Crains New York - August 6, 2012 - (Page 4)
IN THE Collective wisdom: Apps shop MARKETS sees way to fuel tech startups
by Aaron Elstein
The idea is to offer space and software development in exchange for equity
BY MATTHEW FLAMM
For a company with just 29 employees, Fueled has one crowded office. More than 100 people can be found sitting over laptops across the 12,500 square feet that the mobileapplications developer subleases on the top floor of 568 Broadway.Some work for Fueled, and the rest belong to what the 3-year-old company’s leaders recently began calling the Fueled Collective. Some 15 startups populate the Collective, five of them Fueled clients who have come in-house.The rest are “friends”—startups that rent desks by the month, work on cool products and foster the lively atmosphere that, in the tech scene, plays a key role in recruiting and retention. The Collective is still in its beta, or tryout, phase, and company executives emphasize that just hosting a “curated” space—complete with pingpong table, free food, a coffee bar and an ice cream cart—isn’t the point. What they envision for their SoHo location is a workspace largely filled with startups in which Fueled has been given a substantial
In a SoHo office, 100-plus people fill a mere 12,500 sq. feet
ing them out into the world is one way that Fueled hopes to grow in the long term. Short term, the developer expects to get the entrepreneurial thrill that comes with deep involvement in interesting projects. “Fueled Collective is our future,” said Director Ryan Matzner. “Right now, we have clients and friends in
Stocks for the long haul? Try the even longer haul
See COLLECTIVE on Page 32
CRAIN’S Business Breakfast Forum:
CHAIRMAN AND CEO, MTA
Join Crain’s New York Business for a discussion with Joseph Lhota, Chairman and CEO, Metropolitan Transportation Authority (MTA). Mr. Lhota will discuss the MTA’s mounting debt, the upcoming fare hike and his plans to upgrade the nation’s largest transit system. He will be questioned by Crain’s Assistant Managing Editor Erik Engquist and another journalist from the media.
DATE: Wednesday September 12, 2012 PLACE: The Plaza 768 5th Avenue TIME: Networking Breakfast: 8:00 - 8:30AM Program: 8:30 - 9:30AM
ast week, Bill Gross, the renowned money manager at Pimco, kicked off one of his monthly missives by declaring: “The cult of equity is dying.” The betterthan-6% annualized returns promised by such stock market gurus as economist Jeremy Siegel are a chimera, thundered Mr. Gross, who made his fortune investing in bonds. Investors, he warned, had better brace themselves for years of middling performance from stocks. Whether Mr. Gross is right or wrong, there’s no doubt that a lot of people are deeply frustrated with their equity portfolios. And with good reason: If you put your money in a mutual fund tracking the Standard & Poor’s 500 stock index back in the summer of 1999, when stocks were all the rage, your investment has produced a total return of around 25% since. That might not sound so bad, but an investment back then in Mr. Gross’ Pimco Total Return Bond Fund would have more than doubled. Bond investors were also spared almost all of the stock market’s gut-churning gyrations of the past decade. Stocks have performed so disappointingly for so long that
even Wall Street equity strategists aren’t bullish.That’s right, the folks charged with finding reasons for people to buy can’t muster up the enthusiasm at present, according to a report last week from Bank of America that found that optimism about the stock market is at its lowest since 1985. BofA strategist Savita Subramanian based that finding on the percentage of portfolios that strategists like her recommend investors dedicate to stocks. The latest reading: 43%. Not surprisingly, Ms. Subramanian thinks the rampant bearishness of today represents a real opportunity for those brave enough to take the plunge and buy stocks. After all, with enthusiasm at such a low level, those who get in early stand to profit the most when other people change their minds. That said, Wall Street strategists have a way of misjudging the stock market. They were collectively at their most bullish in 2001 when they suggested investors put an average of 70% of their money in stocks, according to BofA research. Of course, that was precisely when the Nasdaq was in free fall. Still, even Mr. Gross doesn’t think the chief alternative to stocks—that is, bonds—offers such compelling opportunities. He worries that a nasty bout of inflation looms in the years to come, which would erode the returns that bonds offer.
COST TO ATTEND:
$95 for individual ticket(s). $950 for table(s) of ten (10).
You must be pre-registered to attend this event. No refunds permitted. Pre-register online by going to crainsnewyork.com/events. For more information, call the Events Hotline at 212-210-0739.
REGISTER HERE: www.crainsnewyork.com/events-jlhota
THE LATEST RECORD-HIGH PRICE FOR A BUSHEL OF CORN,
For sponsorship opportunities, please contact Trish Henry at 212-210-0711 or email@example.com
reached last week. Drought throughout the Farm Belt has caused corn prices to spike 25% this year. Soybean prices have jumped 35%.
4 | Crain’s New York Business | August 6, 2012
equity stake in exchange for developing their products. This partnership arrangement would leverage the firm’s skills in strategy, design, execution and marketing—and give it prospects for growth far beyond those of a typical work-for-hire apps developer. Though Fueled is profitable, with projected revenue this year of nearly $6 million—up more than 300% over 2011—apps developers toil in a crowded field. The search for talent never ends, and the shortage of engineers limits the number of clients a firm can take on. Incubating companies and send-
here, but in the future it’s going to be fewer friends, around the same number of clients, and a lot more partnerships.” The program would be a new twist on existing models. Incubators like TechStars provide small amounts of funding in exchange for slivers of equity; Barry Diller’s IAC/InterActive Corp. incubates startups, but the projects are cooked up in-house. Fueled wants to partner with entrepreneurs who bring their own concepts and expertise. Fueled founder Rameet Chawla says the firm needs to double its staff to about 120 employees—half of them in New York—before it can assign developers to numerous projects that may never pay off. That could take another year. In the meantime, it’s building a portfolio. Former television producer Alvina Collardeau went to Fueled nine months ago with plans for a mobile application that had grown out of her online city guide, On the Inside. Rebranded The Pioneers, the app is moving from the development to the execution stage, and Ms. Collardeau is deciding whether to give Fueled a considerable equity stake in place of cash. Drawn by the vibrant atmosphere, she recently moved her staff of five into 568 Broadway. Though she’s wary about partnering, it would save money and give Fueled a
Table of Contents for the Digital Edition of Crains New York - August 6, 2012
Crains New York - August 6, 2012
In the Boroughs
In the Markets
From Around the City
Report: Business of Sports
Real Estate Deals
Out and About
Crains New York - August 6, 2012