Of Aspirin, Bubbles, and Clouds: A Chat with OpenView Venture’s Scott Maxwell
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companies and don’t worry about exits so much.” What the firm does worry about is the growth of its companies. “We try to get them on a high-growth trajectory,” he said. “Almost everything we do will be [mergers and acquisitions as exits]. We aim to get them to $100 million.”
Maxwell says it’ll be at least another year or two before most of the firm’s investments become ripe for acquisitions. So far, only one of its companies, San Francisco-based Loyalty Lab, has been acquired—by Tibco Software in December 2010, for $23 million.
A quick rundown on a few of OpenView’s current investments:
—Intronis, based in Boston (previously in New Jersey), does online data backup and recovery. The firm used to sell its service mostly to consumers, but as Mozy and Carbonite came to dominate that industry, Intronis shifted to IT service providers as its main customers. OpenView invested $5 million in the company in 2007.
—Skytap, based in Seattle, specializes in cloud computing software that helps organizations manage “virtual” machines for software development, testing, and other tasks. OpenView led a $10 million Series C round for Skytap at the beginning of 2011.
—Zmags, based in Boston (it started in Denmark), is a digital publishing, marketing, and e-commerce startup. The company hired Michael Schreck as its new CEO back in May. OpenView invested $4.2 million in the company in 2008.
One thing these companies have in common is cloud-based software. As Maxwell sees it, a sea change happened about a year ago in how businesses think about cloud computing. “There’s a real difference from a lot of hype to a lot of reality,” he said. “The software stack has evolved far enough that it makes huge economic sense for companies to outsource their servers. It’s not just the servers, it’s the software, and the people that manage them. It’s gotten so sophisticated that it’s hard for mid-market companies to have staffs [to manage servers and software].” By his math, companies can save “around 50 percent of overall cost” using cloud service providers such as Amazon Web Services.
One theme I’ve been thinking about lately is how and why a company like Amazon sprang up to take the lead in cloud computing, instead of a Boston-area firm, say—seeing as Boston has traditionally been strong in infrastructure and networking technologies.
“It comes down to individual entrepreneurs,” Maxwell said. “Boston is really set up well for [business-to-business] technology, in my view. Boston missed a couple of wind shifts, while some of the stuff like networking was tapering off. It feels to me that Boston is a little behind New York, and a lot behind California. But it feels like it’s getting better, in general. Boston could be a great cloud hub if some entrepreneurs locate here.”
Maxwell added, “I think there are some opportunities with cloud—and mobile devices—that may create a whole new generation of innovation.”
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