Category Archives: Entrepreneurs

Boston Seaport – We’ll Be Home Soon!

We couldn’t be more stoked about our impending move to the Innovation District.

As Kendall Square continues to be the innovative cradle for most all things Tech & Life Sciences. the Seaport area is coming on fast as a complementary center of heat for startup growth and scaling.  There’s room and need for both and we’re “all-in” with both.

Our plans have been made, our lease has been signed, and our design work is in full swing.  In late winter, Polaris will open our new headquarters on the 10th floor of One Marina Park Drive in the heart of Boston’s Innovation District.

Within minutes of more than 30 of our portfolio companies located throughout Cambridge, Kendall Square, and within the Innovation District itself, our center of gravity will be positioned at the heart of our region’s start up economy.  Our new digs will allow us to be more efficient with our time and welcome far more local entrepreneurs and innovators through our doors.

Waltham has served us well over the last 14 years, and we’ll keep both offices for the next couple of years.  But no doubt that the puck always keeps moving.  And so much of what we do is anticipating where it’ll be over the years to come.  In our view, the puck is very much in Kendall, but it also is moving steadily into the zone of the Seaport.

As Pete Carroll would say, we’re “jacked & pumped” to see you in our new home soon!

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Top Venture Industry Communicator to Join Polaris

We’re thrilled to announce that Emily Mendell — who has led the communications strategy for the National Venture Capital Association (NVCA) for more than a decade — will join Polaris Partners at the end of September as Vice President of Communications.

As part of our team, Emily will be responsible for firm-wide marketing and communications and will support our portfolio of more than 100 growing companies operating in the technology, healthcare, and consumer spaces.

A long-time advocate for the venture industry and start-up community, Emily brings to the table a keen understanding of the innovation ecosystem and a unique appreciation of the critical partnerships that take place between portfolio companies, their partners, and ours.

Emily Mendell

Short story: Emily gets it.

She knows first-hand the synergy that takes place when passionate entrepreneurs and committed investor partners come together to turn ideas into realities.

She understands the lifecycle of value creation.  She knows the challenges and opportunities experienced during each stage — from innovation through iteration, from building and scaling through M&A and IPO — across a diverse portfolio of companies.

And she has built an unparalleled network of partners, communicators and journalists across the country — all committed to sharing the venture capital story.

The keystone of the Polaris strategy lies in our belief in the power of long-term relationships.  In strategically reaching out to and working with individuals who have proven themselves time and time again.

No one knows this more than my partner, Terry McGuire, who partnered closely with Emily during his chairmanship of the NVCA and the Global Venture Capital Congress, where together they worked on behalf of the U.S. venture capital and growth equity industry on critical market and public policy issues.  Speaking about Emily, Terry shares:

 “Emily’s talents as a communicator and advocate are only matched by her high level of professionalism and dedication to her craft.  She’s both a strategic thinker and a tireless operator who takes a great deal of pride in her work and values the contributions of those around her.  Every firm looks for a certain X-factor when it comes to welcoming new members to the team. We certainly saw that in Emily and know she will be a fantastic addition to Polaris.”

There’s a robust pipeline of incredibly-exciting things which Polaris Partners and our companies are working on during the coming months and years.

We’re all looking forward to working with Emily to help convey all that we are — and all that we do — every day alongside our entrepreneurs in our efforts to create value for them, our Limited Partners, and to impact the world around us.

Darwin, meet Willy Loman

We have a saying around our shop that Darwin was an optimist.  Darwin never met Willy Loman.

willy loman

It’s always interesting when people ask “where are the next great enterprise opportunities?” Many are not surprised when I cite the obvious tectonic forces of the cloud, open source development and content management platforms, Big Data, NoSQL and transformative mobile technologies.  Oh, and SaaS delivery wiping out the need for on-premise servers.

All compelling enablers to the next generation of innovation.

But an enabler just as dramatic is the disruption that’s progressively occurred over the last decade on the business side of the enterprise fence.

The business disruption enabled by SaaS delivery, subscription licensing and low-touch, high-velocity selling models enable each of the above areas of technology disruption.  Disruptive costs of delivery and customer acquisition have enabled business tectonic forces to emerge alongside their technology companions.

There‘s been much written over the past week or so since the great Oracle miss. It’s a surprise to some that the old school enterprise sales rep is an endangered species.  Truth is, the enterprise sales model as we knew it has been living on borrowed time for the past decade.  Barb Darrow of GigaOM recently wrote a great piece to this point on  the Death of the IT Salesman.

I spent the first two thirds of my career as an operating guy, building and presiding over enterprise selling efforts of all shapes and sizes. I’ve spent the last third of my career investing in next-generation software start ups that have some common threads running between them.

  • They sell by means of new-school, low-touch, high velocity sales models.
  • Their product value propositions are directed towards individuals and workgroups as much as organizations.
  • Their products are delivered with multiple tiers of  functionality.
  • They’ve perfected (or working on perfecting) the art of initially exposing just enough functionality to deliver critically-needed value to obvious problems.
  • They deliver quick value and can be self-served and self-supported.
  • Their user experiences are elegantly simplistic.

Business-level individuals (rather than IT staff) learn about them, quickly download a portion of the product that exposes just the right amount of value to get them hooked on their use.  These start ups don’t have expensive, outside sales forces that sell their products top-down to C-level executives via long, complicated, cross-level influencing campaigns. Or followed by still-longer deployment periods.

You see, the really big change in selling to the enterprise is about how customers buy.

Legacy software providers are forced to confront a fundamental shift in how companies buy enterprise IT.  A shift in the database mix to NoSQL products which add non-relational database capabilities to manage, query and curate unstructured data.  A shift to distributed data stores. A shift to pay-as you-consume value. A shift away from IT leading the way.

Enterprises large, medium and small no longer are willing to pay big, up-front fees for annual software and upgrades when they can easily move workloads to Amazon Web Services.  And move databases to AWS Dynamo services.  And move shared files from local networks and storage to Egnyte cloud services.

But even more importantly, the buyer has changed.  Certainly at the application level, individuals make the buying decisions now.  File-sharing and collaboration applications enable not just advocacy but virality across work groups, and eventually across organizations.

Because the buyer has changed, product design has changed.

LogMeIn, Lookout and Dropbox and others set the bar for one-button simplicity. Freemium and free trials focus on quick time-to-value. Self-served or assisted by inside sales, added functionality is up-sold and quickly deployed.  Value is shared and the gospel is spread from user to user, without IT involvement nor blessing.

And marketing has changed.  It’s now focused on supporting this low touch model.  Fine-grained analytics help to predict conversion success, to pinpoint areas where inside sales assistance is needed, and to optimize product iteration though understanding user experience.

Five years ago, it was conventional wisdom that innovative software start ups never stood a chance to sell to enterprise customers.  But that was when IT was the gatekeeper.

Now the user is the key to selling to the enterprise.

High velocity enterprise sales are all about targeting the individual as the point of entry, exposing and realizing quick value, elegant design which minimizes customer support requirements, and promoting viral expansion across organizations.

The evolutionary process is too big for Willy and his kind.  We’re well into massive transformation and we’ll never go back.

Good thing for buyers and sellers alike.

Freemium Isn’t for Everyone

Time for a guest post from @seanellis.

I’ve been fortunate to have worked closely with Sean through our investments and my BoD efforts at LogMeIn and most recently, Qualaroo, his newest company.

In between, Sean’s advised and helped build the go-to-market strategies behind Dropbox, Lookout and Eventbrite, among others.  There’s nobody on the planet that knows more about all things Freemium than Sean.

His post was just picked up by the WSJ The Accelerators series and follows. Happy reading :)

GUEST MENTOR Sean Ellis, founder and CEO of Qualaroo: Freemium is a popular emerging business model among software, web services and media companies. It generally means giving away a free version of your product and generating revenue by “upselling” some users to paid versions or services. It is possible to give away a free version because there is little or no marginal cost for most digital products.

The model has always been a bit controversial. I remember when we implemented it at my first startup nearly 10 years ago. My father, who also happened to be an investor in the startup, was doubtful asking: “How can you make money by giving away something for free?” Since that time, I’ve helped implement or execute the model in startups that now have a cumulative market cap of around seven billion dollars.

See what other startup mentors have to say about making money on apps.

Why Freemium Works. Freemium is the perfect response to the increasing competition for consumer attention on the Internet. According to this IAB report, over the last seven years, marketers have increased their online advertising in the U.S. by about 330%. It is now harder than ever to drive attention and trials for a digital product through online advertising.

Rather than competing to buy attention through advertising, freemium apps and services rely on strong evangelism from their free users for a large percentage of their new signups. Free users tend to be the types of people, usually individuals or very small businesses, who are attracted by the free price and spread the word when a free service provides real utility.

As you aggregate free users you create your own exclusive advertising medium for marketing your paid version to them. In advertising context is extremely important, and the free version of your product provides the perfect context for introducing your premium versions.

Common Freemium Mistakes. A common mistake when trying to execute a freemium model is to introduce a weak free offering. While this may give you a higher upgrade rate, you’ll be selling into a very small pool of free users. It is important to remember that the best freemium businesses have a valuable free version that inspires user evangelism. This user evangelism is the growth engine that makes freemium work. Without strong user evangelism, freemium generally fails.

Instead of marketing a weak free version to drive upgrade rates, focus on clearly differentiating value in your premium offering. Remember that a 2% upgrade rate on a fast growing free user base creates a more valuable company than a 4% upgrade rate on a free user base with no growth.

Freemium is Not for Everyone. Given my advocacy for the freemium model, people are often surprised that at my latest startup, Qualaroo, we recently discontinued our free version. We did this for a couple of reasons. First, our product isn’t really intended for individuals. Our primary customers are marketers, who use it to manage the customer experience on their website.

The second reason we stopped offering a free version is that our free and low-cost versions were anchoring our solution at a price point that did not support our revenue growth objectives. New customers are now happy to pay the higher prices because they haven’t been conditioned to think of it as a cheap or free solution. And as we now generate higher average revenue per customer, we can spend more money profitably acquiring them.

However, I continue to be a strong advocate for freemium as a board member at two other companies (Mavenlink and SignNow). These companies both have collaborative business solutions that benefit from not having purchase friction on an initial collaborative user experience. SignNow also meets a second factor that helps freemium work, the ability to digitally sign documents on a computer or mobile device is a value for individual users.

Should Your Company Consider Freemium? If your business category can support a freemium model, you should give it careful consideration. If you don’t use the model yourself, you’ll likely find yourself competing against someone else who does implement it.