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Archive for July, 2010

The costs of Curt’s R.I. decision

Tuesday, July 27th, 2010

By Rodney Brown

Rodney Brown Lost in all the chatter about 38 Studios LLC accepting a $75 million loan from the Rhode Island Economic Development Council to move from its birthplace in Maynard to somewhere in the Ocean State is the set of terms the RIEDC has imposed on the company.

First is the fact that, in order to get the loan, Curt Schilling and company had to put up as collateral all of the assets of 38 Studios. While a bunch of development workstations and some office furniture may not have a ton of value to the folks in Rhode Island, the intellectual property and the publishing deals just might. And what an intellectual property it seems to be.

The world in which 38 Studios’ games — including its first game, the recently announced single-player role-playing game “Kingdoms of Amalur: Reckoning” — has been crafted by famous fantasy author and Worcester-area homeboy R.A. Salvatore. According to 38 Studios in the recent announcements about Reckoning, Salvatore has already created a 10,000-year history for the world and the races that occupy it. Among fantasy fans, Salvatore is known for having created one of the most iconic characters of recent decades, the dark elf warrior Drizzt Do’Urden, so he already has a track record of crafting some award and revenue-winning IP.

Schilling’s other launch partner at 38 Studios is famous comic book and collectable artist Todd McFarlane, who has designed all of the art elements that will be used in any game or other product based on the Amalur world. McFarlane, for those of you not geeky enough to know, cut his teeth on the Spiderman comic, helping to lift it to some of its highest readerships ever. He also created the character Spawn, which has spawned its own movie and cartoon series. Again, a man already well-established as a creator of winning IP.

Schilling certainly is known for being willing to take some big risks. As an ace pitcher for the Boston Red Sox, instead of wisely ending his season, he famously had a doctor stitch a wall of thread on his ankle to hold a tendon sheath together so he could pitch in Game 2 of the 2004 World Series after rupturing the sheath. But that put just his own career at risk. Now he is putting the efforts of his partners in 38 Studios at risk by agreeing to use their IP as collateral.

Another surprise in the loan deal is the fact that 38 Studios is committed to building up to employing 450 people in Rhode Island, and has to pay a $7,500 penalty per year for each employee in the gap between its staff and that level. As of March, 38 Studios had about 80 people in Massachusetts and about 60 people at Big Huge Games — which the company bought last year — in Baltimore. If it only brings over the Maynard staff, that leaves a gap of 370 people, for a first-year penalty fee of about $2.77 million. Even with the 140 staffers when combining the Big Huge Games staff, the first year hit would be about $2.3 million.

The number 450 itself begs the question: What will all of those people do? Westwood’s Turbine Inc., which maintains three active online games right now and provides regular content upgrades for each while developing new games for new markets, such as consoles, has about 300 people on staff. What will the 450 people at the Rhode Island version of 38 Studios do? While Schilling has made it clear that games alone are not the end of his vision for their intellectual property — books, movies, comics and collectibles have all been tossed about as ideas — it still seems like a challenge to get up to that level of staff numbers based on a single IP.

Certainly $75 million is nothing to sneeze at. And to commit the bulk of your state’s job creation special fund to one company had better allow you to attach some pretty tough requirements to it. If there is any group of people who could be said to be as close to a winning bet when it comes to geekdom, McFarlane, Salvatore and Schilling is that group. But will this new deal result in another celebrated bloody sock or just a bloody mess? What do you think about the deal?

Posted in Entrepreneurship, Gaming, Rhode Island | No Comments »

Enough already: Get over the West Coast envy

Tuesday, July 27th, 2010

Please pardon the following rant, but am I the only one tired of the “East Coast vs. West Coast” innovation-envy conversation? It’s so mid-2000s.

Not clear on what I’m talking about? For those of you who don’t get out much, the script goes like this: You’re at a cocktail reception in the Boston area, most likely Cambridge or Waltham. Someone asks why Boston doesn’t have a consumer home run like a “Google” or a “Facebook” or, more recently, a “Twitter” to capture the hearts and minds of the global innovation economy. The answer, someone replies, is that Boston investors are risk-averse and only West Coast investors are willing to invest in consumer dot-coms. They then cite a laundry list of successful dot-coms that Boston should have had, which is exactly what a West Coast-based Greylock investor (Henry McCance) did during a long-winded interview earlier this week: “There is no compelling reason (like proximity to semiconductor companies) for the consumer e-commerce companies to all be in Silicon Valley, other than thought leadership. But that was enough to have Google, Yahoo, CNET, Facebook, MySpace, YouTube, LinkedIn, Amazon, etc. all locate on the left coast.”

Now, I don’t deny that having a “name-brand” tech company with a large market cap would make it easier for Boston to win the cocktail-conversation game, but I would like to offer up a couple of counterpoints:

One, stop including Amazon.com in the list of Silicon Valley companies you cite when you list your winners. And stop comparing California to Massachusetts. Both arguments are specious. Last I checked, Amazon was based in Seattle — 800 miles from the Valley. And California, by sheer land mass as well as by population, dwarfs not just Massachusetts, but all of New England. By the logic used in this argument, the Boston tech community should start including all of the tech startups from Reston, Va., to the Canadian border. And that includes New York (which by the way has a pretty active digital media startup community. Proof: on any given morning, the Boston-to-LaGuardia shuttle has a couple of local VCs on it.) And if we’re including New York, then I hereby claim Foursquare as a “local (i.e., East Coast) startup.” I won’t claim to know whether it will ever make money, but that never stopped Twitter (whose early investors, by the way, were both on the East Coast).

Two, stop claiming we don’t have retail-oriented online companies. Do we have a Google that started here? No. But where is Google’s second-largest engineering brain trust? Kendall Square. We’ve got a bunch of up-and-comers. Think: Harmonix, Zipcar, iRobot, Carbonite, even LogMeIn. And let’s not forget some other tech innovators that are still alive and kicking, from Monster Worldwide and Bose Corp. to a little one we’ve been writing about for years: Staples.com, which is second only to Amazon as the nation’s largest, Internet retailer. Granted, none of these is Facebook. I get it. But tech jobs are tech jobs and revenue is revenue, and every region in the U.S. (except one) wishes it had what Greater Boston has — including Seattle.

Does New England still have work to do? Of course we do. Our tech salaries aren’t where they need to be, we could be doing more to help build a stronger critical mass of brand-name tech companies, and we could also improve on newly emerging tech opportunities including cloud computing, mobile tech or health IT. But that just means we’ve got a nice healthy list of things to do. And we can’t get real work done if we keep treading over the same tired conversational ground we should have left behind years ago.

Lastly, please stop claiming Harvard as a benefit. When Jeff Bussgang, a VC with Flybridge Capital Partners, was quoted by Fast Company about the strengths of Boston’s startup scene, he cited the IP and innovation being spun out of the local institutions that include MIT, Harvard and our research hospitals. While that is both true and helpful, most folks who actually live and do business here would also agree that Harvard’s innovative graduates tend to leave the area and take their ideas with them (Yes, Mr. Mark Zuckerberg of Facebook, I’m talking to you, but you’re not the only one). MIT, on the other hand, has built a critical mass of local tech entrepreneurs with roots here. But other, less-heralded entrepreneurship engines, from Babson to Dartmouth to UMass, spin out innovations and entrepreneurs who tend to stay.

A lot of the problem is perception, and perceptions do beget reality. I’m afraid that’s where we’ve arrived today. Even McCance agrees there’s “no compelling reason” why Silicon Valley should get all the credit for consumer e-commerce companies. So if it’s a matter of perception, then what should we be doing to change that perception?

Is there something MHT can do? Give me your top three perception-changing ideas in the comments field at this link, and if we get enough good ones, we will follow up on this conversation with a list of the best ideas.

Posted in Startups, Uncategorized | 2 Comments »

Boston: Global drug hub for a day

Friday, July 23rd, 2010

Politicians love to laud the centrality of the state’s biotech sector, but on Friday, Boston was, in fact, the Hub of the drug development universe.

Momenta Pharmaceuticals in Cambridge just blew open the door to bio-similiars – generic versions of biologic drugs – with its approval of a generic form of a blockbuster, $2.9 billion drug made by French pharma Sanofi-Aventis. Biosimiliars were granted a legitimate path to approval recently by Congress, and the approval gives other generic drug makers a window into what it will take to prove to the FDA that their lower-cost alternative to a drug made using living cells, is really equivalent to the original.

Sanofi-Aventis shares dropped on the news, Momenta’s surged 76 percent. And Sanofi wasn’t done drawing the world’s attention to Cambridge.

Genzyme’s shares soared this afternoon, 18 percent, on rumors that Sanofi might buy the company. The rumor mill has been churning for a few weeks, since Sanofi’s CEO said the company planned to make a huge acquisition – one worth up to $20 billion. Analysts started to do the math – Who’s worth $20 billion, and came up with a short list of likely targets, including Genzyme, and its neighbor Biogen Idec.

Now the Wall Street Journal says that early talks are in the works.

The timing of the double French dip into the Boston biotech scene couldn’t make more sense. As Sanofi, and the rest of big pharma, see their blockbuster drugs challenged by generics, and their profits eroded, they’ll have to increasingly look to biotech companies to refill those pipelines. So those shadows you see on the streets of Kendall Square, may belong to vultures from Paris, New Jersey and London, circling in search of their next local biotech company to gobble up.

Posted in Life Sciences | No Comments »

Pay-to-comment play at news site bears watching

Thursday, July 22nd, 2010

As editor of Mass High Tech since 2005 and now having added publisher to my title since January, I’m an avid follower of how general interest daily newspapers are struggling and attempting to solve the problems of declining print readership, dimes-to-dollars differences in ad revenue online vs. print, and generating reader engagement online.

Small-town newspapers are trying models ranging from outright walled gardens to freemium content to keeping it all free, and no one has figured out what will work best.
At the national level, several problems still exist: In print, average weekday sales were down yet again at the beginning of 2010, down almost 9 percent year over year. And while overall ad sales for the big six fell 10.2 percent in the first quarter of 2010, that was actually good news — it represents an improvement compared with drops of 28.3 percent in first-quarter 2009 and 12.8 percent in first-quarter 2008.

But online, it’s still the Wild West for most local newspaper executives. Just last week, Gannett closed a deal with Yahoo to sell Yahoo’s advertising inventory through its 81 local publications in exchange for distributing Gannett content through Yahoo.

Such moves are interesting, but what has me particularly intrigued is news from Wednesday that Massachusetts’ own Attleboro Sun-Chronicle will be requiring its online readers to not only use their real names for commenting online, but also will be charging them a one-time fee to do so.

Despite my discussions about the revenue tribulations going on at newspapers across America, this is not a revenue play — it’s a 99 cent fee, one time, to activate a reader’s account. Instead it’s a hurdle designed to make online venom-spewers put up or shut up: No more anonymous comments and cyber-bullying via the local paper. Sure, such comments are entertaining for people to read, but a newspaper’s brand is often a local institution — and the keeper of that brand, the publisher, has a right to protect it.
Usually, the conversation takes a different tack, with publishers and editors striving to generate more online comments. It’s rare that you see them throwing roadblocks in front of people trying to interact via their web site. After all, it’s all about reader engagement, right?

In this case, it’s a quality vs. quantity. Why not block unwanted blabbers? If they’re not adding anything constructive to the conversation, there’s a good chance they’re not helping the site.

It’s a conversation that has been taking place here at Mass High Tech just this month, in fact. We recently switched from an in-house commenting platform to the more social Disqus platform. We’re waiting to see whether the change makes it easier for our visitors to leave comments and share them on the social networks of their choice. The jury’s still out.

I’m willing to bet that most of the Sun Chronicle’s locally based advertisers are buying ads for brand recognition or direct response, rather than on the more common online CPM, or cost per thousand, basis, so why not take the risk of having fewer page views per visit and less traffic? Ultimately, the traffic that does stay — and comment intelligently — is a higher quality for that advertiser anyway.

I, for one, am interested in watching how this plays out. And I’m rooting for any newspaper publisher willing to take a stand against cheap comment spam for the sake of a few more page views. That game is a race to the bottom.

Posted in Internet, Uncategorized | No Comments »

Apple blames everyone else for iPhone 4 antenna problems

Friday, July 16th, 2010

By Rodney H. Brown

Rodney Brown The Romans knew it – sometimes the best defense is falling on your sword. Steve Jobs, on the other hand, apparently adheres only to the old saw “the best defense is a good offense.” At least that seems to be the case with his explanation of the recent antenna problems with Apple Inc.’s latest product, the iPhone 4.

During his just-ended press conference about the problems, Jobs actually said that the dropping of signal strength bars when holding a smartphone is endemic to the entire industry, and not just an iPhone 4 problem. He even went so far as to imply it was a dirty industry secret, labelling it “Antennagate.” All quotes come from the coverage by Ryan Block of gdgt.com.

Now, maybe Jobs is right. Maybe Consumer Reports, which famously tested the iPhone 4 in a completely controlled environment and was able to replicate the problem every time, will test all other smartphones and find that, in a completely controlled environment with a base station just a couple of feet away, they will lose signal when held in certain ways, just like the iPhone 4 did. Yeah, and Cubs might win the World Series.

I feel sorry for Apple’s lawyers right now. There must be scrambling to get ready to deal with the slander lawsuits that Research in Motion and HTC and Palm/HP must be preparing already.

And what was Jobs’ solution for fixing this industry-wide problem in his company’s own phone? A free bumper case for everyone! Yep, the fix for the most elegant, beautifully designed phone ever is to slap a butt-ugly rubber case on it so you can’t bridge the two external antennas.

But here is the genius behind Jobs’ assertion that there is an Antennagate going on: When the updated iPhone 4 is quietly released, probably this fall, with no explanation of what the dull coating is on the outside antennas and it no longer can be made to lose signal bars, he can point to it and say, “See, we are the first to fix this industry-wide problem!”

The really sad thing is that many Apple devotees will believe him.

Posted in Hardware, Networks | 1 Comment »

Chiang’s cleantech firms A123 and AMSC get Obama OK

Friday, July 16th, 2010

By Kyle Alspach

Every ambitious company has its milestones – the first financing, the break-out quarter, the IPO.

But for the two cleantech companies co-founded by Yet-Ming Chiang of MIT, one of those milestones is a little less traditional: the presidential shout-out.

Sure, it’s not what the two companies – A123 Systems Inc. of Watertown and American Superconductor Corp. of Devens – have been aiming for.

Speaking at an event for an electric-vehicle battery maker in Michigan on Thursday, President Obama mentioned just one other battery company – A123. With the help of $249 million in federal funding, A123 plans this fall to open a battery manufacturing plant in Livonia, Mich., and is also pursuing a second plant in the state.

Meanwhile, American Superconductor was highlighted by Obama in a weekly address last November. The company does most of its business in designs and controls systems for wind turbines, and Obama spoke about the company’s creation of U.S. jobs through exports to Asia.

The two companies have yet to get a visit by the president. Maybe that’s the next milestone. But in any case, the mentions by the president do prove one thing – that Massachusetts cleantech companies are getting attention at the highest levels of government.

Chiang, who spoke with me on Friday, said he’s been much more involved with A123 in recent years than with American Superconductor. He says he’s just glad to see the companies succeeding and isn’t reading too much into the shout-outs.

Still, he said, “It made me smile.”

Posted in Energy | No Comments »

Google’s Facebook competitor – aiming for too much of an unwanted thing?

Monday, July 12th, 2010

By Rodney H. Brown

Rodney Brown Boy, when Google Inc. plans to muscle in on somebody else’s territory they seem to be aiming for complete overkill.

The recent report from the website TechCrunch, which says that its sources indicate Google has invested between $100 million and $200 million in social game developer Zynga Inc., just adds to the almost confirmed rumor that Google is about to launch a Facebook competitor called Google Me. Zynga makes some of the most popular Facebook time-wasters, including Farmville and Mafia Wars.

The TechCrunch report, and others, say that Google plans to make Zynga the lynchpin of a new Google Games operations. While no one at Google has confirmed anything about the Zynga deal, it seems, speculation is running rampant that the new Google Games will be one part of Google Me, and when launched, the new social network should automatically have access to all the features of Facebook, and possibly more. That “possibly more” could be a problem, however.

When Google launched its reputed Twitter-killer, Google Buzz, it tried to make the fact that it would automatically connect to your Gmail and could automatically pull in all of your contacts as Buzz “friends” as a wanted feature and not an intrusive privacy problem. The problem was that initially it would show all of your contacts to all of your other contacts. The small community of regular Buzz users put an end to that pretty quickly with vocal protests, and Google fixed its Buzz privacy settings in April. With a track record of making Facebook-like erroneous privacy assumptions in its very first social network play, one has to wonder what Google Me will be like, if and when it launches.

Anyone looking forward for those Farmville updates from your friends dropping automatically into your Gmail? Not me. Google will need to get these privacy settings correct right out of the farmer’s gate.

Posted in Internet | No Comments »

My goal as a journalist: to subtract value

Thursday, July 8th, 2010

I’m subjecting the good staff and clientele of the Venture Café to open office hours today. That means I’ll be at Cambridge Innovation Center on a warm Thursday afternoon, trying to provide lucid advice for startups on how to handle media exposure.

To accomplish this goal, I’ll be ignoring the half-keg of excellent beer I know they’ll have on tap. In case I fall short of plan, here, at least, are a few coherent thoughts.

Understanding the media is simple if you understand that journalists (the good ones) are mostly trying to do one thing: be valuable to our readers. Readers are usually also sources, and the ones who know the value of a good story are usually the best sources. Good stories beget tips that lead to more good stories.

So, if you’re pitching a story to a news person, imagine yourself reading it, instead of pitching it, and ask yourself: ‘Would I find this valuable?’

OK, the relationship between journalists and information is a little more complicated than that. We don’t always seek to “add value,” as the biz-speak chestnut goes. Sometimes our goal is to remove it.

Like anything, the value of information is based on supply and demand. A company’s announcement has little value in today’s media world, because it’s immediately over-supplied via search and any number of outlets. But a news person may bring something rare to add – analysis, perspective or sources that come from knowing the subject area. Or, he or she may combine pieces of information that alone are worth little, like the Miami Herald did today with disparate accounts of scams related to the gulf oil spill.

These stories are good. But you do a journalist better when you offer information that only a few people know about. When good information is scarce, and therefore valuable, a journalist’s job is to remove some of its value, by supplying it broadly to readers. ESPN may have accomplished this today, with a report that NBA superstar Lebron James is leaning toward signing with the Miami Heat. Let’s say you are a front-office employee at any NBA franchise. Knowing Lebron’s plans yesterday, you had some valuable knowledge. Today, after 2,000 online news organizations picked up Chris Broussard’s report, it’s the baseline for cube farm trash talk.

If you’d like to talk further, drop by the Venture Café today between 3 and 6 p.m. MassChallenge will also be there, along with Boston World Partnerships.

Tags: media, open office hours, pr, Startups, venture cafe
Posted in Internet, Startups | No Comments »

Yes, Maine does do technology

Friday, July 2nd, 2010

By James Connolly

Jim Connolly I hope you caught Rodney Brown’s story on Masshightech.com this week about TechMaine’s annual technology awards. It reminded me of a comment from a relative who lives in Maine when she once told me, “We don’t have much technology in Maine.” When I ticked off a list of some of the companies doing interesting work in the state, she seemed surprised.

What’s neat about the tech goings on in Maine isn’t just the big success stories (Idexx, Fairchild, etc.). What’s really great to see is the type of ideas that people have. It was hammered home when Rodney’s story cited how several award recipients thanked the Maine Technology Institute for its support of their companies.

If you’re unfamiliar with the MTI, it’s a state-funded non-profit that helps early stage companies get off the ground. Several times a year, MTI hands out small grants (in addition to some larger awards), to companies trying to solve everyday problems, sometimes in somewhat unorthodox ways.

The awardee list makes for a fun read. Check out some of the ideas from a month ago:

Phinney Enterprises in Trescott was awarded a seed grant of $12,500 to develop whelk culture and characterize the reproductive cycle of local whelk populations. (That’s whelk as in sea snail culture.)

Lyman Morse Boatbuilding in Thomaston was awarded $12,400 for the development of Water Wheels, a self contained float system able to supply power to any power needs.

Print Recovery Concepts Inc. in Yarmouth was awarded $12,500 to develop black and color soy inkjet samples to help reduce the use of the one billion inkjet cartridges, each containing several ounces of petroleum ink that are consumed annually.

Foreign Auto & Supply Inc. in Harpswell was awarded $12,500 to develop a unique Engine Control Unit (ECU) and a Hydrogen Assist Generator (HAG) that work in conjunction with an automotive engine to burn hydrogen and oxygen in the combustion chamber for gas and diesel engines. The intended result is significantly better fuel economy producing cleaner emissions.

Fox Islands Wind in Vinalhaven was awarded $12,358 to assess the technical feasibility of using their Active Noise Cancellation technology to help mitigate the potentially bothersome effects of wind turbine sound.

Seacolors in Washington was awarded $12,500 to advance their low-impact dye process using solar thermal technology utilizing natural salts and acids. This next step will utilize excess solar capacity to create a drying station, test waste waters and implement a discharge system.

Advance Electronic Concepts in Portland was awarded $9,400 to submit a patent application for an optical system for a solid state luminaire designed to operate in supermarket refrigeration cases.

Jotul North America in Gorham was awarded $12,500 to create an innovative non-catalytic top-loading woodstove (to be branded as the Jotul 50 TL) which utilizes patentable cam lever technology to create an easy-to-load, clean burning, energy efficient product.

Posted in Maine | 3 Comments »