| Issue Date: December 15, 2008, Posted On: 12/23/2008 At MIT VC powwow there is no time like the present Experts: Despite slowdown startup jump is good move By MARK CONNORS |
| CAMBRIDGE, Mass. â€" Is starting a new business in the middle of what may prove to be the most severe economic downturn since the Great Depression a good idea? Surprisingly, experts at a recent MIT conference in Cambridge said the timing may be perfect. The nation lost 533,000 jobs in November, the 11th consecutive month the U.S. economy has shed jobs, according to Department of Labor statistics. The unemployment rate currently stands at 6.7 percent â€" a 15-year high â€" and the Dow Jones Industrial Average index has lost about 40 percent of its value in the past year. And many economic forecasters say the worst is yet to come. Nevertheless, the consensus among experts at the Sloan Venture Capital Conference, held on Dec. 6 at the Charles Hotel in Cambridge, is that the timing couldn’t be better to start a new business. “You’ve got a great deal of people from tech companies who have been laid off, so you’ve got a great pool of talent out there, and costs for things like office space and supplies and even salaries are down. So from an entrepreneur’s standpoint, it’s a great time to start a business,â€� said David Fialkow, a speaker at the event and managing director of General Catalyst Partners in Cambridge. The conference, hosted by the Massachusetts Institute of Technology and now running in its 11th year, featured more than 40 speakers, including a slew of venture capitalists, regulatory officials, MBA students, industry veterans and startup entrepreneurs. Gitika Srivastava, a former technology entrepreneur who now advises Boston-area startups, co-chaired the conference. Indians are active in the Boston area’s venture capital scene and were well represented at this year’s event. Of the conference’s 32 organizers, 10 were of Indian origin. Jamshed Irani, director of Tata Sons, a massive India-based business conglomerate that owns over 96 companies spread across six continents, delivered the conference’s luncheon keynote address. Irani, who was recently honored with a Lifetime Achievement Award by the Indian government, spoke about the healthy state of startup capital in India. “It used to be that you had to be in Cambridge or the Silicon Valley [to get venture capital funding], but I’m happy to say that is changing,â€� Irani said. “India is very much fair game.â€� Several United States-based venture capital firms have launched India-specific funds, including industry giants Matrix Partners, Sequoia and Canaan Partners. MIT alumnus Eran Egozy, co-founder and chief technical officer of Harmonix Inc., the Cambridge-based company behind the wildly popular video games “Guitar Heroâ€� and “Rock Band,â€� delivered the conference’s closing remarks. TIME Magazine recently named him one of its 100 Most Influential People in the World. But Egozy, a bespectacled, skinny figure who sports a thick head of curly black hair and dresses formally, does not exhibit a typical rock star appearance. He acknowledges his musical history consists almost entirely of playing the clarinet. “People ask me all the time if we are going to come out with ‘Clarinet Hero,’â€� Egozy said. “They think it’s hilarious. Well, the answer is there will never be [a ‘Clarinet Hero’] because I don’t think anyone would buy it.â€� Egozy told the story behind Harmonix and the company’s 12-year road to commercial success, one that Egozy termed “a wild ride.â€� At one point, the company was about to go out of business before a well-timed round of venture capital kept the business alive. “People think of ‘Guitar Hero’ as this overnight success story,â€� Egozy said. “Nothing could be further from the truth.â€� Harmonix was launched in the media lab at MIT when Egozy and his partners toiled away at building music improvisation technology â€" a primitive precursor to the company’s Guitar Hero game. “When we saw the joy that [the technology] brought to people, when we saw the twinkle in their eyes when they played it, we knew we were on to something,â€� Egozy said. But the early going was a tough road for Harmonix. Egozy and his partners decided to try to market their innovations as a music improvisation licensing technology. Egozy asked the audience for a show of hands of those interested in such licensing rights. Only two people raised their hands. “Well, in 1995, it was more like zero people,â€� Egozy said to laughter. The business saw no revenues in its four years. Undaunted by their initial stumbles, Egozy and his partners decided to try to harness the technology in the form of video games in 1999, eventually leading to the release of “Guitar Heroâ€� in 2005 and “Rock Bandâ€� in 2007. Egozy’s story was a welcome one for the hordes of startup entrepreneurs at the conference, with many looking to find the same commercial spark Harmonix found. Thirty startup companies, selected from a pool of more than 100 applicants, showcased their business plans at the conference’s “Entrepreneur Showcase,â€� where they competed for the attention of dozens of venture capitalists who attended the event. The startups represented a broad and sometimes eclectic range of industries and platforms. Participating businesses included: Free Flow Power, a company that harnesses energy from the natural flow of water; YouCastr, an online sports network for fans of ‘non-mainstream sports’; Promethean Power, developers of a solar-powered cold-storage system for the preservation of perishable foods; and AugmentRx, a pharmaceutical startup behind a new “tissue bulking agentâ€� for the treatment of urinary incontinence. “For companies like us, this is the place to be,â€� said Bharat Nair, a representative of an online security startup. |
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