Venture Watch: Three Companies That Will Change Your Business

By Jim Louderback  |  Posted 2004-04-14 Print this article Print

If you're just focusing on the big market players, you're missing out. There's an upwelling of innovative new companies delivering technologies that can help you increase profit and profitability. Jim Louderback looks at three currently funded by venture

In times of economic distress, technology organizations in businesses tend to hunker down. The recession of the last three years, coming on the heels of the dot-com boom, caused an extremely sharp correction inside most businesses, just as it did in the market. Just as financiers eschewed speculative investments on new technology, IT departments went back to the basics. The story of the past three years has been one of conservative consolidation, not irrational exuberance. But innovation didnt stop while investors and IT looked inward. Inventors and entrepreneurs kept developing cool new technologies. And smart venture firms have recently begun seeking out and funding those new technology companies. Along with high-tech companies, financial Darwinism has weeded out the weaker venture firms. The ones that are left, though, are stronger than ever. And theyve uncovered some pretty cool technologies, ones that have great potential to help your business.
So over the next few months, Ill be offering an irregular series that looks at the most interesting new companies coming from the countrys top investment funds.
Today we start with one of my favorite firms, Hummer-Winblad. Founded by former programmer Ann Winblad and basketball star and high-tech genius John Hummer, the firms partners also include Kerry supporter and technology whiz-kid Mark Gorenberg and former Powersoft and Sybase CEO Mitchell Kertzmann. I sat down recently with Winblad and Kertzmann to talk technology and analyze the more interesting companies in their portfolio. Its a good time to be investing, according to Winblad. "We are blown away by the number of great companies out there," she insists, even though only a very small number of ideas are getting funded. But thats good too, because "these companies are getting a lot of attention." "When the world stood still, the inventors and passionate people did not." Venture capitalists didnt either. "Just because people are writing bad things about us, as if we were a class of lepers, should we all just find the leper island and die?" According to Winblad during the bubble, "engineers got overwhelmed by the MBA crowd. There were a lot of smart people that understood business strategy and were excellent communicators, and came to talk to us about market opportunities. But they didnt have the invention to match the opportunity." Today, it starts with the invention, not the strategy. Winblad points to two other trends that make this an ideal time to look at and invest in new technology companies. First, the idea that software is becoming a service is done. That battles been fought, and services won. But the emergence of open source has also been a big plus. "Its just not true that open source will kill innovation," said Winblad. Instead, because software tools are freely available, including relational databases, development frameworks and bug tracking systems, its much easier for a small company to get a prototype up and running quickly. "It puts them on parity with the big dogs [like IBM and Microsoft]," Winblad said. Its scalable too. "You can start with a small investment and easily add more hardware to build it up." According to Kertzmann, its time for companies to look beyond their core technology suppliers. "Were calling it the new era of optimism," he says, comparing it to the technology explosion of the early nineties. Back then companies like Wind River, Arbor and Kertzmanns own Powersoft "invented brand new spaces, based on technology as much as products in the market." Management teams, as well, are richer now than during the boom. "Three to four of the people in a team could be CEOs, but they want to work together," Kertzmann said. Winblad takes it even further: "We are also seeing a shift of leaders in the technology industry. One of the reasons its not all about Larry Ellison and Steve Jobs, there are newcomers that are taking the mantle of the industry." According to both partners, its time for CIOs to invest. Only through new technology will they keep improving productivity. So whats Hummer-Winblad investing in? Here are four of their investments that I believe have a real chance to succeed. Next page: Bridgestream tackles provisioning.

With more than 20 years experience in consulting, technology, computers and media, Jim Louderback has pioneered many significant new innovations.

While building computer systems for Fortune 100 companies in the '80s, Jim developed innovative client-server computing models, implementing some of the first successful LAN-based client-server systems. He also created a highly successful iterative development methodology uniquely suited to this new systems architecture.

As Lab Director at PC Week, Jim developed and refined the product review as an essential news story. He expanded the lab to California, and created significant competitive advantage for the leading IT weekly.

When he became editor-in-chief of Windows Sources in 1995, he inherited a magazine teetering on the brink of failure. In six short months, he turned the publication into a money-maker, by refocusing it entirely on the new Windows 95. Newsstand sales tripled, and his magazine won industry awards for excellence of design and content.

In 1997, Jim launched TechTV's content, creating and nurturing a highly successful mix of help, product information, news and entertainment. He appeared in numerous segments on the network, and hosted the enormously popular Fresh Gear show for three years.

In 1999, he developed the 'Best of CES' awards program in partnership with CEA, the parent company of the CES trade show. This innovative program, where new products were judged directly on the trade show floor, was a resounding success, and continues today.

In 2000, Jim began developing, a daily, live, 8 hour TechTV news program called TechLive. Called 'the CNBC of Technology,' TechLive delivered a daily day-long dose of market news, product information, technology reporting and CEO interviews. After its highly successful launch in April of 2001, Jim managed the entire organization, along with setting editorial direction for the balance of TechTV.

In the summer or 2002, Jim joined Ziff Davis Media to be Editor-In-Chief and Vice President of Media Properties, including, Microsoft Watch, and the websites for PC Magazine, eWeek and ZDM's gaming publications.


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