At the Source Boston conference last month, we spoke about
the opportunities for start-ups and how now may be an ideal time to launch a
new venture. CSO Magazine published a nice recap of our message and added some
great perspective for would-be entrepreneurs. With the stock market still
seemingly stuck in a wide but capped range, investors are likely becoming
frustrated with traditional investments – or certainly fatigued by the
never-ending evidence of how the average Joe has no chance to generate
meaningful wealth with reckless Investment Banks or Bernie Madoff. And as
layoffs hit levels not seen for 25 years, job security isn’t exactly a reason
to keep toiling away in the ivory towers.
Paper Napkins
While this may sound like a silly concept, many a successful
company has its roots from a couple of folks sitting in a hotel lobby drawing
out what eventually becomes a solid business plan, and ultimately a going
concern. Our advice is to first solicit feedback and ideas from both industry
pundits (IANS Faculty are a great source) and the intended business users.
Danny, see your future, be your future
While we could write a book containing many stories and
issues surrounding salesforce.com’s CEO Marc Benioff, we can’t take away the
fact that his company capitalized on a subtle but dramatic shift in computing
platforms. Software-as-a-Service (SaaS) has led to a number of fast-growing
companies of all types in all aspects of technology – from available CPU cycles
and storage (Amazon) to applications (SuccessFactors) and, of course, security
(Qualys). There are many other companies and even more start ups that are
targeting this complementary shift within Infrastructure Technology. Chris
Hoff’s well received presentation at Source Boston (The Frogs Who Desired a
King) points out the need for management around “the cloud” else we will not
only replicate but perhaps exacerbate the mistakes made in the more traditional
computing efforts. As the cloud is not exactly new, there are already a number
of companies targeting this opportunity – but that doesn’t mean there isn’t
room up on the cloud. In fact, in many cases the first mover (assuming no
patent issues) makes enough mistakes to allow the next player to take
significant share as they capitalize on the learnings of the “bleeding edge”.
Thank you sir, may I have another?
Finding a hidden gem can lead to securing investor dollars
so long as the founders understand that it’s usually no simple task. Even
entrepreneurs with incredible ideas may find themselves on many a plane trip to
have only a 15 minute meeting with a distracted venture capitalist. The VCs are
certainly distracted, as they too are typically challenged raising funds given
the wonderful economy. Having said that,
there are a number of VCs with cash to invest. One good example is .406
Ventures, a relatively new VC located in Boston, MA. We’ve highlighted the firm’s
investment approach, significant security investments (Bit9, Chosen Security,
Memento, Veracode), and knowledgeable executives. Maria Cirino, one of the
co-founders, was herself a “paper napkin” executive back when she co-founded
Guardent, the MSS eventually acquired by VeriSign for $140 million. We also
respect Maria for her thoughtful but straightforward advice. Honest feedback is
what any entrepreneur needs as having a dream is not in itself useful; finding
a way to effectively apply the passion is a requisite. There are undoubtedly a
number of other VC firms that are also very helpful with investment and
guidance, and investors need to find the right firm for their needs. One size
does not fit all. For more information on this, please contact us – listing all
the VCs that we see as proactive would itself be a decent-sized report!
Square peg, round hole? No problem!
Another thought we’d like to share with the IANS community
is that sometimes one idea may not exactly generate a billion, but a tangential
extension or different application of the core technology may be extremely
successful. Sourcefire is a useful example here. Marty Roesch, the CTO and
founder of Sourcefire, thought through the issues of monetizing open source
solutions. Building commercial offerings around his Snort core technology led
to an Initial Public Offering (IPO) currently trading on NASDAQ: FIRE. We
previously mentioned Tenable and Ron Gula’s related approach to capitalizing on
an open source standard. Beyond open source, there are a number of other
examples to examine. Another factor in the FIRE and Tenable successes is lower
TCO. In this economy, providing more for less is an absolute must. Companies
that offer a compelling technology for a better price are seeing very strong
growth. Early this week, we had lunch with the COO of Rapid7, a Bain
Capital-backed company, who indicated the company is achieving record results –
even in this economy. And other
opportunities come with expanding technology platforms. We cited SaaS earlier,
which has many proven examples in security such as Postini, acquired by Google
for $675 million. Beyond SaaS, consumer
plays are open to security providers: the .406-backed Chosen Security recently
signed an exclusive multi-year contract with CI Plus LLP to provide digital
certificates for piracy protection in TV set top boxes and other devices.
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