cup. MSP’s are paid Microsoft developer evangelists recruited out of universities to popularize the brand. Soon MSP-run Microsoft events became ubiquitous at many key campuses in the United States, with the attraction of free Xbox 360s and video games helping to add to the brand’s appeal. Imagine Cup, Microsoft’s humanitarian invention competition, allowed  student inventors a paid outlet to compete for seed funding for a socially conscious projects using Redmond’s technology.

All of these measures have been met with wide appeal, and the brand’s image continues to improve with this core audience.

Muscle – Capitalizing off Competitive Advantage

While in decline, Microsoft was far from dead in the ground. The company’s rebound can also be attributed to strategically using more popular aspects of their brand to push the company’s development initiatives.A good example of this is their use of the Xbox 360. The Xbox brand has been a strong player in the video game console space since 2001. Modern development for the Xbox is largely done in the XNA Framework, which uses .NET. This ensures that game developers wishing to release on the Xbox need to use .NET, and further popularizes the .NET suite (particularly C#) via complementary demand.

Microsoft may not be the coolest game in town. But it’s certainly not dying anymore, and companies like RIM – and even Apple and Google – need to realize that Redmond is coming back with a vengeance.

Cue the Imperial March theme.

SF New Tech Contributor Andrew “Andy” Manoske is a PM by day, hacker by night, and sometimes in the evening he fights crime. He currently serves as a product manager at NetApp – the youngest in the company’s history – and previously held technical positions at SAP, Microsoft, and Electronic Arts. He received his Bachelors of Arts in Economics and Computer Science from San Jose State University in 2010, and was a finalist in Microsoft’s Imagine Cup competition and the Silicon Valley Neat Ideas Fair.
Twitter: @a2d2 Website: http://www.zomghacks.net