Inaki Berenguer, MBA '09

Ken Zolot: the entrepreneurial ecosystem at MIT

Today Ken Zolot was one of the invited speakers in our weekly Entrepreneurship and Innovation dinner. Ken Zolot is a serial entrepreneur mainly in IT (co-founder of Egenera, Geer Zolot Associates, and Spectra Communications) and is currently an MIT faculty member. He currently leads the MIT Innovation Teams (i-teams) program.

I-teams helps MIT lab directors evaluate go-to-market opportunities and strategies for their research discoveries. It works like this: a reseacher from MIT contacts i-teams and then a group of mainly MBA students volunteer to do a market assessment for the research in order to prepare a business plan. This is a free service for the lab director and students get credit for it. A list of the research projects participating in the i-teams program during this Fall is here. After the end of the semester, a lot of ideas move forward and in most cases, the people participating in the i-teams collaborate with the company as advisors, co-founders or employees.

Ken also talked about the entrepreneurial ecosystem components at MIT:

• Good ideas
• People: inventors, investors, role models, founders, mentors
• Sources of capital
• Clusters (~real state), e.g., coffee shops: it is important to realize that you are part of the system
• Services willing to work with startups, e.g., lawyers and accountants
• Cultural acceptance
• Events: receptions, cocktail parties, etc., so you can have encounters to collaborate

Zipcar merges with Flexcar (car sharing providers)

Today, car sharing company Zipcar has announced that it is merging with rival Flexcar. I read it in Alarm:clock. The merger sounds interesting since there isn't much geographical overlap: Zipcar currently operates in New York, Boston, Washington D.C., Chicago, San Francisco, Vancouver, Toronto and London while Flexcar operates in Seattle, Portland, San Francisco, Los Angeles, San Diego, Atlanta, Pittsburgh, Philadelphia and Washington D.C. Both companies provide car sharing on college campuses where traffic congestion and limited parking are frequent challenges. The combined company will be a serious competitor of standar car rental companies and a real threat to the ~30 other smaller car sharing competitors in the US.

Zipcar was founded in 1999 in Cambridge, MA, by MIT Sloan alumni and they are the leading car sharing company in the world with 120K members and 3,500 vehicles in more than 35 cities, including Boston, NYC, Chicago, San Francisco, Washington DC, Vancouver, Toronto and London. The founders and the CEO come often to our classes at MIT Sloan to talk about startups and entrepreneurship.

Flexcar is the second largest car sharing provider in the US. In 2005, Steve Case (founder of AOL) acquired 60% of Flexcar.

If you haven't tried car sharing, it works like this. You monthly your monthly dues to join the Zipcar club. With that you get a smart card that you can use to get into Zipcars which are parked in small numbers around most cities. Via Zipcar's web site or using your mobile phone you can reserve a car for an hour or a day. You then have the freedom to get groceries or drive out to the beach for the day without having to own a car and pay for parking. You can drive from $7.44/hr & $55.25/day. Car sharing is increasingly acknowledged as a smart urban lifestyle choice and transportation alternative. Zipcar has raised around $38M in VC funding from Benchmark Capital, Greylock and Globespan [alarm:clock]

Some facts about car sharing: Car sharing programs are proven to have significant positive environmental and social impacts. National studies show that each shared car replaces up to 20 privately owned vehicles. Car sharing members report driving significantly less and are more likely to walk, bike, and use public transportation. Members also report savings of $500 or greater per month compared to the average cost of owning and operating a car in the city, and businesses have saved thousands of dollars by eliminating company fleets or augmenting their transportation offerings with car sharing programs [alarm:clock]

As far as I know, car sharing companies do not exist in Spain yet. I wonder who will be the first one launching this business model in big cities in Spain. 

Vinod Khosla: a renewable universe

Last week I attended a talk given by Vinod Khosla. The talk was about Khosla Ventures renewable portfolio.

Vinod Khosla is one of the most influential persons in Silicon Valley and one of the successful entrepreneurs I admire the most. He co-founded Sun Microsystems in the 80s and then became partner at Kleiner, Perkins, Caufield & Byers (KPCB), one of the major early stage VC firms in the world (Colin Powell became a KPCB partner two years ago). KPCB early invested in Amazon.com, Google, Compaq, America Online, Netscape, etc. and actually Khosla was behind many of the succesful venture hits (and also behind some of the pitfalls like Excite). In the past, I have used Khosla's quote: "An entrepreneur is someone who dares to dream the dreams and is foolish enough to try to make those dreams come true." In 2004, he founded his own VC firm Khosla Ventures. During the last year, Khosla Ventures has been covered in various newspapers for its investments in alternative energies.

During the talk, he presented a non-exhaustive list of companies focusing on renewable energies in which Khosla Ventures is investing. He also presented the Khosla's "solution" rules for investing in clean energy startups:

• Technologies that attack manageable but material problems (e.g., biodiesel is not material because it does not scale)
• Technologies that can achieve unsubsidized market competitiveness in 5-7 years
• Technologies that scale: if it is not cheaper, it does nto scale
• Technologies that have manageable startup costs and short innovation cycles
• Technologies that have declining costs as they scale

In particular, he gave relevant companies for scale solutions for oil, coal, materials and efficiency (e.g., less oil and coal) in which he has invested.

During the Q&A, there were 4 interesting answers:

1. He compared the clean energy investing boom with the internet boom in 2000. He thinks that a lot of companies will fail but more money will be made than lost
2. A problem with distributed energy generation is storage. Fuel cells may solve the problem. However, he expects that centralized energy will prevail for a long time
3. He supports nuclear power but he thinks in the future solar energy will be more efficient. The problem with nuclear power is that it has very long innovation cycles, e.g., 15-20 years for new designs, which discourages VC investments.
4. All the companies he invests in are in the US, except an Australian company that is now relocating to the US. He thinks that in the US it is easier to create large and good teams. US entrepreneurial mentality allows good people to leave their jobs to join a good startup.

A123 Systems receives additional funding

On Tuesday, A123 Systems, a startup developing next generation Lithioum-Ion batteries (high power and fast recharging), announced that it has raised $30M in Series D. I read it in VentureBeat and Alarm:clock. Total funding to date is $132M. The company is an MIT spin-off the management team and board are impressive. The company is growing super fast and it already has over 800 employees. Here in Cambridge everybody talks about A123. I am sure that it is going to be a big success story.

I first heard of A123 Systems back in June, from Kelli McKechnie (my EM at McKinsey) who had worked there for one summer. One month ago, we had a meeting with Ric Fulop, one of the founders, regarding class activities related to MIT Sloan (Ric is a Sloan alumni and a successful serial entrepreneur and we had the chance to talk about Tabarca for a while). I will continue keeping an eye on it.

Partha Ghosh: uncovering the leader in you

On Tuesday we had a six-hour seminar about business leadership given by Partha Ghosh. Partha Ghosh is an MIT alumni who spent 12 years at McKinsey as a partner.

He talked about leadership development along three critical power dimensions: the power of intellect (IQ), the power of interconnectivity and the power of intuition (joining the dots).

Quoting him: "Business means never having to say you're sorry" (similar to the quote from Love Story "Love means never having to say you're sorry"). If you say sorry, you lose the trust. As a simple example, he would always carry three pendrives with his presentations.

Elevator Pitch Competition

Last week I participated in the Elevator Pitch Contest (EPC) in the Stata center at MIT (the EPC concept is similar to the Cambridge-Oxford Varsity pitch competition).

There were over 170 entries from different US universities (MIT, Harvard, Princeton, etc.).  The quality of the pitchers was excellent! I did not see anybody that run over the allocated time for the pitch (maybe some seconds) and the ideas were very well explained. Regarding the originality, quality and viability of the ideas there was a little bit of everytying. Among the judges there were several VCs. The competition was mainly weighting the quality of the pitch.

I participated with two ideas. One of them together with Javi Torres about an internet company. The other idea was Tabarca Networks. I did not win although for me, the goal was to get some practice and use the event to meet other people with similar interests. During my pitch, one judge said that he would not invest in our idea. Not a big issue: Fred Smith needed 5 years to convince an investor to invest in FedEx 40 years ago (he had to invent the reliable overnight delivery service industry) and yesterday I read that Tim Westergren, the founder of Pandora, pitched Pandora to 300 VCs before getting an investment (I did not know there were so many VCs :-)

Among the EPC finalists (all very good ideas and pitches), there were an online employment market place for qualified employees seeking partime positions, a company developing wireless power chargers (similar to Splashpower), and a company developing a new patent pending painting equipment for the car manufacturing industry that reduces Capex investments from $200M to $5M and reduces by 75% the time to paint a car.

Next business idea competition is the MIT $100K Executive Summary Contest. The deadline is November 29. I will participate with Tabarca Networks.

Dinner with Sherwin Greenblatt, first employee of Bose Corporation

Last week, in the Entrepreneurship and Innovation dinner at the  Faculty Club we hosted Sherwin Greenblatt, first employee and long-time President of Bose Corporation, recently Executive VP of MIT, and since its beginning the Director of the MIT Venture Mentoring Service.

Bose Corporation is a audio equipment company founded in the 60s as an MIT spin-off. In 1964, Amar Bose, professor at MIT, convinced his student Sherwin Greenblatt to become Bose first employee. Now Bose is still privately held, with ~10,000 employees and revenues of ~$2.5B.

Sherwin told us a lot of anecdotes about Bose early days. For example:

• During the first years, they used to work partime while working at MIT
• They were working in two ideas: a) switching power supplies/amplifiers and b) as a hobby (the loved music), accoustic ideas to reproduce music very well
• They did not know about business but they knew how to solve problems
• During 3 years, they worked 365 days a year, 13 hours a day and they had a very difficult time
• In 1967 all started to take off
• They were at the right place at the right time: in the early 70s, suddently everyone wanted good speakers
• The contributed capital was ~$300K (from friends and family), which in today's money is ~$2.5M

Bose has tried to have a strong corporate philosophy/culture. For instance, they wanted to support its technological development through research and recruit good researchers. He also mentioned that they wanted to create a workplace where you would like to be (e.g., clean). As an example, they forbade to eat where employees worked, and employees were forced to eat in the cafeteria. As a European, I like this idea a lot!!! the goal was two fold: keep the working desks clean and engineers could see other people (maybe they would not talk but at least they could see others :-)

After serving 20 years as President of Bose, in 2002 he volunteered to become director of the MIT  Venture Mentoring services (VMS). The VMS is a free service from MIT which provides mentoring, contacts and guidance  to commercialize ideas from MIT, so business people do not take advantage of the researchers. They try to teach researchers what they would usually learn by experience. Sherwin mentioned that some people would arrive there at t=-4, e.g., a page with a set of equations.

Nowadays, VMS is working with ~120 ventures and ~25 are successful (i.e., they have an advisory board, revenues, liquidity, etc.). There are ~100 mentors available.

Bahamas

I am back from the Bahamas. After the "pressure" of midterms, we went 4 days to the Bahamas to relax (pic of the hotel beach). Now I will focus again on Tabarca.

Carlos Robles and the Spanish National Day

Last week, Carlos Robles, Consul General of Spain in Boston, invited a small group of students to celebrate the Spanish National Day in the Saint Bothols Club.

In the picture, from left to right: Cristian Lucas, Inaki Berenguer (yo), Begona, Carlos Robles, Borja Borrero, Teresa Hernandez and Javier Donoso.

We had already met Carlos two weeks before in a dinner organized by the Rafael del Pino foundation in Boston, with Maria del Pino, her family and the 7 students sponsored by the foundation from this and last year at Harvard and MIT (including Cristian Lucas and me in the picture).

Carlos and his wife have been very nice with us. They spent a lot of time with us during the reception and we are organizing with them an additional dinner in one month. Before coming to Boston, Carlos used to be the Spanish ambassador in Guinea.

Tips from a successful software entrepreneur

This week in our Entrepreneurship and Innovation talk we had Imran Sayeed, founder of Netnumina (among other companies). Netnumina got $25M in its first round of funding. Imran gave us general tips about SW startups, which can be applied to any other startup:

• The idea needs to be easy to explain, specially in SW
• The benefit of the idea should be clear
• Try to find a first customer: a customer will give you more credibility than a VC saying that your product is great
• Keep costs low, even if you have VC money: the discpline you obtain is extremely useful
• Market your brand: if people hear your name, it gives credibility
• Stay focus with one product (and if possible, a product that does not need to be customized for every customer)
• Angels is the best source of funding, specially if they come with contacts
• Know your employees yourself (or through your network)
• Keep talent: employees need to have interesting jobs, have options and you need to promote outperformers
• Never do a company that does both services and products. Stay focus. Try to be product oriented instead of service oriented. That way it will be easier to offer services in the future. The other way around usually does not work.