I attended a panel last night nominally on the topic of whether the local startup ecosystem was best seen as the M&A feeding grounds of big west coast technology companies. Because it was an interesting group of panelists, we wandered a bit and never really dug into the core question of whether this is true and what its implications might be for the overall technology industry in Cambridge and Boston. Having been Twitter taunted by Scott Kirsner to come prepared for a fight, I was disappointed we mostly avoided the topic.

The short answer is that while we do indeed have plenty of liquidity events tied around large technology companies from the west coast as acquirers, we could use more to ensure an even healthier ecosystem and that as such I think we should be thrilled to have more companies exit to the big tech companies of out west, not stressed. While there is one nuance about what we are missing today (particularly when it comes to web companies), overall this is a good thing.

First, my take on the necessary virtuous cycle of the startup ecosystem:

It starts with "founder material," the engine of the entire machine. As a general rule, New England has always done well in producing founders but a macro trend which has helped us disproportionately in the last five years has been the plummeting age of the typical founder, a factor which plays very well in a university-rich geography. Whereas the 1980s saw the median founder coming out of a minicomputer company on the 128 riviera, today that founder is just as likely to be 22 and fresh out of MIT, Harvard or any of the sixty odd colleges and universities in Massachusetts alone.

To get the engine started, most founders need a little fuel in the form of a few hundred thousand dollars, something which until this latest boom in seed activity was a weakness of our region, or more likely, a unique strength of Silicon Valley. Back in 2001 when the venture dollars dried up, the only place one could get money at this scale in Boston ($100-1000K) was from one of a few rather onerous angel groups. However, using the new StartupDataTrends (a very cool new tool I highly recommend you try out for what it achieves in terms of startup funding transparency), you can see the differences in average seed round amount raised and valuations below:

Once the engine has started, the startups that find product/market fit then often go on to need scaling capital, the job of traditional early stage investors and a segment where New England has been over represented on a per capita basis for a long time, so we certainly have no problems there. Entrepreneurs may argue that VCs are too conservative or don't get the Internet but it's hard to argue that there are too few of us, and more importantly, not enough dollars in this geography.

Where we have suffered a bit, especially in this latest wave of Internet companies has been in finding "scaling employees," or the folks that, trained at large companies in a similar sector, can quickly ramp a few hundred thousand dollars of run rate revenue or unique visitors into millions and tens of millions. In the 1990s we didn't have this problem because everyone was new to the web and we were all making it up as we went but over the last 10 years there has been a legion of middle managers that have gone from Yahoo to eBay to Google to Facebook (and a few other relevant chains) and learned how to skillfully scale engineering, sales, marketing, operations, etc. for ever larger web businesses. My mental image of this is a set of Russian dolls surrounding the same core group of management talent with each subsequent generation of a "pole tech company" being more massive at scale than the former (e.g. Yahoo->Google->Facebook).

While we've got some of those folks here (hidden away at companies like TripAdvisor, VistaPrint and Kayak), the density is too low for all of the interesting startups that need this type of talent. This is the one place where not having the big pole companies in the web (unlike say systems companies in networking and storage which we've got plenty of) has hurt us. Though again, time and success should fix this.

Finally, a lot of liquidity is necessary to recycle founders (who will swing harder the next time), create new sources of startup capital, and most importantly, provide a way for startups that won't ever be able to turn into billion dollar standalone companies to find a home, thereby releasing raw materials back to start the cycle.

This last point on too much "selling out" was meant to be at the core of last night's panel and my core argument was going to be that we need more not less of it and that by having companies like Google, Microsoft, VMWare, and Amazon, establish meaningful presences (not just sales offices) in Cambridge, we were likely to see more of this type of activity.

I believe Scott Savitz said it best last night when he talked about the key metric being the number of "at bats" that we get as a region to create monster companies here. No matter how you think of it, accelerating this startup ecosystem virtuous cycle— be it in e-commerce, mobile adtech, infrastructure software, robotics, ed tech, or any other of our emerging tech clusters— can only help that particular statistic.

Postscript: In a related sign of the virtuous cycle being accelerated, Brad had a very nice piece after his visit here this week on entrepreneurial density that is worth reading.

The Amazon Kindle sucks plain and simple. I say this despite loving almost everything that Amazon does and thinking that Jeff Bezos is the closest contender for the post Steve Jobs "best tech CEO." And the excuse that it great for people who can't afford an iPad reminds of the wackos who argue that Linux on the desktop is good for the developing world as though being poor helps one overlook crappy product.

Professional reviewers have said it better but here is the laundry list of blemishes: it's industrial design is at best uninspired and more likely flawed (no buttons on the device, an easy to depress overloaded button on the bottom), it's build quality is atrocious (my unit squeaks like Tweetie bird and it feels cheap), and most importantly, the software build shows its underpowered Android roots in everything from the sluggish page swipes to wanky and discordant visual effects or periodic freezes that make one wonder why they didn't just port the diminutive eInk interface to this dog of a slab.

Overall, the 2011 Android Amazon tablet is not much better than the 2008 HP Android tablet that we worked on— and that was built on older silicon and with little of the right software expertise. How Amazon expects this to sell well is beyond me. I'd definitely not recommend it to anyone— not even someone looking for a cheaper iPad— not just because it is bad but because it is a product that gets hired to solve no problem and does it poorly. The iPad face a similar challenge but fortunately for Apple proved to be so good at what it did (surf, email, content) that people were delighted to use it as their portal to these applications.

The lesson is clear: if you are going to invent a category not fundamentally rooted in a basic need, you need to overdeliver not provide the budget low entrant disruptor. Go big or go home. Amazon did this with the first 3G seamless e-reader back in 2008 so it's shocking to see them missing the mark now.

We are all going to miss him a ton. A zillion pieces have been written about it. For days I've been struggling with whether I'd add to the mush by writing any of the three stories from my meetings with him— each funny and poignant in its own way. But in the end, I think I'll stick to a couple of pointers from the torrent of stuff I've been inhaling over the last few days.

If you are feeling kicked in the stomach like me and don't quite get why, go watch Jon Stewart's Moment of Zen on Steve's passing— he nails why you feel out of sorts with the alien metaphor.

If you want a personal view, go read Walt's piece. The journalist who Steve cared about the most, Walt nailed the essence of Steve— and the walk to the park bit shows you why our best heroes are just as human as the rest of us.

And finally, if you want to be humbled a bit this weekend, watch the video below from the 1997 closing WWDC fireside chat. Remember that this was a time when Apple was the laughing stock of the tech industry— when even Michael Dell could shit on them. And then listen closely to how honestly Steve communicates what the company needs to do. He lays out the next 14 years with remarkable detail, stated plainly and without futuristic marketing bullshit. Listen to him talk about living the cloud+mobile future at NEXT and wanting to bring that to the Apple customer base, or why dollars spent on TV advertising in 1997 would be wasted to see how clear-eyed he was at the time about what he needed to go and get done.

As many have said, I don't think we'll see another Steve in our lifetime and man do I feel lucky to have been able to live through his leadership of Apple's return to the top.

Tim Wu wrote a fantastic book on the history of communications and media where he pointed out that patterns tend to repeat themselves with every new medium, starting with an open ecosystem full of enterprising entrepreneurs leading eventually to a closing down opportunity set due to the market power of the new winners. In the book he covers the telephone, the radio and television and forecasts that the same will happen to the Internet. With today's Kindle Fire annoucenment, things certainly seem to be headed in that direction.

First of, as many will write, the new Kindle strategy is terrific. It's about the content and the price. Even their "top of the line" Fire at $200 has the chance to become the first personal mass market tablet device. At current course and speed, I could see the iPad becoming the family desktop of the tablet space— a shared machine that is bought once per household while the Fire takes the "one in every bag" position (of course I doubt Apple will stand still this time next year when Amazon has sold 1/2 to 2/3 as many Fires as iPads).

Back to Wu's book: the most significant part of yesterday's announcement to me was Silk, the browser that runs half its MIPS on Amazon's web services. Nominally the idea is that the web's architecture is not ideally suited to a low bandwidth, screen & CPU constrained device and that by pre-processing all of the requests and content on a powerful server, the experience can be sped up significantly. It's not a new idea: Blackberries worked like this along with Danger's Sidekick, Opera Mobile, and Skyfire's browser (an investment). However, I'm just not sure that the improved user experience is the end of the story.

After all, the Fire is a Wifi only device so unless they are thinking forward to some world where they go 3G (instead of LTE), it can't be bandwidth alone. Plus, the existing mobile ARM cores are plenty zippy when it comes to running web content (witness iOS). Even the Kindle Fire can be set (likely through some deep options menu no one will find to "client only" mode). And to boot, the cry of "mobile first" has publishers and app developers racing to optimize for the new relevant target of the tablet and the smartphone.

Additionally, why take the execution risk of server-side rendering? Not only does this add a variable cost that Amazon has to support for every user surfing their web on the Fire, but it also creates a dependency on a web service that has to be managed, debugged, and made compliant with all of the browser idiosyncrasies that currently live on the client.

I believe the real reason for squirting all of the web through Amazon's AWS straw comes down to control, the most important bit being ownership of the clickstream data. Plenty of people have raised the privacy issue thus far and have quoted Amazon as saying that the data will remain anonymous and aggregated is different from not captured or "incapable of being used to build profiles." At my last company I had someone from Amazon's early days (before cheap storage, Hadoop, and the big data obsession) who told me that Amazon had kept every click on every log since inception despite the fact that it used to cost a lot of money to do so. There is no doubt this is a company that understands the value of data when it comes to discerning shopping intent, the lifeblood of a low margin high volume e-commerce retailer.

If I were Best Buy or B&N, I'd be worried. All signs today point to 7-10% of e-commerce happening on mobile devices (smartphone, tablet), with some people believing the tablet may come to take 50% of that in the next 2-3 years. With the Fire Amazon has effectively extended their storefront to this new platform in a closed and proprietary way, a completely rational strategy. But with Silk, they've gone one step further, choosing a page out of Microsoft's old "embrace & extend" playbook applied to something much more relevant than the DOM or some other geeky browser standard, the currency of commerce on the web (data). Bold, and bit scary.

In a day when all the rest of the Web 1.0 companies seem like dump trucks crashing into each other in the night, who'd have thought that the humble little bookseller which just 12 years ago was jokingly known as Amazon.org (no profits) would come out on top of the next major phase of the Internet?