Showing posts with label entrepreneurs. Show all posts
Showing posts with label entrepreneurs. Show all posts
Saturday, August 15, 2009
Welcome NextBurgh, on Burgh Entrepreneurship
A belated welcome to the Burgosphere to Nextburgh, a new blog covering Pittsburgh's entrepreneurship community, with a special interest in tech and new media. NextBurgh is the brainchild of Tim Marman, a New York-based entrepreneur who is relocating to Pittsburgh.
Tuesday, May 19, 2009
Pittsburgh's Entrepreneurship Darknet
In recent conversations with experienced local entrepreneurs, I've formulated a new hypothesis: The conventional wisdom about Pittsburgh's entrepreneurship and startup communities is wrong.
That conventional wisdom runs something like this: There are lots of great ideas in Pittsburgh, but there isn't enough risk capital. Individual family + friends and angel investors are more risk-averse than their counterparts in regions where the entrepreneurial winds blow more regularly than they seem to here. Local institutional investors are reluctant to place bets here rather than in higher velocity locations. Local investors are skittish; they don't like to lose money and would rather take a break from investing rather than get back into the market after a failed play.
The new hypothesis is that the conventional wisdom applies -- perhaps -- if one focuses on the "public" entrepreneurship space, the one dominated by conversations that include regional economic development enterprises, local governments, big companies, and technology transfer operations at local universities. (I add the "perhaps" because my sense is that even that "public" space has gotten a little more lively and energetic, and investors there have gotten a little savvier and more risk-oriented.)
But the conventional wisdom may not apply if one focuses on what I'll call Pittsburgh's entrepreneurship Darknet. (Darknet or dark fiber? You choose the better metaphor.) What I mean is that there is, in fact, a vibrant off-the-public-radar community of entrepreneurs which is regularly and happily building enterprises based on excellent ideas, and getting funding for them from local investors, with none of the "no one takes risks in Pittsburgh!" angst that percolates via the conventional wisdom. It's a Darknet because this high-bandwidth network functions effectively to circulate ideas and money, yet it deliberately stays out of the news. There are no big public parties or show-and-tells; there is little engagement with the better-known local economic development institutions; they give few interviews to the media - even social media. Yes, these folks are trying to hit home runs, but in the meantime, they are doing what entrepreneurs do: Researching, planning, building, executing. In the words of Nuke LaLoosh, "This is a very simple game. You throw the ball, you catch the ball, you hit the ball. Sometimes you win, sometimes you lose, sometimes it rains."
If the hypothesis is right, then it doesn't solve all problems, but it puts certain propositions in a different light. First, for example, it's still true that Pittsburgh lacks a legal community that can fully support a vibrant entrepreneurship and startup sector, Darknet or no Darknet. Second, entrepreneurs' reported difficulties in securing local financing may in some cases have less to do with the lack of local risk capital and more to do with the fact that the ideas in question are mediocre, or that the entrepreneurs themselves are lacking a certain something. Third, Darknets don't just happen; they get built, intentionally; Darknet entrepreneurs and investors may be cut from a slightly different cloth, or they may conceive of what they do in somewhat different terms. But they don't wait for good ideas to fall from the sky like manna from Heaven (i.e., they don't wait for the phone to ring with Pitt or CMU on the other end); they go in search of the good stuff; and they don't, as a rule, do their dancing in public (at least until the exit strategy has been executed). They don't focus their search for ideas on public meetings and conferences. By the time the ideas hit the show-and-tell, the good stuff may be gone, or the market opportunity may be gone, or both.
And the hypothesis says nothing about the fact that the conventional wisdom is, well, conventional. Nothing would be better for all of Pittsburgh's entrepreneurs than for the conventional wisdom to change and for Pittsburgh to be known as a place that is as welcoming of innovation as Austin or Seattle. At least some of the re-framed propositions in that last paragraph involve things that can be modified. The legal community can get brighter and more vibrant; entrepreneurs at all levels can be more aggressive in chasing down new ideas; with more experience and better mentoring, it becomes easier to distinguish promising ideas from lousy ones -- though this is more quantum mechanics than classical physics. That distinction is never easy.
That conventional wisdom runs something like this: There are lots of great ideas in Pittsburgh, but there isn't enough risk capital. Individual family + friends and angel investors are more risk-averse than their counterparts in regions where the entrepreneurial winds blow more regularly than they seem to here. Local institutional investors are reluctant to place bets here rather than in higher velocity locations. Local investors are skittish; they don't like to lose money and would rather take a break from investing rather than get back into the market after a failed play.
The new hypothesis is that the conventional wisdom applies -- perhaps -- if one focuses on the "public" entrepreneurship space, the one dominated by conversations that include regional economic development enterprises, local governments, big companies, and technology transfer operations at local universities. (I add the "perhaps" because my sense is that even that "public" space has gotten a little more lively and energetic, and investors there have gotten a little savvier and more risk-oriented.)
But the conventional wisdom may not apply if one focuses on what I'll call Pittsburgh's entrepreneurship Darknet. (Darknet or dark fiber? You choose the better metaphor.) What I mean is that there is, in fact, a vibrant off-the-public-radar community of entrepreneurs which is regularly and happily building enterprises based on excellent ideas, and getting funding for them from local investors, with none of the "no one takes risks in Pittsburgh!" angst that percolates via the conventional wisdom. It's a Darknet because this high-bandwidth network functions effectively to circulate ideas and money, yet it deliberately stays out of the news. There are no big public parties or show-and-tells; there is little engagement with the better-known local economic development institutions; they give few interviews to the media - even social media. Yes, these folks are trying to hit home runs, but in the meantime, they are doing what entrepreneurs do: Researching, planning, building, executing. In the words of Nuke LaLoosh, "This is a very simple game. You throw the ball, you catch the ball, you hit the ball. Sometimes you win, sometimes you lose, sometimes it rains."
If the hypothesis is right, then it doesn't solve all problems, but it puts certain propositions in a different light. First, for example, it's still true that Pittsburgh lacks a legal community that can fully support a vibrant entrepreneurship and startup sector, Darknet or no Darknet. Second, entrepreneurs' reported difficulties in securing local financing may in some cases have less to do with the lack of local risk capital and more to do with the fact that the ideas in question are mediocre, or that the entrepreneurs themselves are lacking a certain something. Third, Darknets don't just happen; they get built, intentionally; Darknet entrepreneurs and investors may be cut from a slightly different cloth, or they may conceive of what they do in somewhat different terms. But they don't wait for good ideas to fall from the sky like manna from Heaven (i.e., they don't wait for the phone to ring with Pitt or CMU on the other end); they go in search of the good stuff; and they don't, as a rule, do their dancing in public (at least until the exit strategy has been executed). They don't focus their search for ideas on public meetings and conferences. By the time the ideas hit the show-and-tell, the good stuff may be gone, or the market opportunity may be gone, or both.
And the hypothesis says nothing about the fact that the conventional wisdom is, well, conventional. Nothing would be better for all of Pittsburgh's entrepreneurs than for the conventional wisdom to change and for Pittsburgh to be known as a place that is as welcoming of innovation as Austin or Seattle. At least some of the re-framed propositions in that last paragraph involve things that can be modified. The legal community can get brighter and more vibrant; entrepreneurs at all levels can be more aggressive in chasing down new ideas; with more experience and better mentoring, it becomes easier to distinguish promising ideas from lousy ones -- though this is more quantum mechanics than classical physics. That distinction is never easy.
Thursday, July 31, 2008
Growthology
From the entrepreneurially-minded folks at the Kauffman Foundation, a new blog emerges: Growthology.
Friday, July 25, 2008
Pgh Entrepreneurship Support Opportunity
The Pitt Law School, where I teach, is dipping its toes in the waters of local entrepreneurship. Here is a job posting that recently went live at the University:
If you are interested in this position and have questions, please feel free to get in touch with me. I'm not the one doing the hiring, but I may have some role as the process goes forward.
All applications must be made through the University’s “PittSource” website; the following Quicklink will take people directly to this position posting: www.pittsource.com/applicants/Central?quickFind=60490The University of Pittsburgh School of Law seeks an individual to develop and direct a program in Law and Entrepreneurship at the School. The program, which will seek to prepare law students to advise entrepreneurs effectively and to increase the level of quality legal services received by entrepreneurial start-ups in Pittsburgh, will include both academic and nonacademic components. Reporting to the Dean of the School, the individual, in the program development stage, will engage in needs assessment relating to existing representation of entrepreneurs locally and will develop relationships and partnerships within the local entrepreneurial community, practicing bar, funders and local university communities. In the program development stage, individual will engage in needs assessment relating to existing representation of entrepreneurs locally and will develop relationships and partnerships within the local entrepreneurial community, practicing bar, funders and local university communities.
The Program Director will work with faculty at the School of Law and the Dean to develop the academic component of the Program, which is anticipated to include both classroom instruction elements and clinical or quasi-clinical learning elements permitting law students to work hands-on with start-up ventures under attorney or faculty supervision. As the program develops, the potential exists for the incumbent to actively teach a portion of the developed classroom, clinical or quasi-clinical learning elements of the program. As part of the non-academic component of the Program, the Director will plan and coordinate one or more events or public programs annually relating to Law and Entrepreneurship. In coordination with development staff, the Program Director will also determine opportunities for future funding and prepare proposals for funding to support the long-term viability of the Program. For this position, the School of Law seeks an individual with a J.D. and 2-5 years experience practicing law in the areas of intellectual property law, technology commercialization, corporate law, corporate finance, and/or advising start-ups. Individual will demonstrate initiative, creativity, entrepreneurial thinking, administrative skills, and a vision of the roles that law and entrepreneurship programming can play in preparing law students to practice and in supporting regional economic growth. The individual must both be able to work independently with little supervision and be able to deal effectively with a wide range of persons, including entrepreneurs, attorneys, students, and faculty. This position is currently funded for a one-year period beginning on the date of hire.
If you are interested in this position and have questions, please feel free to get in touch with me. I'm not the one doing the hiring, but I may have some role as the process goes forward.
Thursday, June 12, 2008
Entrepreneurship Conference Report
I've been traveling more than usual recently and blogging even less. Here's a report on one event that I attended recently: a conference titled "Technology Entrepreneurship and Institutions: Contemporary and International Research" at the University of Wisconsin-Madison, sponsored by the Initiative for Studies in Technology Entrepreneurship (INSITE) at the Business School there.
This was an academic conference, with lots of interesting empirical research on what makes entrepreneurs and their projects tick. My colleague Gordon Smith, who is a law professor at BYU (and who used to teach at Wisconsin) captured the flavor of the conference here:
At this thematic level, I didn't hear much that I hadn't heard before. There was a panel with a Wisconsin politician, the head of WARF (Wisconsin's tech transfer operation), and a successful faculty entrepreneur, all of whom trotted out themes that Pittsburghers have heard before: There are lots of good ideas here; local investors are too risk averse; failure is a badge of dishonor; it's difficult to recruit management talent -- despite an attractive community and a low cost of living -- because of the relative absence of second-chance startup opportunities (if you fail at company one, is company two waiting to offer you a position?).
Nonetheless, lots of interesting data got presented, including a study that suggests that universities do more "technology transfer" in their regions via faculty consulting than via formal "tech transfer office" operation. Since most tech transfer offices barely break even, perhaps some bold university should consider abolishing theirs -- and transferring those resources to an office that helps place faculty with interested consulting opportunities.
Among the pieces of the puzzle that was not among the presentations: causes and cures for structural conflict among regional economic development interests. As anyone who works in entrepreneurial sectors in Pittsburgh can attest, not everyone is always on board the entrepreneurial train. Ox get gored along the way, and to prevent being gored, those ox (mixing my metaphors) can throw sand in the entrepreneurial gears -- and they do. Can anything be done to mitigate the impact of sand-throwing, egomania, and plain old fear and resentment?
My friend Jeff Lipshaw, who is a law professor at Suffolk University in Boston (and who spent many years as a corporate lawyer) adds an interesting note that extends the "no secret sauce" point beyond economic structures to individual entrepreneurs -- and to the service professionals who work with them:
This was an academic conference, with lots of interesting empirical research on what makes entrepreneurs and their projects tick. My colleague Gordon Smith, who is a law professor at BYU (and who used to teach at Wisconsin) captured the flavor of the conference here:
Anne Miner 's central point [Anne is the head of INSITE and a UW faculty member] . . . is that entrepreneurship scholarship of the sort she is interested in promoting is not like car repair. The point of entrepreneurship scholarship of this sort is not to produce a how-to manual, but to understand the forces that drive entrepreneurial behavior. Of course, causal theories are nice, and as we develop them, society will benefit. But we shouldn't expect to find a "secret sauce" that can turn any region into the next Silicon Valley. Indeed, Anne asserts that there is no secret sauce.
At this thematic level, I didn't hear much that I hadn't heard before. There was a panel with a Wisconsin politician, the head of WARF (Wisconsin's tech transfer operation), and a successful faculty entrepreneur, all of whom trotted out themes that Pittsburghers have heard before: There are lots of good ideas here; local investors are too risk averse; failure is a badge of dishonor; it's difficult to recruit management talent -- despite an attractive community and a low cost of living -- because of the relative absence of second-chance startup opportunities (if you fail at company one, is company two waiting to offer you a position?).
Nonetheless, lots of interesting data got presented, including a study that suggests that universities do more "technology transfer" in their regions via faculty consulting than via formal "tech transfer office" operation. Since most tech transfer offices barely break even, perhaps some bold university should consider abolishing theirs -- and transferring those resources to an office that helps place faculty with interested consulting opportunities.
Among the pieces of the puzzle that was not among the presentations: causes and cures for structural conflict among regional economic development interests. As anyone who works in entrepreneurial sectors in Pittsburgh can attest, not everyone is always on board the entrepreneurial train. Ox get gored along the way, and to prevent being gored, those ox (mixing my metaphors) can throw sand in the entrepreneurial gears -- and they do. Can anything be done to mitigate the impact of sand-throwing, egomania, and plain old fear and resentment?
My friend Jeff Lipshaw, who is a law professor at Suffolk University in Boston (and who spent many years as a corporate lawyer) adds an interesting note that extends the "no secret sauce" point beyond economic structures to individual entrepreneurs -- and to the service professionals who work with them:
I've been intrigued by some empirical data on this subject, particularly
that gathered by Professor Saras Sarasvathy at Virginia's Darden School about
what she thinks might be the derivable and teachable micro secret sauce, at
least for the entrepreneurs . . . .Professor Sarasvathy wrote a paper called "What Makes Entrepreneurs Entrepreneurial?" based on research she undertook with thirty successful entrepreneurs (their companies ranged from $30 million to $6.5 billion in sales), giving them each an identical seventeen-page business problem to solve. Her conclusion was that there was a teachable set of principles involved:
"This set of principles, when put together, rested on a coherent logic that clearly established the existence of a distinct form of rationality that we have all long recognized intuitively as “entrepreneurial”. For reasons that will become clear in the next section, I have termed this type of rationality “effectual reasoning”. * * *
The word “effectual” is the inverse of “causal”. In general, in MBA programs across the world, students are taught causal or predictive reasoning – in every functional area of business. Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal – fastest, cheapest, most efficient, etc. –
alternative to achieve the given goal. The make-vs.-buy decision in production,
or choosing the target market with the highest potential return in marketing, or picking a portfolio with the lowest risk in finance, or even hiring the best person for the job in human resources management, are all examples of problems of causal reasoning. A more interesting variation of causal reasoning involves the creation of additional alternatives to achieve the given goal. This form of creative causal reasoning is often used in strategic thinking.Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they
interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world). It is important to point out though that the same person can use both causal and effectual reasoning at different times depending on what the circumstances call for. In fact, the best entrepreneurs are capable ofboth and do use both modes well. But they prefer effectual reasoning over causal reasoning in the early stages of a new venture, and arguably, most entrepreneurs do not transition well into latter stages requiring more causal reasoning."[Jeff again] If what MBAs normally do is causal reasoning, then what lawyers do is causal reasoning par excellence. This particular comparison struck home: "While causal reasoning urges the exploitation of pre-existing knowledge and prediction, effectual reasoning stresses the leveraging of contingencies." In short, the usual business
lawyer's job is to use past circumstances to predict and minimize the risk in a contingent future; the entrepreneur views that very contingency as stock in trade.
Wednesday, March 12, 2008
Mixed Venture News
Surely there is muted cheering in Hazelwood, at the South Side Works, in Wexford, and on Craig Street. Pittsburgh finished near the top in a recent survey that measured venture capital growth. As the Post-Gazette put it:
Pop City helpfully provided a link to the report itself.
And nice as this is, now for some friendly criticism:
First: When it comes to both the pace of investment and the absolute dollar amounts invested, Pittsburgh has nowhere to go but up. This Yahoo! News story shares the details. The periodic Money Tree report (not the data excerpted for this bit of news) doesn't even include Pittsburgh as one of its default "regions" for benchmarking venture capital investments. "Western Pennsylvania" is part of the "Midwest," which also includes Illinois, Missouri, Indiana, Kentucky, Ohio, and Michigan.
Second: PR surrounding the report, like this very interesting Pop City feature about Pittsburgh's being on the cusp of being an angel "darling," tends to obscure some key data about local capital markets. Pop City buries this nugget in the very last graf. Silicon Valley angel investor John Cornwell says:
Meaning, of course, that the big players aren't here yet. I read the Pop City feature as arguing that local angel funders and service firms are regarded by the Silicon Valley investment community as too unsophisticated, on the whole, to justify a serious look. In venture terms, Pittsburgh is not the big leagues. Maybe we're a AAA city (he wrote, hopefully). Maybe we're AA. To move up a notch or two, Pittsburgh needs to do some of the things that San Diego (for example) did 15 or 20 years ago -- welcome outside expertise, and turn up the heat on the native business community.
Third, venture capital investments (and friends-and-family money, angel funding, and so on) don't translate into a lot of near-term job growth. Or, they generate and sustain jobs only indirectly, because lawyers and accountants and printers and food servers, and lots of other people in service businesses feed off of new investment in their clients. The deals noted the MoneyTree report may turn into long-term job growth supported directly by funded companies, but that's a very, very uncertain proposition.
Fourth, the uncertain prospects for funded companies include (i) a very high failure rate, and (ii) the fact that lots of early-stage companies that are founded locally may succeed somewhere else. Highlighting the growth rate and the raw dollars invested is a good thing. Even better would be to highlight the failure rate -- not to pick on losers, but to point out that in a risk-oriented economy, risk-takers often fail, yet they should be praised for taking risks. Couple data on the failure rate with what I hope would be improvement in the rate at which folks who fail in company A (or, for that matter, succeed with company A) get back in the local start-up game with company B.
Both phenomena are natural parts of the national and international entrepreneurial ecology.
So, here's the report that I'd like to see -- but doubt that I will:
1 - Local companies receiving VC and angel funding in 2005 and 2006
2 - Companies on that list that are still operating in 2008
3 - Companies on that list that are still operating locally in 2008
4 - Local companies founded since 2005 or 2006 by people who were employed in 2005 or 2006 by companies on list (1)
The MoneyTree report, by PricewaterhouseCoopers and the National Venture Capital Association, used information from Thomson Financial to determine the five fastest growing regions for venture capital investment.
And where was Pittsburgh?
Second, right behind New Mexico.
Pop City helpfully provided a link to the report itself.
And nice as this is, now for some friendly criticism:
First: When it comes to both the pace of investment and the absolute dollar amounts invested, Pittsburgh has nowhere to go but up. This Yahoo! News story shares the details. The periodic Money Tree report (not the data excerpted for this bit of news) doesn't even include Pittsburgh as one of its default "regions" for benchmarking venture capital investments. "Western Pennsylvania" is part of the "Midwest," which also includes Illinois, Missouri, Indiana, Kentucky, Ohio, and Michigan.
Second: PR surrounding the report, like this very interesting Pop City feature about Pittsburgh's being on the cusp of being an angel "darling," tends to obscure some key data about local capital markets. Pop City buries this nugget in the very last graf. Silicon Valley angel investor John Cornwell says:
Right now, Pittsburgh does not have a critical mass of institutional investors and VCs who are local. When you are dealing with early stage companies, they need a lot of hand-holding. It requires a local presence. To break that geographic barrier, Pittsburgh needs development of a local critical mass of funding capability. As deals are funded locally and you raise serious seeds of $50 million…it’s just a matter of time before you have the big players setting up shop locally.
Meaning, of course, that the big players aren't here yet. I read the Pop City feature as arguing that local angel funders and service firms are regarded by the Silicon Valley investment community as too unsophisticated, on the whole, to justify a serious look. In venture terms, Pittsburgh is not the big leagues. Maybe we're a AAA city (he wrote, hopefully). Maybe we're AA. To move up a notch or two, Pittsburgh needs to do some of the things that San Diego (for example) did 15 or 20 years ago -- welcome outside expertise, and turn up the heat on the native business community.
Third, venture capital investments (and friends-and-family money, angel funding, and so on) don't translate into a lot of near-term job growth. Or, they generate and sustain jobs only indirectly, because lawyers and accountants and printers and food servers, and lots of other people in service businesses feed off of new investment in their clients. The deals noted the MoneyTree report may turn into long-term job growth supported directly by funded companies, but that's a very, very uncertain proposition.
Fourth, the uncertain prospects for funded companies include (i) a very high failure rate, and (ii) the fact that lots of early-stage companies that are founded locally may succeed somewhere else. Highlighting the growth rate and the raw dollars invested is a good thing. Even better would be to highlight the failure rate -- not to pick on losers, but to point out that in a risk-oriented economy, risk-takers often fail, yet they should be praised for taking risks. Couple data on the failure rate with what I hope would be improvement in the rate at which folks who fail in company A (or, for that matter, succeed with company A) get back in the local start-up game with company B.
Both phenomena are natural parts of the national and international entrepreneurial ecology.
So, here's the report that I'd like to see -- but doubt that I will:
1 - Local companies receiving VC and angel funding in 2005 and 2006
2 - Companies on that list that are still operating in 2008
3 - Companies on that list that are still operating locally in 2008
4 - Local companies founded since 2005 or 2006 by people who were employed in 2005 or 2006 by companies on list (1)
Tuesday, February 26, 2008
The Revolution Will Be Networked
It's not a revolution, but progress in Pittsburgh does proceed, one node at a time. It's not political progress, but -- here and there -- economic development progress.
Innovation Works has launched AlphaLab,
I'm not wild about the name of the project, for reasons that become clear when you run a Google search, but the core of the idea is terrific. This baby belongs to Jim Jen at IW, who has the right background and outlook for this enterprise.
Relatedly, in recent weeks I've learned about Pittsburgh Equity Partners, a venture fund that is looking to fill an important gap in the Pittsburgh capital landscape: Entrepreneurial companies that have outgrown the resources of F&F, seed, and angel funding but aren't ready for larger venture investments. PEP is run by Ed Engler, founder and chairman of Summa Technologies and GP in Summa Venture Works, and Steve Robinson, of Robinson Venture Works. PEP is the current evolutionary stage of the Pittsburgh Angel Fund, with sponsorship by the Commonwealth and the involvement of IW, PLSG, and other players around town. Here's some history.
Competition in capital markets is a good thing. Investors in entrepreneurial markets measure deals by primarily by level of risk rather than primarily by level of return. Pittsburgh needs more of these folks, and it needs more of them to be visible players in the economy of new firms. The banking mentality, which expects every deal to pay out a return discounted by some level of risk, doesn't suit the entrepreneurial environment.
Last but not least, I'm late to the party celebrating Bill Toland's update on IntoPittsburgh and the Pittsburgh Diaspora from last Friday's Post-Gazette. Bill has some excellent info and links about projects to connect grassroots economic developments initiatives in the so-called Rust Belt, including the Pittsburgh Diaspora and IntoPittsburgh (search this blog's archives and Jim Russell's Burgh Diaspora for more information on IP).
What might be called the "rustroots" movement has a challenge. How do we take it out of the blogosphere and out of column's like Bill's (where it gets flattering coverage but is nonetheless marginalized by the paper itself), and how do we connect it to real economic momentum? If IP and the Great Lakes Urban Exchange and the Rust Belt Bloggers Network come across as a bunch of outsiders trying to fell trees in their own forest, then the movement is a non-starter, amusing to its own members and to no one else.
IP has to follow the money, to borrow a phrase from a different time and a different context. Grassroots activism needs to connect, in specific ways, to folks who not only are of like mind but who are of better economic standing. We have to persuade them to put their money where our mouths are.
Jim Jen at IW and Ed Engler at PEP are two of the people in Pittsburgh who get that connection, which is why I've assembled these items in this one post. If others like them stand up and are counted, then IP will have something to show for itself.
Innovation Works has launched AlphaLab,
AlphaLab provides funding, free office space, expert business advisors and services through an intensive six-month program in Pittsburgh. AlphaLab helps companies rapidly develop their technology, gain user feedback from early alpha or beta releases and move toward successful commercial launch. . . . The application deadline is March 31, 2008.
I'm not wild about the name of the project, for reasons that become clear when you run a Google search, but the core of the idea is terrific. This baby belongs to Jim Jen at IW, who has the right background and outlook for this enterprise.
Relatedly, in recent weeks I've learned about Pittsburgh Equity Partners, a venture fund that is looking to fill an important gap in the Pittsburgh capital landscape: Entrepreneurial companies that have outgrown the resources of F&F, seed, and angel funding but aren't ready for larger venture investments. PEP is run by Ed Engler, founder and chairman of Summa Technologies and GP in Summa Venture Works, and Steve Robinson, of Robinson Venture Works. PEP is the current evolutionary stage of the Pittsburgh Angel Fund, with sponsorship by the Commonwealth and the involvement of IW, PLSG, and other players around town. Here's some history.
Competition in capital markets is a good thing. Investors in entrepreneurial markets measure deals by primarily by level of risk rather than primarily by level of return. Pittsburgh needs more of these folks, and it needs more of them to be visible players in the economy of new firms. The banking mentality, which expects every deal to pay out a return discounted by some level of risk, doesn't suit the entrepreneurial environment.
Last but not least, I'm late to the party celebrating Bill Toland's update on IntoPittsburgh and the Pittsburgh Diaspora from last Friday's Post-Gazette. Bill has some excellent info and links about projects to connect grassroots economic developments initiatives in the so-called Rust Belt, including the Pittsburgh Diaspora and IntoPittsburgh (search this blog's archives and Jim Russell's Burgh Diaspora for more information on IP).
What might be called the "rustroots" movement has a challenge. How do we take it out of the blogosphere and out of column's like Bill's (where it gets flattering coverage but is nonetheless marginalized by the paper itself), and how do we connect it to real economic momentum? If IP and the Great Lakes Urban Exchange and the Rust Belt Bloggers Network come across as a bunch of outsiders trying to fell trees in their own forest, then the movement is a non-starter, amusing to its own members and to no one else.
IP has to follow the money, to borrow a phrase from a different time and a different context. Grassroots activism needs to connect, in specific ways, to folks who not only are of like mind but who are of better economic standing. We have to persuade them to put their money where our mouths are.
Jim Jen at IW and Ed Engler at PEP are two of the people in Pittsburgh who get that connection, which is why I've assembled these items in this one post. If others like them stand up and are counted, then IP will have something to show for itself.
Wednesday, February 20, 2008
Entrepreneurs, Be Careful
Here's the full text of a short Pop City story today about what looks like an interesting enterprise that wants to support entrepreneurs. I'm quoting the full text because the buildup is really intriguing -- and the payoff is eye-popping. You have to see both.
Lesson: If you're an entrepreneur, get clear on ownership of IP *before* signing up with any firm that wants to "help" entrepreneurs!
Talk about burying the lede! The first time I read that next-to-last sentence, I just about fell out of my chair. The next-to-last sentence reads like companies have to assign their IP to Ad-Base in order to secure their services and support. Ouch! Holy indentured servitude! On reconsideration, I have to assume (or at least I have to hope) that this isn't the case. I hope that "control" means that Ad-Base offers legal counsel that helps its portfolio companies license and otherwise exploit their IP.Pittsburgh-based Ad-Base Group’s unconventional approach to the business of venture capital seems to be working.
A “one stop shop” for entrepreneurs, Ad-Base Group made the Inc. 5000 list of fastest growing companies in the country in 2007. Last year Ad-Base added six employees to its growing staff of professionals, bringing the total to 36; revenues also jumped $1.3 million for a total net revenue of $17.5 million for the year.
The company started out in 1986 as Computer Comfort and evolved from a tech-based company into an early-stage, technology incubator and investment company in 2007, explains Josh Lucas, marketing coordinator. Unlike the typical investor that provides promising companies with funds, Ad-Base Group goes an extra step, assisting entrepreneurs with a shopping list of services to get them off and running: administrative, financial, marketing, advertising, legal, engineering and development support. And all at less than half the normal cost, says Lucas.
“We’re a non-traditional venture capital company,” Lucas explains. “Our unique business model gives the entrepreneur the resources to jumpstart their dream.”
In exchange, Ad-Base assumes control of the company’s intellectual property. Most recently Ad-Base added Inspira to its portfolio, a Pittsburgh-based IRA management software company. [Bold added!]
Lesson: If you're an entrepreneur, get clear on ownership of IP *before* signing up with any firm that wants to "help" entrepreneurs!
Monday, February 11, 2008
Gotta Business Plan?
I got an email over the weekend letting me know that applications for the 2008 EnterPrize Business Plan Competition are being accepted. Here's the gist of the message:
EnterPrize is Pittsburgh’s premier business plan competition for technology startups. This year, we [the Pittsburgh Technology Council] will host eight workshops and three networking events, beginning February 20 with a workshop, “Developing the Idea” taught by Chris Allison. Through three phases of competition more than $80,000 will be awarded. Participants will get plenty of feedback through a coach and comments on their plans from judges and will have many, many networking opportunities to meet potential funders, advisers and peers.
The goal of the competition is to help stimulate economic growth in southwestern Pennsylvania and support local technology entrepreneurs.
Here is the link to all of the relevant information about the competition, including a contact for questions: http://www.pghtech.org/Events/enterprize.asp
EnterPrize is divided into two categories – new business and existing business. What defines a “new business?”
· The team has an idea for an innovative product or service with which they intend to start a company.
· The company does not exist.
· The company is nothing more than an idea.
· They have no employees (founders are acceptable).
· No money has been raised.
· The company is not incorporated. (NOTE: If it is incorporated, its only purpose was to create a shell – the company is not conducting any business).
· The company has not experienced Substantial Business Activity:
o Payment of wages or salaries
o Receipt of research grants, development contracts or other sources of revenue
o Receipt of equity or debt financing from outside the Founder’s immediate family
* Founder’s activities, such as research, prototype development, establishing beta sites (other than for paying customers), licensing necessary technologies, will not be considered Substantial Business Activities.
Definition of an Existing Business Category:
· The company is less than three (3) years old.
· The company has less than twenty (20) employees.
· The company has less than $1 million in annual sales.
· The company has raised less than $500,000 in capital since its inception.
· The company is experiencing Substantial Business Activity:
o Payment of wages or salaries
o Receipt of research grants, development contracts or other sources of revenue
o Receipt of equity or debt financing from outside the Founder’s immediate family
* Founder’s activities, such as research, prototype development, establishing beta sites (other than for paying customers), licensing necessary technologies, will not be considered Substantial Business Activities.
Some of PTC members who have participated in EnterPrize over the years include: Vivisimo, Plextronics, Agentase, ALung Technologies, LogicLibrary, RemComm, Staffing Direct Business Solutions. Many of these companies are very active in the Council … speakers at events, Tech 50 finalists, etc.
EnterPrize is Pittsburgh’s premier business plan competition for technology startups. This year, we [the Pittsburgh Technology Council] will host eight workshops and three networking events, beginning February 20 with a workshop, “Developing the Idea” taught by Chris Allison. Through three phases of competition more than $80,000 will be awarded. Participants will get plenty of feedback through a coach and comments on their plans from judges and will have many, many networking opportunities to meet potential funders, advisers and peers.
The goal of the competition is to help stimulate economic growth in southwestern Pennsylvania and support local technology entrepreneurs.
Here is the link to all of the relevant information about the competition, including a contact for questions: http://www.pghtech.org/Events/enterprize.asp
EnterPrize is divided into two categories – new business and existing business. What defines a “new business?”
· The team has an idea for an innovative product or service with which they intend to start a company.
· The company does not exist.
· The company is nothing more than an idea.
· They have no employees (founders are acceptable).
· No money has been raised.
· The company is not incorporated. (NOTE: If it is incorporated, its only purpose was to create a shell – the company is not conducting any business).
· The company has not experienced Substantial Business Activity:
o Payment of wages or salaries
o Receipt of research grants, development contracts or other sources of revenue
o Receipt of equity or debt financing from outside the Founder’s immediate family
* Founder’s activities, such as research, prototype development, establishing beta sites (other than for paying customers), licensing necessary technologies, will not be considered Substantial Business Activities.
Definition of an Existing Business Category:
· The company is less than three (3) years old.
· The company has less than twenty (20) employees.
· The company has less than $1 million in annual sales.
· The company has raised less than $500,000 in capital since its inception.
· The company is experiencing Substantial Business Activity:
o Payment of wages or salaries
o Receipt of research grants, development contracts or other sources of revenue
o Receipt of equity or debt financing from outside the Founder’s immediate family
* Founder’s activities, such as research, prototype development, establishing beta sites (other than for paying customers), licensing necessary technologies, will not be considered Substantial Business Activities.
Some of PTC members who have participated in EnterPrize over the years include: Vivisimo, Plextronics, Agentase, ALung Technologies, LogicLibrary, RemComm, Staffing Direct Business Solutions. Many of these companies are very active in the Council … speakers at events, Tech 50 finalists, etc.
Friday, February 08, 2008
Pittsburgh's Start-Up Culture
Jefferson Provost is blogging again at The Q Function. He has a terrific post up today, prompted by a NY Times piece on the Seattle economy: Does Pittsburgh have a Spin-Off Culture? A taste:
People often ask why Pittsburgh, with it’s great universities, isn’t
seeding more startups. Maybe it’s because an essential missing component is a
large pool of large tech companies to employ university engineers and scientists
after graduation, until the stars align properly for them to start their own
ventures.
Wednesday, February 06, 2008
Innovation and Robert Morris University
The huzzahs for tech/higher ed collaboration in Pittsburgh usually emerge from Oakland, home of the rocket scientists at Pitt and CMU. But as most Pittsburghers know, there are many other high caliber colleges and universities in the region. Duquesne, for example, often feels slighted in tech development conversations.
So I was especially intrigued the other day to receive a press release from Robert Morris University that starts off as follows:
So I was especially intrigued the other day to receive a press release from Robert Morris University that starts off as follows:
I hope that I'll be hearing more about RMU's partnering with Innovation Works. The press release came to my in box from longtime Burghosphere contributor and new RMU Director of Public Relations Jonathan Potts, he of The Conversation and the Dead Tree Blog.Robert Morris University’s Center for Applied Research in Engineering and Science (RMU-CARES) has received two grants from Pittsburgh-based Innovation Works to fund the development of a new manufacturing process and the creation of a device to aid in the care of homebound individuals.
The first grant, for $50,000, is to design and build a robotic work cell for Penna Flame Inc., a Zelienople company that provides flame hardening, a process that renders the surface of machine parts more resistant to wear. Currently, Penna Flame utilizes a manual process in which each tooth of a gear is individually heated with a 2200-degree Fahrenheit flame. As with other manual processes, problems arise with operator fatigue and consistency and quality. The manual operation will be eliminated and replaced by an automated one using industrial robots.
The second grant, for $25,000, will be utilized to design and build three prototypes of a unique device dubbed The Memory Minder. Triggered by a sensor, the device will provide recorded messages in response to the needs of the individual user. The Memory Minder delivers customized messages set by a caretaker, nurse, family
member or the user. The device can deliver several timed messages throughout the day with personalized messages from familiar voices that are critical to an individual’s care.
Thursday, January 17, 2008
Ireland and Models for Entrepreneurship
My law professor colleague Gordon Smith, who is on the faculty at BYU, writes and teaches and blogs about corporate law and entrepreneurship. Prompted by a story in the New York Times, he posted the following today about Irish entrepreneurship:
"The NYT suggests that Ireland's recent entrepreneurial success is the 'culmination of nearly four decades of government policies.' Here's the formula:
The EU 'regulations' referred to in the story aren't new rules designed to promote entrepreneurship, but rather new rules that, for example, aim to improve worker health and safety, thus creating business opportunities for compliance firms. One firm's burden, another firm's treasure.
Of course, all of the EU benefits inure to every member state, so what makes Ireland special? Is it really just a matter of reducing taxes, providing free higher education, and making direct government equity investments? This paper suggests a more complex answer for Ireland:
I am not trying to suggest that the academics are spot on about Ireland while the NYT reporters are hopeless simpletons. But I believe that finding the root causes of entrepreneurship is a difficult task. In the end, I tend to give more credit to the accounts that describe a stew with many ingredients than the linear cause-and-effect stories."
Pittsburghers, take heed.
"The NYT suggests that Ireland's recent entrepreneurial success is the 'culmination of nearly four decades of government policies.' Here's the formula:
The government rewrote its tax policies to attract foreign investment by American corporations, made all education free through the university level and changed tax rates and used direct equity investment to encourage Irish people to set up their own businesses.In addition, there was the fact that Ireland is a member of the European Union. What, exactly, has the EU contributed?
One reason for many changes in Ireland is its membership in the European Union, which has brought new perspectives and regulations from its governing councils in Brussels.New perspectives and regulations? 'Perspectives' seems to refer to the fact that some Irish entrepreneurs are transcending Ireland's borders. Of course, that is not just a matter of perspective, but a matter of free movement of goods and services across EU member state borders.
The EU 'regulations' referred to in the story aren't new rules designed to promote entrepreneurship, but rather new rules that, for example, aim to improve worker health and safety, thus creating business opportunities for compliance firms. One firm's burden, another firm's treasure.
Of course, all of the EU benefits inure to every member state, so what makes Ireland special? Is it really just a matter of reducing taxes, providing free higher education, and making direct government equity investments? This paper suggests a more complex answer for Ireland:
Regional transformation through technology-based entrepreneurship cannot be easily measured by solely by 'tangible' resource input factors such as access to seed capital or telecommunications infrastructure. Instead, it is important that policy makers need to recognize the importance of fostering a 'bottom-up' approach towards technology-based entrepreneurship especially the role of 'intangibles' such as role models, culture towards risk and failure, and leadership in stimulating technology based entrepreneurship in regions.
I am not trying to suggest that the academics are spot on about Ireland while the NYT reporters are hopeless simpletons. But I believe that finding the root causes of entrepreneurship is a difficult task. In the end, I tend to give more credit to the accounts that describe a stew with many ingredients than the linear cause-and-effect stories."
Pittsburghers, take heed.
Thursday, January 10, 2008
The Real Deal
A long-time friend of Pittsblog wrote me yesterday to suggest this post:
What are the top three entrepreneurial companies in the Pittsburgh region that folks think are the real deal, with job creating potential and wealth creating potential of 100+ jobs and $10M plus in annual revenues?
The 100+ employee threshold and the $10M revenue numbers are arbitrary. What my friend and I are trying to get at, however, is whether folks think (i) that there are more real prospects for sustainable success locally than there were, say, five years ago, and (ii) there are more prospects than ever that can attract and sustain successive rounds of formal and informal private investment -- as opposed to economic development investment via a government-affiliated or subsidized entity.
Post your nominations, justifications, and reservations in the comments. I'm especially interested in hearing from folks in the economic development and investment spaces. Anonymity and pseudonymity are permitted, so long as the comments are on topic and civil.
What are the top three entrepreneurial companies in the Pittsburgh region that folks think are the real deal, with job creating potential and wealth creating potential of 100+ jobs and $10M plus in annual revenues?
The 100+ employee threshold and the $10M revenue numbers are arbitrary. What my friend and I are trying to get at, however, is whether folks think (i) that there are more real prospects for sustainable success locally than there were, say, five years ago, and (ii) there are more prospects than ever that can attract and sustain successive rounds of formal and informal private investment -- as opposed to economic development investment via a government-affiliated or subsidized entity.
Post your nominations, justifications, and reservations in the comments. I'm especially interested in hearing from folks in the economic development and investment spaces. Anonymity and pseudonymity are permitted, so long as the comments are on topic and civil.
Wednesday, June 27, 2007
BioBuds
Pop City features BioBuds, a small informal networking group of local bioscience entrepreneurs. I've been hearing off-the-record anecdotes about the group for years; it's nice that BioBuds is finally getting some broader publicity.
Tuesday, May 01, 2007
Welcome to the Blogosphere: Robert Lowe
Rob Lowe, CMU entrepreneurship and tech transfer researcher and Director of Enterprise Creation (I believe that's still his title), has launched a blog: "Mock Economy."
Rob's inaugural post is about Baumol's theory of destructive entrepreneurship. That's an interesting place for a local expert on university-based economic development to start. A couple of years ago, I heard local tech transfer administrators use the phrase "destructive entreneurship" to defend the idea that universities should pick winners when deciding which faculty research to promote and commercialize, and which to hold back. Too many startups, apparently, would dilute the pool of qualified private management and follow-on investment.
I didn't hear references to Baumol in this pitch, and I'm pretty sure that they were misusing Baumol's theory, and in any case I am optimistic that Pitt and CMU have both moved beyond the "picking winners" approach. It will be interesting to read whether Baumol has anyhthing to do with Pittsburgh today.
Link: http://mockeconomy.blogspot.com/
Rob's inaugural post is about Baumol's theory of destructive entrepreneurship. That's an interesting place for a local expert on university-based economic development to start. A couple of years ago, I heard local tech transfer administrators use the phrase "destructive entreneurship" to defend the idea that universities should pick winners when deciding which faculty research to promote and commercialize, and which to hold back. Too many startups, apparently, would dilute the pool of qualified private management and follow-on investment.
I didn't hear references to Baumol in this pitch, and I'm pretty sure that they were misusing Baumol's theory, and in any case I am optimistic that Pitt and CMU have both moved beyond the "picking winners" approach. It will be interesting to read whether Baumol has anyhthing to do with Pittsburgh today.
Link: http://mockeconomy.blogspot.com/
Friday, April 06, 2007
Pittsburgh's New Big Thing
Chris Briem and I are trying to come up with a metric for recognizing Pittsburgh's Next Big Thing. Specifically, how will we know when we have a new FreeMarkets, Fore Systems, or Respironics on our hands?
Of course, looking for the Next Big Thing is precisely the Wrong Thing To Do, because it emphasizes "looking for Pittsburgh's industrial savior" over "building a sustainable new economy."
Still, it's fun. And Chris could put the question in the New Pittsburgh Stock Exchange.
If Pittsburgh were a Silicon Valley and rich in companies About To Hit The Big Time, we could set a numerical bar: The next company to cash out -- IPO, sale of the company, etc. -- for some big number. Or we might say: Some big sales number, some number of quarters in a row.
Do either of those metrics make sense here, and if so, what would the thresholds be? Low enough to be makeable; high enough that crossing the line would measure something distinctive and significant. I'm inclined to dismiss things like money raised in venture or angel rounds, but perhaps we could measure something like successive up rounds, or percentage increase in company valuation from round to round.
Or should we use a different metric?
Of course, looking for the Next Big Thing is precisely the Wrong Thing To Do, because it emphasizes "looking for Pittsburgh's industrial savior" over "building a sustainable new economy."
Still, it's fun. And Chris could put the question in the New Pittsburgh Stock Exchange.
If Pittsburgh were a Silicon Valley and rich in companies About To Hit The Big Time, we could set a numerical bar: The next company to cash out -- IPO, sale of the company, etc. -- for some big number. Or we might say: Some big sales number, some number of quarters in a row.
Do either of those metrics make sense here, and if so, what would the thresholds be? Low enough to be makeable; high enough that crossing the line would measure something distinctive and significant. I'm inclined to dismiss things like money raised in venture or angel rounds, but perhaps we could measure something like successive up rounds, or percentage increase in company valuation from round to round.
Or should we use a different metric?
Monday, April 02, 2007
Pittsburgh Technology News
No cupcakes today. Just small companies moving forward:
Powercast, in Ligonier, appears to be on the verge of a breakthrough with a commercial form of wireless (RF) power. I was at a conference this weekend and spent a lot of time trying not to trip over a next of power cords, so this news comes none too soon.
CNN Money coverage
Company website
LunaMetrics, in Mt. Lebanon, does "web analytics," and now it's working with Google Analytics *as an Approved Consultant* -- one of only two PA firms in that position.
Company website
Powercast, in Ligonier, appears to be on the verge of a breakthrough with a commercial form of wireless (RF) power. I was at a conference this weekend and spent a lot of time trying not to trip over a next of power cords, so this news comes none too soon.
CNN Money coverage
Company website
LunaMetrics, in Mt. Lebanon, does "web analytics," and now it's working with Google Analytics *as an Approved Consultant* -- one of only two PA firms in that position.
Company website
Tuesday, March 13, 2007
Everybody Comes to Rick's
Among the many fabulous lines from Casablanca is Rick Blaine's comment to Major Strasser. Strasser wants to impress on Rick that the Germans know everything about him; Rick, reading the dossier himself, asks the Major, "Are my eyes really brown?"
I flew on USAirways over the weekend and had an "are my eyes really brown" moment reading the Profile of Pittsburgh that appears in the current (March 2007) in-flight magazine. The whole thing is a masterful piece of marketing by the Allegheny Conference, the Pittburgh Technology Council, and the Mayor's Office. The city and region have rarely been shown off to such wonderful advantage. Still, reading some of the descriptions of the city, I wondered about the region's self-description much as Rick Blaine wondered about the color of his eyes.
Some interesting, and representative, quotations:
I don't want to be too hard on well-intentioned, meaningless puffery, since it's always nice to see Pittsburgh look good. Criticizing Luke Ravenstahl for praising the "revolutionary advances" he anticipates from the Allegheny Conference would be like Lucy pulling the football away from Charlie Brown. Lucy loses that confrontation; we pity Charlie Brown.
But do people really never want to leave? Didn't the Commonwealth just agree to pay Mario Lemieux $10.5 million to stay?
I flew on USAirways over the weekend and had an "are my eyes really brown" moment reading the Profile of Pittsburgh that appears in the current (March 2007) in-flight magazine. The whole thing is a masterful piece of marketing by the Allegheny Conference, the Pittburgh Technology Council, and the Mayor's Office. The city and region have rarely been shown off to such wonderful advantage. Still, reading some of the descriptions of the city, I wondered about the region's self-description much as Rick Blaine wondered about the color of his eyes.
Some interesting, and representative, quotations:
"The economic development climate in Pittsburgh has gone from hot to one fire," adds Mayor Luke Ravenstahl . . . .
"VisitPittsburgh President and CEO Joe McGrath says, "There's tremendous momentum in Pittsburgh right now, and that message is being heard across the globe -- how the city continues to develop, creating an environment that's great for business and families alike."
"[T]he region's economics are both strong and diversified," says Allegheny Conference's [CEO Mike] Langley . . . ."
"With the role they've played in past renaissances," Ravenstahl says, "we know we can rely on the Allegheny Conference for the revolutionary advances we'll make in twentieth-century Pittsburgh."
[Referring to the Life Sciences Greenhouse, Innovation Works, and the Technology Collaborative] "This is the kind of help that technology receives in Pittsburgh," [PITC CEO Steve] Zylstra says. "It is unprecedented -- and unmatched."
"Where else could innovators and entrepreneurs be in the midst of both corporate and university research centers, live affordably near where they work, and have access to world-class culture and outdoor recreation?" wonders Future Strategies President Harold Miller. "No wonder people never want to leave."
I don't want to be too hard on well-intentioned, meaningless puffery, since it's always nice to see Pittsburgh look good. Criticizing Luke Ravenstahl for praising the "revolutionary advances" he anticipates from the Allegheny Conference would be like Lucy pulling the football away from Charlie Brown. Lucy loses that confrontation; we pity Charlie Brown.
But do people really never want to leave? Didn't the Commonwealth just agree to pay Mario Lemieux $10.5 million to stay?
Monday, March 05, 2007
New Businesses
Entrepreneurial notes from all over . . . companies out-competing themselves:
Talkshoe, which I blogged about last Fall, seems to be humming along with its "talkcast" technology, but it turns out that the firm has something of a competitor -- locally: Liberated Syndication, which recently got rolled up into Wizzard Media, part of Wizzard Software, to create what it calls "the largest podcasting distribution network in the world." "Sharecropping" is what Nick Carr calls the user-generated content production business model. It's lucrative, and simultaneously old and new; podcasting distribution means your customers and consumers are out there competing on your behalf. Eventually, however, the sharecroppers will go into business for themselves.
The intelligent avatar technology called "Abby" got a nice plug in last Saturday's Bits & Bytes as Abbyme.com, which allows users to program the avatar to send audio files on their behalf, was getting prepped for a business plan competition. Note to team, based on a quick check of the files that users are sending: watch for the copyright cops. All those clever movie clips that Abby is sending -- they belong to someone.
Abby has other applications and a much more polished appearance, via http://www.getabby.com/, the intelligent virtual assistant firm that used to be known as Eidoserve. (Earlier notes on eidoserve here (Post-Gazette) and here (Pittsblog).) Abby is more traditional entrepreneurship: nifty technology looking to fill every niche it can find. I don't know about the business prospects for using Abby to send movie clips to your friends (then again, ringtones are just about the world's biggest music market; who knew?). But CMU, which spun out the underlying technology, is making money here.
And I spent some time last Friday visiting Ellsworth Street's CoCo's Cupcake Cafe courtesy of an invitation from co-owner and self-proclaimed cupcake chick Shea Mullen, who took note of my earlier posts on the Cupcake Class. CoCo's, like Squirrel Hill cupcake competitor Dozen Cupcakes, is about two months into streetside retailing. If traffic on a late Friday afternoon is any guide, the walk-in trade is doing fine. Better money, though, at least for now, likely comes from call-in orders and catering. Can Pittsburgh support two cupcakeries? Better two than one, perhaps (echoing the old line about how a small town can't support one lawyer, but it can support two). But chic itself won't carry a cupcake store, even one like CoCo's that has space to host private parties and receive soon-to-move-to-Pittsburgh hipsters looking for a future oasis. Shea was a generous host and an excellent in-person ad for the business, and I bought a bunch of cupcakes to take home to the family. She has no plans, she said, to sell cupcakes anywhere except through the store, so that she isn't tempted to compromise on quality. My inner foodie likes the line; my inner-amateur-entrepreneur wonders how long that will last. I saw cupcakes in Starbuck's last week.
With cupcake saturation, how long will people be willing to shell out $2.50 per cupcake -- anywhere? The cupcake market presents Clay Christensen's Innovator's Dilemma: Should you specialize, maintain your margins, and move upmarket? Low cost competitors will move in like sharks. Or should you give up those fat margins, maintain your market share, and commodify? You don't get rich, and you don't get new, but you stay in business. (Christensen's third way is to innovate outside the box -- challenge your own business model.) Right now, and reading the leading cupcake blog, the industry is betting on option one: fancier and purer cupcakes. Home bakers aren't hurting that business. But low-cost upscale cupcakes eventually will. When high end cupcakes come to Costco and Sam's Club, watch out -- or watch for branded cupcakes in a restaurant or coffee house near you.
Talkshoe, which I blogged about last Fall, seems to be humming along with its "talkcast" technology, but it turns out that the firm has something of a competitor -- locally: Liberated Syndication, which recently got rolled up into Wizzard Media, part of Wizzard Software, to create what it calls "the largest podcasting distribution network in the world." "Sharecropping" is what Nick Carr calls the user-generated content production business model. It's lucrative, and simultaneously old and new; podcasting distribution means your customers and consumers are out there competing on your behalf. Eventually, however, the sharecroppers will go into business for themselves.
The intelligent avatar technology called "Abby" got a nice plug in last Saturday's Bits & Bytes as Abbyme.com, which allows users to program the avatar to send audio files on their behalf, was getting prepped for a business plan competition. Note to team, based on a quick check of the files that users are sending: watch for the copyright cops. All those clever movie clips that Abby is sending -- they belong to someone.
Abby has other applications and a much more polished appearance, via http://www.getabby.com/, the intelligent virtual assistant firm that used to be known as Eidoserve. (Earlier notes on eidoserve here (Post-Gazette) and here (Pittsblog).) Abby is more traditional entrepreneurship: nifty technology looking to fill every niche it can find. I don't know about the business prospects for using Abby to send movie clips to your friends (then again, ringtones are just about the world's biggest music market; who knew?). But CMU, which spun out the underlying technology, is making money here.
And I spent some time last Friday visiting Ellsworth Street's CoCo's Cupcake Cafe courtesy of an invitation from co-owner and self-proclaimed cupcake chick Shea Mullen, who took note of my earlier posts on the Cupcake Class. CoCo's, like Squirrel Hill cupcake competitor Dozen Cupcakes, is about two months into streetside retailing. If traffic on a late Friday afternoon is any guide, the walk-in trade is doing fine. Better money, though, at least for now, likely comes from call-in orders and catering. Can Pittsburgh support two cupcakeries? Better two than one, perhaps (echoing the old line about how a small town can't support one lawyer, but it can support two). But chic itself won't carry a cupcake store, even one like CoCo's that has space to host private parties and receive soon-to-move-to-Pittsburgh hipsters looking for a future oasis. Shea was a generous host and an excellent in-person ad for the business, and I bought a bunch of cupcakes to take home to the family. She has no plans, she said, to sell cupcakes anywhere except through the store, so that she isn't tempted to compromise on quality. My inner foodie likes the line; my inner-amateur-entrepreneur wonders how long that will last. I saw cupcakes in Starbuck's last week.
With cupcake saturation, how long will people be willing to shell out $2.50 per cupcake -- anywhere? The cupcake market presents Clay Christensen's Innovator's Dilemma: Should you specialize, maintain your margins, and move upmarket? Low cost competitors will move in like sharks. Or should you give up those fat margins, maintain your market share, and commodify? You don't get rich, and you don't get new, but you stay in business. (Christensen's third way is to innovate outside the box -- challenge your own business model.) Right now, and reading the leading cupcake blog, the industry is betting on option one: fancier and purer cupcakes. Home bakers aren't hurting that business. But low-cost upscale cupcakes eventually will. When high end cupcakes come to Costco and Sam's Club, watch out -- or watch for branded cupcakes in a restaurant or coffee house near you.
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