The Good NET Guide

Posts Tagged ‘management’

Information management company Iron Mountain has acquired Mimosa Systems for a cool $112 million in cash. Mimosa Systems provides an enterprise-friendly archiving system for email, SharePoint data and files.

Iron Mountain provides data management solutions including protection, recovery, archiving, eDiscovery and intellectual property offerings. Mimosa Systems will provide on-premises archiving solution to compliment Iron Mountain’s cloud-based information management systems.

With the acquisition of Mimosa, Iron Mountain gains 1000 more customers. Mimosa will be folded into Iron Mountain’s Total Email Management Suite. The president and CEO of Mimosa Systems, T. M. Ravi, will become chief marketing officer for Iron Mountain Digital. Since its launch in 2003, Mimosa has raised close to $50 million in venture funding.

“People in technology businesses are drawn to places known for diversity of thought and open-mindedness”, is what Professor Richard Florida concluded after studying the growth and success of 50 metropolitan areas in the U.S. The most successful regions were those with the most gays, bohemians, and immigrants. These groups flourish in Silicon Valley, and its diversity has undoubtedly provided it with great advantage. But after attending the recent Crunchies Awards, I realized that something important is still missing — women entrepreneurs.  I was shocked that the only woman CEO on stage during the entire event was TechCrunch’s own Heather Harde. Nearly all the companies that competed in the event (other than the PR firms) had males at the helm. This dearth may be one of the reasons for which the Venture Capital community is in such sharp decline, and why the Valley isn’t achieving even more success.

An analysis of Dunn and Bradstreet data shows that of the 237,843 firms founded in 2004, only 19% had women as primary owners. And only 3% of tech firms and 1% of high-tech firms (as in Silicon Valley) were founded by women. Look at the executive teams of any of the Valley’s tech firms – minus a couple of exceptions like Padmasree Warrior of Cisco, you won’t find any women CTOs. Look at the management teams of companies like Apple – not even one woman. It’s the same with the VC firms – male dominated. You’ll find some CFOs and HR heads, but women VCs are a rare commodity in venture capital. And with the recent venture bloodbath, the proportion of women in the VC numbers is declining further. It’s no coincidence that only one of the 84 VCs on the 2009 TheFunded list of top VCs was a woman.

Is the background or motivation of women that prevents them from becoming entrepreneurs? I just completed a project with National Center for Women & Information Technology (NCWIT) to find out (Kauffman Foundation will be releasing our research paper this spring). Our analysis of 549 successful startups showed there was virtually no difference in motivation between men and women entrepreneurs.  Just like men, women started companies because they wanted to build wealth, capitalize on business ideas they had, liked the startup company culture, and were tired of working for others and wanted to be their own boss.

Women entrepreneurs were as highly educated as their male counterparts, had the same early interest in starting their own business, and learned the same valuable lessons from their work experience and from prior successes and failures. The only real difference was that women put a higher value on their business partners and on their personal and professional networks.

Is it that women are less competent than men? Quite to the contrary. An analysis performed by Cindy Padnos, managing director of Illuminate Ventures, showed that women are more capital-efficient than the norm and that venture-backed companies run by a woman had annual revenues that were 12 percent higher and used an average of one-third less committed capital. Women-led high-tech startups have lower failure rates than those led by men. And organizations that are the most inclusive of women in top management achieve 35% higher return on equity and 34% better total return to shareholders than do their peers.

Padnos points out that the tide is turning in favor of women in education. Girls are now matching boys in mathematical achievement.  In the U.S., 140 women enroll in higher education for every 100 men.  Women earn more than 50 percent of all bachelor’s and master’s degrees, and nearly 50 percent of all doctorates. Women’s participation in business and MBA programs has grown more than five-fold since the 1970s, and the increase in the number of engineering degrees granted to women grew almost 10-fold.

So what holds women back from starting companies? Shaherose Charania, of Women 2.0, thinks it is because women have had few role models and mentors. Additionally, it is harder for women to obtain funding than for men. She notes that historically, women-led companies have received less than 9% of venture capital investments; in 2007, the proportion of funded female CEOs dropped to 3%. And there is another problem which her group works hard to overcome: some old-time VCs won’t give women the time of day. Her group members recount examples of VCs and angel investors interrupting pitches to ask questions and make comments like:

• When are you planning to have kids?
• Why isn’t “he” the CEO?
• So you moved here because your husband lives here? What if he has to move for work one day? Will you go with him?
• You should cut your hair, dress a bit more manly if you want to be CEO.

Sharon Vosmek, CEO of venture accelerator Astia doesn’t think that VCs have an overt bias against women. Instead, it’s the way the venture-capital industry operates.  Vosmek says that these “systematic or hidden biases” include:

1. that VCs hold clear stereotypes of successful CEOs (they call it pattern recognition, but in other industries they call it profiling or stereotyping.)  John Doerr publicly stated that his most successful investments – and the no-brainer pattern for future investments – were in founders who were white, male, under 30, nerds, with no social life who dropped out of Harvard or Stanford (2009 NVCA conference).
2. VCs invest in people they know. If women aren’t in their natural networks, they won’t get through the door.  We know that still today, men and women network in separate business networks.
3. VCs want to invest in serial entrepreneurs. (This further reduces the chance for woman entrepreneurs.)
4. The VC community is obviously male dominated, and it just got worse…after the cold freeze VCs experienced over the past 24 months, many women partners exited the industry. As the Diana Project research shows, a firm with women General Partners is more likely to invest in women entrepreneurs.

So, it is clear we have a problem here: we’re holding back the most productive half of our population. What can we do to fix this problem? NCWIT’s CEO, Lucinda Sanders, Shaherose Charania, Cindy Padnos, and Sharon Vosmek have all given me their suggestions. I also have some ideas of my own. I plan to write a follow-up post that details some of these, but I’d like to get your input first. After my recent BusinessWeek column on the dearth of women entrepreneurs, I was deluged with angry emails from men who disagreed with my conclusion that the problem isn’t a failure on the part of women but rather a societal failure. Some were really angry about my comparison of Wall Street firms to their counterparts in India. I’ve heard from the angry men, now I’d like to hear from the women. Please post your comments below.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

I’m going to keep this post short and sweet because no one likes a blogger who says “I told you so.” But, Spotify fans: Paul Carr and I told you so.

StrategyEye reports that less than 4% of users of Spotify—the gorgeous online music app with a troubled business model—are paying subscribers. StrategyEye quotes Universal Music International digital VP Rob Wells who says the company needs 10% to 12% of its users to subscribe to be a sustainable business. It’s only at the 10 threshold that Spotify is able to ink revenue share deals with labels, until then, it has to pay for music by the stream, driving its costs up substantially.

StrategyEye further cites Wells saying Spotify has those numbers in Sweden, Norway, Finland and France, but not larger markets like the UK and Spain. And the only thing more far-fetched than Spotify’s claims last summer that it would be profitable by the end of the 2009 and “definitely” be in the U.S. by early 2010 is the idea that paid-subscriber rates would be higher in the U.S. than the rest of the world.

Americans don’t like to pay for things online. As we wrote in our August article about Spotify, even the giants of the Web struggle with this. Netflix only has 10 million subscriptions and Match.com has less than 1 million. Hell, US Web audiences don’t even like free services that make money through intrusive advertising. (Yes, that’s an invitation to complain about our new interstitial advertising format in the comments.)

Unlike consumer Web properties like Twitter and Facebook that can build first and monetize later, online music is a graveyard full of companies sucked dry by the labels and left for dead. Pandora is one of the few to make it and that took $56 million in venture funding, a huge user base, years of employees not taking salaries and a user revolt so extreme it broke fax machines on Capitol Hill.

As a result, Spotify is going back to its invite-only model to throttle back widespread free usage in money losing markets like the UK. Meanwhile, labels are pushing for the product to be subscription only in the US. According to Mike, Google was at one point so hungry for Spotify on Android that it was willing to subsidize those per-user fees. That deal has apparently gone cold for now, which isn’t a shock to European VCs I’ve spoken with who’ve dealt with the startup in the past. Spotify is known for naming outrageously high valuations and not budging until it gets what it wants. That’s an odd tact for a company in such a brutal market to take. While it makes sense that Google would be drooling over the application, why not sit back, let Spotify’s funding dry up and then just buy it on the cheap?

At the very least, Spotify will have to raise more money to launch in the US without a Google-like deal, and many local venture capitalists I’ve talked to echo what European investors who passed on the deal told us last August: There are just too many leaps of faith for this company at such a nosebleed valuation. Of course, the Valley being the land of too much venture capital, if worst comes to worst someone will fund it at some price—it just may not be the deal Spotify wants.

Look, I love the service, I love that the founders believe in it enough to invest their own money and I love that the company is ballsy enough to think it can succeed where hundreds of music startups have failed. But the only way Spotify can have a shot in this near-impossible market is with truly stellar execution, and the experiences I’ve had with the management team have been marked by misleading “off the record” statements and unchecked arrogance. (As always, I’d love to talk with CEO Daniel Ek more about the company. Alas, so far he’s responded to requests for interviews by telling me he “doesn’t like (my) tone.” He has offered to meet up sometime when we’re on the same continent, which I genuinely hope happens.)

I usually root for startups with great products not to sell early, but this may be one case where a stunning and much-beloved app would do better in someone else’s hands. With any luck, a bidding war could still make good on that $250 million valuation.

Computer voice-to-text technology has come a long way, and every time it gets better, new applications open up. It is still not 100 percent accurate. Hell, it’s not even 90 percent accurate. But it is accurate enough for automated voicemail transcription services to become increasingly available and good enough not to have to listen through 15 voicemails to get the gist of what they are about.  Of course, voicemails are often translated incorrectly, sometimes to comic effect.

In a study comparing the accuracy of four different voice-to-text technologies (Google Voice, Preview in Microsoft Exchange, Ditech’s PhoneTag, and Yap) the one which came out on top was PhoneTag, which is now part of Ditech Networks. PhoneTag showed an 86 percent accuracy rate in translating 500 spoken messages into text. Google Voice was only able to achieve an 82 percent accuracy in its voice-to-text translations.  The study only evaluated purely automated voice-to-text systems.  Here’s how all four fared:

Automated Voice-to-Text Accuracy:

• PhoneTag: 86%
• Microsoft: 84%
• Google: 82%>
• Yap: 78%

The Ribbit Mobile, which I’ve been using with the human-assisted transcription option turned on.  I also use Google Voice on another phone.  I’ve certainly noticed that the human-assisted transcriptions are incredibly accurate.  It can even make sense of my three-year-old son’s messages:

Hi, daddy. Hello. We’re calling you from the kitchen. We just made, what we had just made, a banana (??). Bye. Bye.’

I turned off the human-assisted option and tested some purely automated transcriptions today, so I could compare it more fairly to Google Voice.  Some messages were pretty much the same, for others the accuracy went way down, but I really couldn’t say that PhoneTag was noticeably better than Gogle Voice.  But I do notice the difference when I have the human-assisted option turned on. So while 86 percent accuracy might be something to crow about, adding human translators to the mix is still by far the best way to go.

Accuracy of Voicemail-To-text Services

An old idea applied to a whole new generation and its bag of fresh tools. That’s how you could describe Beezag, a service from the eponymous New York startup, that was launched in private beta a couple of months ago.

Dubbed a ‘real-time targeted video advertising service’ by the company, Beezag’s business model is basically to force-feed young adults with video ads in exchange for cash and coupons (which is not to say it won’t work; more on that later).

And they’ve just raised over $2.5 million (on top of an earlier $750k founding round) from a group of angel investors, so time for us to take a closer look.

Currently, the only way to get in to Beezag is to have an invite code or exercise some patience after signing up for the waiting list. Once you get in, you’ll get a bracelet with a PIN sent to you and you’re supposed to let the company know more about what interests you the most. Based on your profile, Beezag will then start offering you selected coupons, rewards and discounts, straight from advertisers.

In addition, registered users get video advertising sent to their iPhones or Facebook accounts based on their profiles, and every time they watch ads completely, their iTunes or PayPal accounts get a little bigger. The way Beezag makes sure users pay enough attention to the video ads is by adding floating digits to the stream which users have to enter on the site to get the dollars.

In the future, more mobile and even interactive TV platforms will be added to the fray.

Now, call me crazy, but I actually think this might work out well considering the startup’s target audience: 18 to 24-year olds (generally strapped for cash but flush with enough free time to watch ads). Of course, a lot will depend on the actual pay-out rates, but according to the company clients like Dr. Pepper, Dentyne, Starbucks Shop, Skull Candy and Mandee have already signed up for campaigns.

It’s also worth pointing out that the two co-founders of Beezag, Richard Smullen and Laurent Alhadeff, have managed to convince two very savvy people to join the management team: six-year Google vet and former Lime Wire business development exec Brian Dick (as Chief Revenue Officer) and former-Upoc/Dada Entertainment CEO/CTO Steven Spencer (as Chief Operating Officer).

The fresh financing round comes from Bruellan Wealth Management (Geneva), whose MD Antoinne Spillmann led the round on behalf of clients that included four undisclosed angel investors.

This guest post was written by Aaron Levie, CEO and co-founder of Box.net. Box.net was founded in 2005 with the goal of helping people and businesses easily access and share information from anywhere. Box.net is now used by millions of individuals, small businesses, and Fortune 500 enterprises worldwide.

Consumers have readily embraced the Cloud in the form of services like Facebook, YouTube and Gmail, but businesses are a different story. While small and medium businesses have been drawn to the cost efficiencies of web-based solutions, the Cloud has thus far hovered on the periphery of mainstream business IT, with many dismissing it as unfeasible on a large scale, or at best, a distant solution. But cloud-based services are about to tip for the enterprise, and quickly.

The coming shift echoes the disruptive transformation of IT in the ’90s, driven by companies like Oracle, Microsoft, Lotus and Sun. Geoffrey Moore, author of “Crossing the Chasm” and “Inside the Tornado,” studied this transition and described the chain of adoption for enterprise technology: innovators are followed by early adopters, visionaries, and finally IT departments. And when enterprise technology hits this latter group, we’re officially in the Tornado.

Well the dust is beginning to swirl once more. Over the next two years, enterprise IT will follow in the footsteps of today’s early adopters and visionaries, finally embracing the Cloud and moving content, applications, and processes to the web. So what are the catalysts for this perfect storm? A combination of maturing platforms, generational and cultural shifts, and compelling economics, making cloud-based solutions the undeniable choice for nearly all future non-core technology purchases.

The platforms are ready

Today’s web-based platforms are finally maturing into real, viable solutions for businesses. They’re not just for small businesses or early adopters. Between Amazon EC2 for infrastructure-as-a-service, Force.com for platform-as-a-service, and Google Apps for software-as-a-service, companies large and small now have enough options to run their entire business in the Cloud. These complementary services can now talk to each other like never before, making it easy for IT administrators to weave connections between web platforms. And unplanned downtime is no longer a valid argument against the Cloud: like most cloud-based offerings, Google guarantees that Google Apps will be available at least 99.9% of the time, and will reimburse customers if this target isn’t met. According to a study by The Radicati Group, companies with onsite email solutions averaged 30-60 minutes of unscheduled downtime and 36-90 minutes of planned downtime per month in 2008. Even after a spat of outages in 2008, Matthew Glotzbach of Google’s Enterprise unit estimated that Google Apps downtime totaled a mere 10-15 minutes per month. Furthermore, cloud vendors front the bill to get the server back online, not your internal IT team.

Make way for new workers and a new way to work

Not only have our applications and platforms changed, so have the people using them. We’re now seeing the newest generation of the “knowledge worker” emerge in the enterprise. The formative years of this generation were spent chatting online, facebooking strangers and friends alike, and maxing out their hard drives with music and movie downloads. Accordingly, these employees are simply not capable of doing more work to find information than performing a Google search (I know, because I am one). They have no patience for convoluted IT policies, limited email storage and siloed data. Cloud-based IT services are the only solutions that can match the experience, efficiency, and access that we get in our personal lives. We’re already seeing companies like Salesforce mimic consumer tools with offerings like Salesforce Chatter. It’s only a matter of time before more vendors catch on that enterprise collaboration should be as easy as social networking, and must likewise take place in the Cloud.

The cloud is cheap

Okay, so we’re almost out of the recession. Companies who hunkered down will soon shift from survival mode to winning back marketshare. But guess whose stock is already at an all-time high? Salesforce. Despite the still-fragile economy, businesses are buying into the cloud, and there’s a lot more room to grow. At the risk of sounding completely obvious, they’re buying these services because they cost so much less to maintain and the barriers to getting started are much lower. And although the economy is showing signs of improvement, the past few years have fundamentally changed the way we think about technology purchases. Higher cost does not necessarily translate to higher quality. Products from behemoth software vendors like Microsoft are not necessarily more reliable. And in the Cloud, substantially fewer people are needed to get started: a medium-sized business five years ago required dedicated personnel, consulting, and redundant infrastructure to deliver corporate email. Today, the point of entry is a credit card transaction, with no infrastructure in sight. The time to transition to cheaper, more manageable platforms is now.

Momentum in the IT department

Managing infrastructure and technology that is not competitively-additive has become competitively-expensive. As we approach the Tornado, IT experts are redefining their roles and priorities from directly maintaining all the “contextual” applications around their business (CRM, email, file servers, search) to honing in on technologies that are core to their company’s performance and competitive advantage. This opens up the IT department to a new world of meaning and purpose. IT will move from a pure systems and process management function to a business success through technology service.

How do we know this is happening? IT decision-makers are starting to knock on the doors of Google, Amazon, Salesforce and Box.net. Box’s 10 largest sales in 2009 were made with IT managers at organizations you’d recognize. The common thread linking these IT buyers? In our case, they want to move toward Cloud Content Management, in lieu of spending hundreds of thousands of dollars on traditional ECM. This comes from awareness that their role is not about being bogged down in server administration, storage limitations and downtime, but rather about finding best-of-breed technology to solve their company’s issues and enhance their business, quickly. Imagine a world where IT is defined as a means to increase margin through people and process productivity gains, rather than an expense to the organization.

Ok, so what’s holding us back?

There is no question that Security concerns and a fear of relinquishing control of data and applications are still holding back adoption of cloud technologies in the enterprise. The interconnectedness of our web identities, and especially our reliance on email as a primary authentication provider, limits the level of security possible for web-based software today. We saw an example of this with Twitter’s leaks from Google Docs. But traditional IT has never been fully secure either, and Cloud IT providers have a number of mechanisms at their disposal to improve lock-down procedures on all fronts – plus, their business survival hinges on reliability and security. Between two-factor authentication, centralized network and hardware security, and other standards now being implemented by cloud providers, I think we’ll see the Cloud as being more secure in aggregate than traditional IT.

Vendors of cloud-based services are aggressively tackling security concerns as a final hurdle, and thanks to maturing platforms, a new generation of knowledge workers and compelling pricing, the Tornado is already gathering momentum. Many concede that the Cloud is indeed coming to business, but see it as a distant solution, perhaps five or ten years off. But the Tornado-like transformation of Enterprise IT will soon be upon us. And once adopted, the Cloud is inherently scalable. Internal infrastructure can take months to set up, but cloud solutions can be online within hours. Traditional platforms require ongoing maintenance and tedious administration and training, but web-based platforms can (and should!) be as end-user friendly as their consumer-focused counterparts. And because cloud-based platforms can be woven together, it’s no longer about forcing your business to fit a one-sized-fits-all solution, but rather designing a solution to fit your business.

Most businesses have spent the past few years in survival mode, trying to minimize losses and weather the recession. The coming Tornado will be game-changing for those who dive in early, and devastating for companies that continue to resist. Once the Cloud tips for enterprise IT, the whirlwind of adoption will be impressive. We should see major surges of implementation in 2010, with the Tornado in full force in 2011. And unlike the storm Geoffrey Moore detailed in the 1990s, the drivers of this fast-approaching disruption won’t be the behemoths Oracle, Microsoft, Lotus and Sun. They’re too bogged down by rigid ecosystems and product upgrade commitments. Rather, it’s a new generation of cutting-edge, nimble software companies that are disrupting the current order and leading the charge into the storm. A storm that is bringing unprecedented change to IT and competitive advantage to early adopters, ultimately redefining the role of Enterprise IT itself.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Each day 11 people die of asthma in the U.S., and it accounts for one-quarter of all emergency room visits. Since 1980 the asthma death rate overall has increased by 50%.

A new iPhone app called AsthmaMD, which was created by am Pejham (a doctor and researcher) and Salim Madjd, aims to help some of those sufferers. The application let’s them keep a diary of attacks, helping them keep records of the severity of attacks, medications used, etc.

But what’s really interesting about AsthmaMD: users can opt in to share this data anonymously with the service. The data is aggregated and will be shared with researchers. The company says that will help doctors and researchers better understand the disease, and may help people know when an attack is more likely.

In an email, Madjd says:

Just imagine what might be possible now with the data we gather from this app. For example, since we have precise location of patient and the time of their asthma activity we can correlate that against local pollutant count, adverse weather changes, and different type of pollutants. Or imagine if one area in a city shows higher per capita asthma severity than the rest, we can clearly show that in a map and alert the parent of a potential pollutant by a nearby business. Or imagine this data mashed up against a real estate site. For parents or to-be parents they can also look at the asthma activity in any specific area and make more informed decisions about where they want to move.

There is also ability to better understand the effect of different medications, on age groups, gender, on managing asthma caused by different type of triggers from pollutant to exercise, etc.

We can even alert users of higher asthma chances in real time if we detect users of similar asthma history reporting asthma issues. Ultimately we could even send tweeter streams with zipcode or geocode of areas with asthma flare ups on real time. This app has the potential to make an impact on people lives unlike anything we’ve seen before and on personal level is one of the most exciting projects I’ve worked on.

We will see a lot more apps like this in the future. Crowdsourcing is great for fixing pot holes. But it may also give doctors the information they need to better understand a variety of diseases, too.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Last week, we covered Googlle opening a school in India. Googlle, not to be confused with Google. Obviously, this was a site and service set up to trick people, as they were even ripping-off Google’s logo. Well guess what? After the publicity, they decided to switch up some things.

Most notably, you’ll see that the Googlle Institute has a brand new, beautiful logo, as Fake Steve noticed today. Gone is the Google font and colors. It has been replaced by “Googlle” written in red. I’m not sure what the font is, but I wouldn’t be surprised if Googlle wasn’t supposed to be using it.

You’ll also notice a new “declaration” at the bottom of the site:

We are no way related to Google Search Engine, Neither We want to copy the name or take advantage of that name & Pronounciation of same is different as “Google”.

Poor English aside, I’m going to assume Google India may not have been too happy about the site, and this is Googlle trying to cover itself.

They also apparently took the time to fix all the broken links (simply by removing many of them). They’ve also switched up the curriculum, now offering a 1-year program for a “googlle intern.” Hurry, they’re accepting applications now!

[thanks Brinke]

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Well that didn’t take long. Just four days in 2010 and we already have an acquisition. Social networking application Seesmic has acquired the social status updater Ping.fm.

The move positions the various Seesmic applications (web, desktop, and mobile) to be able to update some 50 social networks very easily. Seesmic is also acquiring the over 500,000 current Ping.fm users as well as the two co-founders, Adam Duffy and Sean McCullough, who are joining the Seesmic team full time.

Financial details of the deal were not disclosed, but Seesmic founder Loic Le Meur tells us that Duffy and McCullough are “becoming Seesmic shareholders obviously and key part of the management team.”

On January 1, Le Meur wrote that a 2010 goal for Seesmic was to have 1 million status updates a day. This acquisition will make hitting that much easier as Ping.fm adds some 200,000 updates a day to Seesmic’s arsenal. Le Meur promises that all of the Seesmic applications will gain Ping.fm integration shortly.

More importantly, Seesmic is promising to maintain and extend Ping.fm’s API and platform (there are about 100 applications that currently use Ping.fm for various reasons). Undoubtedly, they hope that this will be a compelling part of their upcoming plug-in support for Seesmic, as well. And Seesmic users will now be able to use Ping.fm’s core features such as being able to update via IM, SMS, and email.

This addition is a big plus for Seesmic as they aim to become the go-to application for social network updating. Rival Brizzly, by comparison, can only update Twitter and Facebook.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

“I just emailed you a video. You have to watch it now,” I said to Paul Carr, my resident TechCrunch partner-in-crime.

“Why are you sending me a video about….farm equipment?”

“Just watch it.”

“Oh my God! What is it doing to that tree!?”

“Turn up the volume. You have to hear the music.”

I probably could just embed said video and hit publish, but the Colossus—the world’s largest and possibly most badass olive harvesting machine—deserves a few more words than that. And so does the company behind it, MaqTec, which spent ten painstaking years building a business that sells $500,000 pieces of farm equipment from the middle of nowhere in Argentina.

I know, farm equipment isn’t really a regular beat at TechCrunch, but take away the product and the story of the Colossus is just like any story of a scrappy software, hardware, Web or gaming company that saw a big innovation hole in the market and decided it could go up against bigger, lazier competitors who’d dropped the ball on innovation. Only in this case, it wasn’t Microsoft or Yahoo. It was John Deere and Caterpillar.

To be fair to those lazy giants, the Colossus is attacking (and if you watch the video, you know that’s the right word) a small farming niche: High-density olive groves. But that’s exactly how most successful Silicon Valley startups skip around the plodding feet of tech giants: They find a market opportunity big enough to be a business, but small enough the big guys won’t see it or care about it. (Yet.) That was the formula for Intuit, Adobe, Siebel or more recently Flickr and YouTube.

I met Martin Bonadeo and Jose Mourelle, MaqTec’s founders, at Endeavor’s International Selection Panel in Patagonia two weeks ago and was so captivated I trucked out to Venado Tuerto Santa Fe—aka the middle of Argentina— the following week to see the machine in person. It was a long drive full of pretty much flat farmland. “If you’ve seen Iowa—you’ve seen Argentina,” Bonadeo said.

But it gave me plenty of time to hear Bonadeo’s story. This guy isn’t Indian, but trust me, he’s got enough Jugaad to fuel Argentina for the next forty years. Simply put, this is a company that never should have succeeded, but did through smarts, trial-and-error and sheer “no-we-can-build-this-company-in-rural-Argentina” force-of-will.

The idea was born back in the late 1990s. Argentina offered a tax benefit to encourage the planting of some 70,000 hectares of olive trees in poor areas of the country. Argentina had less than 20,000 hectares before the change. The catch was these groves had to be high density, a minimum of 300 trees per hectare. The incentives have worked well enough that Argentina’s Ministry of Economy and Production estimates that the country could be a top ten producer of the world’s olive oil supply within the next decade.

Olive groves take about three years to mature and Bonadeo—a self-proclaimed “soybean man” and long-time farmer—noticed a problem before a lot of other people: Who was going to harvest all these olives? Harvesting olives is expensive and time-consuming and has to be done in a 70-day window. There just wasn’t the labor in Argentina, especially given the high-density plots. It would take 800 people to harvest 1,200 hectares. “That’s more like a military operation than agriculture,” Mourelle says.

So began years of trial and error building the Colossus, a huge machine that, crassly put, looks like it’s having its way with an olive tree. The machine straddles a row of trees and rubber tentacles gently swat off the olives at rapid speed. The arms can move in and out to hug the canopy of the tree—all controlled by a joystick in the air-conditioned, comfortable cab. The company is doing roughly $4 million a year in revenues and sells the machines in six countries. The Colossus increases productivity ten-fold and cuts harvesting costs by a third once the cost of the machine is paid back.

It was a humble beginning. Bonadeo barely had a working prototype and no customers. There’s no such thing as venture capital in Argentine farm country. Without money, he couldn’t build more machines. Bonadeo used to befriend olive farm managers to find out when the owners would be in town. He and his team would crowd into a van and tow the Colossus over for cold calls. Sometimes he was laughed at, sometimes the owner wouldn’t be there after all. “There’s no way you guys can build this business from here,” potential buyers said, even when they saw the machine working. It was disheartening.

The only reason the first Colossus was sold was luck. Two farms were close to signing, but not quite ready to commit to the pricey $500,000 sticker price. So the smaller one called up the larger one and offered to split it with him and share the machine. Simply out of Argentine machismo the owner of the larger farm decided he wasn’t going halfsies on any farm equipment, called Bonadeo into his office and said he had five minutes to make a sale.

“What’d you say?” I asked.

“Hamana…hamana…hamana…” he joked.

It didn’t matter what he said, the man bought one anyway. Soon after that an Australian company placed and order for three machines. Three! “Not bad, fat boy,” Bonadeo said to himself. MaqTec was in business.

Today, it’s still an uncertain slog. Mourelle is the salesman and he spends much of that time flying around the world selling machines, while Bonadeo manages everything on the ground. He spent much of the week before his Endeavor pitch trying to get some Swedish tires out of Argentine customs.

I have to admit my original hope in driving so far to see the Colossus was that they’d let me drive one. Mourelle told me I only needed to watch a 45-minute instructional video to be qualified. (I love South America.) But alas—due to such constraints in parts and working capital—there wasn’t one with tires that wasn’t already sold and at a customer’s farm. But seeing how one was built was more impressive in person. Not because it’s elaborate but because the “factory” is so sparse. Each machine is comprised of parts from scores of local vendors and international companies and welded together in big, open garage-like workshops. Sure the rooms are big, but so is the Colossus. It’s hard to fit more than one in there at a time.

The biggest concern over MaqTec’s future isn’t so much John Deere building a me-too product. Should the Colossus become a serious enough threat to the $23 billion company, it’ll likely do what the big tech companies do: Make MaqTec an acquisition offer.

The bigger concern is whether Mourelle and Bonadeo have it in them to keep slogging away at a difficult business that’s made only more difficult by capital constraints and the challenges of building a company amid the soybean fields of Argentina. The two are definitely tired. They probably need some money and definitely need to fill out their management ranks to give each of them a break. But I’m not giving up on them. On paper, they shouldn’t have made it this far. They’ve innovated in a forgotten space with huge competitors in a place with no inherent advantages. What’s managing growth compared to that?

Watch the video below to see the Colossus in action. [NOTE: The bizarre similarity between MaqTec and TechCrunch’s logo and video intros are just sheer, weird coincidence.]

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