brinking - nabeel hyatt

Harvard panel on non-competes and the example of Turbine

I wasn't able to make the event at Harvard about non-competition agreements recently due to my second kid being born, but wanted to share Scott Kirsner's coverage of the event:

Harvard prof. Lee Fleming said that people and ideas move from states that enforce non-competes to states that don’t (think California.) His research has found that non-competes squelch employee mobility by about 20 percent, and 30 percent for experts in a given field. Fleming asked whether non-competes might stifle the reallocation of the best people to the best business opportunities.

A great example of this effect just came to my attention. It turns out that Turbine has been trying to introduce new non-competes. Now, I haven't actually seen the agreements but apparently they have some clauses saying you are not to work for a gaming company within 100 miles (or something like that). Many of the professions in game development are industry specific (level designer anyone?) which essentially means that once an employee has worked at Turbine he is almost guaranteed to move away from Boston for his next job.

This is particularly ridiculous in Turbine's case, since just recently an employee left for Harmonix then thought better of it after a few months and returned to Turbine. With their new non-compete agreement this would never happen, as the person would have likely left Boston altogether and simply taken a different job wherever they had moved. Turbine is poisoning their own pond out of fear instead of building the company from strength.

Innovation Economy's Cool Companies

As a writer for the Globe, Wired, Fast Company, etc, Scott Kirsner gets asked what the "cool" companies around these parts are quite often. It's a common question I get as well, and I'm glad he took the time to give his off the cuff list based on the simple criteria:

- Is the company working on something important, or at least fun?
- If you worked there, would you put people to sleep explaining what you do?

Tim Rowe notes that 16% of the companies have been located at CIC, five are game companies, at least five has strong ties to the MIT Media Lab, and probably a bunch are somehow linked to Lotus. I note a distinct lack of wireless companies.

See the list here.

This Thursday - Facebook Apps OpenCoffee

OpenCoffee Boston has settled into a rhythm in the last couple months, so of course that means we should shake things up a bit and see what happens. We're going to try giving a coffee some focus, and see if we can get a little impromptu conversation going.

So what to talk about this week? That's pretty obvious. With OpenSocial being announced last week it's a great week to talk Facebook apps, MySpace widgets, OpenSocial and the implications for growing a startup. We'll talk tech, what apps are oversaturated and where the opportunities are, and of course bring your demos.

I'll be there, as will Bijan, and David Cancel. As usual everyone is welcome, no RSVP necessary, just come by starting at 10am this Thursday at Andala Coffee. We've got at least three top 25 Facebook apps here locally that I know of, so hopefully everyone comes out for a cup of joe, some wifi, and friends.

Update: It was packed, and a lot of fun. We'll need to pick a subject for OpenCoffee's every once a while for sure. Suggestions welcome.

When is CEO 2.0 good? Ambient hires ex Palm, Sony exec as new CEO.

My old company Ambient Devices have just appointed Carl Yankowski, the former President of Sony Electronics and CEO of Palm, to come run the company. Ironically, Marc Andreessen just posted his guide on How to hire a Professional CEO. I'll copy his very brief post in its entirety if you haven't read it:

Don't.

If you don't have anyone on your founding team who is capable of being CEO, then sell your company -- now.

Perhaps Marc was just talking about the lack of a CEO at inception, but I disagree with the rule to never hire a new CEO. An outside CEO is usually brought in for one of two reasons:

a) Holy shit, this startup is totally screwed, let's fire someone so we can blame it on him. You see this frequently, with the recent exit of Dave Sifry at Technorati as a good example.

b) Holy shit, this startup isn't a startup anymore, and the current challenges require someone entirely different. There are a host of examples here as well, such as Google.

A big mistake common of VC-backed companies is replacing the CEO when the startup is in real trouble (scenario A). Of course it's hard to maintain confidence with your CEO if the company is going through rough times. But every startup has some real dark days, and the best person to make sure that it does not die is the founding team. The only thing a company has at that low point is its culture and its vision -- both of which can only come from the founders. So either the culture & vision are worth saving and you stick by the team, or they are not and it's time to shut the thing down or sell it if you can. A new CEO does neither.

But, a startup has three phases: the jungle, the dirt road, and the highway. Being the CEO of each of these is really a different job. And being a good leader is understanding how to get people better than you at a job to do it, even if it's your own. Sometimes when the start-up is doing very well, but lacks some critical expertise to get to the highway, it's time for a new leader (scenario B).

I'll be honest and say this is a very tough thing for a CEO of a startup to talk about. It's one of those dark corners we'd rather not discuss with everyone. When it comes to Conduit, I don't think there is a person on the planet that understands as well as I do what we are trying to do here, and has the ability to execute on it. But, the startup you start is almost never the startup you end up with.

That's a lot of ramen.

Here at Conduit Labs we're announcing the closing of our $5.5m Series A round with Charles River Ventures and Prism VentureWorks. We're also using this occasion to launch the Conduit Labs blog and begin the dialog with everyone, so drop by and say hi. In the future we plan to give a pretty open and honest look at building this startup, everything from what fundraising was like to the technical hurdles we've hit dealing with Flash, and most anything else you guys are interested in chatting about.

The opening post is: How we started Conduit Labs

If we were on the west coast, we'd have been funded by now.

I hear this refrain quite often from consumer Internet entrepreneurs on the East Coast. "If we were in the Valley we'd have raised money in no time, but people here don't get us." This is a kind lie, and it is time we rid ourselves of it. You're not getting funded because your idea stinks, the way you talk about it stinks, you stink, or VCs in general stink - but it's not because you are in Boston, New York, or DC... not anymore.

Scott Kirsner's article in the Boston Globe this Sunday (where I was quoted), or his follow-up piece with George Zachary of CRV on his blog both give this feeling of impending doom for consumer folks on the East Coast. But I think he's being overly dire.

It IS harder to build a consumer internet business in Boston. You get this constant nagging feeling that you're missing the kind of impromptu meetings with like-minded folks that provide inspiration -- that's why I support efforts like OpenCoffee so much. And he is right when he says:

Having just boomeranged back to Cambridge after spending two years in San Francisco, the lack of consumer tech activity here is startling to me -- it's like going from a noisy, hot, crowded bar to another across the street where the bartender has plenty of time to wash glasses and gab with the three regulars perched on stools.

But the fact that it is harder is nothing new. That's like saying, "the financial industry in Boston is still not as big as New York's." That's not news, that's reality. I think what IS news is that it is much easier to run a consumer business on the East Coast than it used to be. There are more of us for one, and location is much less of an issue for funding.

As recently as five years ago most VCs invested locally exclusively, but that is becoming increasingly rare. Today plenty of west coast firms, from Redpoint to Sequioa to Kleiner Perkins, invest in east coast companies. Three of the most famous consumer internet investors are not even in Silicon Valley. Brad Feld (Colorado), Josh Kopelman (Philly), and Fred Wilson (NY) make it a point that they will go anywhere for a good company.

But the reverse is happening too, Charles River, Matrix and Venrock are bi-coastal, and guys like Bijan and Will seem to be doing as many deals in Seattle, NY, and LA as they are New England. All that is to say that VCS are getting better at not making excuses based on location, and so should we entrepreneurs. If you are down the VC road and aren't getting the reception you want, first check yourself, then I encourage you to have no fear and get your ass on a plane to hunt down that deal.

Conduit got fairly close to moving (none of us have much family here, and I'm sure the house would do well in any market) but we decided Boston was the best place to build this company. Some of our reasons for Boston were:

1) Much easier to hire excellent engineers. Google and a few others have sucked all the oxygen out of San Fran, and that's why they are trying to recruit here now.

2) Easier to get mainstream press attention. While getting Techcrunched and Digged is somewhat harder, New York is a huge asset when it is time to access mainstream TV and print. I've seen this first hand.

Gaia looking to sell?

Either Gaia Online is thinking of raising a new round, looking to sell, or they've just gotten tired of not getting talked about more. First CEO Craig Sherman shows up at Web 2.0  (props to Susan for getting two normally recluse companies - Club Penguin & GAIA - to show up to a panel), and then arranges for a cushy article from GigaOm.

Readers of this blog have heard about GAIA several times in passing (1, 2, more) but perhaps a bit more detail is warranted. GAIA started out as a web forum for Anime fans, and has grown into a social network/micro-economy/flash game portal juggernaut on the Internet. It's not as immersive as Second Life, not even as "world-like" as Habbo Hotel. The best analogy is that GAIA is Neopets for anime fans. What Neopets does for virtual pet lovers as a casual semi-immersive social experience, Gaia does for anime lovers. And if anyone thinks that's a slam on GAIA, you don't know your Neopets (#18 most popular place for US users to spend time online).

I often use them as an example of "mega-niche" -- where dominating one niche category so thoroughly can be an effective strategy of reaching the mainstream (the Lord of the Rings movies, for example). And with the number of concurrent users and activity at GAIA Online, it has effectively moved into the mainstream of what Millenials (18-24) do online.

We all know how you like the stats, so here are some that have come to light recently:

Craig: Gaia is the world's fastest growing hangout for teens.  #2 forum, a billion posts, over 1M posts yesterday, 2M monthly unique visitors.  Avg simultaneous users 64k.  3x growth since May 2006.  Avg minutes per session: 48, beats myspace, facebook, habbo, runescape, puzzle pirates

and

85% US users, 55% female audience, 300k users log in daily. Were doing .5m uniques a month this time last year, now doing 2.5m/mo.

Additionally - it's practically a post-modern social network. Just look at the varied offerings and activities: virtual world (10% of users time), rate each other’s artwork and other content (7-10% total activity), play multiplayer Flash mini-games with group chat (10-15% total activity), chat on GAIA forums (30% of activity - not surprising as this was the genesis of the site).

As Hunter quoted over at Lightspeed's blog:

Bing Gordon (chief creative officer at EA) where Bing said something that has stayed with me: “virtual worlds will be a rite of passage for every teenager". The chance to interact with various types of people, to play “dress up” and experiment with different identities was (IS) just a formative part of adolescence.

GigaOM » Move over MySpace, Gaia Online is here

Update: GAIA continues their coming out party with this Ypulse interview.

Technorati Tags: gaia, web20, social networking, casual mmo, virtual worlds

OpenCoffee update

  packed house at opencoffee this week 
  Originally uploaded by Nabeel H.

I'm not going to post about OpenCoffee every week, but suffice to say it's a good mix of entrepreneurs and VCs grabbing breakfast and chatting together casually.

It was a packed group this last week, got to see two pre-launch companies, chat with two VCs, and see a couple of folks who now feel familiar although I've only met them at OpenCoffee. Meanwhile this seems to be taking off internationally as there are now over 20 chapters, not bad for a couple months.

Based on feedback we'll be moving it back an hour so more folks can start their day at OpenCoffee and then head into work.

OpenCoffee Boston
every Thursday, 9am
Andala in Cambridge

Is Cambridge the new hub of Northeast startups?

It occurred to me the other day that in the mile or so between MIT and Harvard there are now literally hundreds of startups. And unlike the past artificial efforts to create a hub for Boston startups, this one happened quite naturally.

This isn't the first shot at a hub for Boston activity. Back in the dot-com days there was an effort to create a "Sand Hill Road-East" called the "128 corridor." I hated this idea. It took the absolute worst thing about Silicon Valley (how spread out it is) and applied it to a city who has the great benefit of actually being very compact.

128 has largely died as a haven for startups, just some VCs left behind there now. But meanwhile Cambridge seems like it has hit a tipping point. Now Google Boston is here, Ideo moved in from Lexington to Central Square, and there are even rumors some of the VC crew out in Waltham may be eyeing the area.

It seems that the combination of Harvard & MIT, the relatively (for this close to the city) inexpensive rent, and efforts like Cambridge Innovation Center (CIC) have really helped spur this growth. And I don't want to underestimate the help CIC has given to this effort. CIC started out as a doomed incubator concept and was reborn after the dot-bomb as a mixture of flexspace & entreprenuer support network.  They now take up something like six floors of a fourteen floor building and host 100+ companies.

Ambient was born in CIC in those dark of 2001, and they are still here now. Who else is here? I pinged Tim and got a quick list of a couple of the guys I could run into in the kitchen:
- iSkoot (CRV-backed VOIP over your cell phone, including Skype)
- Great Point Energy (raised a $30m A round from Kleiner and others to gassify coal)
- Visible Measures (General Catalyst-backed metrics for online video)
- Sconex (MySpace for the high school set)

Hell, there's even an NPR show (currently being recorded in Second Life) that's on the third floor. Walk out of the building and you can hit Tabblo, Vanu, Harmonix, Brightcove, E-Ink and many others in less then a mile radius.

the notice board at CIC where companies in the building show off their clippings

Cambridge overall seems to be developing its own character, and it's great to see. This month Conduit made the leap to becoming a real company (hence my going a bit quiet this month on the blog) and we needed an office. It was an easy choice to come back to CIC. Good to be home.

See the locals at OpenCoffee tomorrow at 10am, in Cambridge of course.

Oh, one more thing. Although I am continuing my "I will not travel this month" pledge, I have been roped into a speaking locally at a conference this weekend. It's called Powering Up: Boston's Digital Gaming Industry, and I'm speaking on a panel with a bunch of VCs about investing in the sector.

Lotro reverses, OpenCoffee #2, and Raph's How to Make the Web Fun

This is a bit of a clean-up post on some on-going topics here at Brinking:

• If you have been drinking with me lately, you've already heard my rant about how game design (particularly MMO design) should be a more applied tool in the development of ANY social network (think Flickr, Myspace, Virb, Last.fm). Well, you've likely already read this but Raph gave a typically elequent speech on this exact topic at Etech. See the preso here, or read Wonderland's notes.
  
  IMHO: game theory is to economics as game design should be to interaction design.
  
  
• I posted last week about Turbine's oversight of forceably segregating their player base by nationality in Lord of the Rings Online. Well, I'm happy to report that the outporing on the blogosphere and the forums has made Turbine reverse their decision. Well done guys.
  
  For those that aren't in virtual worlds and don't see how this might be a big deal - remember that for a growing percentage of the populace this is becoming as important a form of regular communication as the telephone, email, IM, or SMS. Some quotes: