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Olson’s Observations

Technology. Innovation. Science. VC. Media. :: by Eric Olson

Archive for October, 2007

Technology Outside the Valley: The Debate Rages On

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After reading Paul Graham’s essay suggesting that to really make an internet company work you need to move to a start-up hub (i.e. the Valley) I was immediately compelled to write something on the issue. I thought better of it though and continued to think it over.

On the one hand I was part of a successful start-up in Chicago (FeedBurner of course) so I know great companies can be built outside the Valley but on the other hand it is undeniable that the Valley has an order of magnitude more companies (and VC money) and has been home to perhaps some of the most successful companies of all time including Google.

What is it about the Valley that seems to produce start-up talent? Is the ratio of success to failure the same as in other areas of the country (and the world - need some data here)? Is there simply easier access to capital in the Valley? Do Valley companies get more publicity?

These are all questions I have pondered over and over again in my couple years in Chicago. In fact, these questions were partly involved in the forming of TECH cocktail. Frank and I just couldn’t accept that there weren’t interesting technology companies forming in Chicago. We believed that there were a lot of interesting ideas and that they simply weren’t getting the publicity that the Valley companies do.

Through running TECH cocktail in Chicago I have seen that there are, in fact, a lot of great ideas and entrepreneurs in the area. The issue I do see people running into though is funding. While there are a handful of great VCs in the Chicagoland area it seems that capital is still hard to come by (look at Mosaic/Netscape, PayPal, etc. - developed at the University of Illinois/by U of I alums but took funding from west coast VCs and, thus, had to relocate).

However, I wonder if that is completely a bad thing. Perhaps in areas like Chicago, New York, Boston and Washington D.C. only the very best of new companies get funded. This could lead to a higher success to failure ratio over time which may be more important than the sheer number of start-ups started (which the Valley wins hands down).

While being agile and not forcing the original game plan when the market tells you otherwise is important in a start-up there are simply a lot of companies that startup simply because they have an idea for a cool product. They may not be sure if anyone will use it, if they can even make money, how they will make money, etc. but they are able to get VC and start-up anyhow since the Valley is more apt to make those kinds of bets.

The way I just framed that makes it sound like a bad thing but is it? Some of the most interesting companies ever to emerge in the technology/internet space were started by simply trying to improve something or by creating a great product. The making money part was figured out along the way. Google is, of course, one of the best examples of this. Perhaps Google may not have been able to get off the ground in another city where investors are looking for solid companies and not R&D projects that may turn into companies at some point.

This is an interesting debate for sure and the only conclusion that I can come up with so far is essentially what Scott Heiferman says in his response to a recent piece in NY Mag about the issue (originally found via Andrew Parker).

Silicon Valley Companies succeed because of who they are, how they are, why they are… not where they are. It’s just been a coincidence. The non-SV companies haven’t had the right who/how/why. A company that NEEDS to exist — a company with a vital purpose to serve millions of people’s real needs — will attract the people to bring it to life — and it can exist anywhere.

I have seen this to be the case. FeedBurner was needed and thus succeeded (wow, that was a cheesy rhyme) even though it was based in Chicago. Even though it was based in Chicago… Why should I even feel the need to say it that way? There were a lot of great things about Chicago that made FeedBurner what it was/is.

One of my favorite things about Chicago (and NYC, Boston and any place outside the Valley) is that it is outside the hype which allows entrepreneurs to focus on building a solid company and not on the blog, parties, etc. In Chicago no one really cared about FeedBurner (I could wear my shirt around town and no one even noticed) whereas in the Valley people would have known who we were from the logo right away. That may seem bad but it was actually good. It always kept things in perspective for me (i.e. not everyone knows about RSS or even cares about what it is).

Keeping that perspective by living and working outside the echo chamber helped me to do my job much better and, I would argue, helped to make the company stronger.

Of course the drawback to that is that there aren’t a huge amount of parties, networking events and other meetups where you get to chat face to face with other entrepreneurs and potential partners and customers. Those interactions are extremely helpful and the Valley has a lot of them. Again, this is why we started TECH cocktail in Chicago and now more and more events are popping up there. The ecosystem is on the rise.

In the end of the day I do believe you can build a great company anywhere. The key is simply that you a) have a great company and b) that you know the right people. Charlie O’Donnell recently posted his thoughts on that from the NYC perspective and I would say that, while at times his thoughts are a little harsh, they do make a lot of sense for NYC and for other cities like Chicago. A top notch entrepreneur will find a way to get things done and, while it may be a little harder than building a company in the Valley, there are a lot of benefits to starting companies outside the Valley.

Who knows, perhaps the harder the ramp up is the better thought out your company will be before you really push things post funding.

Additional side note: One of the biggest complaints in areas outside the Valley, second only to money, is the lack of top notch engineering talent. The first thing to note here is that there is a shortage of engineers everywhere, including the Valley (they have a lot more engineers but they also have a lot more companies). The difference between the Valley and elsewhere is this:

In the Valley there are so many new companies starting that it is hard to retain top engineering talent. There is always someone trying to steal them away. In places like Chicago, however, there aren’t a ton of start-ups so if there are engineers who want to work at start-ups they are likely to join your company and stick around (of course in the latter situation your biggest threat will be larger companies who can pay more but don’t have the upside you do and, perhaps, the engineers may not value the options you give them highly enough and simply opt for more cash from a larger company).

In the end of the day you will probably spend less time hiring since you have far more retention.

Written by Eric Olson

October 31st, 2007 at 10:54 am

Posted in Business, Technology

Nice Work Sox

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2007 World Series Champs.  Enough said.

Written by Eric Olson

October 29th, 2007 at 7:52 pm

Posted in Baseball

Olson on the World Series: Go Sox!

with 3 comments

Ahhhh yes. My boys are back in the big one. This is almost too much for a Sox fan to handle. After a crazy drought - who was counting, right? - we break the curse in spectacular fashion and a few years later manage to end up in the Series again.

What is interesting this time around is how much new talent we have on the club. While we have always had teams where most of the guys were contributing a lot we’ve never quite had the depth we have today. Opposing teams have no way of knowing who will break out in a given night so they can’t quite nail down a strategy.

Take the Cleveland series for example. Who would have thought J.D. Drew would come up huge and bring us a win? I sure didn’t and I don’t think many citizens of Red Sox Nation did either. In fact, if I recall, most of the Nation was calling for Drew’s head by the end of season since he wasn’t as productive as we all hoped.

Then there is Kevin Youkilis. Sure, he isn’t the typical first baseman in that he doesn’t hit for power a lot but the guy gets on base and makes pitchers work and I thin that’s very important. My uncle has been po-pooing Youk for a while now because he doesn’t hit a ton of homeruns but that is just old baseball thinking. In fact, even he’s now realized the errors of his ways and is a big Youk fan. I am sure his .500+ batting average in the ALCS helped there.

Youk is a great example of the Sox farm system which is one area in which I think we differ significantly from the Yankees. In fact, there were a lot of homegrown guys that came up through the Sox farm club who have contributed a lot to this 2007 team.

Dustin Pedroia - a shoe-in for Rookie of the Year - has to be my favorite of the homegrown talent this year though. I mean the guy is 5′9″ and 180 but he has a huge swing leading to consistent extra base hits that tie in nicely with his outstanding glove. He’s also a scrappy player that does what it takes to get the job done.

All the vets (i.e. Ortiz, Manny and the guys and the pitching staff - how about Beckett!) well, what do I need to say about them. We all know they’re the best of the best and that they play to win.

I am really excited for the guys this year. This time they can go into the Series without the curse hanging over them and simply play the game. For some this will be the first of many World Series (Ellsbury) and for others it will be the end of an era (Schilling) but either way this will be one to remember.

That said I’d like to wish my boys good luck tonight. All of Boston is behind you guys as we have been for over 100 years except this is our time now. We’ve entered the era of the Red Sox. In fact, I would say I’m long on the Sox. Too bad I can’t invest in their success.

Now, if you’ll excuse me I am off to listen to Tessie to get fired up for the game.

Let’s go Red Sox *clapping here* Let’s go Red Sox…

**Next post will get back to your regularly scheduled business and technology musings.

Written by Eric Olson

October 24th, 2007 at 4:51 pm

Posted in Baseball

Little Blue Squares = Smartlinks

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I just installed the new adaptation of Smartlinks Adaptive Blue released today after seeing the post on Fred Wilson’s blog. I have been waiting for this release for some time now since it will add a lot more interactivity and information to my posts meaning all of you get a better experience.

While Smartlinks have been out for a while one used to have to add each one “by hand.” It wasn’t too bad but I always forgot to do it. Now, with the new release of auto-smartlinks once a piece of code is added to my site the Smartlinks software simply looks for all amazon, IMDB, last.fm, etc. links and instantly makes them Smartlinks.

This means that each time you see a link with a blue square next to it on this site you can click on it for a wealth of information. A great example of this is any of my movie reviews. I used to include a simple link to IMDB but now those are augmented with Smartlinks that will pull up a little window with links to IMDB, wikipedia, amazon, flixter and a wealth of other information about the film.

I’d love to hear what all of you think of Smartlinks in the comments. I hope you find them useful and that you are able to get much more out of my writing because of them.

Congrats to the whole Adaptive Blue team on this launch. I can’t wait to see what’s up next.

Written by Eric Olson

October 23rd, 2007 at 11:44 am

Posted in Technology

TECH cocktail Chicago 6 Announcement

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Just a quick note: Frank and I announced TECH cocktail Chicago 6 today over on the official TECH cocktail blog. We’re both coming into town for the weekend and looking forward to seeing everyone. Let it never be said that we have forgotten our technology roots. Here are the details:

Venue: John Barleycorn Wrigleyville (Map)
Time: 6:30pm -9pm
Date: Thursday, November 15th
Cost: FREE

RSVP HERE

Written by Eric Olson

October 22nd, 2007 at 10:25 pm

Posted in TECH cocktail

Movie Review: The Flying Scotsman

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Oh yes, this is another cycling movie. Hold up though. Don’t change that dial. How does this sound:

Man breaks the hour record (distance traveled in one hour of cycling) and wins the world cycling championship on a bike he designed and built partly from old washing machine parts.

Right, that sounds pretty silly and if this movie was fiction I would agree with you and there would have been no way I would have watched it (well, I probably would have watched it just because there were bikes in it). However, The Flying Scotsman is in fact the true story of Graeme Obree and it took place only in the mid 1990s so it is actually fairly recent.

While technically not an outstanding film I did enjoy the story and the racing scenes. This was a story I had only heard about here and there so it was nice to get the complete picture from of what had happened via the movie.

This story is not simply a “feel good” one though. Graeme suffered from brutal bouts with depression that caused him to attempt suicide once and drove him to push himself as hard as he did. Along with the depression Graeme suffered from he also had the UCI cycling officials to deal with who continually came up with new rules to bar his innovations from competition.

In fact, one piece of the story that struck a chord with me other than the cycling was that of Graeme’s innovations.

Graeme thought about cycling differently. He questioned why bikes were built with certain geometries and why riders positions on their bikes were the way they were. This lead him to design and build his own bike and to pioneer a number of different riding positions that he others behind him used to propel themselves to victory.

Unfortunately, every step of the way the UCI found ways to outlaw his innovations though even though they were completely reasonable. My views on the governing bodies of cycling, including the World Anti-Doping Agency, are a whole other post though.

The bottom line is that Graeme was and is an innovator and an entrepreneur in every sense of the word. His story is an inspiring one. Even if you aren’t into cycling I would recommend checking out this film for the simple reason that it will inspire you to keep doing what it is you do which, in a lot of cases, will be building your company.

If there is one thing we can learn from Graeme it is to keep questioning, keep innovating and to never say die.

Written by Eric Olson

October 22nd, 2007 at 10:18 pm

Posted in Movie Reviews

Movie Review: The Lives of Others

with 5 comments

The Lives of Others is a fantastic period piece and top notch character study rolled into one. I was incredibly impressed with this film because every piece of it, from the acting to the writing to the color palette, were executed at an incredibly high level. There is no wonder that this piece won the 2007 Oscar for Best Foreign Film.

From the first scene it is evident that writer/director Florian Henckel von Donnersmarck did his homework. The sets, costumes and color palette were, by all accounts, spot on to the period. Even the dialog was looked over extensively by some of the actors and others who had actually lived in the GDR to ensure its accuracy.

Unlike other authentic period pieces that fall flat after the initial historical accuracy starts to lose its luster The Lives of Others continues on with a fantastic story.

In the former GDR people were regularly monitored to see if they were doing anything illegal or against the state. Artists, writers and the like were especially targeted. In The Lives of Others we follow a handful of artists and, in particular, one named Georg Dreyman (Sebastian Koch) and his girlfriend Christa-Maria Sieland (Martina Gedeck) a playwright and actress respectively.

These people are watched at every step of the way by Hauptmann Gerd Wiesler (Ulrich Mühe) who sits in the attic day after day watching their lives unfold. However, Wiesler doesn’t know that he is about to change profoundly over the course of this monitoring assignment.

Wiesler, a career Stasi (GDR “police”) agent, lives a drab life devoid of any art and music but, through monitoring Dreyman and Sieland, he is exposed to great music, literature and discussion that leaves him wondering what he is doing with his life.

Donnersmarck could have easily had Wielser change quickly and haphazardly but he didn’t. He had Wiesler change slowly through a couple of small events. His changes were also brought to our attention through a number of small gestures. In The Lives of Others it really is the small things that make the difference which is very much like real life.

Over the course of the film Wiesler begins to help Dreyman without Dreyman’s knowledge and even though Dreyman is getting ready to publish a piece in a West Berlin magazine that would be damning to the GDR. I’ll leave it at that since I don’t want to spoil the film.

I honestly can’t say enough about this film. It is a must see and possibly one of the best films I have ever seen (and I have seen over 1000 or so - wow, that’s a lot - it’s almost embarrassing). They simply nailed everything from the smallest detail on the set to the complex interaction that is human existence. Well done.

Written by Eric Olson

October 9th, 2007 at 10:11 am

Posted in Movie Reviews