A strong panel of internet entrepreneurs and service providers spoke on the subject of market demand and entrepreneurial opportunities in the Software as a Service space at a meeting of the MIT Enterprise Forum New York City, last evening.
The approximately 60 attendees heard from six experienced individuals in the field who are working in various aspects of SaaS 2.0, or the second generation of this space.
"Since the late 1990s, the promise of SaaS for businesses has been to maximize business process quality and productivity with minimized IT departmental [capital expenditures] and personnel," the meeting's literature stated. "With some notable exceptions, big successes have been rare. Nevertheless, in the midst of an 'economic perfect storm,' market demand for the promise is greater than ever. Intensified market demand, along with enabling technological innovations such as cloud computing and Web 2.0, are igniting entrepreneurial efforts to deliver the promise of ... SaaS 2.0"
The session covered a number of topics, including:
SaaS Platforms: What are Microsoft and Google doing to create SaaS platforms that support ecosystems of independent SaaS providers?
SaaS Startups: How are two exemplary SaaS startups that target businesses, winning customers and making money: subscription services, advertising, or other?
Investors: From VC and investment banking perspectives, is SaaS 2.0 a field of dreams or a great opportunity?
The panel included: Harry Patz, vice president of Microsoft's Communications Sector Americas Region; Frank Fawzi, CEO, IntelePeer; Duke Chung, CEO, Parature; Scott Johnston, senior product manager, Google Sites; and Ben Boissevain, managing partner, Agile Equity. The moderator was Alan Mitchell, president, ARMAK & Associates.
Friday, May 29, 2009
Thursday, May 28, 2009
Community Banks are Key to Financing Small Businesses in Today's Economy
With all the talk about small businesses being unable to borrow to finance growth during the current financial turmoil, lenders and borrowers in some quarters say that money is available. That is particularly true for borrowing from community banks, according to an article in today's New York Times, titled "Getting the Loan Officer on Your Side: Small Banks Will Lend if They Understand the Business."
"Many bankers claim that their small-business loan volume is up significantly," the Times said. The Federal Reserve's April survey of lending practices showed that credit conditions have improved somewhat. The Small Business Administration (SBA) says that the weekly volume of loans to small businesses is up more than 25% since March.
Most of the lending is being done by small community banks, the Times said. A May survey of 1,500 small businesses by Barlow Research Associates found that companies that applied to small banks for loans in the past year were three times as likely to obtain credit as those who applied to large banks.
Through comments from both borrowers and community bankers, the Times indicates that money is available to creditworthy borrowers who can communicate their needs articulately to the banker, have a good plan in place for moving forward, have good financials and/or a good previous track record, and can develop a good relationship with their banker.
The Times also pointed out that community banks have been cautious, and that many applicants may not be creditworthy at this time.
"Many bankers claim that their small-business loan volume is up significantly," the Times said. The Federal Reserve's April survey of lending practices showed that credit conditions have improved somewhat. The Small Business Administration (SBA) says that the weekly volume of loans to small businesses is up more than 25% since March.
Most of the lending is being done by small community banks, the Times said. A May survey of 1,500 small businesses by Barlow Research Associates found that companies that applied to small banks for loans in the past year were three times as likely to obtain credit as those who applied to large banks.
Through comments from both borrowers and community bankers, the Times indicates that money is available to creditworthy borrowers who can communicate their needs articulately to the banker, have a good plan in place for moving forward, have good financials and/or a good previous track record, and can develop a good relationship with their banker.
The Times also pointed out that community banks have been cautious, and that many applicants may not be creditworthy at this time.
Wednesday, May 27, 2009
New Federal Effort to Enable Venture-Backed Tech Companies to Contract with the Government
The federal government is seeking to alter the government procurement process to enable more venture-backed technology startup companies to compete for government contracts, the government's Chief Information Officer, Vivek Kundra told attendees in Washington at a conference sponsored by the Mid-Atlantic Venture Association.
In an article posted on nextgov.com, Kundra was quoted as saying: "We're looking at the procurement process to make sure we're able to tap into some of the best ideas. We cannot continue to spend billions of dollars on IT projects that haven't produced the dividends we've been looking for. The federal government can lead when it comes to innovation."
A key barrier to achieving the objective, Kundra told nextgov, is achieving a balance between the risk of a zero return on investment and the potential for accessing technology that can transform our society.
Former federal government officials speaking at the meeting on Tuesday raised the possibility of involving VCs and private equity investors in helping to bring new technologies to the government.
Wednesday, May 6, 2009
New Ideas to Revive Venture Capital Investing Presented at Industry Conference
A New York Times blog post earlier this week described the four-step plan put forward last week by the National Venture Capital Association to address the drought in acquisitions and IPOs of venture-backed companies. The plan was announced at the association's annual meeting in Boston.
The plan calls for "the return of small investment banks and accounting firms. These helped small tech companies go public until the dot-com bubble burst and then they disappeared. In order for start-ups to start going public again, the big banks and accounting firms must partner will smaller ones to reinvigorate them," the N.V.C.A. said.
Second, the plan deals with new forms of exits, such as SecondMarket and other exchanges where start-ups can sell shares on the private market.
Third, the plan seeks new tax benefits, such as a more competitive capital gains tax rate for IPO investors and tax incentives for-clean tech companies.
Finally, the plan calls for regulations such as Sarbanes-Oxley and financial statement requirements to be eased for very small companies that want to go public.
“It can’t be fixed with a stroke of the pen, but without fixing this problem, literally innovation will be at bay in this country, precisely at the time competition is increasing from abroad,” The Times quoted Paul Maeder, a general partner at Highland Capital Partners.
The blog post also cites Josh Lerner, a Harvard Business School professor of venture capital and entrepreneurship, who recommends that the VC industry focus on three key ideas.
(1) Changes in patent policy. Patent litigation costs so much and takes so long that it is burdening small tech companies, Lerner said. Instead, he suggests a patent policy similar to that in Europe, where inventors can challenge patents before they are approved. By contrast, in the U.S., Lerner said, most patents are granted quickly and protesters have to go to court to fight them.
(2) Lerner recommends using federal funds to support start-ups, rather than just supporting large, struggling companies.
“In our efforts to rescue failing giants, we are spending all this money keeping buggy whips afloat,” he said. “It seems a little crazy to say we’re going to invest all this money in sunset industries, not emerging companies.”
(3) Lerner said the U.S. to do a better job of keeping foreign-born scientists and entrepreneurs who have immigrated here to stay here. These are people we need to advance our business and economy. He predicted tremendous future pressure from China and India -- who will want to hold on to these talented people and provide incentives for them to remain at home rather than emigrat to the U.S.
The plan calls for "the return of small investment banks and accounting firms. These helped small tech companies go public until the dot-com bubble burst and then they disappeared. In order for start-ups to start going public again, the big banks and accounting firms must partner will smaller ones to reinvigorate them," the N.V.C.A. said.
Second, the plan deals with new forms of exits, such as SecondMarket and other exchanges where start-ups can sell shares on the private market.
Third, the plan seeks new tax benefits, such as a more competitive capital gains tax rate for IPO investors and tax incentives for-clean tech companies.
Finally, the plan calls for regulations such as Sarbanes-Oxley and financial statement requirements to be eased for very small companies that want to go public.
“It can’t be fixed with a stroke of the pen, but without fixing this problem, literally innovation will be at bay in this country, precisely at the time competition is increasing from abroad,” The Times quoted Paul Maeder, a general partner at Highland Capital Partners.
The blog post also cites Josh Lerner, a Harvard Business School professor of venture capital and entrepreneurship, who recommends that the VC industry focus on three key ideas.
(1) Changes in patent policy. Patent litigation costs so much and takes so long that it is burdening small tech companies, Lerner said. Instead, he suggests a patent policy similar to that in Europe, where inventors can challenge patents before they are approved. By contrast, in the U.S., Lerner said, most patents are granted quickly and protesters have to go to court to fight them.
(2) Lerner recommends using federal funds to support start-ups, rather than just supporting large, struggling companies.
“In our efforts to rescue failing giants, we are spending all this money keeping buggy whips afloat,” he said. “It seems a little crazy to say we’re going to invest all this money in sunset industries, not emerging companies.”
(3) Lerner said the U.S. to do a better job of keeping foreign-born scientists and entrepreneurs who have immigrated here to stay here. These are people we need to advance our business and economy. He predicted tremendous future pressure from China and India -- who will want to hold on to these talented people and provide incentives for them to remain at home rather than emigrat to the U.S.
Tuesday, May 5, 2009
Getting Investing Wisdom Straight from the Horse's Mouth
Last year, a friend of mine bought one non-voting share of Berkshire Hathaway stock so that she could make the pilgrimage this year to the company's annual meeting in Omaha, which features the presence and comments of Warren Buffett, the company's chairman and the world's most famous value investor. Indeed, to ensure herself a room at an area hotel, she booked more than six months ahead of time.
The 2009 Berkshire Hathaway annual meeting was held last weekend, and from press accounts, despite the weak year in 2008, Buffett continued to enthrall his audience of the faithful.
The New York Times reported today that 35,000 shareholders attended the meeting, and that despite the weak year in 2008, "shareholders still hung on every word from the 78-year-old investor's lips."
The Times added, "Between sips of Cherry Coke and bites of peanut brittle, he served up some wisdom that might have saved a lot of heartache (not to mention jobs and untold financial losses) had investors heeded it over the last decade: keep it simple."
While "his fan club is still strong, dismissing his bad year as part of the 'markets go up and markets go down inevitability of value investing...., even "Mr. Buffett himself acknowledged, 'I didn't cover myself in glory' in 2008."
The Times report noted that, "Most of what Mr. Buffett said was basic and obvious -- and was roundly ignored during the period leading up to this mess [the current financial crisis]. 'Leverage is what causes people real trouble in this world,' Mr. Buffett said. 'You don't want to be in a position where someone can pull the rug out from under you or, emotionally, where you pull it out from under yourself.'"
However, The Times noted that Buffett, too, is invested in some complicated leveraged investments, i.e., "the very same derivatives that he has called 'weapons of mass destruction.' On Saturday, he acknowledged that he had futures and options contracts on stock indexes and foreign currencies, but added that, in and of themselves, 'derivatives aren't evil.'"
It is doubtful that another Warren Buffett -- combining the extremely sophisticated value investor with the folksy ways that endear him to his followers -- will come along anytime soon.
I'm sure that my friend enjoyed the weekend and will no doubt have gained some investment wisdom along the way.
The 2009 Berkshire Hathaway annual meeting was held last weekend, and from press accounts, despite the weak year in 2008, Buffett continued to enthrall his audience of the faithful.
The New York Times reported today that 35,000 shareholders attended the meeting, and that despite the weak year in 2008, "shareholders still hung on every word from the 78-year-old investor's lips."
The Times added, "Between sips of Cherry Coke and bites of peanut brittle, he served up some wisdom that might have saved a lot of heartache (not to mention jobs and untold financial losses) had investors heeded it over the last decade: keep it simple."
While "his fan club is still strong, dismissing his bad year as part of the 'markets go up and markets go down inevitability of value investing...., even "Mr. Buffett himself acknowledged, 'I didn't cover myself in glory' in 2008."
The Times report noted that, "Most of what Mr. Buffett said was basic and obvious -- and was roundly ignored during the period leading up to this mess [the current financial crisis]. 'Leverage is what causes people real trouble in this world,' Mr. Buffett said. 'You don't want to be in a position where someone can pull the rug out from under you or, emotionally, where you pull it out from under yourself.'"
However, The Times noted that Buffett, too, is invested in some complicated leveraged investments, i.e., "the very same derivatives that he has called 'weapons of mass destruction.' On Saturday, he acknowledged that he had futures and options contracts on stock indexes and foreign currencies, but added that, in and of themselves, 'derivatives aren't evil.'"
It is doubtful that another Warren Buffett -- combining the extremely sophisticated value investor with the folksy ways that endear him to his followers -- will come along anytime soon.
I'm sure that my friend enjoyed the weekend and will no doubt have gained some investment wisdom along the way.
Friday, May 1, 2009
Lessons for Startups from Four Experienced Entrepreneurs
Four entrepreneurs discussed their motivations for starting their businesses and provided insights into the many challenges they have faced since startup, at a meeting at the Crowne Plaza Hotel in White Plains on Wednesday evening, April 29.
The discussion, titled “What I Wish I Knew When I Started My Business,” provided a lively and informative exchange between the panelists and the audience of approximately 40 professionals, many of them budding entrepreneurs evaluating whether they should start up businesses of their own. The meeting was sponsored by the Westchester-Connecticut Committee of the Columbia Business School Alumni Club of New York.
The panel of entrepreneurs included: Anirban Das, president and CEO of USAS Technologies (www.usastechologies.com); Mobeen Khan, COO of Metaphor Solution (www.metaphorivr.com); Jamak Khazra, founder and designer of Bluesuits LLC (www.bluesuitsonline.com); and Jennifer Prosek, founder and CEO of CJP Communications (www.cjpcom.com).
Some of the key points of advice provided by the panelists included:
Das: Talk to many knowledgeable people to get a wide range of advisory input before you start up. Use internet resources as well.
Prosek: Promote your successes through PR and other tools of marketing communications.
You can’t build a business totally on your own. Give commissions to those who help you bring in new business. “Spread the wealth,” advised Prosek. “You can’t do it alone.”
“Great advisors are important,” Prosek said. “Surround yourself with entrepreneurs. We’re all learning. “
Khan: “I carried forward some of my mentoring relationships of the past,” said Khan. “These were invaluable. This process allowed me to call on someone who I trusted to give me unbiased advice.” For example, I have called on my former COO at Cingular for this kind of advice. He can be very straightforward in his comments.”
You need to be able to communicate – with customers, employees, board members. If you’re not good at this, get an executive coach to help.
Khazra: Develop relationships with many people in your industry. You may be able to piggyback on the capabilities and experience of larger organizations without really spending a lot of money.
Das: Go into business for the right reasons. Don’t do it because you don’t like your boss and you want to get away.
You need to have a well thought out and disciplined business and marketing plan.
Khazra: Starting a business is like deciding to invest in a stock. In a stock, you’re investing in the idea of the company. In starting up a business, you’re investing in your own idea.
Determine your risk tolerance. You need to know when to cut the cord.
Khan: You need to love what you do.
Prosek: You have to love what you do, because you’re going to live it 24/7. It’s like a marriage. You have to believe you’re in love and it’s going to last forever.
Try to sell your idea to others before you start up – i.e., try to have one or two customers pre-sold.
On the Current State of the Economy
Das: The downturn is an opportunity, where a small company has an advantage. When things are going well, there’s no incentive for customers to change. If you can survive this period, there’s a huge upside.
Khazra: This is a good time for business suits, because so many people are doing job interviews.
What helps, too, is diversity of products, investment in social networking, add to market basket.
Khan: There are opportunities, but I spent a lot of time in the past six months trying to save my company. You better have a high risk tolerance during these times.
This is a good time to get great talent at cheaper prices.
Prosek: Your pipeline is your only insurance policy in a recession.
You need an army of entrepreneurs, not a single rainmaker. We’re basically flat.
Today’s talent pool is excellent, high quality and available at lower rates.
The discussion, titled “What I Wish I Knew When I Started My Business,” provided a lively and informative exchange between the panelists and the audience of approximately 40 professionals, many of them budding entrepreneurs evaluating whether they should start up businesses of their own. The meeting was sponsored by the Westchester-Connecticut Committee of the Columbia Business School Alumni Club of New York.
The panel of entrepreneurs included: Anirban Das, president and CEO of USAS Technologies (www.usastechologies.com); Mobeen Khan, COO of Metaphor Solution (www.metaphorivr.com); Jamak Khazra, founder and designer of Bluesuits LLC (www.bluesuitsonline.com); and Jennifer Prosek, founder and CEO of CJP Communications (www.cjpcom.com).
Some of the key points of advice provided by the panelists included:
Das: Talk to many knowledgeable people to get a wide range of advisory input before you start up. Use internet resources as well.
Prosek: Promote your successes through PR and other tools of marketing communications.
You can’t build a business totally on your own. Give commissions to those who help you bring in new business. “Spread the wealth,” advised Prosek. “You can’t do it alone.”
“Great advisors are important,” Prosek said. “Surround yourself with entrepreneurs. We’re all learning. “
Khan: “I carried forward some of my mentoring relationships of the past,” said Khan. “These were invaluable. This process allowed me to call on someone who I trusted to give me unbiased advice.” For example, I have called on my former COO at Cingular for this kind of advice. He can be very straightforward in his comments.”
You need to be able to communicate – with customers, employees, board members. If you’re not good at this, get an executive coach to help.
Khazra: Develop relationships with many people in your industry. You may be able to piggyback on the capabilities and experience of larger organizations without really spending a lot of money.
Das: Go into business for the right reasons. Don’t do it because you don’t like your boss and you want to get away.
You need to have a well thought out and disciplined business and marketing plan.
Khazra: Starting a business is like deciding to invest in a stock. In a stock, you’re investing in the idea of the company. In starting up a business, you’re investing in your own idea.
Determine your risk tolerance. You need to know when to cut the cord.
Khan: You need to love what you do.
Prosek: You have to love what you do, because you’re going to live it 24/7. It’s like a marriage. You have to believe you’re in love and it’s going to last forever.
Try to sell your idea to others before you start up – i.e., try to have one or two customers pre-sold.
On the Current State of the Economy
Das: The downturn is an opportunity, where a small company has an advantage. When things are going well, there’s no incentive for customers to change. If you can survive this period, there’s a huge upside.
Khazra: This is a good time for business suits, because so many people are doing job interviews.
What helps, too, is diversity of products, investment in social networking, add to market basket.
Khan: There are opportunities, but I spent a lot of time in the past six months trying to save my company. You better have a high risk tolerance during these times.
This is a good time to get great talent at cheaper prices.
Prosek: Your pipeline is your only insurance policy in a recession.
You need an army of entrepreneurs, not a single rainmaker. We’re basically flat.
Today’s talent pool is excellent, high quality and available at lower rates.
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