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October 16, 2013 at 4:52 PM
Michel Feaster spent more than a decade building products for breakout enterprise software companies Mercury Interactive, Opsware and Apptio.
December 3, 2012 at 9:57 AM
It’s revenge-of-the-nerds time in Seattle.
The cool kids in Silicon Valley usually get all the attention. But the tables are turning, now that it’s getting harder to make a killing with a clever app or website.
Lately, the Valley’s been fretting about a slowdown in venture funding for consumer Web companies.
Venture capitalist Fred Wilson opined last week that the consumer Web has finally matured and the big players like Google, Facebook, Amazon.com, Microsoft and others are “starting to suck up a lot of the oxygen.’
In a blog post, Wilson wrote that “consumer behaviors are starting to ossify on the Web, and it is harder than ever to build a large audience from a standing start.”
Meanwhile, Seattle has been steadily growing a promising crop of business-oriented startups with half the glamour and perhaps twice the promise.
These companies don’t get the buzz of the Valley’s groovy consumer startups. But those that survived the recession and steadily built strong businesses are moving into position for big breakouts over the next year or two.
The backdrop for this is the emergence of Seattle as the world leader in cloud computing. Tech ventures small and large are building the infrastructure, tools and services that are modernizing the business world and managing the massive amounts of data that’s being generated.
That environment is drawing talent and investors now that enterprise software is back in favor. Evidence of this came in a surge of financing deals over the past month as a handful of tech startups in the area raised collectively more than $100 million.
“We’re going to look back 10 years from now, and we’re not going to believe how successful the Pacific Northwest has been in terms of growing great businesses,” Matt McIlwain, managing director at Madrona Venture Partners in Seattle, told me last week.
Here’s a look at some of the area companies moving into pole positions:
Big Fish Games: The steady Seattle casual-games giant is hunkering down and investing heavily in new businesses, which could position the company to go public or be acquired within two years.
Big Fish just named Dave Stephenson (below right, in a photo by Times photographer Ken Lambert) its president, freeing up founder and Chief Executive Paul Thelen (left) to focus on its new initiatives.
Stephenson formerly led finance operations for the biggest group at Amazon.com, its North American retail business. He joined Big Fish as chief financial officer last year.
Big Fish produces and publishes hundreds of games a year and distributes them on multiple platforms. Its games may not be household names, but they’re good enough to draw a huge, paying audience. That provides more consistent growth than chasing big hits.
Sales grew 30 percent last year and this year will exceed $200 million. Its global head count is about 700, including 550 in Seattle, where it added nearly 100 employees over the past year.
Big Fish considered going public last year but held off because it was planning big investments in its new cloud gaming platform. Thelen said the investments will lead to “hypergrowth” but wouldn’t have gone over well on Wall Street.
“We saw a lot of opportunity to emerge as a much bigger company through this forward investing in these new businesses we’re pursuing now,” he said.
Big Fish plans to spend perhaps 18 to 24 months getting the new ventures up to speed. They include the expansion of its cloud gaming platform, new “free to play” games supported by microtransactions and expansion in Asia.
“When we emerge is the time we’d consider an acquisition or an IPO, but right now we’re in a build phase,” Thelen said.
Smartsheet: Bellevue-based Smartsheet is announcing Monday that it has raised $26 million to accelerate its business providing online spreadsheets. The funding came from Madrona and Insight Venture Partners.
More than 20,000 organizations are now using Smartsheet’s online service to collaborate and share information.
Chief Executive Mark Mader expects his team will grow from 40 to 140 over the next 18 months. Smartsheet is cash-flow positive and saw triple-digit sales growth over the last three years.
“The opportunity we see here, it’s substantial,” he said.
Mader wouldn’t say much about plans to go public or be sold. But he acknowledged that large software vendors are interested in adding new products that are used by workers at every level of a company.
Those companies have to innovate “or find technologies that have huge reach and touch users within business.”
Qumulo: Seattle data-storage startup Qumulo surfaced last week with $24.5 million in initial funding.
The amount of data that companies need to store will grow 50 times by 2020, yet corporate IT budgets and staffing are expected to grow only about 50 percent over that period, Qumulo Chief Executive Peter Godman said.
“That situation — this massive increase in data and a fairly modest increase in resources — requires fundamentally better and more efficient technologies,” he said.
Qumulo is a fourth-generation Seattle tech company. Godman came from Isilon, a data-storage company started by veterans of RealNetworks, which was started by a Microsoft alum.
Isilon was sold to EMC for $2.25 billion in 2010.
At last week’s state Innovation Summit, the president of EMC’s Isilon group said the business has expanded from 500 to 1,300, and sales have more than tripled since the acquisition.
Qumulo is keeping its product plans under wraps until next year, but in the meantime it’s using its newfound capital to hire like mad. Godman expects head count to grow from 18 to 68 over the next 18 months.
June 27, 2011 at 9:48 AM
There’s a new game you can play if you’re following the recent hype around online music services.
It’s like “Where’s Waldo?” But instead of looking for a little guy hidden in a complicated picture, you look for a proud company that’s vanished from the industry it helped create.
I call this game “Where’s Rhapsody?”
Remember Rhapsody? It’s a Seattle-based subscription music business that started a decade ago, was acquired by RealNetworks and spun off last year as a stand-alone company.
Rhapsody has 750,000 subscribers paying $10 per month for unlimited access to its online library of about 12 million songs. It streams music to devices, PCs or Web-connected audio gear. It has 150 employees and about $130 million in sales..
I’m a fan. For that $10, I get unlimited access to a vast collection that plays with no ads or limits on how many times I can play a particular song. For $5 more per month, I can download songs to a smartphone (and hear them played through tiny speakers until the battery ran out faster than usual … ).
It’s like Netflix for music, but with a far better selection — and new releases.
You’d think Rhapsody would be a service against which newcomers are measured.
But in recent months, as new music ventures turned the hype volume up to 11, Rhapsody seems to have pressed a giant “mute” button.
Since May, Apple, Google, Amazon.com and Best Buy unveiled new “cloud” music services without a peep from Rhapsody.
Midsize companies in the business are soaring. Online radio service Pandora went public two weeks ago; its stock didn’t fare well, but the money-losing business still ended up with a $2.5 billion market capitalization. British subscription music service Spotify simultaneously raised $100 million, arming it for a U.S. debut and direct challenge to Rhapsody later this summer.
I caught up with Rhapsody President Jon Irwin to find out what’s been going on. (I took the picture below last year at Rhapsody’s new Seattle office.)
“We’re staying the course,” he said. “These new entrants are simply validating the space — they’re moving in a direction where we’ve already been and our products are already going.”
Rhapsody has been working to fully sever itself from RealNetworks, building capabilities such as its own billing system. That was completed a few months ago.
At the same time, Rhapsody has been redesigning its website and building new features. The redesign’s been in beta testing and went live last week.
In a nod to Pandora, there’s a “Radio” link that’s basically a different name for the curated collections of music that had been called Rhapsody “channels.”
Social networking features are coming in late July, enabling users to share and “Like” songs, Irwin said. Spotify now has an edge here. Its users can share playlists on Facebook (although they’re not really giving friends music — the friends have to be using Spotify, which is where the playback happens).
Also in the works is a “sync” feature that will scan users’ offline music collection and add those songs to their online Rhapsody collection.
Synchronizing online and offline music collections is a big selling point of “cloud lockers” that Apple, Amazon and Google are rolling out. But these are very different offerings than Rhapsody’s “all you can eat” service. The cloud lockers are mostly designed to store and stream music that you’ve bought, or will buy from the cloud companies.
Rhapsody lost $7 million on sales of $32.5 million in the quarter ending March 31. Irwin said it’s in “fantastic shape” and accumulating cash that could eventually be used for acquisitions or international expansion.
“We are break even and moving toward profitability the back half of this year,” he said.
Irwin believes that all the new entrants will help Rhapsody, because people will get more accustomed to subscription music services in general. I think he’s right, that people are getting used to paying $10 a month for services such as Netflix, which provide convenient and legal access to premium content.
But I’ll bet people will be confused by the different options, and they’re not likely to subscribe to multiple music services. If they decide to start paying a monthly fee for online music, they’ll decide among well-financed newcomers bombarding them with promotions, tech giants with household names and, perhaps, Rhapsody.
Irwin is undaunted. Rhapsody has a critical mass while other players in the U.S. are “nowhere near the scale they need to be profitable, and it’s a very expensive proposition to close the gap,” he said.
Rhapsody also is making deals with wireless companies to offer and bill for its service. Irwin said that’s exposing Rhapsody to “not hundreds of thousands, but millions, of customers.”
“The best way for me to position Rhapsody for additional value creation is to continue to deliver a great service and innovate on the product side,” he said.
That’s fine, but it may be time to start watching for Rhapsody to be acquired by a larger company.
February 6, 2009 at 3:48 PM
After inadvertently posting details of its new MyPhone service online, Microsoft went ahead and confirmed that it will unveil the service at the upcoming Mobile World Congress wireless show starting Feb. 16.
It looks pretty interesting — and like Windows Mobile finally has an answer to the groovy cloud services offered by Nokia, Apple and Google.
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