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Opportunity abounds as the downturn persists

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Articles - December 2010
Wednesday, November 17, 2010
Opportunity on the digital frontier

As much opportunity as there is in the buying of technology, there may be more in pushing technology forward. Businesses that devise new ways to do basic things more efficiently and with fewer headaches can grow very quickly in this environment.

For example, consider the work of systems administrators who oversee hundreds or thousands of machines at once. Portland startup Puppet Labs, one of the fastest-growing companies in Oregon, has developed a system to automate data center management, freeing up systems administrators to focus on work with more strategic importance to the organization. Founder and CEO Luke Kanies wrote the code for Puppet with a “fanatical focus on ease of use,” creating an open-source platform upon which software developers can share improvements and build applications.

The market potential for Puppet is huge. Tech giants such as Google and Amazon profit from data center management, but for most other companies it is a hassle and an expense. Kanies pitches Puppet as a means to free up a company’s technologists to do important rather than menial work, comparing it to the historic shifts from telephone operators to automated systems that improved service and offered more advanced opportunities in the industry.

Kanies positioned the Puppet brand as a frequent speaker at international open-source conferences and moved to build the company in Portland with $7 million in venture capital. Over the past year he has built the company from nine employees to 25, and he intends to grow to 50 next year. Already Puppet Labs has outgrown its funky Old Town office and is in the process of moving into 9,000 square feet on the top floor of a building on NW Park Avenue that will soon bear the company’s name.

As CEO of a rapidly growing technology company with big investments propelling it forward, Kanies has a different view of the real estate market from other business leaders. The low-rent, long-term lease is less appealing to him because a seven- to 10-year lease requires information about the future that is fairly unknowable at this stage. “Either I’ll be out of business in seven years,” says Kanies, “or we’ll be 700 employees.”

It goes without saying which of those options he would prefer. Like Jive Software before him, Kanies is trying to prove that the rapid-growth, investor-backed tech model can work in Portland and resist the gravitational pull of California (Jive recently moved its headquarters to the Bay Area but maintains a major presence in Portland). “I want to stay CEO and I want to stay in Portland,” says Kanies. “But we have to perform. That’s what it comes down to.”

In his view, the opportunity for innovation in the digital space is “unlimited.”


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